Pre and Post of Accounting 2

Republic of the Philippines
Department of Education
Region IV – A CALABARZON
Paaralang Sekundarya ng Heneral Nakar
Brgy. Anoling General Nakar, Quezon
FINAL Exam in FOUNDAMENTAL OF ACCOUNTACY AND BUSINESS MANAGEMENT
Name: _______________________________________________________________Score: ___________________

Section: _________________ Date: ___________________
Multiple Choice : Direction: Answer the following questions
_______ 1. It also known as the balance sheet. This statement includes the amounts of the company’s total assets,
liabilities, and owner’s equity which in totality provides the condition of the company on a specific date.
a. Statement of financial position c. statement of comprehensive income
b. c. cash flow d. statement of changes of equity
_______ 2. these accounts are permanent in a sense that their balances remain intact from one accounting period to
another.
a. Permanent accounts b. work sheet c. report form d. account form
_______ 3. Examples of this accounts are : Cash, Accounts Receivable, Accounts Payable, Loans Payable and Capital
among others.
_______ 4. Basically, assets, liabilities and equity accounts are belongs to___________.
_______ 5. those accounts that are presented under the assets portion of the SFP but are reductions to the company’s
assets.
a. Contra assets b. current assets c. non current assets d. liabilities
_______ 6. A form of the SFP that shows asset accounts first and then liabilities and owner’s equity accounts after.
_______ 7. A form of the SFP that shows assets on the left side and liabilities and owner’s equity on the right side just like
the debit and credit balances of an account.
_______ 8. An Assets that can be realized (collected, sold, used up) one year after year-end date. Examples include Cash,
Accounts Receivable, Merchandise Inventory, Prepaid Expense, etc. Current
_______ 9. Its fall due (paid, recognized as revenue) within one year after yearend date. Examples include Notes Payable,
Accounts Payable, Accrued Expenses (example: Utilities Payable), Unearned Income, etc.
_______ 10. Assets that cannot be realized (collected, sold, used up) one year after yearend date. Examples include
Property, Plant and Equipment (equipment, furniture, building, land), Long Term investments, Intangible Assets etc.
_______ 11. A Liabilities that do not fall due (paid, recognized as revenue) within one year after year-end date. Examples
include Loans Payable, Mortgage Payable, etc.
a. Contra assets b. non current liabilities c. non current assets d. liabilities
_______ 12. It is Also known as the income statement.
a. Statement of financial position b. statement of comprehensive income
c. cash flow d. statement of changes of equity
_______ 13. Contains the results of the company’s operations for a specific period of time which is called net income
_______ 14. Also known as nominal accounts are the accounts found under the SCI.
a. Permanent account b. temporary accounts c. assets d. liabilities
_______ 15. This is the total amount of revenue that the company was able to generate from providing services to
customers
a. revenue b. expenses c. sales d. income
_______ 16. .Revenues less Expenses. Is equal to _______
_______ 17. It called ______ for a positive result and net loss for a negative result
_______ 18. This is the total amount of revenue that the company was able to generate from selling products
_______ 19. Sales less Sales returns and Sales discount is equal to ________ .
a. revenue b. expenses c. net sales d. income
_______ 20. This account represents the actual cost of merchandise that the company was able to sell during the year.
(Haddock, Price, & Farina, 2012)
a. cost of goods sold b. beginning inventory c. net purchase d. purchase discount
_______ 21. This is the amount of inventory at the beginning of the accounting period. This is also the amount of ending
inventory from the previous period. iv.ii.Net Cost of Purchases = Purchases + Freight In
_______ 22. Purchases – (Purchase discount and purchase returns) is equal to ________
_______ 23. amount of goods bought during the current accounting period.
_______ 24. Account used to record early payments by the company to the suppliers of merchandise. (Haddock, Price, &
Farina, 2012) This is how buyers see a sales discount given to them by a supplier.
_______ 25. This account is used to record transportation costs of merchandise purchased by the company. (Haddock,
Price, & Farina, 2012) Called freight in because this is recorded when goods are transported into the company.
a. freight in b. beginning inventory c. net purchase d. purchase discount
_______ 26. These expenses are those that are directly related to the main purpose of a merchandising business: the
sale and delivery of merchandise. This does not include cost of goods sold and contra revenue accounts. (Haddock, Price,
& Farina, 2012)
a. cost of goods sold b. selling expenses c. net purchase d. purchase discount
_______ 24. All changes, whether increases or decreases to the owner’s interest on the company during the period are
reported here.
_______ 25. An entity whose assets, liabilities, income and expenses are centered or owned by only one person (Haddock,
Price, & Farina, 2012).
a. Sole proprietorship b. partnership c. corporation d. cooperative
_______ 26. An entity whose assets, liabilities, income and expenses are centered or owned by two or more persons
(Haddock, Price, & Farina, 2012).
_______ 27. An entity whose assets, liabilities, income and expenses are centered or owned by itself being a legally
separate entity from its owners. Owners are called shareholders or stockholders of the company(Haddock, Price, & Farina,
2012).
_______ 28. Part of Statement of Changes equity which is the very first investment of the owner to the company.
a. Initial investment b. additional investment c. withdrawals d. deposits
_______ 29. Part of Statement of Changes equity which is Increases to owner’s equity by adding investments by the
owner(Haddock, Price, & Farina, 2012).
_______ 30. Part of Statement of Changes equity which is Decreases to owner’s equity by withdrawing assets by the
owner
_______ 31. The Statement of Changes in Partners’ Equity is used by a partnerships instead of the Statement of Changes
in Owner’s Equity.
b. c. cash flow d. statement of changes of equity
_______ 32. Provides an analysis of inflows and/or outflows of cash from/to operating, investing and financing activities
(Deloitte Global Services Limited, 2015). This statement shows cash transactions only compared to the SCI which follows
the accrual principle.
_______ 33. Its provides the net change in the cash balance of a company for a period. This helps owners see if their
revenues are actually translated to cash collections or if they have enough cash inflows in order to pay any maturing
liabilities.
_______ 34. The operating cash flow section of the CFS under the direct method would show each major class of gross
cash receipts and gross cash payments (Deloitte Global Services Limited, 2015).
a. Direct b. indirect c. cash flow d. equity
_______ 36. The operating cash flow section of the CFS under the indirect method will reconcile the net income/loss of
the company with the total cash flows generated/used in operating activities by adjusting the net income/loss for effects of
non-cash transactions (Deloitte Global Services Limited, 2015).
A. Direct b. indirect c. cash flow d. equity
_______ 37. A part of cash flow which the activities that are directly related to the main revenue-producing activities of
the company such as cash from customers and cash paid to suppliers/employees (Deloitte Global Services Limited, 2015).
a. Operating expenses b. investing activities c. financing activities d. cash flow
_______ 38. A part of cash flow which Cash transactions related to purchase or sale of non-current assets (Deloitte
Global Services Limited, 2015).
_______ 39. A part of cash flow which Cash transactions related to changes in equity and borrowings.
_______ 40. A part of cash flow which The net amount of change in cash whether it is an increase or decrease for the
current period. The total change brought by operating, investing and financing activities.
a. Operating expenses b. investing activities c. financing activities d. net cash flow
_______ 41. The balance of the cash account at the beginning of the accounting period. Ending Cash Balance – The
balance of the cash account at the end of the accounting period computed using the beginning balance plus the net change
in cash for the current period.
a. Beginning cash balance b. investing activities
c. financing activities d. cash flow
_______ 42. A part of operating expense which Non-cash expenses are added back while non-cash revenues are
deducted. Gain/loss on sale of non-current assets are deducted/added back because the cash transaction is recorded
under investing activities. c.
a. non cash expenses b. account recievables c. account payable d. unearned income
_______ 43. A part of operating expense which increases revenue which increases net income but is not a cash
transaction Prepaid Expense – decreases cash but does not change the net income
_______ 44. A part of operating expense which increases cash but does not change the net income
_______ 45. A part of operating expense which increases expenses which decreases net income but is not a cash
transaction Increase in current liabilities – added to net income
_______ 46. A part of operating expense which increases expenses which decreases net income but is not a cash
transaction Unearned Income – increases cash but does not change the net income Decrease in current liabilities –
deducted to net income
_______ 48. A part of operating expense which decreases cash but does not change the net income
_______ 49. A part of operating expense which increases revenue which increases net income but is not a cash transaction
_______ 50. It is an analysis which is the process of evaluating risks, performance, financial health, and future prospects
of a business by subjecting financial statement data to computational
a.Vertical analysis b. horizontal analysis c. cash flow d. financial analysis
_______ 51. analytical techniques with the objective of making economic decisions (White et.al 1998).
a. Vertical analysis b. horizontal analysis c. cash flow d. financial analysis
_______ 52. It also called trend analysis, is a technique for evaluating a series of financial statement data over a period
of time with the purpose of determining the increase or decrease that has taken place (Weygandtet.al 2013).
a.Vertical analysis b. horizontal analysis c. cash flow d. financial analysis
_______ 53. This will reveal the behavior of the account over time. Is it increasing, decreasing or not moving? What is
the magnitude of the change? Also, what is the relative change in the balances of the account over time?
_______ 54. An analysis uses financial statements of two or more periods. –
_______ 55. The following formula used for what for what ? Peso change=Balance of Current Year-Balance of Prior
Year
Percentage change= (Balance of Current Year-Balance of Prior Year)/(Balance of Prior Year)
_______ 56. An analysis which , also called common-size analysis, is a technique that expresses each financial statement
item as a percentage of a base amount For the SFP, the base amount is Total Assets.
_______ 57. It is a chronological record (day-by-day) of business transactions. It is called the book of original because it
is the accounting record in which financial transactions are first recorded.
a. Journal b. ledger c. original entry d. book of final entry
_______ 58.it is called as the book of final entry.
_______ 59. It is refers to the accounting book in which the accounts and their related amounts as recorded in the journal
are posted to periodically.
a. Journal b. ledger c. originsl entry d. book of final entry
_______ 60. It is also called the “book of final entry” because all the balances in the ledger are used in the preparation of
financial statements. This is also referred to as the T-Account because the basic form of a ledger is like the letter “T”.
_______ 61. The simplest type of journal is called the ________ .
a. General journal b. special journal c. original entry d. journalizing
_______ 62.The process of recording a transaction is called journalizing the transactions.
_______ 63.This type of journal is unique among journals because it may be used to record any type of business
transactions.
_______ 64. It is designed to record a particular type of transaction efficiently and quickly.
_______ 65. It is an examples of special journals which is used to record all cash that had been received.
a. cash receipt b. cash disbursements journals c. sales journal d. purchase journal
_______ 66. It is an examples of special journals which is used to record all transactions involving cash payments.
_______ 67. It is an examples of special journals which is used to record all sales on credit (on account)
_______ 68. It is an examples of special journals which is used to record all purchases of inventory on credit (or on account)
_______ 69. It is a means of accumulating in one place all the information about changes in an asset, liability, equity,
income, and expense accounts.
_______ 70. An account which are intended to provide an incentive for the depositor to save money.
a. book of accounts b. savings account c. checking accounts d. current accounts
_______ 71. An account which The depositor can make deposits and withdrawals using the form provided by the bank.
• Banks usually pay an interest rate that is higher than a checking account or a current account.
_______ 72. An account which accounts have a passbook, in which transactions are logged in a small booklet that
the depositor keep
_______ 73. An account which charge a fee if the balance falls below a specified minimum
_______ 74.Another type of this account is popularly used nowadays is an ATM (Automated Teller Machine) account
wherein withdrawals can be made through designated machines. This is a 24 hour teller machine and the funds can be
withdrawn anytime.
_______ 75. Money held under a checking account can be withdrawn through issuance of a check
b. book of accounts b. savings account c. checking accounts d. current accounts
_______ 76 A written orders to the bank. These slips are used to take out money or to put in money to the depositors
account.
a. Deposit slip b. withdrawal slip c. book of account d. check
_______ 77. The advantage of this account is that even if the banks are closed, you can withdraw your funds.
a. Checking account b. ATM account c. book of account d. saving account
_______ 78. Use to the processes involve prior to sending a confirmed order to the seller. This may include getting
quotations from various suppliers and securing budgetary approval to ensure there is funding for the purchase.
a. purchase form b. check voucher c. purchase order d. delivery receipts
_______ 79. used to document the disbursement process. Used to document the following reconciliation process: orders
are authorized, deliveries are from valid orders, and purchase invoices represent actual deliveries and agreed upon price.
_______ 80. a form prepared by the buyer and sent to the seller to document the order and agreed upon terms of the
purchase.
_______ 81. a form prepared by the seller, with a copy given to the buyer, to document the delivery of the items ordered.
_______ 82. –It contains information on the prices of the items delivered and the terms of the purchase. This should be
consistent with the information on the purchase order.
a. purchase invoice b. check voucher c. purchase order d. delivery receipts
_______ 83. The _______ and sales invoice are the same form. It is referred to as purchase invoice by the buyer because
it documents its purchase transaction.
a. purchase form b. check voucher c. purchase invoice d. delivery receipts
_______ 84. A document used for cash transaction. The entity receiving the cash will prepare the Official Receipts (OR).
The entity paying will receive the OR as evidence of payment made.
a. purchase form b. official receipts c. purchase order d. delivery receipts
________ 85. The meaning of Or in business form is _________
a. Order receive b. order rate c. official receipts d. official rate
Parent’s signature: _________________________________________ Date of receive: ________________
“KNOWLEDGE knows what to say. WISDOM knows when to say it.”

Prepared by: NANCY T. ATENTAR
Answers key
_______ 1. It also known as the balance sheet. This statement includes the amounts of the company’s total assets,
liabilities, and owner’s equity which in totality provides the condition of the company on a specific date. (Haddock, Price, &
Farina, 2012)
a. Statement of financial position b. statement of comprehensive income c. cash flow

d. statement of changes of equity
PERMANENT ACCOUNTS – As the name suggests, these accounts are permanent in a sense that their balances remain
intact from one accounting period to another.
A. Permanent accounts b. work sheet c. report form d. account form
Examples of permanent account Cash, Accounts Receivable, Accounts Payable, Loans Payable and Capital among others.
b. Permanent accounts b. work sheet c. report form d. account form
Basically, assets, liabilities and equity accounts are permanent accounts.
CONTRA ASSETS – Contra assets are those accounts that are presented under the assets portion of the SFP but are
reductions to the company’s assets.
Report Form – A form of the SFP that shows asset accounts first and then liabilities and owner’s equity accounts after.
(Haddock, Price, & Farina, 2012)The balance sheet shown earlier is in report form.
Account Form – A form of the SFP that shows assets on the left side and liabilities and owner’s equity on the right side just
like the debit and credit balances of an account.
Current Assets – Assets that can be realized (collected, sold, used up) one year after year-end date. Examples include
Cash, Accounts Receivable, Merchandise Inventory, Prepaid Expense, etc. Current
Liabilities – Liabilities that fall due (paid, recognized as revenue) within one year after yearend date. Examples include
Notes Payable, Accounts Payable, Accrued Expenses (example: Utilities Payable), Unearned Income, etc.
Noncurrent Assets – Assets that cannot be realized (collected, sold, used up) one year after yearend date. Examples
include Property, Plant and Equipment (equipment, furniture, building, land), Long Term investments,Intangible Assets etc.
Noncurrent Liabilities – Liabilities that do not fall due (paid, recognized as revenue) within one year after year-end date.
Examples include Loans Payable, Mortgage Payable, etc.
STATEMENT OF COMPREHENSIVE INCOME – Also known as the income statement. Contains the results of the
company’s operations for a specific period of time which is called net income
TEMPORARY ACCOUNTS – Also known as nominal accounts are the accounts found under the SCI.
Elements or Components of SCI
1. Heading i. Name of the Company ii. Name of the Statement iii. Date of preparation (emphasis on the wording – “for the”)
2. revenues -This is the total amount of revenue that the company was able to generate from providing services to
customers
3. expenses (can be broken down into General and Administrative and Selling Expenses) Please see the discussion in
multi-step for general and administrative and selling expenses.
4.Revenues less Expenses. Net income for a positive result and net loss for a negative result
1.Sales This is the total amount of revenue that the company was able to generate from selling products
2. Contra revenue – called contra because it is on the opposite side of the sales account. The sales account is on the credit
side while the reductions to sales accounts are on the debit side. This is “contrary” to the normal balance of the sales or
revenue accounts. (Haddock, Price, & Farina, 2012)
ii.i. Sales returns – This account is debited in order to record returns of customers or allowances for such returns.(Haddock,
Price, & Farina, 2012) Sales returns occur when customers return their products for reasons such as but not limited to
defects or change of preference.
ii.ii.Sales discount – This is where discounts given to customers who pay early are recorded. (Haddock, Price, & Farina,
2012) Also known as cash discount. This is different from trade discounts which are given when customers buy in bulk.
Sales discount is awarded to customers who pay earlier or before the deadline.
iii. Sales less Sales returns and Sales discount is Net Sales
3.Cost of Goods Sold – This account represents the actual cost of merchandise that the company was able to sell during
the year. (Haddock, Price, & Farina, 2012)
iv.i.Beginning inventory – This is the amount of inventory at the beginning of the accounting period. This is also the amount
of ending inventory from the previous period. iv.ii.Net Cost of Purchases = Purchases + Freight In
iv.ii.i.Net Purchases = Purchases – (Purchase discount and purchase returns) iv.ii.i.i.Purchases – amount of goods bought
during the current accounting period.
iv.ii.i.ii.Contra Purchases –An account that is credited being “contrary” to the normal balance of Purchases account.
iv.ii.i.ii.i.Purchase discount – Account used to record early payments by the company to the suppliers of merchandise.
(Haddock, Price, & Farina, 2012) This is how buyers see a sales discount given to them by a supplier.
iv.ii.i.ii.ii.Purchase returns – Account used to record merchandise returned by the company to their suppliers. (Haddock,
Price, & Farina,2012) This is how buyers see a sales return recorded by their supplier
iv.ii.ii.Freight In – This account is used to record transportation costs of merchandise purchased by the company. (Haddock,
Price, & Farina, 2012) Called freight in because this is recorded when goods are transported into the company.
5. Selling Expenses – These expenses are those that are directly related to the main purpose of a merchandising business:
the sale and delivery of merchandise. This does not include cost of goods sold and contra revenue accounts. (Haddock,
Price, & Farina, 2012)
STATEMENT OF CHANGES IN EQUITY – All changes, whether increases or decreases to the owner’s interest on the
company during the period are reported here.
b. SINGLE/SOLE PROPRIETORSHIP –An entity whose assets, liabilities, income and expenses are centered or
owned by only one person (Haddock, Price, & Farina, 2012).
c. PARTNERSHIP – An entity whose assets, liabilities, income and expenses are centered or owned by two or
more persons (Haddock, Price, & Farina, 2012).
d. CORPORATION – An entity whose assets, liabilities, income and expenses are centered or owned by itself
being a legally separate entity from its owners. Owners are called shareholders or stockholders of the
company(Haddock, Price, & Farina, 2012).
Initial Investment – The very first investment of the owner to the company.
Additional Investment – Increases to owner’s equity by adding investments by the owner(Haddock, Price, & Farina, 2012).
Withdrawals –Decreases to owner’s equity by withdrawing assets by the owner
The Statement of Changes in Partners’ Equity is used by a partnerships instead of the Statement of Changes in Owner’s
Equity.
b. Statement of financial position b. statement of comprehensive income c. cash flow
d. statement of changes of equity
The Statement of Changes in Shareholders’ Equity is used by a corporation instead of the Statement of Changes in Owner’s
Equity.
LESSON 4 CASH FLOW STATEMENT
CASH FLOW STATEMENT – Provides an analysis of inflows and/or outflows of cash from/to operating, investing and
financing activities (Deloitte Global Services Limited, 2015). This statement shows cash transactions only compared to
the SCI which follows the accrual principle.
Importance: The CFS provides the net change in the cash balance of a company for a period. This helps owners see if
their revenues are actually translated to cash collections or if they have enough cash inflows in order to pay any maturing
liabilities.
Receipts from customers - derived from the following formula:
Ending Accounts Receivable = Beginning Accounts Receivable + Net Sales – Collections
Ending Accounts Payable and Ending Accrued Salaries Expense = Beginning Accounts Payable + Beginning Accrued
Salaries Expense + Net Purchases + Salaries Expense - Payments
B. Direct – The operating cash flow section of the CFS under the direct method would show each major
class of gross cash receipts and gross cash payments (Deloitte Global Services Limited, 2015).
C. Indirect – The operating cash flow section of the CFS under the indirect method will reconcile the net
income/loss of the company with the total cash flows generated/used in operating activities by
adjusting the net income/loss for effects of non-cash transactions (Deloitte Global Services Limited,
2015).
Parts of the Cash Flow Statement ( Indirect Method )
Operating Activities – Activities that are directly related to the main revenue-producing activities of the company such as
cash from customers and cash paid to suppliers/employees (Deloitte Global Services Limited, 2015).
Investing Activities – Cash transactions related to purchase or sale of non-current assets (Deloitte Global Services Limited,
2015).
Financing Activities – Cash transactions related to changes in equity and borrowings.
Net change in cash or net cash ﬂow (increase/decrease) – The net amount of change in cash whether it is an increase
or decrease for the current period. The total change brought by operating, investing and financing activities.
Beginning Cash Balance – The balance of the cash account at the beginning of the accounting period. Ending Cash
Balance – The balance of the cash account at the end of the accounting period computed using the beginning balance plus
the net change in cash for the current period.
1. operating activities
i.i.Non-cash expenses are added back while non-cash revenues are deducted. Gain/loss on sale of non-current
assets are deducted/added back because the cash transaction is recorded under investing activities. c.
i.ii.Changes in current assets and current liabilities are either added or deducted depending on whether they
increased or decreased during the year.
Increase in current assets – deducted to net income
Accounts Receivable – increases revenue which increases net income but is not a cash transaction Prepaid
Expense – decreases cash but does not change the net income
Decrease in current assets – added to net income
Accounts Receivable – increases cash but does not change the net income
Prepaid Expense – increases expenses which decreases net income but is not a cash transaction Increase in
current liabilities – added to net income
Accounts Payable – increases expenses which decreases net income but is not a cash transaction Unearned
Income – increases cash but does not change the net income Decrease in current liabilities – deducted to net income
Accounts Payable – decreases cash but does not change the net income
Unearned Income – increases revenue which increases net income but is not a cash transaction
2. investing activities
3. financing activities
LESSON 5 Financial statement (FS) analysis
Financial statement (FS) analysis is the process of evaluating risks, performance, financial health, and future prospects of
a business by subjecting financial statement data to computational and analytical techniques with the objective of making
economic decisions (White et.al 1998).
Horizontal analysis also called trend analysis, is a technique for evaluating a series of financial statement data over
a period of time with the purpose of determining the increase or decrease that has taken place (Weygandtet.al 2013).
This will reveal the behavior of the account over time. Is it increasing, decreasing or not moving? What is the magnitude of
the change? Also, what is the relative change in the balances of the account over time? -
Horizontal analysis uses financial statements of two or more periods. –
 Peso change=Balance of Current Year-Balance of Prior Year
• Percentage change= (Balance of Current Year-Balance of Prior Year)/(Balance of Prior Year)
What is vertical analysis ?
Vertical anaylsis, also called common-size analysis, is a technique that expresses each financial statement item as
a percentage of a base amount (Weygandt et.al. 2013). –
For the SFP, the base amount is Total Assets.

Ratio analysis expresses the relationship among selected items of financial statement data.
The relationship is expressed in terms of a percentage, a rate, or a simple proportion (Weygandtet.al. 2013).
A financial ratio is composed of a numerator and a denominator.
1. what is a journal and why it is called the book of original entry.

The journal is a chronological record (day-by-day) of business transactions. It is called the book of original because
it is the accounting record in which financial transactions are first recorded.
2. what is a general ledger and why it is called as the book of final entry.
The ledger refers to the accounting book in which the accounts and their related amounts as recorded in the journal
are posted to periodically.
The ledger is also called the “book of final entry” because all the balances in the ledger are used in the preparation
of financial statements. This is also referred to as the T-Account because the basic form of a ledger is like the letter
“T”.
the journal is referred to as the book of original entry

Types of journals.
The simplest type of journal is called the general journal.
The process of recording a transaction is called journalizing the transactions. This type of journal is unique among
journals because it may be used to record any type of business transactions.
1. Special journals. Each special journal is designed to record a particular type of transaction efficiently and
quickly.
Examples of special journals
a. Cash Receipts Journal – is used to record all cash that had been received.
b. Cash Disbursements Journal – is used to record all transactions involving cash payments.
c. Sales Journal (Sales on Account Journal) – is used to record all sales on credit (on account)
2. Purchase Journal (Purchase on Account Journal) – is used to record all purchases of inventory on credit (or
on account)
A. The ledger
A ledger is a means of accumulating in one place all the information about changes in an asset, liability, equity,
income, and expense accounts.
The Chart of Accounts
LESSON 6 Basic Documents and Transactions Related to Bank Deposits
Business two types of account:

(1) savings account ,
These are intended to provide an incentive for the depositor to save money.
• The depositor can make deposits and withdrawals using the form provided by the bank.
• Banks usually pay an interest rate that is higher than a checking account or a current account.
• Some savings accounts have a passbook, in which transactions are logged in a small booklet that the
depositor keep
• Some savings accounts charge a fee if the balance falls below a specified minimum
Another type of savings account that is popularly used nowadays is an ATM (Automated Teller Machine)
account wherein withdrawals can be made through designated machines. This is a 24 hour teller machine and the
funds can be withdrawn anytime. The advantage of this account is that even if the banks are closed, you can
withdraw your funds.
(2) checking or current account

Money held under a checking account can be withdrawn through issuance of a check
A withdrawal slip and deposit slip are written orders to the bank. These slips are used to take out money
or to put in money to the depositors account.
1. Internal business forms – forms used only within the business.
- Purchase request – to document the processes involve prior to sending a confirmed order to the seller. This may include
getting quotations from various suppliers and securing budgetary approval to ensure there is funding for the purchase.
- Check vouchers – used to document the disbursement process. Used to document the following reconciliation process:
orders are authorized, deliveries are from valid orders, and purchase invoices represent actual deliveries and agreed upon
price.
- Purchase order – a form prepared by the buyer and sent to the seller to document the order and agreed upon terms of
the purchase.
- Delivery receipts–a form prepared by the seller, with a copy given to the buyer, to document the delivery of the items
ordered.
- Purchase /Sales invoice –It contains information on the prices of the items delivered and the terms of the purchase.
This should be consistent with the information on the purchase order.
The purchase invoice and sales invoice are the same form. It is referred to as purchase invoice by the buyer
because it documents its purchase transaction.
On the other hand, the same form is referred to as sales invoice by the seller to document its sale transaction.
- Official receipts – used to document cash transaction. The entity receiving the cash will prepare the Official Receipts
(OR). The entity paying will receive the OR as evidence of payment made.
FINAL EXAMINATION IN FABM 2
PRACTICE SET No. 1 Given Data :

Instructions :
1. Identify the following and indicate on the spaces provided:

a. Business or bank forms to be used by AngTindahan to document the above transactions.
b. Journal to be used to record the original entry for the respective transactions.
2. Prepare the journal entry (debit-credit format) to record the above transactions. Use only the accounts listed on the chart
of accounts given below.
3. Fill up the relevant forms based on the answer in 1a. . Produce the necessary forms. or use Google search )
4.Based on your answer in 1b, record the transactions in the appropriate journals. Formats are also provided below.
1. Post the journal entries in the appropriate subsidiary ledgers and general ledger accounts.
Use this format
2. Prepare the 4 financial statements from the trial balance. ( SFP / SCI / Cash Flow and Changes Equity ) .
7.Summarize the ledger accounts and list the balances on the trial balance. Use the format below and provide a work
sheet (yellow )
8.Prepare necessary closing entries and record on the general journal and ledger.
9.Perform financial statement analysis on the completed financial statements

Pre and Post of Accounting 2

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Republic of the Philippines

Name: _______________________________________________________________Score: ___________________

Parent’s signature: _________________________________________ Date of receive: ________________

“KNOWLEDGE knows what to say. WISDOM knows when to say it.”

a. Statement of financial position b. statement of comprehensive income c. cash flow

A. Permanent accounts b. work sheet c. report form d. account form

b. Permanent accounts b. work sheet c. report form d. account form

Basically, assets, liabilities and equity accounts are permanent accounts.

Elements or Components of SCI

LESSON 4 CASH FLOW STATEMENT

Receipts from customers - derived from the following formula:

Ending Accounts Receivable = Beginning Accounts Receivable + Net Sales – Collections

Parts of the Cash Flow Statement ( Indirect Method )

Financing Activities – Cash transactions related to changes in equity and borrowings.

Increase in current assets – deducted to net income

Decrease in current assets – added to net income

LESSON 5 Financial statement (FS) analysis

Horizontal analysis uses financial statements of two or more periods. –

 Peso change=Balance of Current Year-Balance of Prior Year

• Percentage change= (Balance of Current Year-Balance of Prior Year)/(Balance of Prior Year)

What is vertical analysis ?

For the SFP, the base amount is Total Assets.

A financial ratio is composed of a numerator and a denominator.

1. what is a journal and why it is called the book of original entry.

the journal is referred to as the book of original entry

The Chart of Accounts

LESSON 6 Basic Documents and Transactions Related to Bank Deposits

Business two types of account:

(2) checking or current account

1. Internal business forms – forms used only within the business.

FINAL EXAMINATION IN FABM 2

PRACTICE SET No. 1 Given Data :

1. Identify the following and indicate on the spaces provided:

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Name: _____________________________________________Score: _

Parent’s signature: _________________________ Date of receive: