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Name ________________________________________________________ Score ____________

FABM2 LONG QUIZ 10.21.2019

Directions: Read the statements carefully and encircle the best answer from the choices.

1. Under IAS 1, how often should financial statements be prepared?


A. at least annually B. No more than annually C. as often as the company requires D. Monthly

2. Which of the following disclosures are not required in relation to share capital in the SOFP?
A. Number of shares authorized C. Name of individual shareholders
B. Number of share issued and fully paid D. Shares in entity held by itself of by related group of
companies

3. What is the term used to describe the time between the acquisition of assets for processing and their realization in
cash or cash equivalents?
A.. Processing cycle B. Turnover C. Operating cycle D. Turnaround

4. When a company issues shares for more than their nominal amount, the excess is called?
A Share excess B. Share premium C. Share markup D. Par value

5. Which of the following is not a liability?


A. Government grants repayable C. Debentures
B. Amounts owed to shareholders as capital D. Rebates payable

6. Which of the following is a current liability?


A. bank overdraft B. Mortgage C. Preference shares D. Retained Earnings

7. Which of the following are examples of current assets?


A. Motor vehicles B. Prepayments C. Share Premium D. Goodwill

8. Accumulated profits (minus any losses) held by an entity are called


A. Provisions B. Equity C. Retained Earnings D. Shareholders’ funds

9. Which of the following is not a component of a Statement of Financial Position?


A. Non-current assets B. Inventories C. Cost of Goods Sold D. Retained Earnings E. Deferred Tax

10. P800 paid for a keyboard of a desktop Computer is written off as an expense rather than capitalized because the
business does not capitalize items that cost less than P1,000. This is an application of which concept?
A. Prudence B. Money measurement C. Going concern D. Materiality

11. A non-current asset, acquired for P960,000 and depreciated by P360,000 is reported in the Balance Sheet at the
written down value of P600,000, although, being an item specially manufactured for the business, its realizable value is
expected to be only P380,000. Which accounting concept is followed:
A. Going Concern B. Substance over form C. Prudence D. Money measurement

12. The expenses relating to the proprietor and his household should be treated as drawings rather than as business
expenses on the basis of which of the following accounting concepts:
A. Matching concept B. Substance over form concept C. Separate entity concept D. Prudence Concept

13. The objective of general purpose financial reporting is:


A. Provide financial information about the reporting entity that is useful to existing and potential investors, lenders and
other creditors in making decisions about providing resources to the entity.
B. to inform government statistics
C. to support the entities tax & return
D. to meet all the information needs of all the users of an entities financial statements.
E. to inform economic decision-making by a broad range of users including manager’s interest.

14. The residual interest in the assets of an entity after deducting all its liabilities is:
A. Income B. Profit or loss C.Equity (Your Answer) D. Other comprehensive
income
15. The fundamental qualitative characteristics of useful financial information are:
A. Comparability and relevance B. Relevance and reliability C. Relevance, reliability and
comparability
D. Relevance and faithful representation E. Comparability, relevance and faithful representation

16. For information to be relevant, it has to possess:


A. Only predictive value B. Only confirmative value C. Both predictive and
confirmatory value
D. Either predictive or confirmatory value, or both

17. Which financial statement displays the revenues and expenses of a company for a period of time?
A. Income Statement B. Balance Sheet C. Cash Flow Statement D. Statement of
Owner’s Equity

18.Which of these is not included as a separate item in the basic accounting equation?
A. Assets B. Revenues C. Liabilities D. Stockholder’s Equity

19.Which financial statement uses the expanded accounting equation?


A. Income Statement B. Balance Sheet C. Cash Flow Statement D. Statement of
Owner’s Equity

20.The accrual basis of accounting records revenues when they are:


A. Collected B. Earned C. Contracted D. Readily available for
use

21.The account format that displays debits, credits, balances, and headings.
A. General Journal B. General Ledger C. T-account D. Ledger Account

22.What is the main purpose of financial accounting?


A. Organize financial information B. Provide useful financial information to outsiders C. Keep track of
company expenses
D. Minimize company taxes

23. Asset accounts have what type of balance?


A. Debit B. Credit C. Contra D. All of the above

24.Which account is not a liability account?


A. Accounts Payable B. Accrued Expenses C. Cash D. Notes Payable

25.Which account increases equity?


A. Expenses B. Withdrawals C. Treasury Stock D. Revenues

26. A contra asset account has what type of balance?


A. Debit B. Credit C. Contra D. All of the above

For items number 27 and 28:


Mr. Y has a recent gross profit history of 40% of net sales. The following data are available from X’s accounting records
for the three months ended March 31, 2019:
Inventory – January 1 P650,000 Purchase Returns 75,000
Purchases 3,200,000 Freight In 50,000
Net Sales 4,500,000

27.What is the Ending Inventory of Mr. Y?


A. P1,110,000 B. P1,125,000 C. P1,130,000 D. P1,120,000

28.What is the total Cost of Goods Sold?


A. P2,650,000 B.P2,700,000 C. P2,750,000 D. P2,600,000

29.A sale on March 21 with terms n/10 eom is due to be collected by?
A. March 31 B. April 1 C. April 10 D. April 30

30.Suppose Mr. Y had sales of P300,000 and sales returns of P40,000. Cost of goods sold was P160,000. How much gross
profit did Mr. Y report?
A. P160,000 B. P180,000 C. P140,000 D. 100,000
31.The receipt of cash arising from a sales transaction would be recorded in the
A. Cash payments journal b. Cash receipts journal C. Purchase Journal D. Sales Journal

32.An item retailing for P10,000, subject to a trade discount of 25%, is paid for within the discount period on terms 2/10,
n/30. What is the amount of payment?
A. P10,000 B. P7,500 C. P7,400 D. P7,350

33.Which of the following items would be recorded in the purchase journal?


A. Equipment purchased on account B. Merchandise purchased on account C. Supplies purchased on account
D. All the of above

34.The seller paid the freight charges but not legally responsible for the same.
A. FOB Destination, Freight prepaid B. B. FOB Destination, Freight collect C. FOB Shipping point, freight Prepaid
D. FOB Shipping point, freight collect

35. Which of the following transaction does not use the Merchandise Inventory account under perpetual system?
A. Sales Returns B. Purchase Returns C. Freight on goods acquired
D. Freight on goods sold

36. The investment of cash into the business results in a/an


A. increase in cash and a decrease in capital B. increase in cash and an increase in capital
C. decrease in cash and an increase in capital D. increase in fees earned and an increase in capital

37. Under the double-entry system


A. An increase in asset must be compensated by a decrease in asset
B. Asset amount must be equal to liability amount.
C. The change in asset must be compensated by a change in liability
D. The change in a debit-side entry must be compensated by a change in credit-side entry.

38. The following items will be included in a trial balance, except:


A. Accounts Receivable B. Accounts Payable C. Inventory, beginning
D. Trade discounts

39. An accounting method in which revenues are reported in the period in which they are earned, and expenses are
reported in the period in which they are incurred;
A. Accrual basis B. Cash basis c. Adjusting entries d. Worksheet

40. Accounts Receivable account has an ending balance of P240,000. Consultation fee billed to the customers for the
period were P430,000 and collections on account from customers were P472,000. What was the beginning balance of
the Accounts Receivable?
A. P670,000 B. P282,000 C. P198,000 D. P662,000

41. You have agreed to keep the accounting records for a business that has agreed to pay you P1,000 per month,
beginning December 16. You use the accrual basis of accounting and recorded adjusting entries on December 31. When
you receive the P1,000 on January 16, you will record the following entry
A. Cash, dr., P1,000; Acc. Rec., cr., P500; Fees Earned, credit, P500
B. Cash, dr., P500; Acc. Rec., cr., P500
C. Cash, dr., P1,000; Fees Earned, cr., P1,000
D. Acc. Rec., dr., P1,000; Cash, cr., P500; Fees Earned, cr., P500

42. Dee Preciated rented an office space to Core Poration for three months at P500 per month, payable at the end of the
third month, January 31. No year-end adjusting entry was recorded on December 31. As a consequence of this oversight,
A. assets were overstated and revenue was overstated
B. assets were overstated and revenue was understated
C. assets were understated and revenue was overstated
D. assets were understated and revenue was understated
43. A tenant rented space in our companies’ office building on September 1 at P450 per month, paying six months' rent
in advance. The bookkeeper recognized a current liability of P2,700. The December 31, year-end adjusting entry would
be
A. Unearned Rent, dr., P1,800; Rent Revenue, cr., P1,800
B. Unearned Rent, dr., P1,350; Rent Revenue, cr., P1,350
C. Rent Revenue, dr., P900; Unearned Rent, cr., P900
D. Cash, dr., P2,700; Rent Rev., cr., P1,800; Unearned Rent, cr., P900

44. At the end of the accounting period, the business had P450 of office supplies on hand, which was a 50% increase
over the beginning balance. If the business purchased P1,200 of office supplies during the year, then P_____ of office
supplies were used during the year.
A. P975 B. P1,050 C. P1,650 D. P1,425

45. At the beginning of the year, a business had a two-year, P1,200 insurance policy on its office equipment. On July 1 it
purchased a three-year, P1,800 policy on a newly constructed building. A December 31, year-end, adjusting entry was
made for the policy on the building but not for the policy on the office equipment. As a consequence of the oversight
A. expenses are understated and assets are overstated
B. expenses are overstated and assets are understated
C. expenses are understated and assets are understated
D. expenses are overstated and assets are overstated

46. The adjusting process is based on two accounting principles. The two accounting principles are
A. realization and recognition
B. revenue recognition and matching
C. cost and business entity
D. continuing-concern and realization

47. At the end of the fiscal year, an adjusting entry was made for accrued salaries of P500. The salaries for one week,
P1,250, were paid on the first Friday of the new fiscal period. The entry to record paying the salaries expense for the
week would be a
A. Sal. Exp., dr., P750; Salaries Payable, dr., P500; Cash, cr., P1,250
B. Sal. Exp., dr., P500; Salaries Payable, dr., P750; Cash, cr., P1,250
C. Salaries Exp., dr., P1,250; Cash, cr., P1,250
D. Salaries Exp., dr., P1,250; Salaries Payable, cr., P1,250

48. The personal telephone bill of Junior Sample was paid by issuing a cheque from the business chequing account. No
business calls had been made from Junior's personal phone. What account must be debited for this transaction?
A. Junior, Capital B. Cash C. Junior, Withdrawals D. Telephone Expense

49. Which of the following statements is not true?


A. Journalizing errors should be erased and a correct entry made
B. Asset accounts are increased by debit entries
C. Debit entries are entries involving the left-hand side of an account
D. Journalizing precedes posting

50. Peter Atli received P5,000 for some excavation work to be done when the weather permits. Peter figures it will be at
least three weeks before he can start the job. Recording the transaction requires
A. an asset to be debited, a liability to be credited
B. a liability to be debited, an asset to be credited
C. withdrawal to be debited, an asset to be credited
D. an asset to be debited, revenue to be credited

51. A business purchased equipment by issuing a one-year note payable. The entire amount of the note is due at the end
of one year. Recording the transaction requires
A. an asset to be debited, a liability to be credited
B. a liability to be debited, an asset to be credited
C. an asset to be debited, capital to be credited
D. withdrawals to be debited, an asset to be credited
52. One of the local fast-food outlets hired a first-year accounting student to oversee the cash-collection procedures.
When the firm pays the student her weekly wage, the transaction will
A. increase an asset, increase a liability
B. decrease an asset, decrease a liability
C. increase an asset, increase owner's equity
D. decrease an asset, decrease owner's equity

53. If during the accounting period the assets increased by P7,000, and the owner's equity decreased by P3,000, then
the liabilities must have
A. increased by P10,000
B. increased by P4,000
C. decreased by P4,000
D. decreased by P10,000

54. The owner of a computer services business was able to acquire a new computer, valued at P5,000, by establishing an
account with the computer vendor, Com Pewters Unlimited. There was no down payment. Recording the transaction
will
A. increase an asset, increase a liability
B. decrease an asset, decrease a liability
C. increase an asset, increase owner's equity
D. decrease an asset, decrease owner's equity

55. What is the reportable June 2019 expenses?


Received electricity bill for P15,000 for use of electricity in June 2019; payable in July 2019.
Paid P12,000 in June for a 12-month insurance policy.

A.P16,000 B. P12,000 C. P26,000 D. None of the above

56. Which of the following is not a quick asset?


A. Cash B. Cash equivalents C. Accounts Receivable D. Inventory

For items number 57 to 61:


A portion of the Xyrisse Company’s statement of financial position appears as follows:

December 31, 2018 December 31, 2017


Assets:
Cash P353,300 P100,000
Notes receivable 0 25,000
Inventory ? 199,875
Liabilities:
Accounts payable ? 75,000

Xyrisse Company pays for all operating expenses with cash and purchases all inventory on credit. During 2018, cash
totaling P471,700 was paid on accounts payable. Operating expenses for 2018 totaled P220,000. All sales are cash
sales. The inventory was restocked by purchasing 1,500 units per month and valued by using periodic FIFO. The unit
cost of inventory was P32.60 during January 2018 and increased P0.10 per month during the year. Spark sells only one
product. All sales are made for P50 per unit. The ending inventory for 2017 was valued at P32.50 per unit.

57. Number of units sold during 2018


A. 7,066 B. 18,400 C. 4,268 D. 13,400

58. Accounts payable balance at December 31, 2018


A. P190,100 B. P50,000 C. P199,100 D. P200,000

59. Inventory quantity on December 31, 2018


A. 5,750 B. 2,750 C. 17,084 D. 10,750

60. Cost of inventory on December 31, 2018


A. P187,450 B. P186,875 C. P192,950 D. P189,660
61. Cost of goods sold for the year ended December 31, 2018
A. P609,125 B. P609,700 C. P606,915 D.P603,625

For items number 62 to 64:


An entity presented the following comparative financial information:

2018 2017

Property, plant and equipment 2,190,000 1,440,000


Accumulated depreciation 450,000 270,000
Long-term investments 225,000 -
Prepaid expenses 351,000 315,000
Merchandise inventory 1,950,000 1,260,000
Accounts receivable, net of allowance 1,560,000 1,080,000
Cash 690,000 640,000

Share capital-ordinary 3,000,000 2,400,000


Retained earnings 906,000 688,000
Long-term note payable 1,275,000 1,095,000
Accounts payable 309,000 282,000
Dividend payable 201,000 -
Accrued expenses 825,000 -

2018 2017

Net credit sales 7,020,000 3,753,000


Cost of goods sold (3,915,000) (1,881,000)
Gross profit 3,105,000 1,872,000
Expenses, including income tax (2,586,000) (1,374,000)
Net income 519,000 498,000

Accounts receivable and accounts payable relate to merchandise for sale in the normal course of business. The
allowance for bad debts was the same at the end of 2018 and 2017 and no receivables were charged against the
allowance.

Accounts payable are recorded net of any discount and are always paid within the discount period.

The proceeds from the note payable were used to finance the acquisition of property, plant and equipment. Ordinary
shares were sold to provide additional working capital.

62. What amount should be reported as net cash provided by operating activities in 2018?
A. P345,000 B. P165,000 C. P546,000 D. P510,000

63. What amount should be reported as net cash used in investing activities in 2018?
A. P750,000 B. P225,000 C. P975,000 D. P750,000

8. What amount should be reported as net cash provided by financing activities in 2018?
A. P600,000 B. P780,000 C. P750,000 D. P680,000

******THE END******

“A wise man will hear and increase learning, and a man of


understanding will attain wise counsel.” (Proverbs 1:5)