28689018-Nfjpia-2006-Mock-Board - NATIONAL FEDERATION OF...

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NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS Cagayan de Oro City MOCK BOARD EXAMINATION July 15, 2006 FINANCIAL ACCOUNTING THEORY 1. A primary objective of financial reporting is to: C a. assist investors in analyzing the economy b. assist suppliers in determining an appropriate discount to offer a particular company c. assist investors in predicting prospective cash flows d. assist banks to determine an appropriate interest rate for their commercial loans 2. Which of the following is the incorrect statement? B a. Theory can be defined as a coherent set of hypothetical, conceptual, and pragmatic principles forming a general frame of reference for a field of inquiry b. Accounting theory has developed primarily in response to government regulations c. Concepts are components of theory d. Accounting concepts are human-made 3. Accounting concepts are not derived from: D a. Inductive reasoning b. experience c. pragmatism d. laws of nature 4. The primary qualitative characteristics of accounting information include which of the following: C a. Comparability (including consistency) c. relevance b. Understandability d. materiality 5. If accounting information is timely and has predictive and feedback value, then it can be characterized as: B a. Verifiable b. relevant c. reliable d. qualitative 6. Comparability is sometimes sacrificed for: D a. Reliability b. conservatism c. objectivity d. relevance 7. A firm signs a major contract in December to construct custom machinery for a client. No work is begun the current year yet the footnotes to the firm’s financial statements discuss the nature and peso amount of the contract. This is an example of B a. Reliability b. full disclosure c. historical cost d. conservatism 8. Which of the following would most likely to be found in an adjusting entry? A a. Prepaid expenses c. Cash dividend paid b. Accounts receivable d. Cash dividend declared 9. All the date of purchase of a service which is not immediately used up, the cost of such unused service is a(n): C a. Revenue b. liability c. asset d. expenses 10. Increase in equity (net assets) form peripheral or incidental transactions of an entity are called: D a. Revenue b. liability c. comprehensive income d. gains 11. Which on of the following is the secondary qualitative characteristic of accounting information? C a. Continuity c. Comparability (including consistency) b. Relevance d. Reliability 12. The going concern or continuity assumption is critical to financial accounting. The assumption B a. Is always maintained for all firms for all years b. Supports the use of historical cost valuation for assets rather than market values c. Means that a corporation has a definite ending date d. Requires that we immediately expense prepaid accounts because they do not represent a future cash inflow. 13.
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28689018-Nfjpia-2006-Mock-Board - NATIONAL FEDERATION OF...

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