Fundamentals of Accounting, Business, and Management 2 Midterm Exam

Name: ________________________________________ Year/Block: _____________ Date: _____________

General Instructions: Read thoroughly the instruction given in each item. Answers not in compliance to given
instruction will not earn a point. Use pens with permanent ink only. No erasures allowed. Do not make unnecessary
marks on the examination paper.

Part I Identification.
Instruction: Identify the word/phrase that is being described in each item. Write your answer on the space provided.

1. The amount received by the business from selling main goods or services 1. ________________________
to its customers during the period.
2. A division in the cash flow statement that constitute the revenue- 2. ________________________
generating activities of the business.
3. A division in the cash flow statement that constitute payments made to 3. ________________________
acquire the long-term assets, as well as cash received from their sale.
4. The accounting equation 4. ________________________

5. A division in the cash flow statement that constitute activities that will 5. ________________________
alter the equity or borrowings of the business.
6. Liabilities that are not due for settlement within 12 months after the 6. ________________________
reporting period.
7. This term is used to describe the owners act of utilizing the business 7. ________________________
asset for his personal expenditures.
8. Income < Expenses 8. ________________________

9. These ratios measure the business ability to meet its current obligation. 9. ________________________

10. The term used to mean the total earnings of the business. 10. ________________________

11. These ratios measure the degree of protection of suppliers of long-term 11. ________________________
funds.
12. The most liquid asset 12. ________________________

13. This shows the changes in the capital account due to contributions, 13. ________________________
withdrawals, net income, or net loss.
14. This focuses on trends and changes in financial statement items over 14. ________________________
time. This helps financial statement users to see relative changes
overtime and identify trends.
15. The terms that refers to what the business earns on selling assets which 15. ________________________
are not inventories of the business.
16. The time between the acquisition of asset for processing and their 16. ________________________
realization in cash or cash equivalent.
17. These ratios measure the earning ability of the business. 17. ________________________

18. This convert all amounts of key financial statement component for a 18. ________________________
given year into percentages. This allows one to see the composition of
each of the financial statements and determine if significant changes
have occurred.
19. A classification in the statement of financial position which provides 19. ________________________
information in essentially horizontal format.
20. The amount left after deducting all expenses from the revenues. 20. ________________________

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Part II. Enumeration.
Instruction: Give the items being required in each number. Write your answer on the space provided.

(1-3) Three accounts titles that are considered current (16-18) Three areas in the Statement of Cash Flows
assets
16. _________________________________
1. _________________________________
17. _________________________________
2. _________________________________
18. _________________________________
3. _________________________________
(19-20) Two methods of presenting Statement of
(4-5) Two accounts titles that are considered current Cash Flow
liabilities
19. _________________________________
4. _________________________________
20. _________________________________
5. _________________________________
(21-23) Three profitability ratios
(6-7) Ways of presenting a Statement of
Comprehensive Income 21. _________________________________

6. _________________________________ 22. _________________________________

7. _________________________________ 23. _________________________________

(8-10) Examples of an expense account (24-25) Two liquidity ratios

8. _________________________________ 24. _________________________________

9. _________________________________ 25. _________________________________

10. _________________________________ (26-28) Two leverage ratios and one activity ratio

(11-14) At least three elements that affect the Capital 26. _________________________________
account
27. _________________________________
11. _________________________________
28. _________________________________
12. _________________________________
(29-30) Two Financial Statement Analysis Methods
13. _________________________________
29. _________________________________
(14-15) They increase the Capital account
30. _________________________________
14. _________________________________

15. _________________________________

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Part III. Financial Statement Preparation

The following accounts relate to Big Bulilit Graphic Arts:

Accounts Payable P 122,500

Accounts Receivable 219,000
Accumulated Depreciation Building 60,000
Accumulated Depreciation Equipment 60,000
Advertising Expense 105,000
Art Revenues 1,437,500
Building 450,000
Cash 36,200
Depreciation Expense - Building 30,000
Depreciation Expense - Equipment 217,000
Interest Expense 37,000
Land 120,000
Miscellaneous Expense 24,600
Mortgage Payable 395,000
Notes Payable 213,000
Office Supplies 17,200
Bulilit, Capital 1/1/2012 50,500
Bulilit, Withdrawals 148,600
Representation Expense 164,000
Salaries Expense 673,200
Salaries Payable 17,300
Travel Expense 159,000

During the year, Bulilit invested additional P75,000 in the business.

Required:
(1 - 15) Prepare the Statement of Financial Performance using function of expense method.

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(16-20) Prepare the Statement of Changes in Equity.

(21-35) Prepare the Statement of Financial Position using the report form.

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(36-40) The following transactions pertain to the operations of Happiness Accounting and Business Consultant, an
Accounting and Business Consultancy operated by Sorrowful Joy Dimaano. The entity had the following transactions
during the month:
a. Received a P180,000 cash investment from owner.
b. Provided P400,000 services on account.
c. Incurred P220,000 operating expenses on account.
d. Collected P320,000 cash from accounts receivable.
e. Allowed a P30,000 cash withdrawal to the owner of the business.
f. Paid P160,000 cash on accounts payable.
g. Performed services for P30,000 cash.
h. Paid 12, 000 cash for expenses.

Required:
Prepare a Statement of Cash Flows, using the direct method, for Happiness Accounting and Business Consultant.

Part IV. Financial Statement Analysis.

Instruction: Using the information in Part III: 1-35, compute and give your evaluation of Big Bulilit Graphic Arts:
(5 points each)
A. Current Ratio
Computation: Evaluation:

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 B. Net Profit Margin
Computation: Evaluation:

***End of Exam***
Good luck and God Bless