Midterm Examination

2rd Term, AY: 2020-2021

BFFINARL – FINANCIAL ANALYSIS AND REPORTING

Name: __Ella Marie P. Lopez_ Section: __FIN191___ Date: _January 26,2021______

General Directions:
• Read the questions and follow the directions carefully.
• No cheating.
• Ask your professor for any question or inquiry.

MULTIPLE CHOICE. ENCIRCLE THE LETTER OF YOUR BEST ANSWER (15 POINTS).
1. STOCKHOLDER’S EQUITY REPRESENTS THE CLAIM OF THE OWNERS AGAINST THE ASSETS OF THE
CORPORATION.
A. STOCKHOLDER’S EQUITY C. TREASURY STOCK
B. CAPITAL STOCK D. RETAINED EARNINGS
2. RETAINED EARNINGS REPRESENTS THE CUMULATIVE BALANCE OF PERIODIC EARNIGS, DIVIDENDS
DISTRIBUTIONS, PRIOR PERIOD ADJUSTMENTS, AND OTHER CAPITAL ADJUSTMENTS.
A. STOCKHOLDER’S EQUITY C. PAID-IN CAPITAL
B. RETAINED EARNINGS D. ADDITIONAL PAID-IN CAPITAL
3. UNAPPROPRIATE RETAINED EARNINGS REPRESENTS THAT PORTION, WHICH IS FREE AND CAN BE DECLARED AS
DIVIDENDS TO STOCKHOLDERS.
A. STOCKHOLDER’S EQUITY C. APPROPRIATED RETAINED EARNINGS
B. TREASURY STOCK D. UNAPPROPRIATED RETAINED EARNINGS
4. APPROPRIATED RETAINED EARNINGS REPRESENTS THAT PORTION, WHICH HAS BEEN RESTRICTED AND
THEREFORE, IS NOT AVAILABLE FOR ANY DIVIDEND DECLARATION.
A. STOCKHOLDER’S EQUITY C. APPROPRIATED RETAINED EARNINGS
B. TREASURY STOCK D. UNAPPROPRIATED RETAINED EARNINGS
5. AN INCOME STATEMENT IS A FORMAL ACCOUNTING REPORT SHOWING THE RESULTS OF OPERATIONS OF A
BUSINESS ENTERPRISE FOR A GIVEN PERIOD.
A. BALANCE SHEET C. STOCKHOLDER’S EQUITY
B. INCOME STATEMENT D. RETAINED EARNINGS
6. REVENUE IS GROSS INCREASES IN ASSETS OR GROSS DECREASES IN LIABILITIES THAT RESULT FROM PROFIT
DIRECTED ACTIVITIES OF AN ENTERPRISE THAT CHANGE OWNERS EQUITY.
A. REVENUE C. EXPENSES
B. NET LOSS D. RETAINED EARNINGS
7. EXPENSES ARE GROSS DECREASES IN ASSETS OR GROSS INCREASES IN LIABILITIES.
A. REVENUE C. EXPENSES
B. NET LOSS D. RETAINED EARNINGS
8. A BALANCE SHEET IS A FORMAL STATEMENT SHOWING THE FINANCIAL POSITION OR CONDITION OF A
BUSINESS ENTERPRISE AS OF A GIVEN DATE.
A. BALANCE SHEET C. STOCKHOLDER’S EQUITY
B. INCOME STATEMENT D. RETAINED EARNINGS
9. CURRENT ASSETS INCLUDE CASH AND OTHER ASSETS OR RESOURCES WHICH ARE REASONABLY EXPECTED TO
BE RELIAZED IN CASH OR SOLD OR CONSUMED WITHIN THE NORMAL OPERATING CYCLE.
A. INVESTMENT C. PROPERTY, PLANT AND EQUIPMENT
B. INTANGIBLES D. CURRENT ASSET
10. INVESTMENTS THIS CLASSIFICATION PERTAINS TO PERMANENT OR LONG-TERM INVESTMENT. PERMANENT
INVESTMENTS ARE THOSE HELD FOR REGULAR INCOME, APPRECIATION AND OWNERSHIP CONTROL
A. INVESTMENT C. PROPERTY, PLANT AND EQUIPMENT
B. INTANGIBLES D. CURRENT ASSET
11. PROPERTY, PLANT AND EQUIPMENT. INCLUDE ALL ASSETS OF A RELATIVELY PERMANENT NATURE, USED IN
BUSINESS AND NOT INTENDED FOR SALE
A. INVESTMENT C. PROPERTY, PLANT AND EQUIPMENT
B. INTANGIBLES D. CURRENT ASSET
12. INTANGIBLES. INCLUDE THOSE RELATIVELY LONG-LIVED ASSETS WITHOUT ANY PHYSICAL SUBSTANCE AND
WHOSE VALUE LIES IN THE RIGHTS, PRIVILEGES AND COMPETITIVE BUSINESS ADVANTAGE WHICH THEY GIVE THE
OWNER
A. INVESTMENT C. PROPERTY, PLANT AND EQUIPMENT
B. INTANGIBLES D. CURRENT ASSET
13. CURRENT LIABILITIES. OBLIGATIONS WHICH ARE PAYABLE WITHIN ONE YEAR OR NORMAL OPERATING CYCLE
WHICH EVER IS LONGER
 A. CURRENT LIABILITIES C. LONG TERM LIABILITIES
B. DEFERRED REVENUES D. CAPITAL
14. LONG-TERM LIABILITIES. ARE THOSE OBLIGATIONS WHICH ARE NOT DUE WITHIN ONE YEAR OR NORMAL
OPERATING CYCLE WHICH EVER IS LONGER OR THOSE OBLIGATIONS WHICH DO NOT REQUIRE THE USE OF
CURRENT ASSETS FOR THEIR LIQUIDATION.
A. CURRENT LIABILITIES C. LONG TERM LIABILITIES
B. DEFERRED REVENUES D. CAPITAL
15. DEFERRED REVENUES INCOME RECEIVED IN ADVANCE BUT NOT YET EARNED. DEFERRED REVENUES REFER TO
UNEARNED INCOME WHICH WILL BE REALIZED AS INCOME OVER A PERIOD OF MORE THAN ONE YEAR FROM
THE BALANCE SHEET DATE.
A. CURRENT LIABILITIES C. LONG TERM LIABILITIES
B. CURRENT ASSETS D. DEFERRED REVENUE

PROBLEM SOLVING:

PROBLEM 1 – BALANCE SHEET (24 points)

Given below are the account balances of Easy Company as of December 31, 2020, prepare in good form a properly
classified balance sheet in accordance with current accounting standards.

Accounts payable 350,000

Accounts receivable 450,000
Property, plant and equipment 5,600,000
Accumulated depreciation 1,200,000
Mortgage payable, due in 5 years 1,500,000
Share capital, P100 par 4,000,000
Share premium 500,000
Cash and cash equivalents 800,000
Accrued expenses 100,000
Inventories 900,000
Long-term investments 950,000
Notes payable, long-term debt 500,000
Notes payable, short term debt 200,000
Office supplies 50,000
Patent 800,000
Prepaid rent 150,000
Retained earnings 1,350,000

EASY COMPANY
Balance Sheet
December 31, 2020

ASSETS
Current Assets
Cash and Cash Equivalents P 800,000
Inventories 900,000
Accounts receivable 450,000
Office supplies 50,000
Prepaid rent 150,000
Total Current Assets P 2,350,000

Non-current Assets
Property, plant and equipment P 5,600,000
Long-term investments 950,000
Patent 800,000
Less Accumulated Depreciation (1,200,000)
Total Non-current Assets P 6,150,000
TOTAL ASSETS P 8,500,000

LIABILITIES AND SHAREHOLD’S

 EQUITY
Current Liabilities
Notes payable, short term debt P 200,000
Accounts payable 350,000
Accrued expenses 100,000
Total Current Liabilities P 650,000

Non-current Liabilities
Mortgage payable, due in 5 years P 1,500,000
Notes payable, long-term debt 500,000
Total Non-current Liabilities P 2,000,000
TOTAL LIABILITIES P 2,650,000

Shareholder’s Equity
Share capital, P100 par P 4,000,000
Share premium 500,000
Retained earnings 1,350,000
Total Shareholder’s Equity P 5,850,000
TOTAL LIABILITIES AND P 8,500,000
SHAREHOLDER’S EQUITY

PROBLEM 2 – FINANCIAL ANALYSIS (50 points)

Below is the financial cash flow of BIDA- BIDA ALWAYS COMPANY

BIDA -BIDA ALWAYS COMPANY

Comparative Statements of Financial Position
December 31, 2019 and 2020

2020 2019 Amount Percent

Assets
Current Assets
Cash & Cash Equivalent 168,000 150,000 18,000 12
Trading Securities 91,000 77,000 14,000 18.18
Trade & Other Receivables 585,000 535,000 50,000 9.35
Inventory 509,000 542,000 (33,000) (6.09)
Prepaid Expenses 512,000 520,000 (8,000) (1.54)
Total Current Assets 1,865,000 1,824,000 41,000 2.25
Non-Current Asset
Property, Plant & Equipment 1,456,000 1,450,000 6,000 0.41
Total Assets 3,321,000 3,274,000 47,000 1.44

Liabilities and Shareholders’ Equity

Current Liabilities
Trade & Other Payables 319,000 299,000 20,000 6.69
Unearned Revenues 84,000 126,000 (42,000) (33.33)
Notes Payable-current 59,000 70,000 (11,000) (15.71)
Total current liabilities 462,000 495,000 (33,000) (6.67)

2020 2019 Amount Percent

Non-Current Liabilities
 Notes Payable- non current 399,000 454,000 (55,000) (12.11)
Total Liabilities 861,000 949,000 (88,000) (9.27)
Shareholders’ Equity
Ordinary Shares, P1 par 1,235,000 1,235,000 0 0
Premium on Ordinary Shares 340,000 340,000 0 0
Total paid- in capital 1,575,000 1,575,000 0 0
Retained Earnings 885,000 750,000 135,000 18
Total Shareholders’ Equity 2,460,000 2,325,000 135,000 5.81
Total Liabilities & Shareholders’ Equity 3,321,000 3,274,000 47,000 1.44

 In the above table, it can be seen that the there is no significant percentage change between the total
assets with (1.44%) and the total liabilities and shareholder’s equity (1.44%). From the data gathered,
it is evident that Bida Bida Always Company has performed the results to their financial liquidity and
stability that made the financial position for 2018-2019 capable to yield a sufficient amount of return
on company sales assets and invested capital. Here, we where able to compare the company’s
financial position and results of operation during 2018-2019 term.

Requirement: Analyzed the statement using Horizontal Analysis and discuss the status of the company based on
your analysis results.

Prepared by: Reviewed by: Approved by:

DR. ROLAND M. SIMBRE

___________________ _______________________________ ______________________
Faculty In- Charged Program Chair-BSBA Dean, CBA