FABM Grade 11 Week 1-10 Exam
AMA OED ANSWERAccounting Basics
Question: These are resources of the firm which were taken by the owner for personal use.
Question: It represents the right of the owner over the resources of the firm.
Question: There are common account titles between assets and liabilities.
Question: Property, plant, and equipment are assets.
Question: Assets minus Liabilities is equal to Equity is also considered an Accounting Equation.
Question: This is the type of business which offers services for a fee.
Question: Services businesses offer products.
Question: Long-term liabilities are noncurrent.
Question: Cash and cash equivalents are current assets.
Question: A liability is a present obligation arising out of past events.
Income Statement and Financial Reporting
Question: Income statement for merchandising businesses usually have how many sections?
Question: The heading of a statement of income usually consists of the following except:
Question: The story of the success, or failure, of operations is shown in the _______________________.
Question: The following are included in the income statement for merchandising businesses except:
Question: Operating expenses and operating income or operating loss are items which can be found in an income statement prepared in a multi-step approach.
Question: We use a multi-step approach in preparing a statement of income for ______________________.
Question: The income statement for merchandising businesses usually has eight sections: Net sales, Cost of goods sold, Gross profit, Operating expenses, Operating income or operating loss, Other revenues and gains (expenses and losses), Net profit or net loss.
Question: In preparing the income statement for service businesses, expenses are deducted from the revenue to arrive at the net profit or loss.
Equity and Capital
Question: It is the usual account title used for corporations.
Question: It is consists of the owner's investment and the earned profit less any withdrawals made during a given period.
Question: These are added to the capital beginning to arrive at the total investments used during the year.
Question: It is the difference arrived at after deducting withdrawals from the sum of the beginning capital, additional investments, and profit.
Question: If the firm has been operating in the past year, the beginning capital of the current year is _____________ the ending capital of the previous year.
Question: Mr. Alvarez, capital is an example of account title used for the equity of the owner in what form of business organization?
Question: We use this account title for the equity of the owner in constructing a Statement of Changes in Equity for a Sole Proprietorship.
Question: The corporation uses this account title for the equity of the owner or owners.
Merchandising and Inventory
Question: It represents the total amount of inventory on hand.
Question: These are deducted in the purchase price either because of returns or reductions due to defects or damages of goods purchased.
Question: These are reductions in the total sales price given to the customer if the account will be paid within a short period of time.
Question: It refers to total or gross sales less any sales discounts, and sales returns and allowances.
Question: It is the total or gross purchases less any purchase discounts and purchase returns and allowances.
Question: Beginning inventory is P50,000, net cost of purchases is P125,000, and ending inventory is P35,000. Compute for the cost of goods sold.
Question: The equation for cost of goods sold is:
Question: Which one does not form part of cost of goods sold?
Cash Flow and Accounting Principles
Question: Cash flows are categorized into three types: operating, investing, and financing activities.
Question: Cash receipts from customers is P200,000, cash paid to suppliers is P10,000 and cash paid to employees is P25,000, how much is the net cash from operating activities.
Question: It is a basic accounting principle that states that income is earned regardless of when cash is received, and expenses are incurred regardless of when cash is paid.
Question: It relies entirely on the payment and receipt of cash.
Question: Cash withdrawal of an owner for personal use falls in what cash flow category?
Question: _____________________ involves transactions showing those related to gross cash receipts and gross cash payments.
Question: Among all the activities, only ____________________ have different ways of being presented.
Question: It details the movement of cash in the business.
Business Transactions and Effects
Question: ABC Store records the transaction by a debit to Accounts Receivable for P1,000 and a credit to Service Revenues for P1,000. What is the effect of this entry upon the accounting equation for ABC Store?
Question: In August 2016, ABE Store receives the P4,000 for services rendered. What is the effect on the accounting equation and which accounts are affected?
Question: What is the effect on Single Lady's accounting equation when it pays the account to the supplier P22,500? And which accounts are affected?
Question: The business bought furniture for office use on account.
Question: The owner invests trucks to be used in the business.
Question: Increase in assets is recorded as a Debit.
Question: Debit entries with a larger number would always possess a debit balance.
Business Organizations and Principles
Question: This type of business usually does activities that converts raw materials into finished products, and sells this to other firms or to individuals.
Question: The law that manages Corporations.
Question: Meaning of GAAP.
Question: AICPA means.
Question: This principle has two aspects, the quantifiability and stability of peso.
Question: This concept states that assets and services that are acquired should be recorded at their actual cost.
Question: This principle requires that 'those costs and expenses incurred in earning a revenue should be recorded and reported in the same period'.
Question: Going-concern is a concept where accountants assume that the business will continue to operate for a foreseeable future.
Additional Accounting Concepts
Question: Total is synonymous to ___________.
Question: The difference between net sales and the cost of goods sold.
Question: Accounting is the system of measuring business activities of financial character.
Question: The T-account is the simplest form of account.
Question: The group of accounts of the entity is called ledger.
Question: This concept ensures that accounting information is current and is reported at regular intervals.
Question: Also known as Time Period Concept.
Question: Entity principle separates business from personal transactions.
Frequently Asked Questions
What is the difference between merchandising and service businesses in terms of income statements?
Merchandising businesses' income statements include sections like net sales, cost of goods sold, and gross profit, reflecting the buying and selling of goods. Service businesses' income statements focus on revenues from services and expenses, without cost of goods sold, as they offer services rather than physical products.
How is the cost of goods sold calculated?
The cost of goods sold is calculated using the formula: Beginning Inventory + Net Cost of Goods Purchased - Ending Inventory. This reflects the cost of inventory sold during a period.
What is the difference between cash basis and accrual basis accounting?
Cash basis accounting recognizes income and expenses only when cash is received or paid. Accrual basis accounting recognizes income when earned and expenses when incurred, regardless of cash flow, providing a more accurate picture of financial performance.
What are the three types of cash flow activities?
Cash flow activities are categorized into operating (day-to-day business transactions), investing (acquisition or disposal of long-term assets), and financing (changes in equity and liabilities, such as loans or owner withdrawals).
What is the accounting equation, and why is it important?
The accounting equation is Assets = Liabilities + Equity. It is fundamental because it ensures that a company's financial statements are balanced, reflecting that all resources are funded by either debts or owner's contributions.