Summative Test

Test I- Multiple Choice Select the letter of your choice from among
the given options. Write all your answers on a piece of paper. DO
NOT ANSWER ON THE TEST BOOKLET. This will serves as your
midterm examination.

1. These are resources with future benefits that are within the control of the company
and as a result of past transactions and events.
a. Assets b. Liabilities
c. Owner’s Equity d. Income

2. These are present obligations of the business arising from past transactions or
events, the settlement of which is expected to result in an outflow from the
resources of the business.
a. Income b. Assets
c. Liabilities d. Owner’s Equity

3. It is considered the residual interest in the assets of the entity after deducting all of
its liabilities.
a. Assets b. Income
c. Liabilities d. Owner’s Equity

4. It is the element of the Statement of Financial Position found on the left side of the
accounting equation.
a. Income b. Liabilities
c. Assets d. Owner’s Equity

5. Which of the following is an example of an Asset?

a. Cash b. Accounts Payable
c. Capital d. Sales

6. Loans Payable is a/an ____________.

a. Assets b. Liabilities
c. Owner’s Equity d. Income

7. Owner’s Equity is an element of the Statement of Financial Position. Which of the

following accounts is a line item under Owner’s Equity?
a. Inventory b. Notes Payable
c. Capital d. Cash

8. What is the element of SFP found in the right side of the accounting equation?
a. Assets b. Liabilities
c. Assets and Owner’s Equity d. Liabilities and Owner’s Equity
9. Intangibles are considered ____________.
a. Owner’s Equity b. Assets
c. Liabilities d. Expenses

10. Assets, Liabilities, and Equity are considered permanent or real accounts because
____________.
a. they are retained in the SFP until their balances become zero.
b. their balances are not forwarded to the next year.
c. they are forwarded to the next year when they become zero.
d. they are still reflected in the SFP even their balances become zero.

11. The basic accounting equation is composed of the elements of SFP. What are they?
a. Assets and Owner’s Equity b. Assets and Liabilities
c. Assets, Liabilities and Owner’s Equity d. Assets Only

12. These are results of past transactions and events and the company has control
over these and are expected to give future benefits to the company.
a. Income b. Assets
c. Liabilities d. Owner’s Equity

13. The company has ₱10,000 cash in its bank account. Cash is under what element
of the SFP?
a. Assets b. Liabilities
c. Owner’s Equity d. Income

14. Which of the following describes Liability?

a. Present obligation of the business arising from past transactions or event to
be settled by the business
b. Resources with future benefits that are within the control of the company
c. Considered the residual interest in the assets of the entity after deducting all
of its liabilities
d. An account found at the left side of the accounting equation

15. The business has a bank loan amounting to ₱5,000,000 payable within this year.
The bank loan is considered as a/an ______.
a. asset b. liability
c. owner’s equity d. income

16. The residual interest in the assets of the entity after deducting all of its liabilities.
a. Assets b. Income
c. Owner’s Equity d. Liabilities
17. The company has a net worth of ₱1,000,000 based on its financial report.
₱1,000,000 is considered as a/an _____________ element of the SFP.
a. asset b. income
c. liability d. owner’s equity

18. Which of the following is considered Assets?

a. Inventory b. Notes Payable
c. Capital d. Owner’s Equity

19. The total tax payable of the company to BIR is ₱20,000. Tax payable is an example
of a/an _______.
a. asset b. liability
c. owner’s Equity d. income

20. SFP elements are also known as ______.

a. ordinary accounts b. nominal accounts
c. temporary accounts d. permanent or real accounts

21. The following are components of Cash Flow Statement, except

_____________.
a. Operating activities b. Investing activities
c. Financing activities d. Financial Activities

22. These are principal-revenue producing activities of the entity.

a. Operating activities b. Investing activities
c. Financing activities d. Financial Activities

23.Cash payment to acquire land is classified under ___________________.

a. Operating activities b. Investing activities
c. Financing activities d. none of the above

24.Cash Payment for the principal amount borrowed are classified under
_________________.
a. Operating activities b. Investing activities
c. Financing activities d. none of the above

25.Which of the following shall be presented under cash flow from operating activities?
a. receipt from sale of Intangible assets
b. paid for borrowed amount
c. paid to suppliers for goods and services
d. cash received from issuing ordinary shares
26.Which of the following correctly states the purpose of CFS?
a. To provide important and timely information regarding cash receipts and cash
payments of an entity during a period
b. To disclose separately noncash investing and financing activities
c. To assess the capacity of an entity to pay dividends to stockholders
d. To give additional work to accountants.

27.The following are classified under Investing activities, except_____________.

a. payment for purchasing land
b. cash received from getting a long-term loan from a bank
c. cash collected from a long-term notes receivable
d. cash receipts from a sale of patent

28.Statement 1: Investing activities are presented first in the CFS.

Statement 2: Investing activities are presented before financing activities
Which is correct?
a. Statement 1 is true; statement 2 is true.
b. Statement 1 is true; statement 2 is false.
c. Statement 1 is false; statement 2 is false.
d. Statement 1 is false; statement 2 is true.

29.Statement 1: Owner’s cash withdrawals are under financing activities.

Statement 2: Cash collected from purchase of Property, Plant, and Equipment is
under investing activities
a. Statement 1 is true; statement 2 is true.
b. Statement 1 is true; statement 2 is false.
c. Statement 1 is false; statement 2 is false.
d. Statement 1 is false; statement 2 is true.

30.In the CFS, Interest payments to creditors is classified as ______________.

a. Operating activities
b. Investing activities
c. Financing activities
d. None of the above
Test II- Write I if the statement describes an Income and E if it describes
an Expense. Write all your answers on a piece of paper. DO NOT
ANSWER ON THE TEST BOOKLET.

1. It increases assets and/ or decreases liabilities leading to

increase in equity resulting from the operations of the
business and not from the owners’ contribution.
2. It decreases assets and/ or increases liabilities leading to
the decrease in equity resulting from the operations of the
business and not because of distribution to owners.
3. One of the accounts under it is Cost of Goods Sold.
4. Sale of inventory is one of its sources.
5. It can be classified as Revenue or Gains.
6. It is an SCI element having a normal balance of debit.
7. Professional Fees is one of its examples.
8. It is an SCI element with credit normal balance.
9. Losses can be considered under this element.
10.It is earned by rendering services or selling of goods.

Test III: Prepare SCE. Write all your answers on a piece of paper. DO
NOT ANSWER ON THE TEST BOOKLET.
ISLA PAHO PIZZARIA, a Guimaras native pizza restaurant that offers the
original best-selling Mango Pizza is owned by Mr. Matt Tamis, a single proprietor. Mr.
Tamis initially invested cash and property to his business. After a year of business
operations, he wants to know if there are changes in his capital account. Prepare a
Statement of Changes in Equity for ISLA PAHO PIZZARIA to help Mr. Tamis in his
concern. Use a separate sheet of paper for your answers.

The following are information provided by ISLA PAHO PIZZARIA.

1. Mr. Tamis’ capital balance on January 1, 2019 was ₱850,000.
2. During the year, Mr. Tee invested an additional furniture for the restaurant
amounting to ₱80,000.
3. The restaurant earned a net income of ₱270,000.
4. Before the year ended, Mr. Tamis withdrew cash from the restaurant for
personal use in the amount of ₱100,000.

“BE SAFE AND GOD BLESS”