27.

A company has a negative cash flow from operating AMADOR-BELLO HIGH SCHOOL
activities. What could explain this negative cash flow? Gangao, Baleno, Masbate
A. A substantial investment in a new fixed
B. The repayment of a loan DIAGNOSTIC TEST
C. A sudden increase in credit sales FUNDAMENTAL OF ACCOUNTING BUSINESS & MANAGEMENT 2
D. High levels of dividend payment
Name : ___________________________________________________
28. Sean-McDonald Company sold a printer with a cost of
Grade/Section:_____________________Date:__________________
₱ 34,000 and accumulated depreciation of ₱ 21,000 for
₱ 10,000 cash. This transaction would be reported as:
A. Choose the correct answer and circle the letter of your
A. An investing activity C. An operating activity
B. A financing activity D. None of the above choice on your answer sheet.

29. If the cash balance as of February 1, 2017 is ₱ 219,000, 1. A group of liabilities which the entity expect to settle
the cash provided by (used in) investing activities is after one year from the reporting date.
₱ 100,000 and net cash provided by (used in) financing A. Long term liabilities C. Current liabilities
activities is ₱ 150,000, what amount of cash should be B. Non-current liabilities D. short-term liabilities
reported in the Statement of Financial Position as of
February 28, 2017?
2. What are the elements of the statement of financial po-
A. 383, 300 C. 378,300
B. 188,300 D. 219,000 sition?
A. Assets, liabilities and equity
30. If ever the company would ask you how much would B. Revenue and expenses
be the ending cash balance using the direct method C. Assets, liabilities, Equity, Revenue and expenses
Instead of the indirect method, what amount will you D. None of the above
provide?
A. 388,300 C. 219,000
B. (80,700) D. Cannot provide amount 3. Which of the following is the fundamental accounting
equation?
A. Assets = Liabilities + Equity
B. Value Received = Value Parted with
C. Equity = Assets – Liabilities
D. None of the above

4. Expected to result in an outflow from the enterprise of

resources embodying economic benefits.
A. Liabilities C. Expenses
B. Revenue D. Equity

5. An element of the Statement of Financial Position that

could result in increases in equity.
A. Liabilities C. Assets
B. Revenue D. Equity

6. Which of the following is an asset account?

A. Prepaid insurance C. Accounts payable
B. Rental Income D. Unearned Revenue

7. Under single step approach, which of these items below

is used to derive at the Expense?
I. Sales III. Interest of Sales
II. Cost of Sales IV. Salaries expense
A. I and II C. II and IV
B. I and III D. II and III

8. Under single step approach, which of these items below

is used to derive at the Expense?
I. Sales III. Interest of Sales
II. Cost of Sales IV. Salaries expense
A. I, II, III & IV C. I, II & IV
B. I, II & III D. II. II and III

9. The business derived its income from rendering of ser-

vices to its client.
PARENTS’ SIGNATURE : ___________________________________
A. Service concern C. Sole proprietorship
B. Hybrid Company D. Merchandising Company
10. It generates income from buying and selling of mer- business failure.
chandise. B. May have access to more venture capital, but each
A. Partnership business C. Hybrid company loses some independence in decision making.
C. Enjoy limited liability
B. Merchandising business D. Manufacturing business
D. Always split profits and losses 50-50

11. Using the information below, The company records 18. All of the following are characteristics of corporation
showed swelling & general administrative expenses of EXCEPT that ____________.
₱ 1,000. Compute for the profit of company. A. The power of corporate managers is complete and
Purchases ₱ 82,500 cannot be challenged by stockholders.
B. The corporation may gain access to funds by issuing
Purchase Returns & Allowance 4,000
more stock.
Purchase Discounts 3,000
C. Liability is limited
Cost of Goods Sold 55,000 D. The corporation is a separate legal entity, separate
Cost of Goods Available for Sale 85,500 from its owners.
Company’s net purchases 75,500
19. As per Accounting Standard, Cash Flow is classified
A. 42,000 C. 38,500 into:
A. Operating activities and financing activities
B. 11,500 D. No Profit
B. Operating activities, financing activities and
investing activities.
12. A ₱ 150,000 sale is made on January 1st, with terms of C. Operating activities and investing activities.
2/10. n/30, how much would the discount be if payment is D. Investing activities and financing activities
made on January 91t?
A. 45,000 C. 0 20. What are the two methods in preparing cash flows?
B. 3,000 D. 15,000 A. Planed and Unplanned
B. Direct and Indirect
13. If the company has a beginning balance in owner’s C. Normal & Abnormal
equity of ₱ 20,000, an ending balance of ₱ 30,000 and a D. Cumulative & Non-cumulative
withdrawal of ₱ 2,000; how much was the profit of the
company given that there were no additional investments 21. Which of the two methods will show net income fol-
made by the owner? lowed by the adjustments needed to convert the total net
A. 12,000 C. 18,000 income to the cash amount from operating activities?
B. 28,000 D. 8,000 A. Direct
B. Neither Direct & Indirect
For numbers 14-15. Using the information below. C. Both Direct and Indirect
Caday’s bakeshop D. Indirect
Statement of Changes in Equity
For the month ended January 31, 2018
22. Cash inflows are also considered as?
Caday, Capital- Jan 1 ₱ ? A. Sources of Cash
Add: Additional Investment ₱ B. Cash receipt
Profit 81,500 C. Both cash receipt & sources of cash
Total D. Neither cash receipt & sources of cash
Less: Withdrawal ?
Caday, capital – Jan 31 ₱ 125,000 23. Cash outflows are also known as?
A. Uses of cash
Additional information: B. Cash Disbursements
Beginning balance is 8% of Ending balance
C. Both cash disbursements and uses of cash
Drawing is 15% of beginning balance
D. Neither cash disbursements and uses of cash
14. What amount shall be reported as Owner’s Equity in
the Statement of Financial Position for the year ended 24. For a profitable firm, total sources of funds will always
January 31, 2018? __________ total uses of funds.
A. 98,000 C. 10,000 A. Be greater than
B. 125,000 D. 90,000 B. Have no consistent relationship to
C. Be less than
15. What is the beginning balance of owner’s equity for D. Be equal to
February 1, 2018?
A. 125,000 C. 60,000 25. Which part will be affected by a purchase of a new
B. 80,000 D. 10,000 delivery truck to be used in the business?
A. Operating Activities
16. Unlimited liability for sole proprietorship means that B. Investing Activities
___________. C. Financing Activities
A. Proprietors are liable for all the value of all the shares D. None of the above
they own in the business.
B. Sole proprietorship are less risky to operate the 26. Which part will be affected by a decrease in the
corporations. balance of Account Receivable?
C. They can lose everything they own if their business A. Operating Activities C. Financing Activities
fail . B. Investing Activities D. None of the above
D. All of the above
17. In a partnership , the owners _________.
A. Cannot be sued separately in the event of a