Financial Accounting and Reporting Introduction to Accounting

Topic 1: Definition, Nature and Purpose of

Accounting

Application
Congratulations! You have just completed Topic 1.
I prepared some activities for you to assess your learning. Please
answer/accomplish the following activity/ies
Multiple Choice:
1. Which of the following statements regarding accounting is incorrect?
a. All business transactions and events are recorded in the accounting books.
b. Although bookkeeping and accounting are interrelated, they are not the same.
c. The purpose of accounting is to provide information that is useful in making
economic decisions.
d. A transaction or event is recorded in the accounting records only if it has an
effect on the assets, liabilities, equity, income or expenses of the business.

2. Which of the following is not one of the necessary processes performed in

accounting in order to provide information that is useful to interested users?
a. Identifying
b. Summarizing
c. Recording
d. Counting

3. Accounting is described in various ways. Which of the following is not one of those
descriptions?
a. Accounting is a process and a service activity.
b. Accounting is a social science and a practical art.
c. Accounting is the “language of business” because it is fundamental to the
communication of financial information.
d. Accounting is the art of professionally stealing money and other evil purposes.

4. Accounting has a long history. Which of the following is incorrect regarding the
history of accounting?
a. Accounting can be traced as far back as the prehistoric times.
b. Accounting is as old as civilization and has evolved in response to economic and
social needs of men.
c. Fra Luca Pacioli is the mama of modern accounting.
d. All of these are correct.

Cagayan State University –Andrew’s Campus

Financial Accounting and Reporting Introduction to Accounting

5. The main purpose of accounting is

a. to account for money so it will not be lost.
b. to provide information that is useful in making economic decisions.
c. to safeguard the assets of a company.
d. to provide a clear view of the state of the industry’s economy.

6. In accounting, the term “recording” is also called

a. journalizing.
b. communicating.
c. debiting.
d. videoing.

7. This process refers to the reporting of the information processed in the accounting
system to interested users.
a. Measuring
b. Identifying
c. Communicating
d. Classifying
8. Which of the following statements regarding the recording of events is valid?
a. Only non-accountable events are recorded in the accounting books.
b. Only accountable events are recorded in the accounting books.
c. Both non-accountable and accountable events are recorded in the accounting
books.
d. Neither non-accountable nor accountable events are recorded in the accounting
books.

9. Accounting has been given various definitions, which of the following is not one of
those definitions
a. Accounting is a service activity. Its function is to provide quantitative
information, primarily financial in nature, about economic entities that is
intended to be useful in making economic decisions.
b. Accounting is the art of recording, classifying, and summarizing in a significant
manner and in terms of money, transactions and events which are, in part of at
least, of a financial character and interpreting the results thereof.
c. Accounting is a systematic process of objectively obtaining and evaluating
evidence regarding assertions about economic actions and events to ascertain
the degree of correspondence between these assertions and established criteria
and communicating the results to interested users.

10. What is the primary purpose of accounting?

a. To count money.
b. To provide accounts.
c. To provide information that is intended to be useful in making economic
decisions.

Cagayan State University –Andrew’s Campus

Financial Accounting and Reporting Introduction to Accounting

d. To produce accountants.

Topic 2: Users of Accounting Information

Application

Congratulations! You have just completed Topic 2.

I prepared some activities for you to assess your learning. Please
answer/accomplish the following activity/ies

1. Which of the following statements is correct?

a. Financial accounting is the branch of accounting that deals with the specific
needs of an entity’s management.
b. The internal users of accounting information include management, owners and
creditors.
c. The external users of accounting information include potential and existing
investors and lenders and other creditors.
d. Government accounting is the branch of accounting that deals with the analysis
of the costs of products and services.
2. These users need accounting information in order to regulate businesses that are
within the scope of their legal authority.
a. Employees
b. Creditors
c. Auditors
d. Government regulatory bodies or agencies

3. These users need accounting information in evaluating the stability of the business in
so far as their job security, future remuneration, and career growth and opportunities
are concerned.
a. Employees
b. Creditors
c. Auditors
d. Regulatory authorities
4. The following are decisions made by external users except
a. whether to hold or sell investments in stocks.
b. whether or not to extend a loan to the business.
c. whether to sell goods on credit to the business.

Cagayan State University –Andrew’s Campus

Financial Accounting and Reporting Introduction to Accounting

d. whether to obtain additional capital from outside creditors or to generate it

internally.
5. Which of the following users of financial information is not considered a creditor of
the business?
a. A loan provider, such as a bank
b. A supplier that sells goods to the entity on credit
c. A customer that buys goods from the entity on credit
d. A financing company that provides the entity with machineries on a “rent-to-
own” basis

Topic 3 Common Branches of Accounting

Application

Congratulations! You have just completed Topic 3.

I prepared some activities for you to assess your learning. Please
answer/accomplish the following activity/ies

1. This branch of accounting focuses on catering to the information needs of external

users.
a. Management accounting
b. Financial accounting
c. Auditing
d. External accounting
2. It is the branch of accounting that involves the careful analysis of economic events
and other variables to understand their impact on decisions.
a. Accounting education
b. Cost accounting
c. Accounting research
d. Tax accounting
3. It is the process of objectively evaluating evidence and expressing an opinion
regarding the correspondence between management’s assertions and established
criteria.
a. Accounting education
b. Auditing
c. Accounting research

Cagayan State University –Andrew’s Campus

Financial Accounting and Reporting Introduction to Accounting

d. Tax accounting

4. The branch of accounting that deals with providing financial information to external
decision makers is
a. Public accounting.
b. Government accounting.
c. Financial accounting.
d. Managerial accounting.
5. Without this branch of accounting, there will be no accountants
a. Public accounting.
b. Government accounting.
c. Accounting education.
d. Managerial accounting

Topic 4: Forms of Business Organization

Application

Congratulations! You have just completed Topic 4.

I prepared some activities for you to assess your learning. Please
answer/accomplish the following activity/ies

True/False
A. Sole Proprietorship
_______1. The owner is the only boss and you keep all the profits.
_______2. Although it is easier to form, it may be more difficult to raise financing.
_______3. It has unlimited life.
_______4. It has limited liability.

B. Partnership
_____ 1. Compared to a sole proprietorship, risks are spread out over more than one
owner.
_____2. Compared to a cooperative, the business organization is driven more towards
the earning of profit.
_____3. Compared to a corporation, it is easier to form because of fewer legal
requirements.
_____ 4. Compared to a corporation, it has an unlimited life and an unlimited liability.

Cagayan State University –Andrew’s Campus

Financial Accounting and Reporting Introduction to Accounting

Topic 5: Types of Business According to

Activities

Application

Congratulations! You have just completed Topic 5.

I prepared some activities for you to assess your learning. Please
answer/accomplish the following activity/ies.

Make a Table of Comparison about Service, Merchandising, and Manufacturing

Activities of a Business.

Type Activity Structure Examples

Service

Merchandising/Trading

Manufacturing

Cagayan State University –Andrew’s Campus