SIBONGA NATIONAL HIGH SCHOOL

Poblacion, Sibonga, Cebu

3rd Quarterly Examination in Grade 12 Business Finance

Name: _________________________________________ Section: _________________ Score: __________

Directions: Read each item carefully and write the letter of your choice before the number.
1. In which type of market do new securities are traded?
A. Capital market B. Money market C. Primary market D. Secondary market
2. In which type of market do used securities are traded?
A. Capital market B. Money market C. Primary market D. Secondary market
3. The primary goal of the financial manager is __________________.
A. Maximizing profit B. Maximizing wealth C. Minimizing return D. Minimizing risk
4. The major securities traded in the capital markets are ___________.
A. Bonds and commercial paper C. Stocks and bonds
B. Commercial paper and treasury bills D. Treasury bills and certificates of deposits
5. The ultimate goal of financial management is ______________.
A. Profit maximization C. Survival of company
B. Proper utilization of finance D. Wealth maximization
6. This concept of financial management is to improve the value or wealth of the shareholders.
A. Profit maximization C. Survival of company
B. Proper utilization of finance D. Wealth maximization
7. These are intermediaries that channel the savings of individuals, business and governments into loans and
investments.
A. Financial managers C. Financial institutions
B. Financial markets D. Financial instruments
8. It is a type of financial institution which uses the deposited funds to provide commercial loans to firms and
personal loans to individuals and purchase debt securities issued by firms or government agencies.
A. Commercial banks B. Insurance companies C. Mutual funds D. Pension funds
9. These financial institutions are owned by investment companies which enable small investors to enjoy
benefits in a diversified portfolio of securities purchased on their behalf by professional investment
managers.
A. Commercial banks B. Insurance companies C. Mutual funds D. Pension funds
10. It is set up so that employees of corporations or governments can receive income after retirement.
A. Credit union B. Life insurance company C. Pension fund D. Saving bank
11. These are organized forums in which the suppliers and users of various types of funds can make
transactions directly.
A. Financial managers C. Financial institutions
B. Financial markets D. Financial instruments
12. These are real or virtual documents representing a legal agreement involving some sort-of monetary value.
A. Financial managers C. Financial institutions
B. Financial markets D. Financial instruments
13. The ____________ is created by a financial relationship between suppliers and users of short-term funds.
A. Capital market B. Financial market C. Money market D. Stock market
14. Financial managers evaluating decision alternatives or potential actions must consider
A. both risk and return C. risk only
B. return only D. risk, return and the impact on share price.
15. Which of the following is not a financial institution?
A. A commercial bank B. A newspaper publisher C. An insurance company D. A pension fund
16. Which of the following is not a service provided by financial institutions?
A. Buying the businesses of customers
B. Investing customers’ savings in stocks and bonds
C. Lending money to customers
D. Paying saver’s interest on deposited funds
17. By definition, the money market involves the buying and selling of _____________.
A. Flows of funds
B. Funds that mature in more than one year
C. Short-term funds
D. Stocks and bonds
18. Which of the following statement shows assets, liabilities, and owners’ equity as of a specific date?
A. Balance sheet C. Income Statement
B. Cash flow statement D. Statement of change in Stockholders’ Equity
19. The accounting definition of income is
A. Income = current assets – current liabilities C. Income = revenues – current liabilities
B. Income = fixed assets – current assets D. Income = revenues – expenses
20. The difference between current assets and current liabilities is known as
A. Current ratio B. Quick ratio C. Short-term ratio D. Working capital
21. It is the systematic and comprehensive recording of financial transactions pertaining to a business.
A. Accounting B. Bookkeeping C. Financing D. Recording
22. What is the last step in the accounting process?
A. Prepare a closing entry C. Prepare an adjusting trial balance.
B. Prepare a post-closing trail balance D. Prepare the financial statement.
23. It shows the revenues earned and the expenses incurred by a company?
A. Balance sheet C. Income Statement
B. Cash flow statement D. Statement of change in Stockholders’ Equity
24. It shows how changes in balance sheet accounts and income affect cash and cash equivalents.
A. Balance sheet C. Income Statement
B. Cash flow statement D. Statement of change in Stockholders’ Equity
25. It shows the changes occurred in the owners’ equity.
A. Balance sheet C. Income Statement
B. Cash flow statement D. Statement of change in Stockholders’ Equity
26. This is a method of financial statement analysis in which each line is listed as a percentage of a base figure
with the statement.
A. Horizontal analysis B. Ratio analysis C. Trend analysis D. Vertical analysis
27. This is a technique that allows us to see the trend for the different accounts in the financial statements.
A. Financial analysis B. Horizontal analysis C. Ratio analysis D. Vertical analysis
28. It is the comparison of the line items in the financial statements of a business.
A. Horizontal analysis B. Ratio analysis C. Trend analysis D. Vertical analysis
29. Changes from the horizontal analysis can be expressed in percentages computed by using the following
formula
A. Percentage change = peso change/balance of current year
B. Percentage change = peso change/balance of prior year
C. Percentage change = balance of current year/peso change
D. Percentage change = balance of prior year/peso change
30. If current assets are ₱90,000 and total assets are ₱270,000, what percentage of total assets are current
assets?
A. 25% B.30% C. 35% D. 45%
31. A company has total assets of ₱120,000, current assets of ₱80,000, total liabilities of ₱50,000, and current
liabilities of ₱25,000. What is the current ratio?
A. 1.60 B. 2.40 C. 3.20 D. 4.80
32. Liquidity ratios can be used
A. To measure borrowing capacity
B. To measure the degree of protection of long-term suppliers of funds
C. To measure the earning ability of a firm
D. To measure the firm’s ability to meet its current obligations
33. What is the first step in financial planning process?
A. Determine contingency plans C. Identify resources
B. Identify goal-oriented tasks D. Set goals or objectives
34. What is the last step in financial planning process?
A. Determine contingency plan
B. Establish responsibility centers for accountability and timeline
C. Establish the evaluation system for monitoring and controlling
D. Set goals or objectives
35. It provides road maps for guiding, coordinating, and controlling the firm’s actions to achieve its objectives.
A. Planning B. Directing C. Leading D. Organizing
36. This kind of planning focused on how to efficiently and effectively utilize the resources to achieve the
company’s short-term and long-term objects set during the strategic planning.
A. Corporate planning B. Investment planning C. Operational planning D. Strategic planning
37. The following are internal factors influencing the sales EXCEPT
A. Inflation C. Management style of managers
b. Financial resources of the company D. Production capacity
38. Production budget is computed as follows
A. Required production in units = Expected Sales + Beginning Inventories - Target Ending Inventories
B. Required production in units = Expected Sales - Beginning Inventories + Target Ending Inventories
C. Required production in units = Expected Sales + Target Ending Inventories - Beginning Inventories
D. Required production in units = Expected Sales - Target Ending Inventories + Beginning Inventories
39. The following are operations budget EXCEPT
A. Interest payments B. Inventories C. Professional fee D. Rent payments
40. It is a tool of the company to set an overall goal of what the company’s performance and position will be for
and as of the end of the year.
A. Projected financial statement C. Projected statement of cash flows
B. Projected income statement D. Projected statement of financial position
41. The three basic types of inventory are all of the following EXCEPT
A. Capital goods B. Finished goods C. Raw materials D. Work-in-process
42. It is the most important account in the balance sheet that will affect the liquidity and solvency of a company.
A. Cash B. Inventory C. Receivable D. Capital

43-50. The financial statements of ABC Company are given below.

ABC Company ABC Company
Income Statement (2013) Comparative Balance Sheet
Sales ₱2,500,000 2012 2013
Cost of goods sold 1,260,000 Cash ₱50,000 ₱60,000
Gross profit 1,240,000 Accounts receivable 450,000 500,000
Selling and administrative expenses 700,000 Inventory 270,000 300,000

Operating profit 540,000 Total current assets 770,000 860,000

Interest expenses 160,000 Fixed assets 2,120,000 2,180,000

Income before tax 380,000 Total assets ₱2,890,000 ₱3,040,000

Tax expense 152,000

Accounts payable 170,000 200,000
Net income ₱228,000
Bank loan 440,000 460,000
Total current liabilities 610,000 660,000
Bonds payable 860,000 860,000
Total liabilities 1,470,000 1,520,000
Common stock 120,000 120,000
Retained earnings 1,300,000 1,400,000
Total liabilities and equity ₱2,890,000 ₱3,040,000

43. What is the current ratio of the company for the year 2012?
A. 1.26 B. 1.37 C. 1.44 D. 1.44
44. Computer the stockholders’ ratio for the year 2012.
A. 0.21 B. 0.27 C. 0.49 D. 0.51
45. What is the current ratio of the company for the year 2013?
A. 1.03 B. 1.30 C. 1.65 D. 1.82
46. Compute the stockholders’ ratio for the year 2013.
A. 0.50 B. 0.51 C. 0.52 D. 0.53
47. The company’s quick ratio for 2012 is
A. 0.34 B. 0.35 C. 0.52 D. 0.82
48. The company’s quick ratio for 2013 is
A. 0.18 B. 0.37 C. 0.65 D. 0.85
49. Compute the gross profit ratio of the company.
A. 50:1 B. 51:1 C. 52:1 D. 53:1
50. Compute the net profit ratio of the company.
A. 0.061 B. 0.071 C. 0.081 D. 0.091