MULTIPLE CHOICE

1. The data from comparative financial statements are useful

A. To analyses change in gross and net earning over a number of accounting period
B. To analyses the sources of increase in assets
C. To indicate earnings trend and cost trend for the firm
D. In accomplishing all of the above

2. A firm’s income statement showing component percentage is known

A. Common peso statement
B. Condensed income statement
C. Common size income statement
D. Comparative income statement

3. The main internal user of financial statements is

A. The SEC B. Management C. Investors D. Creditors

4. Company performance with industry norms is complicated

A. The existence of diversified companies
B. The use of different account, procedures by different company
C. The fact that companies in the same industry will usually differ in some respect.
D. All of the above

5. Which of the following is a relevant factor in the determination of economic under quantity
A. Physical plant deprecation charge
B. Variable cost of processing purchase order
C. Ware house supervisory sale
D. Physical plant insurance

6. Which of the following is not an operating asset

A. Account receivable
B. Cash
C. Common stock
D. Inventory

7. The ration of cash trade, receivable and marketable securities to current liabilities is
A. Working capital
B. Acid test ratio
C. Current ratio
D. Debt, to equity ratio

8. In the preparation of statement of cash flows all of the following would be classified as
Investing activities except
A. Collection of loan from subsidiary
B. Purchase patent from an inventor
C. Sale of plant asset
D. Dividends received on shares held as investment

9. A series of Cash inflow is

A. Annuity C. Discount
B. Interest D. Maturity value

10. Cash received from issuance of stock is

A. Operating activity C. Financing activity
B. Investing activity D. Non-cash item
ESSAY

1. What may be relevant for one type of decision problem may not be relevant in another,
Explain.
2. Sometimes, quantitative factors are given more weight compared to quantitative factors,
Explain.

PROBLEMS: Show supporting solutions.

1. Dana owns two businesses: a drug store and a retail department store. The following data
are given:

Drug Store Department Store

Net Sales P 1, 050, 000 P 670, 000
Cost of Sales 1, 000, 000 600, 000
Operating expenses 39, 500 36, 500

Which businesses earns more income?

2. The Tess Company has 400 obsolete desk calculators that are carried in inventory at a total
cost of P 26 800. If these calculators are updated at a total cost of 10, 000, they can be sold for
a total selling price of 30 000. As an alternative, the calculators can be sold in their present
condition for P 11 200. What is the net advantage or disadvantage to the company from
upgrading and selling the calculators?
a. P 8, 000 disadvantage c. P 18, 000 disadvantage
b. P 8, 800 advantage d. P 20, 000 advantage

3. Candor Company make and sells electric fans. Each fan regularly sells P 42. The following cost
Data per fan is based on a full capacity of 150, 000 fans produced each period. Direct
materials, P 8; Direct labor, P 9; Factory overhead (70% variable and 30% unavoidable fixed),
P 10. A special order has been received by Candor for a sale of 25, 000 fans in an overseas
customer. The only selling costs that would be incurred on this order would be P 4 per fan
for shipping. Candor is now selling 120, fans through regular channels each period. That
should Candor uses a minimum selling price per fan in negotiating a price for this special
order?
a. P 24 b. P 28 c. P 27 d. P 31

4. In preparing its cash flow statement for the year ended Dec. 31, 2015, Reigner Co. collected
the following data:

Gain on sale equipment P 60, 000

Proceeds from sale of equipment 100, 000
Purchase of AB bonds ( par value, P 2, 000, 000) 1. 800, 000
Amortization of bond discount 20, 000
Dividend declared 450, 000
Dividends paid 380, 000
Proceeds from sale of treasury stock 750, 000
(carrying amount, P 650, 000)

4.1. What amount should Reigner report as net cash provided by financing activities?
a. 200, 000 b. 270, 000 c. 300, 000 d. 370, 000

4.2 What amount should Reigner report as net cash used in investing activities?
a. 1, 700, 000 b. 1, 760, 000 c. 1, 880, 000 d. 1, 940, 000
5. The following data are given on the sole product of Angel Trading

2017 2016

Sales volume (Units) 5, 000 4, 000

Unit Selling Price P 10 P 16
Unit Cost P 9 P 8
Operating Expenses
Selling P 600 P 10, 000
General/ Administrative 8, 000 7. 000

Prepare a comparative income statements.

6. You are given ratios and amounts for X company for 2016

Current ratio 2.7

Quick ratio 1.17
Inventory turnover 3.4
Accounts receivable turnover 6.5
Cost of goods sold 2015 P 197, 200
Credits sales for 1998 260, 000
Accounts receivable, Jan. 1, 2015 38, 200
Merchandise inventory Jan. 1m 2015 62, 000

X Company
Schedule of Current Assets
And Current Liabilities
Dec. 31, 1998

Current Assets:
Cash P 5, 000
Accounts receivable 2. _______
Merchandise Inventory 3. _______
Prepaid Insurance P 7, 200
Total Current Assets 1. _______
Current Liabilities:
Accounts Payable 4. ________
Accrued Payables 5, 000
Total Current Liabilities 40, 000

Required:
Supply the missing amount in this schedule. Do your calculation in the numerical order
indicated in this schedule