Name ________________________________________________________ Score ____________

BUSINESS FINANCE LONG QUIZ 10.21.2019

Directions: Read the statements carefully and encircle the best answer from the choices.

1. Arrange the order of activities in the analysis of financial statements.

I. Gathering information about the firm and the industry
II. Setting the objectives of analysis
III. Performing mathematical computations
IV. Preparing reports and observations

A. I, II, III and IV B. II, I, III and IV C. II, III, I and IV D. I, III, II and IV
2. The basic objective of financial statement analysis is to
A. Detect the amount of fraud committed by cash custodian
B. Determine the working capital policy adopted by the company
C. Assist users in making a decision
D. Attest the accuracy of financial statements
3. Long-term creditors are more interested in the
A. Profitability of the business
B. Solvency of the business
C. Liquidity of the business
D. Operational efficiency of the business
4. When prospective investors analyze financial statements, their main concern is
A. To assess return on their investment
B. To check the reliability of financial statements
C. To determine compliance of the entity with regulatory requirements
D. To evaluate management efficiency in utilizing resources
5. Which of the following does not belong in the list?
A. Common-size analysis
B. Horizontal analysis
C. Performance report
D. Trend analysis
6. The current assets section of the statement of financial position as of June 30, 2019 of Princess Trading is
presented as follows:
Cash and cash equivalents P2,800,000
Financial assets at fair value 2,000,000
Trade and other receivable 1,800,000
Inventories 3,000,000
Prepaid expenses 60,000

The following selected accounts were taken from the accounting records last year, June 30, 2017:
Accounts receivable 850,000
Allowance for doubtful accounts-credit bal 40,000
Notes receivable 700,000
Accrued interest on notes 80,000
Advances to employees-collectible currently 100,000
Advances to officers-collectible 15 months 180,000
Investment in bonds 1,000,000

A. P70,000 FAVORABLE C. P110,000 FAVORABLE

B. P90,000 FAVORABLE D. 170,000 FAVORABLE
7. Alfred Merchandising has the following selected accounts on December 31, 2018:
Cash surrender value P 150,000
Refundable deposits to supplier 60,000
Accounts payable 400,000
Notes payable 250,000
Accrued interest on notes payable 10,000
Cash dividends payable 150,000
Accrued expenses 90,000
Stock dividends payable 200,000
Warranty payable 80,000
Bonds payable 1,000,000
 A portion of the bonds payable amounting to P200,000 will be maturing on March 31, 2019. If the primary
competitor of the business has current total liabilities of P1,300,000 for the year ended December, the
comparative current liabilities of Alfred will have a variance of
A. P60,000 favorable C. P80,000 unfavorable
B. P120,000 favorable D. P160,000 unfavorable

8. Janaya Merchandising provides the following comparative information:

2018 2017

Trade and other receivables 300,000 450,000

Inventory 390,000 980,000
Property, Plant and Equipment 4,000,000 4,500,000
Bank loan payable 1,000,000 1,000,000
Mortgage payable 3,000,000 -

What is the percentage of change of trade and other receivables that will appear in the horizontal analysis?
A. 0.0% B. 33.3% increase C. 33.3% decrease D. 66.7% decrease
9. Using the same data in no. 8, the percentage of change of bank loan payable that will appear in the horizontal
analysis would be
A. 0.0% B. 50% increase C. 100% increase D. 100% decrease
10. Liezl Trading presents the following selected items from its financial statements:
Cash and cash equivalents 500,000
Trading securities 1,000,000
Inventory 2,500,000
Total current assets 5,000,000
Total assets 15,000,000
Trade and other payables 800,000
Total Liabilities 6,000,000
Net sales 8,000,000
Operating expenses 2,200,000
Income after tax 960,000

On a common-size statement of financial position, how will the company present the trading securities?
A. 5.0% B. 6.7% C. 20.0% D. 25.6%

11. Using the same data in no. 10, how will the company present the trade and other payables in a common-size
statement of financial position?
A. 13.3% B. 10.0% C. 5.3% D. 4.0%

12. Using the same data in no. 10, how will the company present the operating expenses in a common-size
statement of comprehensive income?
A. 11.0% B. 14.7% C. 27.5% D. 229.0%

13. Selected items in the statement of comprehensive income of Louisa Trading are as follows:
Sales 3,675,000
Sales discounts and allowances 175,000
Office supplies 52,500
Advertising expense 71,000
Utilities expense 177,500
Interest expense 35,000

The gross profit of the company is 40 percent of net sales and the applicable tax rate for the period is 30
percent. In the common-size statement of comprehensive income, sales discounts and allowances will have a
proportional percentage of
A. 4.76% B. 5.00% C. 4.55% D. 95.23%

14. Using the same data in no. 13, office supplies will appear in the common-size statement 0f comprehensive
income as
A. 1.43% B. 1.46% C. 1.50% D. 2.5%

15. Using the same data, the proportional percentage of interest expense in the statement of comprehensive
income will be
A. 1.00% B. 0.95% C. 0.91% D. 1.15%
 16. Using the same data, the business expects to allocate 8 percent proportional component for salaries and wages
in the common-size statement of comprehensive income, the absolute amount for salaries and wages will be
A. P176,400 B. P280,000 C. P294,000 D. P308,000
17. In a common-size statement of financial position, the total non-current assets of Kaye Trading shows a
proportional percentage of 60 percent. In terms of absolute peso amount, total non-current assets amount to
P2,100,000.
If tangible assets have proportional percentage of 4 percent in the common-size statement of financial position,
the equivalent absolute peso value will be
A. P50,400 B. P84,000 C. P140,000 D. P210,000
18. Bernadette Merchandising maintains a gross profit of 60 percent of sales. During the current year, the total
costs incurred by the business related to the goods sold amount to P2,400,000.
In the common-size statement of comprehensive income, advertising expenses has a proportional percentage
allocation of 3 percent. The absolute peso amount of advertising will be
A. P252,000 B. P180,000 C. P120,000 D. P 72,000
19. The proportional percentage of cash and cash equivalents in the common-size statement of financial position of
Wiljohn Merchandising for the year ended December 31, 2018 is 8 percent with an absolute peso value of
P525,000.
Total net sales during the period is equal to 120 percent of the total assets. If marketing expenses during the
year amount to P1,575,000, how should marketing expenses be presented in the common-size statement of
comprehensive income?
A. 24.0% B. 22.5% C. 20.0% D. 18.6%
20. Cyrell Merchandising provided the following comparative information:

2018 2017 2016 2015

Trade and other receivables P400,000 P520,000 P420,000 P550,000
Inventory 620,000 680,000 640,000 600,000
Trade and other payables 590,000 520,000 500,000 530,000

In the trend percentage statement of financial position, what would be the index of the year 2016 trade and
other receivables using 2015 as base?
A. 5% B. 24% C. 76% D. 105%
21. What would be the index of 2016 trade nd other receivables using 2018 as the base in trend percentage
financial statements of Cyrell Trading?
A. 5% B. 24% C. 76% D. 105%
22. What would be the index of 2017 trade and other payables using 2016 as the base?
A. 104% B. 98% C. 85% D. 96%

23. Melanie Trading has the following comparative data on the equity section of its statement of financial position:

2018 2017 2016 2015

Trade and other payables P 80,000 P 65,000 P 120,000 P 90,000
Warranty payable 30,000 25,000 40,000 15,000
Bonds payable 500,000 500,000 400,000 300,000
Share capital 900,000 900,000 800,000 600,000
Retained earnings 650,000 600,000 700,000 400,000

In the trend percentage statement of financial position, Melanie Trading will present the bonds payable of 2016
using 2018 as the base level is
A. 125% B. 133%C. 80% D. 75%
24. How would Melanie Trading present the trade and other payables of 2018 in trade percentage statement of
financial position if the base level used is 2015?
A. 113% B. 89% C. 13% D. 11%
25. The traditional analytical tool used in evaluating the financial statements that employs proportion of certain
item in relation to other related items is called
A. Trend Analysis B. Financial ratio analysis C. Vertical analysis D. Horizontal analysis
26. Financial statement analysis involves the following processes except
A. Making relevant mathematical computations
B. Comparing performance with other firms in the industry
C. Identifying company’s strengths and weakness
D. Evaluating trends in the operating performance
27. Short-term creditors are more interested in
A. Acid-test ratio B. Debt to Equity Ratio C. Earnings per share D. Dividend-yield ratio
28. The ratios that determine the extent the firm utilized debt financing are called
A. Liquidity ratios B. Financial leverage ratios C. Growth ratios D. Profitability ratios
29. Ben Company has a current ratio of 2 is to 1 at the end of year 2018. Which of the following events will increase
its current ratio?
A. Withdrawal of 30% of the capital
B. Cash borrowing from a bank through the issuance of a 6-month note
C. Collection of P1,000,000 trade accounts receivable
D. Issuance of bonds payable at a discount
30. When compared to a debt to equity ratio, a debt to asset ratio would
A. Be higher than the debt to equity ratio
B. Be lower than the debt to equity ratio
C. Be the same as debt to equity ratio
D. Have no relationship to debt to equity ratio
31. The selected data are related to the operation of Yne Trading for the year ended December 31, 2018:

Current ratio 1.65 : 1.00

Acid test ratio 0.75 : 1:00
Credit sales P3,500,000
Cash sales 2,900,000
Net income 600,000
Gross profit on sales 4,800,000
Inventory turnover 6 times
Average total assets invested 4,500,000
Receivable turnover 8 times

The return on investment of Yne Trading would be

A. 20.00% B. 13.33% C. 12.50% D. 9.38%
32. Sila Company provides the following comparative information (in pesos):

December 31
2017 2018

Net sales 12,450,000 13,200,000

Cost of goods sold 9,300,000 9,600,000
Operating income 750,000 825,000
Current assets 3,000,000 3,150,000
Current liabilities 1,500,000 1,350,000
Non-current liabilities 3,750,000 4,050,000

The current ratio as of December 31, 2018 would be

A. 2.00 to 1 B. 2.35 to 1 C. 2.33 to 1 D. 1.17 to 1
33. The following selected comparative data are taken from the records of Jonathan Trading:

December 31
2017 2018

Cash and cash equivalents 450,000 320,000

Trading securities 300,000 400,000
Trade and other receivables, net 1,200,000 1,600,000
Inventories 600,000 800,000
Property, Plant and Equipment 6,500,000 8,000,000
Intangibles 250,000 400,000
Trade and other payables 500,000 600,000
Warranty payable 200,000 300,000
Accrued expenses 200,000 150,000
Bonds payable 1,500,000 2,000,000

The quick-acid test ratio as of December 31, 2018 would be

A. 2.00 to 1 B. 2.97 to 1 C. 2.58 to 1 D. 2.21 to 1

34. The following are the key concepts of finance except

A. Both a science and an art
B. An application of economic and accounting concepts and principles
C. A financial resources, investments and expenditures
 D. All of the above
E. None of the above
35. Finance is broadly classified into the following except:
A. Private finance
B. Public finance
C. Business finance
D. All of the above
E. None of the above
36. A sub-category of private finance which is directed towards the management of personal resources of an
individual
A. Personal finance
B. Partnership finance
C. Business finance
D. Public finance
37. An area of business finance that studies the different financial institutions and their functions that provide
assistance to both private and public borrowers of funds
A. Financial management
B. Capital market
C. Public market
D. Financial investment
38. This area of finance answers the question what type of financing scheme shall be used in the acquisition of the
asset
A. Financial management
B. Capital market
C. Public market
D. Financial investment
39. The three decision-making functions of a finance officer are the following except:
A. Operating decisions
B. Investing decisions
C. Financing decisions
D. All of the above
E. None of the above
40. The basic elements of a financial system are as follows:
A. Financial institutions
B. Financial markets
C. Financial instruments
D. All of the above
E. None of the above
41. A depository institutions considered the biggest in terms of assets, loan portfolio and revenue
A. Universal bank
B. Commercial bank
C. Thrift bank
D. Rural bank
E. All of the above
42. A financial intermediaries which accumulate money by selling shares of stocks or bonds of publicly-listed
corporations to individuals or corporate investors
A. Mutual funds
B. Pension funds
C. Insurance companies
D. All of the above
E. None of the above
43. A kind of bond which is not supported by any collateral or security as assurance in times of non-payment or
default
A. Term bond
B. Serial bond
C. Secured bond
D. Debenture bond
E. All of the above
44. A financial security that signifies ownership of the assets of the corporation
A. Preference share
B. Common Stock
C. Stocks
D. All of the above
E. None of the above
45. A line item included in the Reserves which represents the excess amount contributed by the shareholders over
par value
A. Appropriate reserve
B. Share premium
C. Revaluation adjustment
D. Foreign currency translation reserve
E. All of the above
46. It conveys the ultimate goal of the organization and outlines the final map of what the business will be and
where the business is going
A. Business vision
B. Business mission
C. Business goal
D. Business objective
47. The following are done in making a forecast or projection except
A. The sale projection
B. The production schedule
C. Additional funds requirements
D. All of the above
E. None of the above
48. The final output or a plan which is expressed in a quantitative monetary value
A. Budgeting
B. Budget
C. Forecast
D. Planning
49. The following are the benefits derived from budgeting
A. Control mechanism is enhanced
B. Planning is facilitated
C. Resources are properly allocated
D. All of the above
E. None of the above
50. A step in budgeting which includes the determination of direct materials requirement, direct labor cost, cost pf
factory overhead and cost of sales preparation:
A. Prepare the sales budget
B. Prepare the production budget
C. Prepare the projected operating expenses
D. Prepare the financial and capital budget

******THE END******

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