ATENEO DE NAGA UNIVERSITY

Senior High School Department

Accountancy, Business, and Management Strand
1st Semester – S/Y 2024-2025

Fundamentals of Accountancy, Business and Management 2

Long Test
Name: Date: Section: Score:

PART I. MULTIPLE CHOICE Theories

Kindly read the questions carefully. Circle the letter of your choice.

1. This is the availability of the resources to meet long-term obligations as they become due.
a. Liquidity
b. Profitability
c. Need for additional financing
d. Solvency
2. Which of the following is not considered as a quick asset?
a. Cash
b. Inventory
c. Receivables
d. None of the above
3. It is the quotient of the current assets divided by the current liabilities of the company.
a. Working capital ratio
b. Gross profit ratio
c. Current ratio
d. Acid test ratio
4. Which of the following best represents the computation for accounts receivable turnover ratio?
a. Cost of sales divided by average inventory
b. Gross profit divided by net sales
c. Net income after tax divided by net sales
d. Net sales divided by average accounts receivables
5. What component of the cash flows does cash paid for the long-term loan borrowed belong to?
a. Operating
b. Investing
c. Financing
d. None of the above
6. What approach in preparing the statement of cash flows is net income part of?
a. Direct
b. Indirect
c. Both a and b
d. Neither a and b
7. The following are the transactions that may be part of the cash flows from investing activities, except
a. Cash proceeds from sale of an equipment
b. Cash payment for the construction of a building
c. Cash proceeds from notes payable used to finance the construction of a building
d. Cash payments for the acquisition of long-term investments
8. Which of the following represents the actual cost of merchandise that the company was able to sell during the
year?
a. Administrative expenses
b. Cost of goods available for sale
c. Cost of goods sold
d. Selling expenses
9. Which of the following is the accounting treatment for transportation costs of merchandise purchased by the
company?
a. Freight in and deducted from the net purchases
b. Freight out and treated as selling expenses
c. Freight in and added to the amount of the net purchases
d. Freight out and treated as general and administrative expenses
10. Which of the following is NOT treated as selling expenses?
a. Salaries of sales agents
b. Depreciation of delivery van
c. Rent of office building
d. Advertising

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 11. Which of the following transactions is not included in the owner’s equity?
a. Net income during the year
b. Additional investments by the owner
c. Withdrawal of cash by the owner
d. Issuance of loans payable for equipment purchased
12. Which of the following does not pertain to current assets?
a. The asset is cash and cash equivalent that is restricted from being exchanged or used to settle a liability
for at least twelve months after the reporting period.
b. The entity holds the asset primarily for the purpose of trading.
c. The entity expects to realize the asset within twelve months after the reporting period.
d. The entity expects to realize the asset or intends to sell or consume it within the entity’s normal operating
cycle.
13. This is an asset held by an entity for the accretion of wealth through capital distribution, such as interest, royalties,
dividends and rentals, for capital appreciation or for those benefits to the investing entity such as those obtained
through trading relationships.
a. Intangible assets
b. Long-term investments
c. Property and equipment
d. Deferred tax assets
14. Which of the following is not included in trade and other receivables account?
a. Accrued interest income
b. Advances to officers and employees
c. Office supplies unused
d. Accounts receivable
15. Under this principle, some costs are expensed by simply allocating them over the periods benefited.
a. Cause and effect association
b. Systematic and rational allocation
c. Immediate recognition
d. Going concern

PART I. MULTIPLE CHOICE Problems

1. Violago Company provided the following account balances at year-end:

1,100,00
Cash
0

1,600,00
Accounts rèceivable - unassigned
0

Accounts receivable - assigned 1,000.00

Equity of assignee in assigned accounts 400,000

3,000,00
Inventory
0

Financial asset at fair value through profit or loss 500,000

1,300,00
Bond investment at amortized cost
0

1,500,00
Investment in associate
0

2,500,00
Equipment and fürniture
0

1,500,00
Accumulated depreciation
0

Patent 400,000

Deferred charges 100,000

2,000,00
Equipment classified as held for sale
0

What total amount should be reported as current assets at year-end?

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a) 9,200,000

b) 9,300,000

c) 8,200,000

d) 8,800,000

2. Darwin Company provided the following information at year-end:

Cash 300,000

Accounts receivable 1,200,000

Inventory, including inventory expected in the ordinary

course of operations to be sold beyond 12 months

amounting to P700,000

1,000,000
Prepaid expenses
.

Investment 800,000

Propert, Plant and Equipment, net of depreciation. 4,100,000

Accumulated Depreciation 500,000

What amount should be reported as total current assets at year-end?

a. 800,000

b. 3,300,000

c. 2,500,000

d. 1,800,000

3. What amount should be reported as total noncurrent assets at year-end?

a. 4,100,000

b. 4,900,000

c. 4,400,000

d. 5,300,000

4. The adjusted trial balance at year-end included the following expense and loss accounts for current year:

1,200,00
Accounting and legal fees
0

1,500,00
Advertising
0

Freight out 800,000

Interest 700,000

Loss on sale of.long-term investment . 300,000

Officers' salaries 2,250,00

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 0

2,200,00
Rent for office space
0

1,400,00
Sales salaries and commissions
0

One-half of the rented premises is occupied by the sales department. What amount should be reported as total
distribution costs?

a .4,800,000

b. 4,000,000

c. 3,700,000

d. 3,600,000

5. Lee Company reported the following data for the current year:

1,700,00
Legal and other fees
0

2,400,00
Rent for office space
0

2,100,00
Interest on inventory loan
0

Loss on abandoned data processing equipment 350,000

1,750,00
Freight in
0

1,600,00
Freight out
0

1,500,00
Officers' salaries
0

Insurance 850,000

2,150,00
Sales representative salaries
0

1,000,00
Research and development expense
0

The office space is used equally by the sales and accounting departments.

What amount should be classified as general and administrative expenses?

A. 5,250,000

b. 6,450,000

c. 5,600,000

d. 6,250,000

6. Vigor Company provided the following information for the current year:

Net accounts receivable at January 1 900,000

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 Net accounts receivable at December 31 1,000,000

Account receivable turnover 5 to 1

Inventory at January 1 1,100,000

Inventory at December 31 1,200,000

Inventory turnover 4 to 1

What is the gross margin for the current year?

A.150,000

b. 200,000

C. 300,000

d. 400,000

7. Hiligaynon Company provided the following information for the current year:

Beginning inventory 400,000

Freight in 300,000

Purchase returns 900,000

Ending inventory 500,000

1,250,00
Sclling expenses
0

Sales discount 250,000

The cost of goods sold is six times the selling expenses.

What is the amount of gross purchases?

a. 6,500,000

b. 6,700,000

C. 8,000,000

d. 8,200,000

8. Bicolano Company provided the following data for the current year

2,000,00
Inventory, January.1
0

7,500,00
Purchases
0

Purchase returns and allowances 500,000

Sales returns and allowances 750,000

2,800,00
Inventory on December 31
0

Gross profit rate on sales 20%

What is the cost of goods sold?

a. 6,700,000

b. 6,200,000
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c. 7,200,000

d. 9,000,000

9. What is the amount of gross sales for the current year?

a. 7,750,000

b. 8,500,000

C. 7,000,000

d. 9,125,000

10. Oakwood Company provided the following data for the year:

Cash balance, beginning of year 1,300,000

Cash flow from financing activities 1,000,000

Cash flow from operating activities 400,000

(1,500,000
Cash flow from investing activities
)

Total shareholders' equity, beginning of year 2,000,000

What is the cash balance at the end of current year?

A. 1,200,000
B. 1,600,000
C. 1,400,000
D. 1,700,000

11. Sun Company provided the following data for the preparation of the statement of cash flows for the current
year

Increase in accounts receivable 300,000

Decrease in income tax payable 170,000

1,000,00
Depreciation
0

Net income 250,000

Gain on sale of equipment 440,000

Loss on sale of building 210,000

What amount should be reported as net cash provided by operating activities?

A.780,000

B. 700,000

C. 880,000

D. 550,000

12. Kersley Company reported net income of P7,500,000 for the current year.
The following account balances are provided for the preparation of the statement of cash flows for the
year:

Jan-01 Dec-31

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 1,150,00 1,450,00
Accounts receivable
0 0

Allowance for doubtful accounts 40,000 50,000

Prepaid rent expense 620,000 410,000

1,120,00
Accounts payable 970,000
0

What is the net cash provided by operating activities?

a. 7,270,000

b. 7,430,000

c. 7,550,000

d. 7,570,000

13. Matthew Company provided the following informaton.

1,950,00
Purchase of inventory
0

Purchase of land, with vendor financing of

3,500,00
P1,000,000 for 2 years
0

2,500,00
Purchase of plant for cash
0

Sale of plant:

Carrying amount 500,000

Cash proceeds 400,000

What amount should be reported as investing net cash outflows?

a. 5,600,000

b. 4,600,000

c. 6,550,000

d. 5,300,000

14. 33

15. 3

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