Choose the correct answer in the following:

1. All of the following are components of an information system, except:

Users

Data collection devices

Data sharing devices

All of the above are components

2. It is responsible for the collection of data, organization of a system of financial information, including the recording, preparation, analysis and interpretation of such information.

Accounting

Finance

Economics

Management

3. Statement 1 - Finance looks into what is ahead and it has a narrower scope in comparison with accounting. Statement 2 - Accounting focuses to what has already transpired. It has a broader scope than finance in that it analyzes performance of individuals, businesses and organizations in the determination of what has happened.

Both statements are correct.

Both statements are false.

Only statement 1 is correct.

Only statement 2 is correct.

4. Statement 1 - Money and capital markets determine monetary needs and obtaining adequate capital and cash. Statement 2 - Investments focuses on the management of principles to financial decision-making for organizations. Statement 3 - Financial management focuses on the analysis and choice among investment alternatives while considering returns and risks.

All statements are correct.

All statements are incorrect.

Only two statements are correct.

Only one statement is correct.

5. The following are the advantages of manual from the computerized accounting system, except:

Audit Trail

Speed

Accuracy

Data storage

6. It refers to the books of final entry of a specific client.

General Journal

Special Journal

General Ledger

Special Ledger

7. Which of the following is not correct?

The Journal is the book of final entry.

The Ledger is the source of account balances to be listed in the trial balance.

The value posted in the general ledger is taken from the journal.

The value received in an accounting transaction is debited in the journal entry.

8. Which of the following is the correct sequence of accounting process?

Communicating, identifying and measuring

Measuring, identifying and communicating

Identifying, measuring and communicating

Identifying, communicating and measuring

9. Which of the following is the correct sequence of the communicating aspect of accounting?

Recording, classifying, and reporting

Classifying, recording and reporting

Recording, reporting and classifying

Reporting, classifying, and recording

10. Classifying is a part of what accounting aspect?

Identifying

Measuring

Communicating

Recording

11. Which of the following accounting processes comes first ahead of the others?

Interpreting

Measuring

Communicating

Identifying

12. These external users of financial reports primarily use accounting information to assess their return on investment in their business.

Government and its agencies

Investors

Management

Creditors

13. All of the following pertains to information maintenance, except:

Maintain the amount and types of information used in your business

Allow access to critical information

Meet storage requirements of original and legal documents

Make information easily accessible, usable and understandable by all with legitimate information needs

14. The one in-charge of carrying out the strategy and policy of the board of directors. He/she provides leadership for management and employees, sets long-term operational direction and is accountable to the board for all company activities.

President

Chief Operating Officer

Chief Financial Officer

Chief Executive Officer

15. Which of the following ratios measures short-term solvency?

Current Ratio

Inventory Ratio

Profit on Sales Ratio

Debt to total assets ratio

16. Statement 1 - The current ratio of 1:2 is better than 2:1. Statement 2 - The quick ratio is equal to acid-test ratio. Statement 3 - The acid-test ratio also depends upon any early cash sale of its inventory as source of its liquidity.

All statements are correct.

All statements are incorrect.

Only two statements are correct.

Only one statement is correct.

17. Statement 1 - The capital structures of the firm are comprised of creditors' claim and shareholders' claim. Statement 2 - Profitability is the ability of the firm to increase assets as a result of its operational activity and not through the contribution of its owners. Statement 3 - The profit on sales ratio that is nearly 1 is better than a profit on sales ratio of more than 1.

All statements are correct.

All statements are incorrect.

Only two statements are correct.

Only one statement is correct.

18. Statement 1 - A very low profit total assets ratio will indicate that some noncash assets must be converted to cash and invest in earning activities. Statement 2 - The rate of inventory turnover is equal to average inventory divided by annual sales. Statement 3 - The current ratio measures the liquidity of the business and this is sometimes referred to as the working capital ratio.

All statements are correct.

All statements are incorrect.

Only two statements are correct.

Only one statement is correct.

19. At December 1, 2020, A Company had a current ratio greater than 1:1 and a quick ratio less than 1:1. On December 31, 2020, all cash was used to reduce amounts payable. How did these cash payments affect the ratios?

Current Ratio - Decreased; Quick Ratio - Decreased

Current Ratio - Increased; Quick Ratio - Increased

Current Ratio - Increased; Quick Ratio - Decreased

Current Ratio - No Effect; Quick Ratio - Decreased

20. B Corporation wrote off Php 100,000 of obsolete inventory at December 31, 2020. The effect of this write-off was to decrease:

Both the current and acid-test ratios

Only the current ratio

Only the acid-test ratio

Neither the current nor acid-test ratios

21. How is the average inventory used in the calculation of each of the following?

Acid-test - Numerator; Inventory Turnover - Numerator

Acid-test - Numerator; Inventory Turnover - Denominator

Acid-test - Not used; Inventory Turnover - Denominator

Acid-test - Not used; Inventory Turnover - Numerator

22. Which of the following is an appropriate computation for return on investment?

Income divided by the total shareholder's equity

Income divided by sales

Sales divided total assets

Profit divided by shareholder's equity

23. On December 31, 2020, C Company collected a receivable due from a major customer. Which of the following ratios would be increased by this transaction?

Quick Ratio

Current Assets Ratio

Accounts Receivable Turnover

All of the above

24. The current ratio increased from 3:1 to 4:1. This could be attributed to which of the following?

The ending inventory is more than the beginning inventory and the rest of the working capital elements remain constant.

The only change in working capital element is the Php 100,000 of accounts receivable collected in cash.

The accounts payable is increased by the same amount of increase in current asset.

All of the above.

25. Long-term creditors are least interested in which of the following factors?

Rate of return on their investment

Ability of the business to repay the debt when it falls due

Debt to equity ratio of the business

Ability of the business to pay the interest when it falls due

26. In a cash budget, a shortage would occur when

Cash receipts exceed cash payments

Working capital is declining

Current assets are less than current liabilities

Cash payments exceed cash receipts

27. Which of the following is the correct order in cash budgeting?

Plan, Create, Execute, Decide, Determine

Create, Decide, Determine, Execute, Plan

Plan, Create, Decide, Execute, Determine

Plan, Decide, Create, Determine, Decide

28. Statement 1 - Cash receipts of the company may stem from cash sales, collections of accounts and other cash receipts. Statement 2 - Cash payments, on the other hand may be for variable cash expenses, fixed cash expenses and other cash payments. Statement 3 - In financial planning, business doesn't necessarily require minimum amount to be available at all times.

All statements are correct.

All statements are incorrect.

Only two statements are correct.

Only one statement is correct.

29. If a company has current assets of Php 230,000 and current liabilities of Php 100,000, the amount of its working capital is:

Php 230,000

Php 100,000

Php 130,000

Php 330,000

30. How will the total amount of a company's working capital change when a Php 10,000 account receivable is collected?

The total decreases by Php 10,000

The total increases by Php 10,000

The total remains the same

None of the above

31. How will the total amount of a company's working capital change when the company pays Php 8,000 of its accounts payable?

1 point

The total decreases by Php 8,000

The total increases by Php 8,000

The total remains the same

None of the above

32. The major source of cash receipts for most companies is:

Borrowing

Sales

Money from the government

Earnings from interest and dividends

33. The difference between current assets and current liabilities is:

A cash excess

A cash shortage

The current ratio

Working capital

34. Statement 1 - A loan in five years is an example of a current liability. Statement 2 - A current ratio of 0,94 indicates that a company has current assets that exceed its current liabilities.

Both statements are true.

Both statements are false.

Only statement 1 is true.

Only statement 2 is true.

Use the following information to answer 35-36: Selling price per unit - Php 17; //Fixed expenses: Selling and administrative - Php 130,000; Interest Expense - Php 10,000; //Variable Expenses: Cost of goods sold - Php 4; Selling and administrative - Php 7. What is the break-even point in units?

10,000

14,000

20,000

0

36. If the company wants to earn a profit of Php 42,000 instead of breaking even, what is the number of units the company must sell?

14,000

18,200

26,000

0

37. Partially completed products are commonly referred to as:

Direct Materials

Work-in Process

Finished Goods

Labor Costs

38. Which of the following is an example of fixed costs?

Electricity

Supplies

Wages

Rent

39. Which compensation method is used in a factory that pays workers an hourly rate?

Wages

Salary

Piece Rate

Commission

40. An unsecured loan is:

A loan paid within 30 days

A loan that has no collateral

A loan to a customer who has no credit history

A loan for which a government agency is the lender

41. An invoice with the credit terms 1/5. n/45 would mean a customer may qualify for a _____________ discount within a certain period of time.

1%

15%

45%

No discount is available

42. Statement 1 - Capital projects involve the construction or purchase of short-term assets such as inventories and supplies. These items are also called operating expenditures and the process may be referred to as operating spending. Statement 2 - Replacement projects are projects that were intended to replace the capital projects that were destroyed and/or dilapidated. Statement 3 - On the other hand, cost-saving projects are technological projects that may be obtained in hopes to increase the operating costs of the company.

All statements are true.

All statements are false.

Only two statements are true.

Only one statement is true.

43. Which of the following would be complementary projects?

a delivery truck and a customer service office

a day care center and a new factory

a reconstructed bridge and highway resurfacing

updated computers and community assistance vehicles

44. Statement 1 - Capital spending projects refers to payment by companies for current operating expenses. Statement 2 - Mutually exclusive projects allow a company to accept more than one project.

Both statements are correct.

Both statements are incorrect.

Only statement 1 is correct.

Only statement 2 is correct.

45. According to the financial theory, the major goal of a business organization should be

higher sales

lower customer complaints

a high market value

a low level of debt

46. A common benefit of debt is

lower risk than equity

interest payments reduce the amount of taxes

stockholders may not receive their dividends

reduced chance of company bankruptcy

47. Statement 1 - Projects with higher risk will usually be evaluated with a lower cost of capital. Statement 2 - If a company has no debt, its WACC would be the same as its cost of equity.

Both statements are correct.

Both statements are incorrect.

Only statement 1 is correct.

Only statement 2 is incorrect.

48. The most accepted method for evaluating capital project is:

Payback

Net present value

Internal rate of return

The risk of analysis process

49. Which of the following NPV elements is most accurate because it requires the least estimating?

Cash Flows

Start-up Costs

Risk

Cost of Capital

50. A project has initial cost of Php 19,000. The cash inflows are Php 0, Php 5,000 Php 9,000 and Php 7,000, respectively. What is the payback period?

2.5 years

3.21 years

3.71 years

4 years

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