MINDANAO MISSION ACADEMY Fundamentals of Accountancy, Business and Management

Accountancy, Business and Management

Midterm Examination
August 2-3, 2018

NAME: ______________________________________ Score: _________________

'Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. And the peace of God, which
transcends all understanding, will guard your hearts and your minds in Christ Jesus.' Philippians 4:6-7

I. Multiple Choice: Select and encircle the best answer.

1. Refers to the company’s right to collect or claim payment.

a. Payable c. Prepaid
b. Receivables d. Revenue

2. Future expenses that the company had paid for in advance.

a. Payables c. Prepaid
b. Receivables d. Revenue

3. Obligation to make payments to creditors.

a. Payable c. Prepaid
b. Receivables d. Revenue

4. Unpaid expenses of the company as of the cut-off date of the statement of

financial position but already incurred.
a. Accrued Revenue c. Prepaid Expense
b. Accrued Expense d. Unearned Income

5. Measures the ability of the company to utilize its assets

a. Profitability c. Solvency
b. Operational efficiency d. Liquidity

6. Statement I: Solvency refers to the company’s capacity to pay their long-term

liabilities
Statement II: Liquidity ratio intends to measure the company’s ability to pay debts
that are coming due.
a. Both statement are correct c. Both statements are wrong
b. Only statement II is correct d. Only statement I is correct

7. A format of Statement of financial position where the assets are reported on the
left and the list of liabilities and equity are on the right.
a. Normal balance form c. Account form
b. Report Form d. Liquidity form

8. A format of Statement of financial position where all the assets are listed first,
followed by liabilities and finally the equity account.
a. Normal balance form c. Account form
b. Report Form d. Liquidity form

9. Statement I: Vertical analysis compares the balances of one account over different
periods.
Statement II: Horizontal analysis can be performed with the statement of financial
position and the Statement of comprehensive income.
a. Both statement are correct c. Both statements are wrong
b. Only statement II is correct d. Only statement I is correct

10. Statement I: Horizontal analysis is the financial analysis technique that

compares the balances of two accounts in one reporting period.
Statement II: Profitability ratios measure the ability of the company’s assets to
generate sale
a. Both statement are correct c. Both statements are wrong
b. Only statement II is correct d. Only statement I is correct
 Winter Convenience store is managed by Dana Reyes. Dana asked you to determine
the balance of her cash as of December 31, 2011. You determine the following:
 She kept cash in the store. The cash count revealed 3 pieces of 100 peso
bills, 5 pieces 50 peso bill and 30 pieces of 10 peso coin.
 Two of her customer gave Dana the following checks in payment of debts:
a. P1,300 check dated December 30, 2011
b. P2,000 check dated December 31, 2012
 There are two bank accounts in the name of the store with the following
balances:
a. Balance of the savings account on December 31, 2011 according to
passbook is 12,000.
b. A time deposit certificate for 14,000 is restricted until December
31, 2012
Use the information above for numbers 11 to 13
11. What is the cash on hand on December 31, 2011?

a. 850 c. 4,150
b. 2,150 d. 14,150

12. What is the cash in bank on December 31, 2011?

a. 12,000 c. 13,300
b. 26,000 d. 14,150

13. What is the total cash and cash equivalent on December 31, 2011?

a. 12,000 c. 13,300
b. 26,000 d. 14,150

On September 30, 2018 Anna Santos acquired a Machinery to use in her soap factory.
The machinery was purchased at a cost of 575,840 with a residual value of 75,840.
Anna depreciates the machine over ten years.

Use the information above for numbers 14 to 16

14. What is the annual depreciation of the machinery?
a.

b. 57,584 d. 12,500
c. 50,000 e. 14,396

15. What is the accumulated depreciation on December 31, 2019?

a. 50,000 c. 66,666
b. 71,980 d. 62,500

16. What is the net book value of the machinery on December 31, 2019?

a. 509,174 c. 513,340
b. 437,500 d. 503,860

Ivy Grace, a neighbor of Benjie Reyes, operates a Banana Cue business. On October
31, 2018, Ivy Grace entered in a contract with Benjie to rent a small space of his
lot. Ivy paid 7,000 in advance for a period of 2 years rent.

Use the information above for numbers 17 to 20.

17. How much is the remaining prepaid rent expense of Ivy Grace at the end of December
31, 2018?
a.

b. 7,000.00 d. 6,416.67
c. 6,125.00 e. None of the above

18. How much is the Rent expense to be recorded in December 31, 2018?

a. 583.33 c. 584
b. 875.00 d. 0
 19. How much is the Unearned Rent Income to be reported by Benjie on December 31,
a. 7,000.00
2018? c. 6,416.67
b. 6,125.00 d. None of the above

20. How much is the Earned rent income to be reported by Benjie on December 31, 2018?

a. 583.33 c. 584
b. 875.00 d. 0

II. PROBLEM SOLVING: Below are the financial statements of Universal Robina Corporation.

Universal Robina Corporation

Statement of Comprehensive Income
2008 2007
Net sales 5,385,860 4,921,850
Cost of goods sold 1,374,790 1,254,860
Gross Profit 4,011,070 3,666,990
Selling and administrative Expense 3,406,460 3,127,150
Operating income 604,610 539,840
Interest expense 11,820 23,040
Net Income 592,790 516,800

Universal Robina Corporation

Statement of Financial Position

2008 2007
Cash and cash equivalents 470,310 519,860
Accounts Receivable 660,110 565,170
Inventories 653,060 555,480
Prepaid Expenses 173,740 228,810
Total Current Assets 1,957,220 1,869,320
Property, Plant, Equipment 5,910,530 5,501,660
Intangible Assets 745,200 721,910
Total Assets 8,612,950 8,092,890

Current Liabilities 1,273,050 1,123,700

Long-term Liabilities 577,580 541,540
Total Liabilities 1,850,630 1,665,240
Owner’s Equity 6,762,320 6,427,650
Total Liabilities and Equity 8,612,950 8,092,890

REQUIRED: Determine the following profitability, Operational Efficiency,

Liquidity and solvency ratios. (Answer directly)
 Answers will be rounded off to the nearest hundredths.
Example: 1.346612 = 1.35
0.684352 = 0.68

1. Gross Profit Rate 6. Inventory Turnover 11. Interest Coverage

ratio

2. Asset Turnover 7. Days in Inventory 12. Accounts Receivable

turnover

3. Return on Assets 8. Quick Ratio 13. Days in Receivable

4. Return on Equity 9. Debt Ratio 14. Operating income
Margin

5. Net Profit Margin 10. Current Ratio 15.Fixed Asset turnover