Basic Accounting (Part 1)

Which characteristic of qualitative accounting information relates to the capacity of information to be confirmed by independent observers?

• Faithful Representation
  
  

• Verifiability

• Timeliness

• Comparability

Which fundamental qualitative characteristic ensures that the financial statements are complete, neutral, and free from error?

• Faithful Representation

• Relevance

• Understandability

• Timeliness

Which of the following is the correct accounting treatment for P120,000 cash received in advance by a service business for one year of services?

• Record it as revenue
  
  

• Record it as an asset (Prepaid Services)
  
  

• Record it as a liability (Unearned Revenue)
  
  

• Record it as an expense

The main purpose of accounting is to provide measurable financial information about a business to support economic decision-making.

• FALSE

• TRUE

Adam Smith is recognized for developing the double-entry bookkeeping system, a major advancement in accounting.

• TRUE

• FALSE

A mortgage payable is considered a short-term liability.

• TRUE

• FALSE

According to the Accrual Basis of Accounting, income is recorded when earned and expenses when incurred, irrespective of cash flow.

• TRUE

• FALSE

Owner’s Equity increases due to revenues, while expenses lead to a decrease in Owner’s Equity.

• TRUE

• FALSE

Financial Accounting is defined as the branch of accounting tasked to identify and detect fraud in the financial statements caused by management.

• TRUE

• FALSE

The Monetary Unit Assumption allows companies to include non-monetary assets such as employee skillsets in their financial statements.

• TRUE

• FALSE