Republic of the Philippines

Department of Education
Region I
Division of Ilocos Norte
BANNA ACADEMY INC.
Banna

FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 1

1ST QUARTER EXAMINATION – 1ST SEMESTER

Name: ___________________________ Date: ___________________

Grade and Section: _________________ Score: __________________

MULTIPLE CHOICE
Direction: Read and understand each statement carefully and choose the correct
answer from the given choices. Write your answer BEFORE THE NUMBER.

1. Which of the following best defines accounting according to the American

Institute of Certified Public Accountants (AICPA)?
a. The process of identifying, measuring, and communicating economic
information to permit informed judgments and decisions by users of the
information.
b. The art of recording, classifying, and summarizing transactions and events in
a significant manner.
c. The systematic recording of all transactions for a business to provide useful
financial information.
d. The science of financial management that ensures the economic activities of
an enterprise are recorded.
2. According to Robert Anthony, accounting is:
a. The art of recording, classifying, and summarizing transactions and events in
a significant manner and in terms of money, and interpreting the results
thereof.
b. The process of identifying, measuring, and communicating economic
information to permit informed judgments and decisions by users of the
information.
c. A system that provides quantitative information about the finances of a
business.
d. The systematic process of managing all financial transactions of a business.
3. Which definition of accounting is attributed to Smith and Ashburne?
a. The art of recording, classifying, and summarizing transactions and events in
a significant manner and in terms of money, and interpreting the results
thereof.
b. The process of identifying, measuring, and communicating economic
information to permit informed judgments and decisions by users of the
information.
c. A systematic process of collecting, summarizing, analyzing, and reporting in
monetary terms, the financial transactions of a business.
d. The science of financial management that ensures the economic activities of
an enterprise are recorded.
4. Which phase of the accounting process involves grouping similar financial
transactions together into relevant categories?
a. Recording c. Summarizing
b. Classifying d. Reporting
5. What is the final stage of the accounting process where financial information is
aggregated to produce financial statements?
a. Recording c. Summarizing
b. Classifying d. Reporting
6. The process of recording business transactions in chronological order as they
happen is called:
a. Recording c. Summarizing
b. Classifying d. Reporting
7. What type of accounting is primarily concerned with providing information to
managers within an organization to assist with decision-making?
a. Managerial Accounting c. Financial Accounting
b. Government Accounting d. Auditing
8. Accounting is a tool to achieve specific objectives. This emphasizes that:
a. Accounting is an art.
b. Accounting is a means, not an end.
Republic of the Philippines
Department of Education
Region I
Division of Ilocos Norte
BANNA ACADEMY INC.
Banna

c. Accounting is a process.
d. Accounting is an information system.

9. Accounting is recognized and characterized as a storehouse of information. This

represents that:
a. Accounting is an art.
b. Accounting is a means, not an end.
c. Accounting is a process.
d. Accounting is an information system.
10. Accounting entails creativity and skills to help us attain some objectives. This
means that:
a. Accounting is an art.
b. Accounting is a means, not an end.
c. Accounting is a process.
d. Accounting is an information system.
11. The accountant arranges the records of the business properly to be easily
understood by the managers in the organization. This function of accounting is:.
a. Keeping systematic record of business transactions.
b. Protecting properties of the business.
c. Communicating the results to various parties in or connected with the
business.
d. Meeting legal requirements.
12. If the accountant notices a discrepancy in recording the expenses incurred by
an employee in attending seminars, this represents:
a. Keeping systematic record of business transactions.
b. Protecting properties of the business.
c. Communicating the results to various parties in or connected with the
business.
d. Meeting legal requirements.
13. The company pays its taxes to the government on time. This function of
accounting is:
a. Keeping systematic record of business transactions.
b. Protecting properties of the business.
c. Communicating the results to various parties in or connected with the
business.
d. Meeting legal requirements.
14. Who is considered the "Father of Modern Accounting"?
a. Luca Pacioli
b. King Victorio
c. Luca Pacola
d. Loca Pacioli
15. Accounting started in:
a. Development of the Roman Empire
b. 14th Century
c. Early development in Mesopotamia
d. Modern Times
16. Double-entry bookkeeping system was introduced in the:
a. 14 century
b. 11th century
c. 20th century
d. 14th century
17. This branch of accounting focuses on creating value for the business by
providing information used in financial accounting and management accounting
fields:
a. Accounting Education
b. Tax Accounting
c. Auditing
d. Cost Accounting
18. Information produced by this branch of accounting aims to educate students in
the field of accountancy:
a. Accounting Education c. Cost Accounting
b. Tax Accounting d. Auditing
Republic of the Philippines
Department of Education
Region I
Division of Ilocos Norte
BANNA ACADEMY INC.
Banna

19. Which of the following is NOT considered an external user of accounting

information?
a. BIR Officials
b. Customers
c. Production Supervisor
d. A student of accountancy
20. Jason is a professor of accountancy in the BS Accountancy program of the
University of the Philippines. He is also a stockholder of Everest Co. In the point of
view of Everest Co., Jason is an:
a. External User
b. Internal User
c. Both a or c
d. None of the above
21. Which of the following is NOT considered an internal user of accounting
information?
a. Owners of a business
b. Senior partners of an audit firm
c. Suppliers
d. Field workers
22. Jason is a professor of accountancy in the BS Accountancy program of the
University of the Philippines. He is also a stockholder of Everest Co. In the point of
view of the University of the Philippines, Jason is an:
a. External User
b. Internal User
c. Both a or c
d. None of the above
23. Why are managers considered internal users of accounting information?
a. Because they use the accounting information to make decisions for the
company.
b. Because managers aim to improve the company.
c. Because managers are usually responsible for preparing financial statements.
d. Because managers can request accounting information directly from the
company.
24. Customers look at a company's financial statements:
a. To see if it will be beneficial to build a long-term relationship with the
company.
b. To help members of the academe gather data for educational purposes.
c. To decide whether they will lend resources to the company.
d. To estimate the potential returns if they plan to transact with the company.
25. What is most likely to happen when companies are experiencing financial
difficulties?
a. Employees are motivated to work to achieve the company's goals.
b. Creditors will be more willing to lend to the company to help overcome its
financial difficulties.
c. Researchers will lose interest in the company since they mostly study
successful companies.
d. Investors will postpone or cancel their investments.
26. The government is also an interested outside party that analyzes a company's
financial statements. Which of the following is NOT performed by the government?
a. The government examines financial statements to help companies in
formulating business decisions.
b. The government assesses the taxes payable by companies through the
analysis of financial statements.
c. The government is the regulatory body that oversees all businesses.
d. The government encourages or prohibits certain business activities
depending on their effect on the company.
27. Which of the following is considered a manufacturing type of business?
a. Shakia's Cakes and Pastries Bakery
b. Karla's Dry Goods
c. ABC Telecommunication Company
d. Patricia's Tutorial Services
Republic of the Philippines
Department of Education
Region I
Division of Ilocos Norte
BANNA ACADEMY INC.
Banna

28. PAL Merchandise, which sells various consumer goods, buys supplies from its
long-term supplier Baby Inc., which buys manufactured goods from FDG Company.
Which of the following statements is true?
a. PAL Merchandise is the wholesaler, whereas Baby Inc. is the retailer.
b. PAL Merchandise and Baby Inc. are both merchandising companies.
c. PAL Merchandise is the wholesaler, whereas Baby Inc. is the retailer.
d. Both b and c are correct.
29. Using the accounting equation, if ABC Company has assets amounting to
P200,000 and liabilities of P100,000, its equity will be:
a. P100,000
b. P300,000
c. P200,000
d. P150,000
30. XYZ Company has equity of P500,000 and liabilities of P200,000, its assets will
be:
a. P1,000,000
b. C. P700,000
c. P70,000
d. P300,000
31. If KLM Company has assets of P1,000,000 and equity of P500,000, its liabilities
will be:
a. P1,500,000
b. P500,000
c. P1,000,000
d. P1,200,000
32. A transaction is first recorded in a book called a
a. Journal
b. Ledger
c. T-account
d. Chart of Accounts
33. А __________ represents the chronological accumulation of all information about
changes in an asset, liability, equity, revenue, or expense item in one place.
a. Journal
b. Accounting System
c. Ledger
d. None of the above
34. The following are the parts of a General Ledger, EXCEPT
a. Date
b. Invoice Number
c. Reference Number
d. Explanation of business transaction
35. General Journal and General Ledger have the same format.
a. Yes
b. Maybe yes
c. No
d. Maybe no
36. Which of the following represents the basic accounting equation?
a. Assets= Liabilities + Owner's Equity
b. Assets + Liabilities = Owner's Equity
c. Liabilities = Assets - Owner's Equity
d. Owner's Equity = Assets + Liabilities
37. If a company has total assets of P50,000 and total liabilities of P30,000, what is
the owner's equity?
a. P20,000 c. P50,000
b. P30,000 d. P80,000
38. Which of the following transactions would increase both assets and liabilities?
a. Purchasing inventory with cash
b. Taking out a loan to buy equipment
c. Paying off a loan
d. Selling goods for cash
39. If a business owner invests P15,000 in cash into their business, what happens to
the accounting equation?
Republic of the Philippines
Department of Education
Region I
Division of Ilocos Norte
BANNA ACADEMY INC.
Banna

a. Assets increase, Liabilities decrease

b. Assets increase, Owner's Equity increases
c. Assets decrease, Owner's Equity increases
d. Liabilities increase, Owner's Equity decreases

Test II. (40-49)Distinguish the branch of accounting needed in each

scenario. Answers must be in uppercase.

40. A technology firm needs to evaluate the cost of developing a new software
product, including programming and marketing expenses.
Branch of Accounting: _________________________
41. A local government office needs to prepare a report on how public funds were
used for infrastructure projects.
Branch of Accounting: _________________________
42. A family-owned grocery store wants to produce an annual report for its owners,
summarizing sales, expenses, and profits.
Branch of Accounting: _________________________
43. This branch involves in teaching accounting principles and practices.
Branch of Accounting: _________________________
44. A consulting firm needs to track and report its internal costs to improve
efficiency and budget for future projects.
Branch of Accounting: _________________________
45. A retail chain needs to ensure that its financial statements are accurate and
comply with generally accepted accounting principles (GAAP) before releasing them
to shareholders.
Branch of Accounting: _________________________
46. An independent auditor is hired to assess the accuracy and reliability of a
corporation's financial reports and internal controls.
Branch of Accounting: _________________________
47. An online business requires a detailed analysis of customer acquisition costs
and sales performance to determine the most profitable marketing strategies.
Branch of Accounting: _________________________
48. A public university needs to allocate its budget for different departments and
ensure that it adheres to funding restrictions and compliance requirements.
Branch of Accounting: _________________________
49. A tax consultant helps a small business owner optimize their tax flings by
Identifying eligible deductions and credits.
Branch of Accounting: _________________________

Test III. Choose the term that matches the definition. Answer must be
written before the number.

Terms:

1. Service Business
2. Manufacturing Business
3. Trading Business
4. Hybrid Business
5. Sole Proprietorship
6. Partnership
7. Corporation
8. Identifying
9. Measuring
10.Communicating

Definition:
Republic of the Philippines
Department of Education
Region I
Division of Ilocos Norte
BANNA ACADEMY INC.
Banna

A. A business that produces goods from raw materials and sells finished
products.
B. A business owned and operated by one individual who is entitled to all profits
and responsible for all debts.
C. A type of business where two or more individuals share ownership and
responsibilities.
D. A business that provides services rather than goods.
E. A legal entity separated from its owners, with its own rights and obligations,
managed by a board of directors.
F. A business that buys and sells finished goods without changing their form.
G. A business that combines elements of more than one type, such as a
manufacturing firm that also provides services.

Test IV. Accounting Equation (57-60)

Problem: The "Future Leaders Club" is an organization similar to KKDAT Banna

Chapter, and they have provided their financial data for the month of August. Your
task is to solve their financial situation and determine their final balance.

Here's the financial data provided:

1. July 10- Contribution from Esterlyn Agcaoili-Salvador: P2,000.00
2. July 11- Donation from Bini Gwen: P1,500.00
3. July 27- Fundraiser Event: P3,000.00
4. July 28- Sponsorship from Sarah Duterte: P4,000.00
5. July 29- Solicitation from Fhukerat and Queen Dura: P1,000.00
6. Aug 5 - Office Supplies: P800.00
7. Aug 10 - Venue Rental: P2,000.00
8. Aug 15 - Marketing Materials: P1,200.00
9. Aug 20 - Event Catering: P2,500.00
10.Aug 25 - Utilities: P700.00
11.August 26- Loan from Miss Catering: P1,500.00
12.August 27- Loan from Tito Mars: P1,000.00
13.August 10- Unpaid Invoice from Jenny: P1,000.00
14.August 28- Pending Payment for Duqueza Vlogs: P500.00

Total Income: ___________________

Total Expenses: __________________
Total Borrowed Funds: ______________________
Total Outstanding Obligations: ___________________

Prepared by: Checked by:

JAN MARC A. AUSTRIA RICARDO B. ACEDO JR.

FABM1 Teacher Academic Coordinator

Approved by:

JANICE M. CACAO
School Principal
Republic of the Philippines
Department of Education
Region I
Division of Ilocos Norte
BANNA ACADEMY INC.
Banna

“It’s better to get zero with dignity than to get high by cheating”