Republic of the Philippines

Department of Education
National Capital Region
JOSE V. PALMA SENIOR HIGH SCHOOL
Maunlad St., Pinyahan, Quezon City
Fundamentals of Accounting, Business, and Management 2 - First Quarter Exam (Midterm)

10. When the seller advances the transportation costs and the
General Directions: terms of sale are FOB shipping point, the seller records the
⚫ Read the questions carefully. payment of the transportation costs by debiting
⚫ Answer the test items by following the indicated A. Accounts Receivable C. Freight-in
instructions. B. Sales D. Accounts Payable
11. Given non-current assets of P40,000, current assets of
I. Multiple choices: Choose the letter of the correct answer P12,000, current liabilities of P5,000 and a long-term loan of
and write it on your answer sheet. NO ERASURES. USE P10,000, owner’s equity will be:
CAPITAL LETTERS ONLY. A. P47,000 C. P57,000
B. P37,000 D. P67,000
1. This system of recording goods intended for sale maintains 12. Which of these statements is not one of the financial
the merchandise inventory account in every transaction. statements?
A. Periodic Inventory C. Updated Inventory A. Income Statement C. Balance Sheet
B. Perpetual Inventory D. Maintenance Inventory B. Statement of Cash Flows D. Bank Statement
2. Which of the following is reported as part of the operating 13. Identify the correct components of the Income Statement.
expenses? A. revenues, losses, expenses, and gains
A. Cost of Sales C. Freight-out B. assets, liabilities, and owner’s equity
B. Freight-in D. Sales Return and Allowance C. revenues, expenses, investments by owners
3. In which of the following arrangements does the freight D. assets, liabilities, and revenues
actually paid by the buyer? 14. The balance sheet lists which of the following
A. FOB destination, freight collect A. assets, liabilities, and owner’s equity
B. FOB shipping point, freight prepaid B. revenues, expenses, gains, and losses
C. FOB destination C. assets, liabilities, and investments by owners
D. FOB shipping point D. revenues, expenses, gains and distribution to owners
4. In which of the following arrangement does the freight 15. Which of the following statements is true?
become the expense of the seller? A. Current Assets include intangible assets.
A. FOB destination, freight collect B. Non-Current Assets will be consumed in a year or less
B. FOB shipping point, freight prepaid C. Intangible Assets have physical substance
C. FOB destination D. Property, plant and equipment are assets that will be
D. FOB shipping point consumed in over a year.
5. This discount is granted because of bulk buying. 16. Which of the following decreases owner’s equity?
A. Trade discount C. Sales discount A. investments by owners C. gains
B. Purchase discount D. SM Advantage Card B. losses D. short-term loans
6. Jerleen is selling a list price of P80,000 with terms of 3, 5, 17. Exchanges of assets for assets have what effect on equity?
1/30, n/60. To record the sales, the debit would be A. increase equity C. decrease equity
A. Cash P80,000 C. Accounts Receivable P73,720 B. no impact on equity D. There is no relationship
B. Accounts Receivable P80,000 D. A/R P77,600 bet. assets and equity
7. Alecks Cabling Company sold merchandise at a list price of 18.All of the following increase owner’s equity except for which
P150,000 with terms of 10, 3/5, 5/10, n/30. If the account one?
is collected 6 days from the invoice date, Alecks will A. gains C. revenues
receive B. investments by owners D. acquisitions of assets by
A. P128,250 C. P124,403 incurring liabilities
B. P135,000 D. P130,950 19. Which of the following is not an element of the financial
8. On March 2, merchandise were sold on account amounting statements?
to P650,000 with terms of 10, 5/15, n/30, FOB shipping A. future potential sales price of inventory
point, freight prepaid for P20,000. What will be the B. assets
amount of sales discount if the receivables will be C. liabilities
collected on March 16. D. equity
A. P30,250 C. P31,250 20. Which of the following is the correct order of preparing the
B. P29,250 D. P28,250 financial statements?
9. Keiku Cativo Company purchased merchandise from A. income statement, statement of cash flows, balance
Reynan Agullo Company for P3,600 list price, subject to a sheet, statement of owner’s equity
trade discount of 25%. The goods were purchased on terms B. income statement, statement of owner’s equity,
of 2/10, n/30, FOB destination. Keiku paid P100 balance sheet, statement of cash flows
for the freight costs. Keiku returned P400 (list price) of the C. income statement, balance sheet, statement of
merchandise to Reynan and later paid the amount due owner’s equity, statement of cash flows
within the discount period. The amount paid is D. income statement, balance sheet, statement of cash
A. P2,254 C. P2,246 flows, statement of owner’s equity
B. P2,252 D. P2,352
21. The three heading lines of financial statements typically 37. Cativo Company has current assets of P50,000 and total
include which of the following? assets of P150,000. Cativo has current liabilities of P30,000 and
A. company, statement title, time period of report total liabilities of P80,000. What is the amount of Cativo’s
B. company headquarters, statement title, name of owner’s equity?
preparer A. P20,000 C. P30,000
C. statement title, time period of report, name of B. P70,000 D. P120,000
preparer 38. Which of the following events increase cash balance?
D. name of auditor, statement title, fiscal year end A. Bank not granting loan C. Debtors paying to the company
22. Which financial statement shows the financial performance B. Loan repayment to creditors D. Sale of stock on account
of the company on a cash basis? 39. Which of the following is categorized as a cash flow from
A. balance sheet C. statement of cash flows investing activities?
B. statement of owner’s equity D. income statement A. Increase in inventory C. Proceeds of a loan
23. Which financial statement shows the financial position of the B. Proceeds from sale of PPE D. Dividends paid
company? 40. Which of the following is not a cash outflow for the business?
A. balance sheet C. statement of cash flows A. Depreciation C. Interest payment
B. statement of owner’s equity D. income statement B. Dividends D. Taxes
24. What financial statement lists assets from current to long 41. The following are examples of current assets except:
term? A. cash C. prepaid expenses
A. balance sheet C. income statement B. accounts receivables D. unearned revenue
B. cash flow statement D. statement of owner’s equity 42. The following are terms used synonymously with equity
25. What balance sheet format is vertical? except
A. standard C. report A. Capital C. Net worth
B. account D. inverted B. Net Assets D. Revenue
26. Income statement format that separates cost of goods sold 43. Cash equivalents and merchandise inventory are classified as
into categories? A. current liability C. current asset
A. standard C. detailed B. non-current asset D. non-current liability
B. expanded D. multi-step 44. This is the availability of resources to meet short term cash
27. Which is not a cash activity listed on the cash flow requirements
statement? A. Liquidity C. Solvency
A. operating activities C. purchasing activities B. Profitability D. None of the choices
B. investing activities D. financing activities 45. This is the excess of current assets over current liabilities
28. Which report gives a review on the profitability of a A. Working Capital C. Current ratio
business? B. Acid test ratio D. Quick ratio
A. Statement of changes in equity 46. Which of the following is not considered as quick assets?
B. Cash flow statement A. Cash C. Inventory
C. Balance sheet B. Accounts Receivable D. None of the choices
D. Income statement 47. Which of the following is considered as quick assets?
29. When assets are subtracted from liabilities it will be equal to? A. Prepaid asset C. Trading securities
A. Capital C. Net Income B. Both A and B D. none of the choices
B. Working Capital D. Goodwill 48. This ratio measures how much of the total assets are
30. Statement of Comprehensive Income is also known as financed by liabilities
A. Profit and Loss Statement C. Balance Sheet A. Debt ratio C. Equity ratio
B. Cash Flow Statement D. Statement of Expenses B. Debt to equity ratio D. none of the choices
31. Which of the following options is not recorded in the Balance 49. This is the entity’s ability to meet long term obligations as
Sheet? they become due.
A. Cash C. Rent expenses A. Liquidity C. Solvency
B. Building D. Goodwill C. Profitability D. None of the choices
32. Which statement shows the flow of cash and cash 50. This is the proportion of the gross profit of the company with
equivalents during the financial period? its net sales.
A. Statement of changes in equity A. Net profit margin C. Both A and B
B. Cash flow statement B. Gross profit margin D. none of the choices
C. Balance sheet
D. Income statement
33. The time heading in the balance sheet indicate a
A. period of time C. point in time
B. fiscal year D. calendar year
34. Which financial statement’s structure is closest to the basic Prepared by: Reviewed by:
accounting equation?
A. Balance sheet C. Statement of Owner’s Equity Mr. Noel C. Calicdan Mr. Salvador A. Bonanciar III
B. Statement of cash flows D. Income Statement Subject Teacher Master Teacher II
35. Which of the following accounts is not a current asset?
A. Account Receivable C. Land Checked by:
B. Prepaid Insurance D. Supplies
36. Which of the following is normally a current liability? Ms. Romelita C. Tumaneng
A. Mortgage payable C. Long-term debt Principal II (SHS)
B. Unearned Revenue D. Bond payable