I. MULTIPLE CHOICE: Write the letter of the BEST answer in CAPITAL form.

Failure to follow instruction in each of the

items is also considered wrong.

1. Which of the following is the best example of a manager performing the management function of controlling?
A. A marketing manager conducts market research to identify new marketing opportunities.
B. A project manager chooses workers to serve on a team that will work on the development of a new product.
C. A store manager meets with workers to explain the company's business goals and philosophy.
D. A supervisor provides performance assessments to workers along with suggestions for improvement.
2. The sole proprietor of an established software design business decides to invest an additional ₱ 10,000 of her own money to
buy new equipment and hire a new employee. The effect of this additional investment will be to:
A. decrease liabilities. B. decrease owner's equity. C. increase profits. D. increase the business' assets.
3. A trial balance is useful for which of the following purposes?
A. ensuring that all account adjustments are entered correctly C. summarizing the changes in the owner's equity of a business
B. showing the financial situation of a business at a given date D. verifying that total debits equal total credits
4. Use the spreadsheet below to answer the question that follows.
A B An accountant is using the electronic spreadsheet above to prepare his forecast
1 Sales Pizza - Pick up 25,000 for the next year. After reviewing the data, the accountant decides to increase
2 Sales Pizza - Delivery 35,000 the content of cell B1 and B4 by 10%. Which of the following cells will remain the
3 T otal Sales 60,000
4 Variable Expenses 30,000
same after these changes are made?
5 Fixed Expenses 10,000 A. B2
6 T otal Expenses 40,000 B. B3
7 Net Income 20,000 C. B6
8
D. B7
5. At the end of a given financial period, an accountant purposely fails to record the appropriate deferral entries for expenses that
were paid in advance. This will result in which of the following potentially fraudulent manipulations of the financial statements?
A. The current period's liabilities will be overstated. C. The next period's cost of goods sold will be overstated.
B. The current period's net profit will be overstated. D. The next period's earnings will be overstated.
6. Which of the following best describes the primary purpose of the balance sheet?
A. providing a detailed account of a business's financial position at a given date
B. providing a list of a business's general ledger account balances at a given date
C. summarizing revenues, expenses, and net income or loss for a business over a given period
D. summarizing the changes in equity due to investments and profit or loss for a given period
7. Which of the following is categorized as investment activity on the Statement of Cash Flows for a business?
A. buying equipment C. paying dividends
B. issuing bonds payable D. selling treasury stock
8. Based on the information below, what is the manufacturer's debt ratio?
Current Assets 120,000 A. 0.66
Long-T erm Assets 160,000
Current Liabilities 80,000
B. 0.75
Long-T erm Liabilities 130,000 C. 1.05
Net Income 200,000 D. 1.5
9. Which of the following ratios is the most useful to a manager for evaluating whether the assets of a division are used
efficiently?
A. return on investment B. inventory turnover C. return on equity D. accounts receivable turnover
10. During a given year of operation, a business issues ₱ 50,000 of common stock, pays dividends of ₱ 20,000, and pays back a
bank loan of ₱ 10,000. What is the net cash provided by these activities for that year?
A. ₱ (10,000) B. ₱ 20,000 C. ₱ 30,000 D. ₱ 50,000
11. At the end of a given year, a business counted too much ending inventory by mistake. Which of the following describes one
way in which the overstated ending inventory will affect the business's financial statements for that year?
A. Cost of goods sold will be understated. C. Net income will be understated.
B. Liabilities will be understated. D. Owner's equity assets will be understated.
12. Assuming a positive bank balance, when reconciling the ledger with the bank statement a returned (dishonoured cheque) should
be:
A. Added to the bank statement balance in the reconciliation C. Subtracted from the bank statement balance
B. Added to the general ledger bank balance D. Subtracted from the general ledger bank balance

(a) Added to the bank statement balance in the reconciliation

(b) Subtracted from the general ledger bank balance
(c) Subtracted from the bank statement balance
(d) Added to the general ledger bank balance
(e) Added to the Cash Receipts Journal
Assuming a positive bank balance, when reconciling the ledger with the bank statement
a returned (dishonoured cheque) should be:
(a) Added to the bank statement balance in the reconciliation
(b) Subtracted from the general ledger bank balance
(c) Subtracted from the bank statement balance
(d) Added to the general ledger bank balance
(e) Added to the Cash Receipts Journal
Assuming a positive bank balance, when reconciling the ledger with the bank statement
a returned (dishonoured cheque) should be:
(a) Added to the bank statement balance in the reconciliation
(b) Subtracted from the general ledger bank balance
(c) Subtracted from the bank statement balance
(d) Added to the general ledger bank balance
(e) Added to the Cash Receipts Journa
13. Assuming a positive bank balance, when reconciling the ledger with the bank statement a returned (dishonored cheque)
should be:
A. Added to the bank statement balance in the reconciliation. C. Subtracted from the bank statement balance
B. Added to the general ledger bank balance D. Subtracted from the general ledger bank balance
Which of these is not a Profitability related ratio ?
(a) Return On Total Assets
(b) Return On Equity
(c) Profit Margin
(d) Times Interest Earned
14. Which of these is not a Profitability related ratio?
A. Profit Margin B. Return On Equity C. Return On Total Assets D. Times Interest Earned
15. The primary basis for the classification of assets and liabilities in the balance sheet is:
A. Degree of Risk B. Liquidity C. Profitability D.Tangibility
Cody Banks Ltd bought 30 laptops on the 8 January 2012 at a cost of $1 200 each. The
laptops are sold for $1 800 each to the public. At the end of the financial year on 30
June 2012, there are still 6 laptops that have not been sold. Due to changing technology,
by the end of the year these laptops can now be sold on the market for only $750 each.
What is the value of the Inventory in the Balance Sheet as at 30 June 2012 ?

(a) $4 500
(b) $7 200
(c) $10 800
(d) $2 700
(e) $6 300
16. Adobo Puto Shop bought 30 laptops on the 8 January 2019 at a cost of ₱ 1 200 each. The laptops are sold for ₱ 1 800 each
to the public. At the end of the financial year on 30 June 2019, there are still 6 laptops that have not been sold. Due to
changing technology, by the end of the year these laptops can now be sold on the market for only ₱ 750 each. What is the
value of the Inventory in the Balance Sheet as at 30 June 2019?
A. ₱ 2 700 B. ₱ 4 500 C. ₱ ₱ 7 200 D. ₱ 10 800

Which type of firm would you expect to have the fastest inventory turnover?
(a) Used car dealer
(b) Jewellery store
(c) Clothing store
(d) Bakery
(e) Retailer of computer
On 16 April, 2014 Edinburgh Ltd sells a Machine to London Ltd who agrees to pay for
it within 90 days. On the Balance Sheet for Edinburgh Ltd at 16 April, 2014 the
amount owing by London Ltd would be reported as which one of the following:
(a) Accounts payable
(b) Accounts receivable
(c) Loan
(d) Inventory
(e) Capital
17. On 16 April, 2019 Summacum Laundry sells a Machine to Libing Things funeral parlor who agrees to pay for it within 90 days.
On the Balance Sheet for Summacum Laundry at 16 April, 2019 the amount owing Libing Things funeral parlor would be
reported as which one of the following:
A. Accounts payable B. Accounts receivable C. Inventory D. Loan
18. Which of the following is not a financial institution?
A. A commercial bank B. An insurance company C. A newspaper publisher D. A pension fund
19. A ______ is set up so that employees of corporations or governments can receive income after retirement.
A. credit union B. life insurance company C. pension fund D. savings bank
19. Contents of gold coins in 1903 are as follows, except:
A. 12.9 grains of gold B. 0.9 fineness C. 416 grains of gold D. 0.9 fineness
20. Contents of silver coins in 1903 are as follows, except:
A. 12.9 grains of gold B. 0.9 fineness C. 416 grains of gold D. 0.9 fineness
II. Modified TRUE or FALSE: Write TRUE, if statement is CORRECT; If statement is False, MODIFY the underlined word/phrase to
make the statement True. Failure to follow instructions in each of the items is also considered wrong.
1. Financing decision involves generating funds internally or from external sources.
2. Capital budgeting concerns the planning and managing of the firm’s long-term investment.
 3. Working capital management refers to the administration of the firm’s longterm assets, including inventory.
4. Industrial Partner shares work, labor or industry to the business.
5. Open Corporation is limited to the selected persons or member of the family, as investors.
6. Date of Payment is the date on which the board of director signs a resolution to pay a dividend.
7. Exposed Market Operations is the purchase of and sale of government securities by the BSP.
8. Dimensions refers to the face value of coins and paper bills.
9. BSP Monetary Board is the policy making body of Bangko Sentral ng Pilipinas.
10.Financial Plan is a statement of what is to be done in the future.
III. Identification: Identify what is described in each statement. Write your answer on your answer sheet. Wrong spelling
is WRONG. Failure to follow instructions in each of the items is also considered wrong.
1. They collect funds from savers or depositors and lend them to or invest them in businesses of people that need cash for capital.
2. Involves the management of financial resources available to the organization.
3. Involves generating funds internally or from external sources
4. Involves determining real assets of business to current assets.
5. Broad area of business that deals with the management of companies.
6. People who acquire necessary funds for the business and ensure they are used effectively.
7. Laws describing how the corporation regulates its existence and how directors are elected and their respective functions.
8. It contains the corporation’s name, its intended life, business purpose, and number of shares issues.
9. A legal entity whose assets and liability are separate from those of its owners.
10. An investee corporation in which the parent corporation has controlling interest.
11. Shares that have assigned definite or fixed value in the articles of incorporation.
12. Dividends declared upon dissolution of corporate operations or return of capital investors.
13. Refers to the process of determining the best uses of the financial resources of an organization to attain its predetermined
objectives and the procurement of the required funds at the least cost.
14. Compares the change in each line item on a statement with the same item in a previous statement.
15. The ability of assets to be converted quickly into cash.
IV. Matching Type : Match items in COLUMN A with items in COLUMN B. Write the CAPITAL letter of the correct answer
on your answer sheet. Failure to follow instructions in each of the items is also considered wrong.
Column A Column B
________ 1. Current Ratio A. Rate of net Income earned, based on the owner’s equity.
________ 2. Quick Ratio B. Shares of stocks for Filipinos
________ 3. Inventory turnover C. Profit percentage per peso of sales
________ 4. Accounts receivable turnover D. Proportion of assets provided by creditors
________ 5. Average collection period E. The amount of money or income received by stockholders from his investment
________ 6. Equity to debt ratio F. Shares of stocks for foreign investors
________ 7. Debt ratio G. Number of times receivable have been realized in sales
________ 8. Net Profit Margin H. Number of times inventory was sold and replenished during the period
________ 9. Return on Assets I. Right to subscribe to all issues of shares in any class, in proportion to shareholdings
________ 10.Return on Equity J. Firm’s ability to meet short term obligations
________ 11.Dividends K. Shows the relationship between investors’ contribution and debt of the firm
________ 12.Class A L. Overall assets productivity
________ 13.Class B M. Average number of days it takes to collect receivables
________ 14.Pre-emptive right N. Firm’s ability to meet immediate demands on current assets
________ 15.Property Dividend O. Dividends in the form of non-cash assets of a corporation
P. Dividends in the form of stocks of issuing corporation
V. Problem Solving:
a. Caiden currently owns 1,700 shares of CJE Corporation, whose outstanding shares are 30,000. The corporation is
issuing additional 25,000 shares for capital expansion. If Caiden will not be allowed to subscribe to the new issue,
determine the stockholder’s change in percentage of interest. Compute for:
a. Proportionate interest at present b. Proportionate interest after new issue
b. With reference to the data given above, assume the current book value of shares is ₱500.00, and the new issue at
₱250.00. Determine:
a. Book value per share, after the new issue b. Book value of Caiden’s share before new issue
c. Book value of Caiden’s after new issue d. Amount of change in the book value of Caiden’s share after
new issue