Accountancy Readiness Test 1 Practice
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About this Exam
Prepare with the Accountancy Readiness Test 1 Practice practice quiz. This question bank includes 10 questions covering accounting, defines, assumption, describes, and accountancy. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.
Sample Questions
Question
1
Which statement defines Sole Proprietorship?
Explanation:
A sole proprietorship is defined by single ownership and control. It’s the simplest business form because there is no separation between the owner and the business: one person owns the business, runs it, and receives all profits while personally bearing all losses and liabilities. It’s usually unincorporated, making setup quick and straightforward. This is why the statement describing it as the simplest form of business owned and managed by only one person fits best. In contrast, descriptions of two or more partners point to a partnership, a corporation with shareholders describes a corporation, and a cooperative owned by members describes a cooperative. Taxes typically pass through to the owner’s personal return, reflecting the lack of a separate legal entity.
Question
2
In accounting history, what is the meaning of the Latin term Debere?
Explanation:
Debere means to owe. In early double-entry accounting, Latin verbs labeled what the business owes (the debit side) and what it is owed (the credit side). Habere means to have or hold, not the act of owing. Credere means to entrust or believe, used for the credit concept. Debtor is a person who owes, not the action itself. So Debere best captures the idea of owing money.
Question
3
Which organization created the Accounting Standards Council (ASC)?
Explanation:
In accounting practice, professional bodies often take the lead in developing and coordinating standards to keep financial reporting consistent. The Accounting Standards Council was created by the Philippine Institute of Certified Public Accountants, the main professional group for CPAs. PICPA organized the ASC to bring practitioners together to discuss, develop, and promote accounting standards for the country. This reflects how a professional association drives standard setting, rather than a regulatory licensing body or an international board. Over time, standard-setting responsibilities in the Philippines moved toward other structures, but the ASC’s origin lies with PICPA.
Question
4
Which statement defines Non-Current Assets?
Explanation:
Non-current assets are items a business expects to use or hold for more than one year, not to be realized as cash within the near term. They’re not part of the short-term liquidity pool and include things like machinery, buildings, intangible assets, and long-term investments. The statement that best defines this is that these assets do not meet the criteria for current assets—they’re not expected to be realized within the next twelve months. The other descriptions describe current assets (cash and cash equivalents) or special classifications like assets held for sale, which are generally treated as current if they’re to be sold within a year, or simply assets expected to be realized within twelve months, which are by definition current.
Question
5
Going concern is an underlying assumption. Which option best describes it?
Explanation:
Going concern means financial statements are prepared on the assumption that the entity will continue to operate for the foreseeable future. Under this assumption, assets and liabilities are reported with the expectation of ongoing business, not liquidation. If management concludes that this assumption is not valid, they must disclose the doubt about going concern and switch to an alternative reporting basis, typically a liquidation or break-up basis, and adjust disclosures accordingly. This is why the best description is that it presumes continuation; if that assumption is not valid, disclosure and a different reporting basis are required. It does not imply that the entity will cease operations by default, it does not determine tax year timing, and liquidation is not required in every case.
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Accountancy Readiness Test 1 Practice
This practice set contains 10 questions from the matching question bank and focuses on accounting, defines, assumption, describes, and accountancy. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.
This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.
Frequently Asked Questions
This quiz contains a total of 10 practice questions carefully selected to test your knowledge on this subject.
Yes, you will have exactly 0 minutes to complete the exam. A countdown timer will be visible once you start.
Yes, you can retake this practice test as many times as you need. The questions and options may be randomized on subsequent attempts to ensure comprehensive learning.
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