ST.

VINCENT COLLEGE
Leganes  Ivisan  Pototan

Instruction: Choose the correct letter that corresponds to your best answer. Shade the letter of your answer on
the given answer sheet. Erasures are not allowed in the answer sheet.

Part I. TRUE or FALSE. Refer to the choices below:

A TRUE C. FALSE
.

1. The third line of the balance sheet heading for the end of the year should begin with "For the Year
Ended".
2. Current assets divided by current liabilities is the current ratio.
3. Another name for the balance sheet is statement of operations.
4. Statement of Financial Position shows the business’s assets, liabilities, and equity as of the report date.
5. Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the
balance sheet and are referred to as assets.
6. The statement of cash flows shows the changes in the owner’s capital during the accounting period.
7. Non-current liabilities are long-term financial obligations like accounts payable that are due within one
year.
8. Financial statements are designed to give investors and lenders a feel for a business's financial health.
9. Income Statement is also known as Profit or Loss Statement.
10. The most liquid asset is Accounts Receivable.

Part II. MULTIPLE CHOICE.

11. If total liabilities is equal to P356,000 and total equity is P187,000, how much is the total assets?

A. P169,000 C. P543,000
B. P345,000 D. P187,000

12. The business paid salaries to employees, P20,000 cash. The journal entry include a credit to

A. Cash C. Salaries and wages payable

B. Salaries and wages expense D. Drawings

13. Performed services to customers on credit worth P15,000. The journal entry include a debit to

A. Accounts receivable C. Service revenue

B. Cash D. Expenses

14. Which of the following is correct if the sole proprietor of a company borrowed P150,000 in the name of
the company and deposited the amount into the company’s bank account?

A. The assets of the company decreased by P150,000.

B. The liabilities of the company increased by P150,000.
C. The capital of the company increased by P150,000.
D. The drawings of the company increased by P150,000.

15. Which of the following is not a current asset?

A. Accounts receivable C. Prepaid Insurance

B. Supplies D. Land

16. Which financial statement will allow you to determine the gross margin for a retailer or manufacturer?

A. Balance Sheet C. Statement of Cash Flow

B. Income Statement D. Statement of Position

17. Received P8,000 cash from customers for services performed. The journal entry include a debit to

A. Accounts receivable C. Service revenue

B. Cash D. Expenses

18. Additional cash investment by the owner will have an effect on

1
 A. Non-current Assets C. Non-current Liabilities
B. Current Liabilities D. Owner’s Equity

19. An RTW business bought an equipment worth P250,000 to be used for its operations and paid it in
cash. What would be the journal entry to record this transaction?

A. Equipment 250,000 C. Inventory 250,000

Cash 250,000 Accounts Payable
250,000
B. Equipment 250,000 D. Inventory 250,000
Accounts Payable 250,000 Cash
250,000

20. Which of the following is an asset account?

A. Accounts payable C. Accrued salaries payable

B. Unearned revenue D. Prepaid insurance

21. The quick ratio excludes which of the following?

A. Cash C. Accounts Receivable

B. Inventory D. Accounts Payable

22. If beginning inventory is P60,000, cost of goods purchased is P380,000, and ending inventory is
P50,000, cost of goods sold is:

A. P390,000 C. P330,000
B. P370,000 D. P420,000

23. On August 21, De La Hoya Company buys merchandise on credit from Pacman Company for P10,000.
What journal entry should De La Hoya Company make to record this transaction?

A. Inventory 10,000 C. Accounts Receivable 10,000

Cash 10,000 Accounts Payable 10,000
B. Inventory 10,000 D. Cash 10,000
Accounts Payable 10,000 Inventory 10,000

24. If sales revenues are P400,000, cost of goods sold is P310,000, and operating expenses are P60,000,
the gross profit is

A. P30,000 C. P340,000
B. P90,000 D. P400,000

25. Purchase of equipment on account affects the accounting equation by a/an

A. Decrease in assets C. Increase in owner’s capital

B. Increase in liabilities D. Decrease in liabilities

Part III. PROBLEM SOLVING

For 2 consecutive items: At December 31 a company’s records show the following information:

Cash P 10,000
Accounts Receivable 30,000
Inventory 80,000
Prepaid Insurance 6,000
Long-term Assets 200,000
Accounts Payable 30,000
Noted Payable due in 10 months 25,000
Wages Payable 5,000
Long-term Liabilities 70,000
Owner’s Equity 196,000

26. The company’s current ratio is

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 A. 1:1 C. 2.1:1
B. 2:1 D. 1:2

27. The company’s quick ratio is

A. 0.67:1 C. 0.76:1
B. 1:1 D. 2:1

For 3 consecutive items: For its most recent year a company had Sales (all on credit) of P830,000 and Cost of
Goods Sold of P525,000. At the beginning of the year, its Accounts Receivable were P80,000 and its Inventory
was P100,000. At the end of the year, its Accounts Receivable were P86,000 and its Inventory was P110,000.

28. The inventory turnover ratio for the year was

A. 4.8 times C. 7.9 times

B. 5.0 times D. 4.77 times

29. The accounts receivable turnover ratio for the year was

A. 6.3 times C. 9.65

B. 7.5 times D. 10.0

30. The days sales inventory ratio for the year was

A. 73 days C. 14 days
B. 46 days D. 25 days

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