1.1 Brief History of Accounting: Match each historical accounting milestone to its corresponding civilization, period, or figure:

Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process.

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

Accounting is thought to be the 'language of business' because business information is communicated to stakeholders.

Managerial accounting information is used by external and internal users equally.

Financial accounting provides information to all of the business stakeholders, while the main focus for managerial accounting is to provide information to the management.

Accounting Information System deals with helping clients to improve their information system and business performance.

Which of the following best describes accounting?

Which of the following is NOT a role of accounting in business?

Tax accountants would be responsible for providing the following information:

Deals with the review of financial statements to assess their fairness and adherence to accounting principles:

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners thus making creditors and investors the primary users of financial statements.

Primary users of accounting information are accountants.

An example of a business stakeholder is the government.

The following are examples of internal users of financial statements EXCEPT:

A regulatory agency that oversees the financial information provided by publicly listed companies in the Philippines:

Which of the following statements is TRUE?

Most businesses in the economy are organized as:

Which of the items below is NOT a recognized legal business organization form?

The following are components of the definition of a partnership, EXCEPT:

Which of the following is FALSE about a manufacturing business?

The two fundamental qualitative characteristics that make accounting information useful for decision-making by interested users are predictive value and confirmatory value.

In order for accounting information to be relevant in making a difference in decision-making, it must have predictive value, confirmatory value, or both, and also must be free from error to be relevant.

A fundamental qualitative characteristic that ensures that accounting information is presented without bias in the selection or presentation of financial information:

When there is an agreement between a measure or description and the phenomenon it purports to represent, relevant information possesses which quality?

The following are attributes that enhance the relevance and faithful representation of financial information, EXCEPT:

Generally accepted accounting principles are:

An organization for accounting purposes, stands apart from other organizations and individuals as a separate accounting entity.

The business entity concept means that:

The going-concern principle states an entity will remain in operation for only the next accounting period.

A problem with the monetary unit assumption is that:

Which of the following statements is TRUE regarding the monetary unit assumption?

The Time Period Assumption requires that all business transactions must occur within the same accounting period.

The Time Period Assumption is most essential for which financial statement?

Under the Accrual Assumption, revenue is recognized before cash is received, as long as it is earned; while expense is recognized before cash is paid, as long as it is incurred.

The Accrual Assumption in accounting dictates that:

The historical cost principle requires that when assets are acquired, they be recorded at:

The relevant measure of value of the assets of a company that is going out of business is their:

Services or goods delivered in 2023 but collected in 2024 should be recognized as income in 2023.

A referral fee was given to a doctor for bringing his patients for laboratory exams at A1 Laboratory. Referral Expenses and Laboratory Expenses are recorded by A1 Laboratory against the service fees earned for the period. The method of recording expenses and revenue supports the principle of:

What is the primary objective of full disclosure in financial reporting?

A deviation from generally accepted accounting principles is:

The cost-benefit constraint goes hand in hand with which principle?

The cost-benefit test constraint refers to the benefit of complying with an accounting principle should not outweigh the cost of compliance.

With Conservatism, if an accountant has more than one Generally Accepted Accounting Principles options to choose from when facing an accounting challenge, the one that yields inferior numbers should be selected.

It is usually the case that industry practice becomes acceptable as GAAP in what types of industries?

Application of Accounting Concepts: Match the accounting concept, principle, assumption, or constraint applicable in each of the 10 real-world business scenarios:

Financial statements provide information about business activities to decision-makers.

The Statement of Financial Position lists all the entity's assets, liabilities, and owner's equity as of a specific date.

In order to possess future service potential, an asset must have physical substance.

Owner’s equity is often referred to as capital and represents the residual amount of business assets that can be claimed by the owner.

The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets.

A Statement of Profit or Loss is dated for a period of time such as 'Year Ended December 31, 2023.'

The Statement of Profit or Loss must be prepared before the Statement of Owner’s Equity.

The Statement of Cash Flows shows how much the cash account either increased or decreased.

Net income for the period is determined by subtracting total expenses and drawings from total revenues.

In the Statement of Owner’s Equity, revenues are listed first, followed by expenses.

The common characteristic possessed by all assets is that they possess future economic benefit or service potential.

Current assets are presented in the Statement of Financial Position according to liquidity.

Liabilities represent existing debts and present obligations to transfer economic resources.

Liabilities:

Statement of Financial Position format that presents assets on the left side and liabilities and owner’s equity on the right side:

A formal written promise for future collections of cash is a(n):

The amount owed by an entity when it makes a purchase on account is termed a(n):

A liability evidenced with a collateral of an asset:

Owner's equity can be described as:

The basic accounting equation may be expressed as follows EXCEPT:

Revenues would NOT result from:

Expenses are recorded when:

Capital is:

When an owner takes cash or other assets from a business for personal use, these withdrawals are termed:

The financial statement that presents a summary of the assets, liabilities, and owner's equity as of a specific date:

The Statement of Profit or Loss presents a summary of the:

Which of the following financial statements reports owner's equity as of the end of the accounting period?

Assets and liabilities are reported on the:

Cash investments by the owner are reported on the:

All are TRUE about the Notes to Financial Statements EXCEPT:

If owner's equity is Php 135,000 and total liabilities are Php 90,000, then total assets would be:

Owner’s equity and total assets were Php 32,000 and Php 79,000 at the beginning of the period. Assets increased 50% and liabilities decreased 60% during the period. The owner's equity at the end of the period is:

If total liabilities decrease by Php 22,000 and owner's equity increases by Php 8,000 during the period, then assets must have decreased by:

On December 31, the assets of a business include Cash Php 3,500, Accounts Receivable Php 14,000, and Supplies Php 1,050. The liabilities on December 31 total Php 7,600. The owner's equity on December 31 is:

Beginning owner’s equity is Php 20,000, cash withdrawals by the owner amount to Php 7,000, and ending owner’s equity is Php 37,000. Net income for the period is:

Net income is Php 34,000, beginning owner’s equity is Php 29,000, and ending owner’s equity is Php 45,000. Owner’s withdrawals for the period is:

Total assets at the end of the period were Php 325,000 and liabilities were 40% of owner’s equity. Owner’s equity at the end of the period is: (Encode rounded to nearest whole number)

A company has Net income = Php 55,000, Ending equity = Php 85,000, Beginning equity = Php 49,000, Withdrawals = Php 12,600, and Revenue = Php 96,000. Total expenses for the current period amounted to:

A company has the following account balances: Accounts receivable Php 9,000, Accounts payable Php 4,200, Service revenue Php 25,550, Furniture Php 4,000, Rent expense Php 4,500, Note payable Php 3,800, Supplies Php 900, Beginning capital Php 30,000, Salary expense Php 9,650, and Cash Php 18,500. Total Current Assets amounted to:

A company purchased farmland 8 years ago for Php 670,000. It was recently appraised for Php 1,370,000. The owner received a purchase offer for Php 1,220,000, and a similar parcel 2 blocks away sold for Php 1,300,000. The land should be reported in its Statement of Financial Position at:

For Aim High Services: Rental paid Sept 2022 in advance for 3 months (Oct-Dec 2022). Rent consumed during Dec 2022 is Php 7,200. Rental paid Dec 2022 in advance for Jan-Mar 2023 for Php 22,500. Supplies purchased Dec 1, 2022 for Php 650; supplies on hand Dec 31, 2022 was Php 100. Paid the Nov electricity bill on Dec 10, 2022 for Php 5,000. Total expense pertaining to December 2022 is:

[Aim High Services Case] Account balances on Dec 31, 2023: AR Php 15,000; AP Php 5,700; Salary exp Php 4,500; Repairs exp Php 800; Equipment Php 14,800; Notes payable Php 8,200; Cash Php 6,800; Supplies exp Php 1,600; Service income Php 12,800; Gasoline exp Php 800. Owner invested Php 22,600 at beg of year and withdrew Php 5,000. The Net Income or Loss for 2023 was:

[Aim High Services Case] Total Assets at year-end December 31, 2023 amounted to:

[Aim High Services Case] Owner’s Equity at year-end December 31, 2023 amounted to:

[Aim High Services Case] Total Liabilities at year-end December 31, 2023 amounted to:

Under the official AICPA definition, what are the four fundamental phases of accounting in proper chronological order?

Under Chapter 1, Section 1.5 of the IFRS Conceptual Framework, which of the following are categorized as Primary Users of general-purpose financial reports?

According to Article 1767 of the Civil Code of the Philippines, what elements can partners contribute to a common fund?

Which of the following is NOT permitted to organize as a standard commercial Corporation under Philippine law because practicing professionals cannot shield themselves from personal malpractice liability?

Which qualitative characteristic is violated when an entity includes vague footnotes, improper aggregation of dissimilar items, and buries significant contingent liabilities in boilerplates?

The qualitative characteristic that assures users that different knowledgeable and independent observers could reach consensus that a depiction is faithfully represented is:

A small office paper shredder costing Php 1,200 with an expected useful life of 5 years is charged immediately to supplies expense rather than capitalized and depreciated. This accounting treatment is justified by:

Under the Accrual Basis of accounting:

[Archon Creative Studio Problem] On Jan 1, 2026, Archon had Total Assets of Php 850,000 and Total Liabilities of Php 320,000. During the year, Total Assets increased by Php 190,000 and Total Liabilities decreased by Php 45,000. Compute the ending balance of Owner\'s Equity as of December 31, 2026:

[Veritas Logistics Problem] Established Oct 1, 2026 with cash capital Php 300,000. During October: Rendered services for cash Php 140,000; Billed clients on account Php 85,000; Paid fuel & driver wages Php 62,000; Incurred unpaid office rent Php 18,000; Owner drew cash Php 20,000. Compute Ending Capital as of October 31, 2026:

In 2020, German fintech giant Wirecard collapsed after auditors discovered that €1.9 Billion in cash purportedly held in Philippine trustee escrow accounts at BPI and BDO did not exist. Which fundamental accounting characteristic was directly violated by management?

In 2002, WorldCom orchestrated an USD 11 Billion accounting fraud by reclassifying billions of routine 'line costs' (operating fees paid to telecom network providers) into capital asset accounts. Which core principle and expense recognition mode was violated?

Enron hid billions of dollars in debt and toxic liabilities inside off-balance-sheet Special Purpose Entities (SPEs) run by its own CFO. This fraudulent concealment directly violated:

In 2015, Toshiba revealed a USD 1.2 Billion operating profit overstatement across seven years due to executives pressuring project managers to delay recognizing expected losses on long-term infrastructure contracts. Which doctrine was violated?

Before its 2008 collapse, Lehman Brothers used temporary short-term sale-and-repurchase transactions ('Repo 105') at quarter-ends to treat short-term borrowings as true sales of securities, slashing USD 50 Billion in liabilities. This violated:

[Archer Logistics] Assets are Php 1,200,000 and Liabilities are Php 480,000. Compute Owner\'s Equity:

[Animo Tech] Beginning Capital = Php 450,000; Additional Investments = Php 100,000; Revenues = Php 620,000; Expenses = Php 390,000; Drawings = Php 60,000. Compute Ending Owner\'s Equity:

[Green & White Consulting] Ending Assets = Php 950,000; Ending Liabilities = Php 310,000; Beginning Equity = Php 500,000; Additional Investments = Php 50,000; Drawings = Php 30,000. Compute Net Income:

[Taft Media] Beg Assets = Php 600,000; Beg Liabilities = Php 250,000. During the year, Assets increased 40% and Liabilities decreased 20%. Compute Ending Owner\'s Equity:

[Lasallian Healthcare] Total Assets are Php 1,800,000. Total Liabilities are equal to 50% of Owner\'s Equity. Compute the exact Owner\'s Equity:

[Vanguard Services 16-Account Trial Balance] Balances: Cash Php 125,000; AR Php 85,000; Allowance for Doubtful Accounts Php 5,000 (contra); Notes Rec (90 days) Php 40,000; Office Supplies Php 15,000; Prepaid Rent (6 mos) Php 60,000; Land Php 500,000; Office Equip Php 350,000; Accum Depr Php 70,000; AP Php 65,000; Salaries Payable Php 25,000; Unearned Service Fees Php 30,000; Mortgage Payable (5 yrs) Php 400,000; Beg Capital Php 480,000; Drawings Php 50,000; Service Rev Php 320,000; Operating Exp Php 170,000.

Compute Total Current Assets:

[Vanguard Services] Compute Total Non-Current Assets:

[Vanguard Services] Compute Total Assets:

[Vanguard Services] Compute Total Current Liabilities:

[Vanguard Services] Compute Total Liabilities:

[Vanguard Services] Compute Net Income for the period:

[Vanguard Services] Compute Ending Owner\'s Equity as of year-end:

[Vanguard Services] Compute Net Working Capital (Current Assets - Current Liabilities):

Under the Direct Method of the Statement of Cash Flows, cash collected from clients for consulting services rendered is classified as:

Cash paid to purchase commercial delivery vans for long-term company use is classified as:

Cash withdrawn by the business owner for personal family expenses is classified on the Statement of Cash Flows as:

Cash proceeds received from a 5-year bank loan facility are classified as:

Cash paid to employees for salaries and wages is classified as:

Cash received from selling an old, fully depreciated office photocopy machine is classified as:

Acquiring an office building by issuing a Php 15,000,000 10-year mortgage note payable without using physical cash is reported:

Cash paid to trade suppliers to settle short-term accounts payable is classified as:

A merchandising business earns income primarily by producing goods, while a manufacturing business earns income by buying and reselling finished products.

Accounting is also called the “language of business” because it communicates financial information about an organization’s activities to help the users in making informed business decisions.

Creditors use accounting information to evaluate the ability of a company to repay its debts and interest.

In the statement of financial position, assets are always equal to the sum of liabilities and income.

Liabilities represent the present obligations of a business arising from past events, to be settled in the future.

Net profit occurs when expenses exceed revenues.

The fundamental qualitative characteristics are attributes that improve the usefulness of information that is already relevant and faithfully represented.

The going concern assumption presumes that a business will continue its operations indefinitely, unless there is evidence to the contrary.

The matching principle requires that expenses be recorded in the same period as the revenues they help generate.

The practice of double-entry bookkeeping, which is the foundation of modern accounting, was first documented by Luca Pacioli.

Which of the following best describes the scope of accounting?

Which of the following best explains why primary users rely on accounting information?

Which of the following statements best distinguishes a partnership from a corporation as a form of business organization in terms of ownership?

The entity assumption in accounting means that:

Which of the following best describes Equity in accounting?

According to the Revenue Recognition principle, when should a company recognize revenue?

The Cost-Benefit constraint in accounting means that:

Which of the following statements correctly describes the difference between the Account form and the Report form of the Statement of Financial Position?

Which of the following items would NOT appear on a company’s Statement of Profit or Loss?

When an owner contributes additional cash or assets to the business, how is this shown in the Statement of Changes in Owner’s Equity?

FDNACCT Company has the following balances: Cash Php 30,000; Accounts Receivable Php 20,000; Accrued Interest Expense Php 7,700; Supplies Php 40,000; Equipment Php 60,000; Prepaid Rent Expense Php 35,000; Land Php 50,000.
Calculate the Total Current Assets:

FDNACCT Company has the following balances: Cash Php 50,000; Supplies Php 30,000; Land Php 700,000; Accounts Receivable Php 40,000; Accounts Payable Php 70,000; Service Revenue Php 300,000; Accrued Revenue Php 40,000; Rent Expense Php 25,000; Accrued Expense Php 15,000; Utilities Expense Php 40,000; Equipment Php 120,000.
Calculate the Total Assets:

FDNACCT company has the following balances: Accounts Payable Php 25,000; Bank Loan (due in 5 years) Php 50,000; Notes Payable Php 20,000; Salaries Payable Php 10,000; Mortgage Payable Php 100,000.
Calculate the Total Non-Current Liabilities:

A company has the following balances: Accounts Payable Php 30,000; Accrued Salaries Expense Php 15,000; Notes Payable (due in 3 years) Php 60,000; Unearned Service Revenue Php 10,000; Service Revenue Php 25,000; Insurance Expense Php 12,000.
Calculate the Total Liabilities:

Use the following information of FDNACCT company to determine equity: Cash Php 200,000; Accounts Receivable Php 60,000; Liabilities Php 180,000; Equipment Php 240,000.
Calculate the Owner’s Equity:

At the start of the year, FDNACCT company had Liabilities of Php 60,000 and Owner’s Equity of Php 90,000. During the period, Liabilities increased by Php 10,000 due to a new bank loan while Owner’s Equity increased by Php 70,000 due to net income and additional investment.
Calculate the Total Assets at the end of the period:

FDNACCT Company has the following information for the month: Service Revenue Php 120,000; Unearned Revenue Php 12,000; Accrued Revenue Php 28,000; Rent Expense Php 20,000; Salaries Expense Php 35,000; Utilities Expense Php 5,000; Supplies Expense Php 3,000.
Calculate the Net Profit/(Net Loss):

FDNACCT Company incurred the following expenses during the month: Rent Expense Php 10,000; Salaries Expense Php 25,000; Utilities Expense Php 3,000; Accrued Salaries Expense Php 12,000; Prepaid Insurance Expense Php 20,000.
Calculate the Total Expense:

At the beginning of the year, the owner’s equity was Php 100,000. During the year, the owner invested an additional Php 20,000, earned net income of Php 30,000, and withdrew Php 10,000.
Calculate the ending owner’s equity:

Faith D. Nakpil established FDN Salon Services on August 1, 2025. She invested additional massage chairs worth Php 150,000, withdrew Php 10,000 personal cash, generated income of Php 180,000 for August, and ended with Capital of Php 740,000.
Calculate the beginning owner’s equity:

Faith D. Nakpil invested the following in FDNACCT: Cash Php 500,000; Office table and chairs bought originally for Php 50,000, valued at Php 25,000 at the time of investment; Second-hand machinery originally purchased for Php 1,000,000, valued at Php 600,000 at the time of investment.
Calculate the total initial investment:

At the start of the year, FDNACCT had Assets = Php 200,000 and Liabilities = Php 80,000. During the year, the owner invested Php 40,000 cash, earned Php 50,000 in revenues, incurred Php 20,000 in expenses, and withdrew Php 10,000.
Calculate the Ending Owner’s Equity:

At the end of its first year, FDNACCT had: Beginning Owner’s Equity Php 300,000; Additional Investment Php 120,000; Revenue Php 200,000; Expenses Php 110,000; Ending Owner’s Equity Php 480,000.
Calculate the total withdrawn amount:

Faith D. Nakpil runs a laundry service center. For August: Cash collections from customers for services done in August Php 60,000; Accounts Receivable for services done in August uncollected Php 37,000; Advance payment of customers unearned Php 32,000.
Calculate the total Revenue for August:

A tutorial center earned Php 28,000 service revenue in August. Outlays were: Salaries Expense Php 12,000; Rent Expense Php 5,000; Repairs and Maintenance Expense Php 3,000; Furniture & Fixtures Php 20,000.
Calculate the Net Profit/(Net Loss) for August:

Double-entry bookkeeping was popularized in the 15th century by Luca Pacioli, an Italian mathematician and Franciscan friar, often called the “Father of Accounting.” This system became the foundation of modern accounting practices.

Financial Accounting focuses on generating reports for internal users, particularly management, to aid in planning, controlling, and decision-making, unlike Management Accounting, which is aimed at external users.

Business organizations are commonly classified by their primary activity: service, merchandising, and manufacturing.

Financial information can be considered useful for decision-making even if it lacks relevance or does not faithfully represent the economic events it purports to describe.

Under the time period concept, a business must recognize revenues and expenses only at the end of its entire operating life rather than allocating them to specific accounting periods.

The going concern concept assumes the business will continue operating for the foreseeable future, not that it will liquidate.

Matching requires that expenses be recorded in the same accounting period as the revenues they help generate, regardless of when the cash is paid.

Under the cost-benefit concept, all financial information must always be disclosed, regardless of the cost of preparing it or its usefulness to decision-makers.

The Statement of Financial Position covers a period of time such as a month or year.

Owner's investments are increases in equity from a company's earnings activities.

Accounting is:

Lenders and other creditors primarily use financial information to:

In terms of capital-raising ability, which form of business is generally most advantageous?

Which of the following best describes the difference between consistency and uniformity under the comparability characteristic?

Which of the following accounting treatments violates the monetary concept?

Which of the following best describes Generally Accepted Accounting Principles (GAAP)?

Which of the following best illustrates proper application of the full disclosure concept?

Which of the following best describes an asset?

Which of the following is not included in the Statement of Profit or Loss?

Which of the following is typically included in the notes to financial statements?

FDN Services has the following selected account balances on December 31, 2025: Accrued Revenue Php 19,000; Interest Income Php 7,000; Service Revenue Php 125,000; Unearned Revenue Php 23,000.
How much is the total revenues?

FDN Services has the following selected account balances on December 31, 2025: Accrued Rent Expense Php 17,000; Prepaid Insurance Expense Php 8,000; Repair Expense Php 5,000; Salaries Expense Php 36,000; Unearned Service Income Php 43,000; Utilities Expense Php 16,000.
How much is the total expenses?

FDN Trading paid rent on Dec 1, 2025 in advance for 3 months (Php 60,000), with Php 20,000 used during December. The December electricity bill of Php 8,000 was paid on Jan 10, 2026. Salaries for December (Php 36,000) were paid on Dec 31, 2025.
How much is the total expenses for the month ended December 31, 2025?

On January 1, 2025, Faith D. Nakpil invested Php 140,000. During the year, she invested an additional Php 30,000. The company recorded a net loss of Php 35,000 for the year. Faith made withdrawals of Php 55,000.
How much is Faith D. Nakpil’s ending capital?

Faith D. Nakpil invested the following in FDN Services: Cash Php 150,000; Old laptop originally bought for Php 60,000, valued at Php 35,000 at the time of investment.
How much is the total initial investment of Faith D. Nakpil?

FDN Services purchased land 3 years ago for Php 1,850,000. The piece of land was recently appraised for Php 3,700,000, and they received an offer from a prospective buyer for Php 4,000,000.
How much should FDN Services report its Land account on its Statement of Financial Position?

The owner’s equity of the company is Php 120,000, which is equal to one-third the amount of total assets.
How much is total liabilities?

FDN Services has the following account balances on December 31, 2025: Service Revenue Php 133,500; Interest Income Php 2,840; Unearned Rent Income Php 1,500; Prepaid Insurance Expense Php 20,000; Rent Expense Php 42,000; Salaries Expense Php 39,000; Utilities Expense Php 21,900.
How much is net profit for the year?

FDN Services has the following account balances on December 31, 2025: Accounts Receivable Php 22,000; Accrued Expense Php 18,000; Advances to Employees Php 15,000; Cash Php 33,000; Prepaid Expense Php 9,000; Service Revenue Php 200,000.
How much is the current assets?

FDN Services has the following balances on December 31, 2025: Accounts Receivable Php 22,000; Accrued Revenue Php 8,000; Cash Php 33,000; Equipment Php 120,000; Office Supplies Php 3,000; Unearned Revenue Php 40,000; Vehicle Php 350,000.
How much is the total assets?

Balances: Accounts Payable Php 23,000; Accrued Expense Php 18,000; Mortgage Payable Php 500,000; Notes Payable (due in 6 months) Php 75,000; Notes Payable (due in 5 years) Php 300,000; Prepaid Expense Php 80,000; Unearned Revenue Php 47,000.
How much is the current liabilities?

Using the same balances: Accounts Payable Php 23,000; Accrued Expense Php 18,000; Mortgage Payable Php 500,000; Notes Payable (due in 6 months) Php 75,000; Notes Payable (due in 5 years) Php 300,000; Prepaid Expense Php 80,000; Unearned Revenue Php 47,000.
How much is the non-current liabilities?

FDN Services had assets amounting to Php 450,000 while Owner’s equity amounted to Php 320,000.
How much is the liabilities at the end of the year?

FDN Services began the year with assets of Php 90,000 and liabilities of Php 35,000. During the year, the owner made an additional investment of Php 15,000, recorded total revenue of Php 80,000, and took withdrawals of Php 45,000. At year-end, assets totaled Php 125,000 and liabilities totaled Php 40,000.
How much is the total amount of expenses during the year?

FDN Services reported at the beginning of the year Php 200,000 in assets and Php 50,000 in liabilities. By the end of the year, assets had decreased by Php 30,000 while liabilities increased by Php 25,000.
How much is the owner’s equity at the end of the year?

According to the American Institute of Certified Public Accountants (AICPA), accounting is defined as an art that involves recording, classifying, and summarizing financial transactions and events, and interpreting their results.

According to the Conceptual Framework, potential investors use accounting information to monitor business performance specifically to check the immediate return on their existing investments.

Only corporations are separate from the owners, managers, and employees operating the business.

To be useful, financial information must also faithfully represent the substance of the phenomena that it purports to represent.

A sole proprietor uses the business checking account to pay for his child's college tuition fees and records it as a direct business operating expense. This bookkeeping treatment represents a valid application of the Business Entity Concept.

A company is facing legal battles that points to possible liquidation within the next five months. In this scenario, the accountant should continue to prepare the financial statements using standard historical cost valuations under the going-concern assumption.

Full disclosure requires important facts that are necessary for the users to properly interpret the financial statements be included.

Owner's capital contributions, such as cash or other assets invested into the business, are recorded at their historical cost rather than their fair market value at the time of investment.

The Statement of Profit or Loss is dated for a certain period ended.

The Statement of Financial Position is said to be using the “account form” when assets are listed on the right side and the liabilities and equity are listed on the left side of the report similar to a T-account.

Which historical publication made the double-entry bookkeeping system widespread across the commercial world?

A branch of accounting is dedicated to evaluating a company's internal policies and procedures to identify weaknesses, mismanagement, waste, or possible fraud:

A business that converts raw materials into entirely new finished goods before selling them:

It refers to the use of the same methods for the same items, either from period to period within a reporting entity or in a single period across entities:

It is a characteristic of information that its omission from, or inclusion in, the financial statements could alter the decision of a financial statement user when assessing a specific entity’s financial condition and performance:

In November 2025, an accounting firm receives a cash advance payment from a client for consultation services that will be performed in January 2026. Under the accrual principle, how should the firm record this transaction in November 2025?

When assets are listed on the left side and the liabilities and equity are listed on the right side of the report, similar to a T-account, the Statement of Financial Position is using what form?

A liability is defined as:

The basic accounting equation reflects that the assets of a business entity are always equal to:

Which of the following does NOT affect Owner\'s Equity?

An individual establishes a sole proprietorship delivery business and transfers his personal van into the business. The van's current Fair Market Value (FMV) is Php 850,000, while its original cost to the owner was Php 1,000,000.
How much should be recorded for the vehicle invested by the owner in the business books?

During April 2026, a consultancy firm: Provided Php 180,000 services to Client A (billed, uncollected); Performed Php 90,000 training for Client B (full cash received); Collected Php 150,000 cash advance from Client C for a project to be performed in July 2026; Finished a Php 60,000 project for Client D paid in advance back in February 2026.
How much is total revenue for the month ended April 30, 2026?

FDN Services balances on Dec 31, 2025: Cash in Bank Php 150,000; Accounts Receivable Php 85,000; Prepaid Insurance Expense Php 15,000; Rent Expense Php 50,000; Land Php 500,000.
How much is total current assets?

FDN Services balances: Cash on Hand Php 45,000; Notes Receivable (due in 6 months) Php 50,000; Advances to Employees Php 12,000; Delivery Vehicles Php 400,000; Furniture & Fixtures Php 75,000.
How much is total non-current assets?

FDN Services obligations on Dec 31, 2025: Accounts Payable Php 65,000; Accounts Receivable Php 30,000; Notes Payable (due in 8 months) Php 40,000; Accrued Salaries Expense Php 12,000; Accrued Commissions Income Php 20,000; Unearned Service Revenue Php 25,000; Long-term Notes Payable Php 300,000.
How much is the total liabilities?

At period-end: Accounts Payable Php 115,000; Accrued Utilities Expense Php 14,000; Unearned Rent Income Php 30,000; Mortgage Payable Php 600,000.
How much is the total current liabilities?

FDN Logistics has total assets of Php 1,450,000 and total obligations to creditors of Php 620,000.
How much is the Owner’s Equity?

A service company reveals an Owner\'s Capital ending balance of Php 480,000. Total liabilities are double the amount of its equity balance.
How much is the value of the firm's total assets?

FDN Consulting Services: Payments for various expenses paid during the year Php 850,000; Advance rent deposits to building owner to be used next year Php 120,000; Cash withdrawal by owner Php 150,000.
How much is the total expenses for the year?

For December, FDN Services had net income of Php 52,000, service revenue of Php 155,000, and total receivables of Php 15,000.
How much was the total expenses incurred during the month?

Faith D. Nakpil invested: Cash Php 100,000; New computer bought for Php 50,000, with an unpaid balance of Php 40,000 which will be assumed by the business.
How much is the beginning capital of Faith?

FDN Trading year ended Dec 31, 2025: Initial Investment Php 230,000; Additional Investment Php 223,000; Net Loss Php 110,000; Owner’s Drawing Php 45,000.
How much is the ending capital?

FDN Consultancy: Initial investment Php 120,000; Drawings Php 100,000; Ending Equity Php 140,000; Revenues Php 800,000.
How much is the total expenses incurred during the year?

Given: Owner\'s Capital beg = Php 60,000; Revenues = Php 80,000; Expenses = Php 60,000; Owner\'s Drawings = Php 10,000; Liabilities end = Php 50,000.
How much is the total assets at the end of the period?

FDN Services balances for 2025: Service Revenue Php 950,000; Rent Income Php 40,000; Salaries and Wages Expense Php 320,000; Utilities Expense Php 55,000; Insurance Expense Php 24,000; Owner's Cash Drawings Php 45,000; Cash received from a bank loan Php 200,000.
How much is net income for the year ended December 31, 2025?

According to the classic definition formulated by the American Institute of Certified Public Accountants (AICPA), accounting is:

In foundational accounting theory, which of the following triads correctly describes the nature of accounting?

Which accounting activity belongs specifically to the 'Recording' phase of the accounting process?

Transferring recorded transactions from chronological journals into specific individual accounts in the General Ledger is known as:

Which of the following documents is produced during the 'Summarizing' phase of the accounting process?

A commercial loan officer analyzes a company's Debt-to-Equity ratio and Working Capital to evaluate its creditworthiness. This task exemplifies which phase of accounting?

Which statement correctly distinguishes bookkeeping from accounting?

Which sequence correctly reflects the chronological order of the accounting process?

Why is accounting referred to as the 'Language of Business'?

What is the primary operational distinction between Financial Accounting and Managerial Accounting?

What are the three major areas of professional accounting practice in the Philippines?

Which of the following professional services is primarily provided by an independent CPA firm in Public Accounting?

Which specialized branch of accounting focuses specifically on the independent review of financial statements to assess their fairness and adherence to accounting principles?

What is the primary role of Cost Accounting in a manufacturing enterprise?

What are the primary responsibilities of accountants specializing in Tax Accounting?

An Accounting Information System (AIS) is defined as:

When an accounting professional investigates corporate embezzlement, hidden assets, money laundering, or financial fraud for courtroom litigation, they are practicing:

Which specialized branch of accounting is dedicated to teaching, academic curriculum design, professional CPA board exam reviews, and academic research?

Government Accounting in the Philippines is primarily characterized by:

An accountant employed as a full-time internal controller or chief accountant for a private commercial airline works in which area of practice?

Under Chapter 1, Section 1.5 of the IFRS Conceptual Framework, who are designated as the PRIMARY USERS of general-purpose financial reports?

Why do existing and potential equity investors primarily analyze a company's financial statements?

Commercial banks and trade creditors examine a borrower's financial statements primarily to determine:

Which of the following decision-makers is categorized as an INTERNAL USER of accounting information?

All of the following are categorized as external users of financial statements EXCEPT:

Employees and employee labor unions are interested in financial statements primarily to:

What is the primary role of the Securities and Exchange Commission (SEC) in relation to accounting information?

Tax authorities (such as the Bureau of Internal Revenue in the Philippines) examine financial statements to:

Why would major corporate customers review the financial statements of their key product suppliers?

Credit-rating agencies (such as PhilRatings, Moody's, and S&P) use accounting information primarily to:

Which of the following is a defining operational and legal feature of a Sole Proprietorship?

What does 'unlimited liability' mean for a sole proprietor under Philippine law?

Under Article 1767 of the Civil Code of the Philippines, what may partners legally contribute to the common fund of a partnership?

Which provision is standardly stipulated in the formal Articles of Co-Partnership (partnership agreement)?

Under Article 1830 of the Civil Code of the Philippines, which event automatically causes the legal dissolution of a general partnership?

Under Section 2 of the Revised Corporation Code of the Philippines (RA 11232), a corporation is defined as: