BROKENSHIRE COLLEGE OF SOCSKSARGEN, INC.

Ced. Ave. National Highway, Lagao, General Santos City

MIDTERM EXAMINATION
Elective 2
Name:______________________________ Date:_________

Write your answer in a clean paper then take a picture send it to me .

Test I

(True or False) 2 points each question.

1. Funds" (as in "flow of funds") always means cash and near-cash equivalents.
2. A flow of funds statement (showing sources and uses of funds) is no
longer useful to financial managers.
3. A major deficiency of the statement of cash flows is that it doesn't explicitly
consider non-cash transactions.
4. A company with profits which increase yearly is, by definition, successful.
 
5. An increase in an asset is a source of funds.
6. Depreciation is a use of funds.
7. The statement of cash flows, in the Philippines, is divided into three required
categories: operating, investing, and financing activities.
8.  A forecast balance sheet could be estimated based on a firm's past
financial ratios.
9. The cash budget is only as useful as the accuracy of the forecasts used in
preparing it.
10. The basic information needed to construct a flow of funds statement is
found on the income statement.
Test II

Problem solving (5points each ? )

Please Show your Solution

During 2006, the business of a sole trader was purchased by issuing shares for Rs. 2,
00,000. The assets acquired from him were: Goodwill Rs. 20,000, Machinery Rs. 1
00,000, Stock Rs. 50,000 and Debtors Rs. 30,000.

(b) Provision for tax charged in 2006 was Rs. 35,000.

(c) The debentures were issued at a premium of 5% which is included in the retained
earnings.

(d) Depreciation charged on machinery was Rs. 30,000.