Third Periodical Examination

Fundamentals of Accounting, Business and Management 1

2nd Semester S.Y 2019 - 2020

General Direction. This is a 100-items test, read each directions written in every type of test, answer this test in one
hour. If you have questions, raise your hand and ask your teacher.

Test I. Multiple Choice. 60 pts

Direction: Read the following questions carefully and write the letter that best describe the answer on your Test
Booklet.

1. Which of the following is not a step in accounting process?

a) Identification c. Recording
b) Communication d. Verification
2. Which of the following is not a relevant economic event?
a) An Agent who attended to the concern of a complaining customer.
b) Patricia, a manager of company X, who sold an abandoned building of her company.
c) Company Y who barrowed P5 million from a bank due to tight financial condition.
d) Company X which paid its employees their salaries for the month of Oct 2019.
3. Which of the following statements describes the accounting process?
a) It involves identifying relevant economic events.
b) Recording economic events is an essential part of the accounting process.
c) The recording process is not complete if the financial information is not communicated to interested
users
d) All of the above
4. Which is the most important step in the accounting process?
a) Identification b. Communication c. Recording d. All are equally important
5. Who is considered as the father of modern accounting?
a) Queen Victoria c. Augustus
b) Luca Pacioli d. Suetonius
6. Which nature of accounting best emphasizes that accounting is not an objective?
a) Accounting is an art.
b) Accounting deals with financial information and transactions.
c) Accounting is a means not an end.
d) Accounting is a process.
7. Jamie, the chief accountant of company X, is preparing a meeting with the top management. This meeting is
done monthly to evaluate the performance of the company. Which step of the accounting process is most
likely being done?
a) Recording Identification c. Communication d. Classification
8. Which profession does not use accounting information at all?
a) Entrepreneurs c. Economist
b) Government Officials d. None of the above
9. These are cost that do not change in total amount within a relevant range of activity?
a) Variable cost b. Fixed cost c. Direct cost d. Indirect cost

10. Financial statements that undergo the process of auditing are called?
a. Audited financial statements c. Quantified financial statements
b. Certified financial statement d. financial statement; as is

11. This branch of accounting aims to educate students in the field of accountancy.
a. Accounting Education
b. Accounting Research
c. Financial Accounting
d. Management Accounting

12. Financial Accounting is concerned with:

a. Special purpose financial statements c. Tax returns
b. General purpose financial statements d. Management reports

13. Financial accounting reports primarily to?

 a. Government agencies c. Top management of the company
b. Taxing authorities d. Creditors and Investors

14. The frequency of reports generated by management accounting can be best described as
a. Annually c. Semi-annually
b. Quarterly d. Whenever management demand

15. Which if the following is NOT considered asan internal user of accounting information?.
a. Owners of the business c. Suppliers
b. senior partners of an audit firm d. Field workers

16. Which if the following is NOT considered an external user of accounting information?
a. BIR Officials c. Production suervisor
b. Customers d. A student of accountancy

17. The Government is also an interested outside party that analyzes a company’s financial statements.
Which of the following is NOT performed by the government?.
a. The government examines financial statements to help companies in formulating business
decisions.
b. The government assesses the taxes payable by the companies through the analysis of the financial
statements.
c. The government is the regulatory body that oversees all businesses.
d. The government encourages or prohibits certain business activities depending on their effect on
the economy

18. Management consist of the following:

a. BOD, Supervisors, top management, laborers
b. Top management, BOD, middle managers, supervisors
c. Top management, supervisors, field workers, BOD
d. Owners, Top management, middle managers, supervisors, laborers

19. What information in the company’s financial statements is the most important for creditors?
a. Level of profit
b. Current borrowings
c. Revenues
d. All information are equally important

20. FKR and Trust Company is a bank organized and operating in the Philippines. Which of the following is
likely to be the user of its accounting information?.
a. Top management of the company c. Bureau of Internal Revenue
b. Internal Revenue Service d. Depositors of the company

21. Employees are mainly concerned with

a. The Company’s ability to pay salaries.
b. The Company’s ability to provide other employment opportunities.
c. The Company’s plan to expand the business to yield more revenues.
d. The Company’s ability to pay it’s obligation when they become due.

22. These internal users of accounting information are viewed as the brains of the company.
a. Owners or Stockholders c. Employees
b. Management d. Board of Directors

23. A Corporation can extend its life for a period not exceeding
a. 40 years c. 50 years
b. 25 years d. 60 years

24. All of the following are general features of a corporation EXCEPT

I. Limited life
 II. More complex management structures
III. Unlimited Liability
IV. Double Taxation

a. I only c. II and III only

b. I and IV only d. I and III only

25. One advantage of a corporation over a partnership is.

a. A corporation has separate legal existence
b. Partnership net income is taxed only on the company level.
c. Stockholders of a corporation have limited liability.
d. A corporation is easier to form than a partnership.

26. Voltaire is a stockholder of Highway Corporation. The board of directors recently declared a cash
dividend of P2.50 per share of stock. Voltaire owns 3000 shares of the company. How much would Voltaire
receive?
a. P 7,500 c. P 6,750
b. P 7,000 d. P 7,750

27. At least how many persons are required to form a cooperative?

a. 10 persons c. 15 persons
b. 20 persons d. 50 persons

28. Which of the following is not considered a service company?

a. Beauty Salon c. Bus Company
b. Carwash business d. Bakeshop

29. Services performed by service companies may include all of the following EXCEPT
a. Professional services c. Transportation service
b. Legal advice d. None of the above

30. Zydhryk CO. consulting firm earns P50,000 from its consultancy services rendered to Thristan. The
P50,000 is considered as Zydhryk Co.’s .
a. Sales Revenue c. Capital
b. Service Revenue d. Investment

31. Which of the following statements regarding service companies is correct?

a. Sercie companies are firms that generally use their employees to provide tangible products to
customers.
b. Service companies basically provide almost the same services to the customers.
c. Service companies are firms that generally use their employees to provide intangible products or
services to customers.
d. A department store may be considered a service company because the sales ladies assist the
customers in buying merchandise.

32. The major input used by service companies is.

a. Raw Materials
b. Labor
c. Overhead
d. All of the above

33. The operating cycle of a service company involves the following EXCEPT?.
a. Paying out labor and operating expenses c. Collecting cash payment
b. Performing services d. Storing goods as inventory

34. Which of the following is considered a service type of business?

a. Cakes and Pastries Bakery c. Meat Shop
b. School for Toddlers d. Sari-Sari Store

35. The disadvantages of running a service company are the following EXCEPT?
a. Inability to standardized services c. Existence of inventory
b. Reliance on highly skilled employees d. Managing human capital
36. What is the primary source of revenues of service companies?.
a. Performance of service c. Sale of equipment
b. Sale of finished goods d. Sale of component parts

37. The main difference of a merchandising company over a service company is

a. It does not need employees. c. It has no inventories
b. It provides tangible products. d. It has production facilities

38. A merchandising company that sells goods directly to customers is called

a. Retailer c. Manufacturer
b. Wholesaler d. Merchandiser

39. A merchandising company that sells goods directly to retailers

a. Retailer c. Manufacturer
b. Wholesaler d. Merchandiser

40. Which of the following is considered as a merchandising company?.

a. Robinson’s Appliance Center c. 7-12 Convenience Store
b. SM Hypermart d. All of the above

41. Manufacturing companies are also known as

a. Retailers c. Manufactures
b. Wholesalers d. Sole Proprietorships

42. One of the advantages of a manufacturing companies is

a. Existence of inventory c. Capital outlay
b. High conversion costs d. Quality control

43. These are revenues earned by the merchandising companies.

a. Sales Revenues c. Sales
b. Service Revenues d. Both a and c are correct

44. Which of the following resources is/are used as major inputs of manufacturing companies?
a. Raw materials c. Labor
c. Overhead d. All of the above

45. Which of the following is NOT a manufacturing company?

a. Car Company c. Bakery
b. Bank d. Oil Company

46. Service companies are to service revenues as manufacturing is to

a. Production services c. Service revenues
b. Subscription revenues d. Sales revenues

47. This states that a business is an entity separate and distinct from its owners.
a. Separate legal existence c. Accounting entity principle
b. Going concern principle d. Time period principle

48. In the past, the function of the International Accounting Standards Board (IASB) is performed by
a. World Trade Organization
b. USA Financial Accounting Standards Board
c. World Bank
d. International Accounting Standards Committee

49. Credit sales are recorded by a company as revenues even though no cash is received. What accounting
principle is this?
a. Accounting Entity c. Accrual Accounting
b. Matching Principle d. Prudence

50. Which of the following businesses most likely uses the cash basis of accounting?
a. A large multinational corporation
 b. A sari-sari store
c. A partnership established for the practice of law
d. A grocery chain

51. Which of the following items in the company’s accounting records requires the use of an estimate?
a. cash c. Accounts Payable
b. Warranty Expense d. Salary expense

52. Which of the following is least likely related to the revenues generated in the sale of goods?
a. Commission expense c. Salary of Salesperson
b. Warranty expense d. Advertising expense

53. This principle states that all relevant and material information should be reported.
a. Disclosure principle c. Materiality principle
b. Conservatism principle d. Objectivity principle

54. Philippine companies are required to report financial statements annually. What accounting principle is
this?
a. Cost principle c. Time period principle
b. Business entity principle d. Objectivity principle

55. This principle is also known as prudence principle.

a. Materiality principle c. Disclosure principle
b. Conservatism principle d. Time period principle

56. A form of business is owned by one person; the simplest, and the most common form of business
organization
a. Sole Proprietorship c. Partnership
b. Corporation d. Cooperative

57. In a partnership, the owner is called a ______________?

a. Corporator c. Partner
b. Incorporator d. Shareholder

58. What government agency approves the Articles of Incorporation of a corporation?

a. BIR c. Office of the President
b. SEC d. Department of Finance

59. What is the proof of ownership of a stockholder in a corporation?

a. Stock c. Share
b. Certificate of registration d. Stock certificate

60. This branch of accounting deals with how the funds of the government are recorded and reported.
a. Auditing c. Accounting Education
b. Government Accounting d. Managerial Accounting

Test II. Matching Type. 15 pts.

Direction. Identify what is being described in the following statements.

1) A form of business established mainly for the welfare a. Corporation

of its members.

2) The most common type of dividend. b. Stock certificate

3) Evidence of ownership of a corporation. C. 50 years

4) The length of the term of a corporation should not exceed. C. Auditors

5) An artificial being created by operation of law that is separate d. Cooperative

and distinct from its owners.

6) Easiest form of business to establish. e. Financial accounting

 7) An accounting principle closely related to accrual accounting f. Management accounting
which states that expenses should be recorded in the same
period as the related revenues.

8) Accounting Equation. g. Inventory

9) It is a system that identifies, records, and communicate h. Wholesaler

relevant economic events to interested user

10) Father of modern accounting. i. Cash Dividend

11) A branch of accounting that deals with the recording of j. Single proprietorship
financial transaction of the business

12) Is a branch of accounting which focuses on the k. Matching principles

preparation of financial reports used by managers in
their day-to-day decision-making.

13) Accountants that performs the auditing procedures. l. Luca Pacioli

14) A merchandising company that sells goods to retailers. m. Accounting

15) Purchased goods held for resale. n. Asset = Liabilities + Equity

Test III. Enumeration. 20 pts

Direction: List down or enumerate what are asked for each of the following.

1. Enumerate the eight branches of accounting. (1 – 8)

2. Enumerate the forms of business organization. (9 – 12)
3. List down the three kinds of business according to their activities. (13 – 15)
4. Enumerate the five nature of accounting. (16 – 20)

“IT IS YOUR ATTITUDE AT THE BEGINNING OF A TASK THAT DETERMINES

SUCCESS OR FAILURE” – CORRINE DEWLOW

Good Luck!!!

Prepared by:

ARD
SHS Teacher