NAME: _____________________________________ SCORE: _______________

LONG TEST IN FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT II

School Year 2019 – 2020

Instruction: Encircle the letter of the correct answer. AVOID ERASURES PLEASE. USE PENCIL ONLY

1. The end product of financial accounting is ____.

a) useful financial information b) balance sheet c) income statement d) cash flows

2. A process in accounting that answers the question “what transactions are concerned” is called ____.

a) recording b) measurement c) communicating d) identification

3. Financial information is communicated through ___.

a) journals and ledgers b) power point presentations c) financial statements d) income statements

4. A process in accounting that answers the question “how much” is called ____.

a) recording b) measurement c) communicating d) identification

5. It only covers the process of record keeping and maintenance of the books of accounts (journalizing and posting).

a) basic accounting b) bookkeeping c) advanced accounting d) journalizing and posting

6. The date of a balance sheet is always ____.

a) for the period ending b) “as at” or “as of”

7. A financial statement that presents a company’s position as to its Assets, Liabilities and Capital.

a) Statement of Financial Position c) Statement of Comprehensive Income

b) Statement of Changes in Owner’s Equity d) Statement of Cash Flows

8. A financial statement that presents the sources and utilization of cash and cash equivalents.

a) Statement of Financial Position c) Statement of Comprehensive Income

b) Statement of Changes in Owner’s Equity d) Statement of Cash Flows

9. A financial statement that presents the performance of the business for a certain period.

a) Statement of Financial Position c) Statement of Comprehensive Income

b) Statement of Changes in Owner’s Equity d) Statement of Cash Flows

10. Beginning and ending capital and withdrawals of the owner can be found at the ___.

a) Statement of Financial Position c) Statement of Comprehensive Income

b) Statement of Changes in Owner’s Equity d) Statement of Cash Flows

11. Revenue and expenses are contents of what financial statement?

a) Statement of Financial Position c) Statement of Comprehensive Income

b) Statement of Changes in Owner’s Equity d) Statement of Cash Flows

12. When a financial statement of a business can be compared to another entity, it possesses the qualitative
characteristic of ____.

a) comparability b) timeliness c) verifiability d) understandability

13. A financial statement that is complete, neutral, and free from error is said to be ___.

a) objective b) subjective c) faithfully represented d) verifiable

14. The accountant of BSP makes it sure that financial statements of the bank are always available when needed. What
does the accountant consider?

a) comparability b) timeliness c) verifiability d) understandability

15. What do we call the accountants’ input in the recording and keeping track of the activities of the business?

a) source documents and business transactions b) personal transactions of the owners

c) payroll of employees d) unexpected events

16. Which is an element of a promissory note?

a) maturity value b) signature of the creditor c) signature of debtors d) interest

17. These are called open accounts because they do not have documentary support other than the sales contract.

a) trade accounts payable b) notes receivable c) trade accounts receivable d) a and c

18. Finished goods, work in progress goods and raw materials are classified as ______ under current assets.

a) inventory b) cash and cash equivalents c) accounts receivable d) PPE

19. Fixed assets is to PPE; assets without physical substance is to ___.

a) Property, plant and equipment b) intangible assets c) tangible assets d) cash

20. It refers to the ease of converting a non-cash asset into cash.

a) profitability b) solvency c) agility d) liquidity

21. Income tax payable to BIR is an example of _____ as a source of liabilities.

a) constructive parties b) contracts c) laws and obligations d) accounts payable

22. The corporate income tax rate which is payable on the 15th of April of the succeeding year is equal to ___.

a) 25% b) 35% c) 45% d) 15%

22. Expenses incurred in accordance with the disposition of merchandise to customers.

a) operating expenses b) selling expenses c) administrative expenses d) cost of sales

23. The formula for revenue is ___.

a) price x quantity sold b) price-quantity sold c) price/quantity sold d) price + quantity sold

24. The formula for profit is ___.

a) revenue-expenses b) revenue + expenses c) revenue/expenses d) revenue x expenses

25. Which is an appropriate date for a statement of comprehensive income?

a) for the period ending December 31, 2018 b) At December 31, 2018
 c) As of December 31, 2018, d) All of the above

26. Which is not an element of a statement of changes in owners equity?

a) equity b) capital c) accounts payable d) withdrawals

27. Which is not an element of a statement of comprehensive income?

a) cost of sales b) total goods available for sale c) ending inventory d) inventory

28. Which is an element of a statement of cash flows?

a) cash paid to owners b) cash c) cash equivalents d) cash flows

29. Which of the following is classified as a selling expense?

a) Salaries of corporate executives b) salaries of salesmen

c) depreciation of corporate headquarters d) rent expense

30. What is the correct formula for net sales?

a) Sales- (sales return + sales allowances + sales discount) b) Sales+ (sales return + sales allowances + sales discount)

c) Sales x (sales return + sales allowances + sales discount) d) Sales / (sales return + sales allowances + sales discount)

31. Beginning inventory plus net purchase is equal to ___.

a) ending inventory b) total goods available for sale c) cost of sales d) net purchase

32. Total goods available for sale minus ending inventory is equal to ___.

a) Cost of sales/Cost of goods sold b) beginning inventory c) ending inventory d) net sales

33. In the income statement, amounts of Operating expenses, selling expenses, and administrative expenses will be
arranged from ___ to ___.

a) lowest to highest amount b) highest to lowest amount c) alphabetical order d) liquidity order

34. Freight in: purchases. Freight out: ____.

a) selling expenses b) purchases c) administrative purchases d) operating expenses

35. A type of business organization owned by two or more partners.

a) partnership b) sole proprietorship c) corporation d) cooperative

36. Operating activities in the statement of cash flows are transactions that affects ___.

a) profit and loss b) non-current liabilities and capital c) non-current assets d) all of the above

37. Investing activities in the statement of cash flows are transactions that affects ___.

a) profit and loss b) non-current liabilities and capital c) non-current assets d) all of the above

38. Financing activities in the statement of cash flows are transactions that affects ___.

a) profit and loss b) non-current liabilities and capital c) non-current assets d) all of the above

39. A comparability standard in the analysis and interpretation of financial statement that does a comparative analysis of
company financial statement against a direct competitor.

a) Industry standard b) intracomparability c) intercomparability d) all of the above

40. A comparability standard in the analysis and interpretation of financial statement that compares company financial
statement as against the standard average of the industry.

a) Industry standard b) intracomparability c) intercomparability d) all of the above

41. Working capital is equal to current asset less current liabilities. The total current asset is P10,000 and the total
current liability is P11,000. Compute the working capital.

a) (P1,000) b) P1,000 c) P21,000 d) P20,000

42. Current ratio is equal to current asset/current liabilities. The total current liabilities is P20,000 and the total current
asset is P150,000. Compute the current ratio.

a) 7.5 b) .13 c) P130,000 d) (P130,000)

43. Average collection period of receivables is preffered to be ___.

a) longer b) higher c) whole number d) shorter

44. Bank reconciliation statements are prepared ___.

a) annually b) monthly c) bi-weekly d) everyday

45. These refer to check disbursements that has been deducted by the book, but has not yet been deducted by the bank
as of the cut-off date.

a) outstanding checks b) deposit in transit c) credit memo d) debit memo

46. What do we call deposits already recorded by the book but not yet by the bank as of cut off date?

a) outstanding checks b) deposit in transit c) credit memo d) debit memo

47. Tax is a ____ contribution.

a) enforced b) solicited c) voluntary d) contributed

48. Who levied taxes?

a) Cabesa de barangay b) Gobernadorcillo c) Mayorya d) Congress

49. It is a process by which our government raises income to pay its necessary expenses.

a) sedula b) fees c) tolls d) tax

50. “Tax rate decreases as tax base increases” is applicable to what principle?

a) regressive taxation b) progressive taxation c) proportional taxation d) none of the above

51. It refers to the weakening of the purchasing power of peso due to rising prices of commodities.

a) inflation b) deflation c) recession d) depression

52. They are citizens that can be taxed for income arising from sources within and outside the Philippines.

a) resident alien b) non-resident alien c) non-resident citizens d) resident citizens

53. A principle of sound taxation where tax should be proportionate to the ability to pay.

a) theoretical justice b) administrative feasibility c) fiscal adequacy d) a & c

54. What do we call the income received by Lolo Lorelo working as the Cashier of Lololipop Company?

a) Compensation income b) business income c) passive income d) all of the above

55. General ledger: book of final entry. ___: book of original entry.

a) general ledger b) subsidiary ledger c) columnar book d) general journal

56. It refers to the recording of transactions to the book of original entry.

a) summarizing b) journalizing c) classifying d) interpreting

57. It refers to the posting of transactions to the general ledger.

a) summarizing b) journalizing c) classifying d) interpreting

58. These are income generated by different investments.

a) business income b) compensation income c) passive income d) a, b,c

59. What kind of income is being generated by people who do not work as employee of other people? Ex. Lawyers,
doctors, businessmen

a) business income b) compensation income c) passive income d) a, b,c

60. The book balance of a bank account is P100, 000. The bank balance is P112,000. There is an outstanding check of
P12,000. Which correctly describes the bank reconciliation statement of the account?

a) The adjusted bank balance is P100,000. b) The adjusted bank balance is P124,000

c) The adjusted book balance is P88,000 d) The adjusted book balance is P112,000

61. The book balance of a bank account is P100, 000. The bank balance is P88,000. There is a deposit in transit of
P12,000. Which correctly describes the bank reconciliation statement of the account?

a) The adjusted bank balance is P100,000. b) The adjusted bank balance is P76,000

c) The adjusted book balance is P88,000 d) The adjusted book balance is P108,000

62. The book committed an error in recording a check issued. Instead of P1,560.00, it was recorded as P1,650.00. Which
correctly describes the bank reconciliation statement of the account?

a) The book will add P90 to its balance b) The book will deduct P90 to its balance

c) The bank will add P90 to its balance d) The bank will deduct P90 to its balance

63. The business received its bank statement for the month of October 2018. It was noticed that the bank credited an
amount of P450 interest. What should the business do?

a) Deduct P450 to its balance b) Deduct P900 to its balance

c) Add P900 to its balance d) Add P450 to its balance

64. The business bought a checkbook from the bank. As a result, the bank debited their account an amount of P700 as
payment. What should the book do?

a) Deduct P700 to its balance b) Deduct P1,400 to its balance

c) Add P1,400 to its balance d) Add P700 to its balance

65. The basic accounting equation is ___.

a) Asset= Liabilities + Capital b) Liabilities= Asset – Capital

c) Capital= Asset – Liabilities d) All of the above

e) None of the above

66. Which financial statement displays the revenue and expenses of a company for a period of time?

a) Statement of comprehensive income b) Statement of financial position

c) Statement of cash flows d) Statement of changes in owners’ equity

67. The accrual basis of accounting records revenues when they are ___.

a) collected b) earned c) contracted d) readily available for use

68. The debts, which are to be repaid within a short period (year or less) are known as

a) Current liabilities b) Fixed liabilities c) non-current liabilities d) All of the above

69. Which of the following is an element of a statement of comprehensive income?

a) cash b) receivables c) revenue d) interest receivables

70. Which of the following cannot be used to analyze financial statement?

a) liquidity ratio b) solvency ratio c) profitability ratio d) none of the above

71. This is the availability of short-term resources to meet short term obligations.

a) liquidity ratio b) solvency ratio c) profitability ratio d) none of the above

72. This is the excess of current assets over current liabilities.

a) working capital b) current ratio c) acid test ratio d) quick ratio

73. Which of the following is not considered as a quick asset?

a) cash b) inventory c) accounts receivable d) none of the above

74. This measures the frequency of accounts receivable converted into cash.

a) accounts receivable turn over b) average collection period c) both a and b d) none of the above

75. Average collection period is 365 days in a year to be divided with the accounts receivable turnover ratio. If the total
sales are P150,000, and the accounts receivable turnover ratio is 7, how long is their average collection period?

a) 52.14 b) 372 c) 358 d) 2,555

GOOD LUCK SA EXAMS!