Accounting and Business Principles

Comprehensive practice questions covering MSME classifications, the role of accounting, GAAP principles, and basic accounting assumptions based on the Chapter 2 lecture notes.

What does the acronym MSMEs stand for?

Micro, Small and Medium Enterprises

According to the transcript, what percentage of total business enterprises in the country do MSMEs represent, and what percentage of the labor force do they employ?

MSMEs account for $99\%$ of total business enterprises and provide employment for $61\%$ of the labor force.

What specific law did Pres. Gloria Macapagal-Arroyo sign on May 23, 2008, to assist MSMEs with financing?

R.A. 9501

Under R.A. 9501, what minimum percentage of their total loan portfolio must banks and lending institutions allocate to MSMEs?

$$10\%$$

Within the mandated loan allocation for MSMEs, what are the specific percentages for Micro/Small Enterprises versus Medium Enterprises?

$8\%$ for Micro and Small Enterprises and $2\%$ for Medium Enterprises

How are Micro Enterprises classified based on assets and employee count?

Assets of $P3M$ or less and not more than $9$ workers

How are Small Enterprises classified based on assets and employee count?

Assets above $P3M$ to $P15M$ and $10$ to $99$ workers

How are Medium Enterprises classified based on assets and employee count?

Assets above $P15M$ to $P100M$ and $100$ to $199$ workers

In the context of an accountant's essential qualities, what does the acronym USA stand for?

Understanding, Speed, and Accuracy

What is the 'breakeven point' or 'breakeven' situation in business operations?

An instance wherein total costs and expenses incurred are equal to total sales or revenues, resulting in zero profit and zero loss.

What are the three criteria for an accounting principle to become generally acceptable?

1. Principle of Relevance, 2. Principle of Objectivity, and 3. Principle of Feasibility

What does the acronym GAAP stand for?

Generally Accepted Accounting Principles

What standard-setting body in the Philippines is currently responsible for the development of GAAP, replacing the Accounting Standards Council?

Philippine Financial Reporting Standards Council (PFRSC)

What is the difference between the source documents previously called Statement of Financial Accounting Standards (SFAS) and the current ones?

They are now called Philippine Accounting Standards (PAS).

What does the Cost Principle require regarding the recording of assets?

Assets should be recorded at their original or acquisition cost.

Which principle dictates that accounting records should be based on reliable and verifiable data as evidence of transactions?

Objectivity Principle

According to the Materiality Principle, what should rule over theory in determining the valuation of an item?

Practicability

What is the Matching Principle?

The combined concept of Revenue Recognition and Expense Recognition, stating revenue should be recognized when earned and corresponding expense recognized when incurred during the same period.

What does the Consistency Principle require to achieve comparability in financial statements?

Accounting methods and procedures should be applied on a uniform basis from period to period.

What is the definition of the Accounting Entity (or Business Entity) assumption?

The business is considered an entity that is separate and distinct from the owner or management.