LET’S CHECK

Activity 1. All this information presented in the metalanguage and

essential knowledge help you to understand better accounting and its
environment. Let us check your understanding of these terms by
providing answers on the space provided.

1.     INTERPRETING is the phase of accounting where transactions

are analyzed whether accountable or non-accountable events.

2.   SOLE PROPRIETORSHIP is a form of organization whose owners

are personally liable for the debts incurred by the business.

3.     CORPORATION is a form of business organization whose owners

are not liable for debts of the business.

4.     ACCOUNTING is an information system that measures, processes

and communicates financial information about an economic entity.

5.     Company ABC obtained loan from Metrobank company to finance

plant expansion. This is an example of FINANCING type of business
activities.

6.     Collected the accounts of the customer and payment of account to

supplier is an example of OPERATING type of business activities.

7.     Constructed a building for the factory is an example of

INVESTING type of business activities.

8.     It is an independent examination that ensures the fairness and

reliability of the reports that management submits to users, this
branch is called OBJECTIVITY PRINCIPLE.

9.     Mr. Reyes invested cash into his business to engage in repair

shop, is an example of INVESTING type of business activities.

10. An organization in Asia that envisioned a stable,

prosperous and highly competitive economic region is called
ESTABLISHMENT OF ASEAN.
 11.An ancient law that requires merchants to give buyers a sealed
memorandum containing the agreed price (in the present times
this is the BIR Code) is called UNIFORM COMMERCIAL CODE.
12. The accountant of primitive age is called
MESOPOTAMIANS.

13. Who invented  the double-entry bookkeeping? LUCA

PACIOLI.
14. It is during this time where Corporations were established
and the factory system was used to create products. THE
INDUSTRIAL REVOLUTION.
15. Group of businessmen whose assets is P3m or less is called
MICRO ENTERPRISE.
16. Returned of defective items to the supplier is an example of
PURCHASE RETURN AND ALLOWANCES type of business
activities
17. Paid salaries and taxes of the business is an example of
FINANCING type of business activities.
18. MATERIALITY an accounting principles which states that
omitting or misstating this information could influence users of
the financial statements.
19. An accounting principles that states that similar items
should receive a similar accounting treatment is
called CONSISTENCY.
20. What accounting concept that should be considered when
an owner of a business takes goods from inventory for his
personal use ENTITY CONCEPT.
21. This is a principle in accounting that support the practice of
recording an asset based on the amount actually paid and not
what the management thinks is HISTORICAL COST.
22. The financial accounting process provides information
about economic activities of an enterprise for a specified
accounting period that is shorter than the life of the enterprise,
this practice is in compliance to concept of PERIODICITY.
23. An accountant employed by a particular business firm or
not-for-profit organization, perhaps as chief accountant,
 controller or financial vice president are said to be engaged in
PRIVATE ACCOUNTING.

24. A business organization is owned by people called members

is a COOPERATIVE.
25. One basic principles in accounting states that an accounting
transaction has to be supported by sufficient evidence to allow
two or more qualified individuals to arrive at essentially similar
conclusion is called PROFESSIONAL COMPETENCE AND DUE
CARE.
26. Carrying out professional responsibilities diligently and in
accordance with applicable technical and professional standards
is description of the principle of PROFESSIONAL BEHAVIOR.
27. A professional accountant should be straightforward and
hones in all professional and business relationships is in
consonance with the principle of INTEGRITY.
28. This is an organization whose main function is to establish
and improve accounting standards that will be GAAP. This group
is THE FINANCIAL ACCOUNTING STANDARDS BOARD
(FASB).
29. Accountant do not recognize that the value of the peso
changes over time. This concept is called STABLE MONETARY
UNIT CONCEPT.
30. The set of guidelines and procedures that constitute
acceptable accounting practice at a given time is called
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).
31. The Filipino accountants should possess knowledge to
enable them to compete internationally. (Enumerate here the
knowledge required) 4 pts.

1. COMPETENT IN ENGLISH LANGUAGE

2. ADAPTABLE TO WESTERN BUSINESS PRACTICES
3. TRAINABLE
4. POSSESS GOOD INTERPERSONAL RELATIONSHIP
ATTRIBUTES
 32. A branch in accounting that concern with the preparation
and publish of complete financial statements to intended users is
called FINANCIAL ACCOUNTING.
33. What area in accounting that is task to manage financial
resources of the business? COST ACCOUNTING/MANAGERIAL
ACCOUNTING.

34. A CPA without any permission divulge an information

about an entity under audit, this is in violation of
CONFIDENTIALITY principle in professional ethics.
35. An information that is relevant but not captured on the face
of the financial statements is normally reflected in the notes to
financial statement, this practice is in compliance of NOTES TO
FINANCIAL STATEMENTS principle.
36. What criteria of GAAP that supports the practice of
preparing financial statements on time so that it can be used in
making a decision? CRITERIA OF FEASIBILITY.
37. Accrual accounting of income is an application of
REVENUE RECOGNITION basic principle.
38. Accrual accounting of expense is an application of
EXPENSE RECOGNITION basic principle.
39. This basic ethical principle requires that CPA must adhere
to relevant laws and regulation and should avoid acts that
discredit the profession is called PROFESSIONAL ETHICS OF
ACCOUNTANTS.
40. This is a report where the entity’s financial performance is
reflected INCOME STATEMENT/PROFIT AND LOSS
STATEMENT.
41. This is a report where the entity’s financial stability,
liquidity and profitability is reflected, FINANCIAL ANALYSIS.
42. What type of business organization owned by shareholders?
CORPORATION.
43. This branch of accounting includes financial and non-
financial data from various sources and utilized it for specific
decision is called MANAGEMENT ACCOUNTING.
44. This area involves collection of financial data and entering
these data in the books of accounts, this is called
BOOKKEEPING.
45. (should be answered with True or False). For reporting
purposes, the personal assets and debts of a business owner
should be combined with the assets and debts of the business.
FALSE
46. (should be answered with True or False). For accounting
purposes, a business and its owner are considered one and the
same entity. FALSE