43.

Which financial statement will allow you to determine the gross margin for a retailer or
manufacturer? a. Balance Sheet b. Income Statement c. Statement Of Cash Flows
d. Statement Of Comprehensive Income e. Statement Of Stockholders’ Equity
44. Does the heading of a balance sheet indicate a period of time or a point in time?
a. Period Of Time b. Point In Time c. Bound in Time d. Specific Time
Name:___________________________________________ Date: _____________
45. The amount spent for capital expenditures will be reported in which section of the statement of
Grade/Section: Grade 11 – Blue Rating: ____________
cash flows? a. Cash Provided/used In Financing Activities b. Cash Provided/used In
Investing Activities c. Cash Provided/used In Operating Activities d. Supplemental Prepare the journal entry to record the following independent transactions:
Information
46. Outstanding checks. a. Add To BOOK Balance b. Deduct From BOOK Balance 1. Siopao Queen paid its P1,390 electric bill for the month.
c. Add To BANK Balance d. Deduct From BANK Balance
47. Bank service charge. a. Add To BOOK Balance b. Deduct From BOOK Balance 2. Friendly Store sold for cash, P4,5000 worth of merchandise. The cost of goods sold is P2,300.
c. Add To BANK Balance d. Deduct From BANK Balance The company uses perpetual inventory system.
48. Interest credited to bank account a. Add To BOOK Balance b. Deduct From
c. BOOK Balance d. Add To BANK BalancFrome e. Deduct From BANK 3. Waldo Merchandising purchased on account P23,000 goods for resale from Melody Inc.
Balance The company uses periodic inventory system.
49. Interest charged to bank account. a. Add To BOOK Balance b. Deduct From
BOOK Balance c. Add To BANK Balance d. Deduct From BANK Balance 4. Butch Auto Repair purchased a building for his business at a cost of P500,000.
50. Deposit in transit. A. Add To BOOK Balance c. Deduct From BOOK Balance Butch paid P300,000 and for the balance he issued a promissory note payable 60 days after.
Add to BANK Balance Deduct From Bank Balance
Prepared by: 5. Seth Laundry Company paid advertising contract for one month, P2,000.

ROSSANO C. DAVID, CPA / MBA Multiple Choice Problems:

Subject Teacher (For numbers 6 to 10) The financial statements of Merdana Trading Ltd. are given below:
2014 2013
Cash and Cash Equivalents 12,250 10,470
Checked and Reviewed by:
Receivables 9,065 8,055
HENRY A. CABACUNGAN Inventory 6,620 5,300
Head Teacher VI Prepaid Expenses 8,545 10,600
Total Curent Assets 36,480 34,425
Other Assets 92,500 78,685
Noted: Total Assets 128,980 113,110
Total current liabilities 36,150 42,335
DR. EPIFANIA B. DUNGCA Long-term Liabilities 23,990 18,960
PRINCIPAL IV Mercedes Aldana, Capital 68,840 51,815
Total Liabilities and Equity 128,980 113,110
 16. Which statement best describes Merdana Trading Ltd.’s acid-test ratio?
a Greater than 1 b Equal to 1 c Less than 1 d None of the above
17. Merdana Trading Ltd.’s inventory turnover during 2014 was (amounts rounded) a 6
times. b 7 times c 8 times d Not determinable from the data given.
2014 18. During 2014, Merdana Trading Ltd.’s days’ sales in receivables ratio was (amounts rounded)
Sales 104,705 a 34 days b 30 days c 32 days d 28 days
19. Which measure expresses Merdana Trading Ltd.’s times-interest-earned ratio? (amounts
Cost of Sales 32,275
rounded) a 54.7% b 20 times c 34 times d 32 times
Gross Profit 69,430
20. Merdana Trading Ltd.’s rate of return on equity can be described as
Selling Expenses 35,325 a 33.55% b 16.72% c 35.29% d None of the above
Administrative Expenses 12,815 21. Merdana Trading Ltd.’s rate of return on asset can be described as
Operating Income 21,290 a 33.55% b 16.72% c. 35.29% d None of the above
Interest Expense 1,050 22. Merdana Trading Ltd.’s gross profit rate can be described as
Net Income 20,240 a 34% b 19% c. 20% d 66%
23. What is stockholders' equity? a Sales of products or services b Owners' claims to resources
6. Horizontal analysis of 2014 Merdana’s balance sheet would report c. Resources owned d Costs of selling products or services e Amounts owed
a. Cash as 9.50% of total assets. c. 19% increase in Cash. 24. What's revenue? a Costs of selling products or services b Expense to run business
b. 17% increase in Prepaid Expenses. d. All of the above. c Sales of products or services d Distributions to stockholders e Assets purchased to run
7. Vertical analysis of 2014 Merdana’s balance sheet would report business
a. Cash as 9.50% of total assets. c. 19% increase in Cash. 25. What are expenses? a Costs of selling products or services b Sales of products or
b. 17% increase in Prepaid Expenses. d. All of the above services c Amounts owed d Distributions to stockholders e Owners' claims to
8. A common-size income statement for Merdana would report (amounts rounded) resources
a Net income of 19%. b. Sales of 100%. c. Cost of sales at 34%. d All of the above 26. A business organization compose by a group and has separate legal personality from its
9. A common-size balance sheet for Merdana would report (amounts rounded) owners a Sole Proprietorship b Corporation c Partnership d Cooperative
a Current liabilities as 28% of total assets c Receivables is 7% of total liabilities and equity 27. Are a business’ source of raw materials, intermediate goods or final products and services.
b Owner’s capital is 53% of total liabilities & equity d All of the above a Vendors b Suppliers c buyers d Vendee
10. Trend analysis will show which of the following? 28. What is the accounting equation? a Assets - liabilities = stockholders equity b Assets +
a. 15% increase in Current Liabilities c 19% increase in Long Term Liabilities . liabilities = stockholders equity c Liabilities - stockholders equity = assets d NOTA
b 33% increase in Owner’s Capital. d All of the above 29. What is an example of an expense? a Bank loan b Interest paid to a credit union
11. If current assets are ₱270,000 and total assets are ₱810,000, what percentage of total assets c Principle paid to Lehman bank d Monthly rent on office space
are current assets? a 3.5 percent b 30 percent c 25 percent d 33 percent 30. What is the statement called that measures activities involving cash recipts and cash payments
12. Comparing the amount of a balance sheet item in one year to the amount for the same item in a over an interval of time? a Income Statement b Balance Sheet c The Statement of
prior year is a common-size analysis. . c horizontal analysis Stockholders' Equity d The Statement of Cash Flows
b vertical analysis. d ratio analysis. 31. What piece of company information better explains companies stock price performance?
13. A firm has liabilities of ₱30,000 and owner’s capital of ₱90,000. The percentage of total a. Balance Statement b. Financial accounting net income c. Revenues d. Expenses
liabilities to total assets is a 25 percent. b 20 percent. c 50 percent. d 75 percent. 32. Which of the following will cause owner's equity to increase? a. Expenses b Owner’s Draws
14. A firm had owner’s capital of ₱150,000 in 2013 and ₱187,500 in 2013. The increase in owner’s c Revenue d NOTA
capital from 2013 to 2014 is a 12.5 percent. b 20 percent. c 25 percent. d 125 percent. 33. Which of the following will cause owner's equity to decrease?
15. If long-term liabilities are ₱300,000 and total assets are ₱2,100,000, what percentage of total a. Net Income b. Net Loss c. Revenue d. Expenses
assets are long-term liabilities? a 7 % b 16.7 % c 12.5 % d 14.3 %
34. The personal assets of the owner of a company will not appear on the balance sheet because
of which principle? a. Cost b. Economic Entity c. Monetary Unit d. All of the above.
35. Which principle requires a company's balance sheet to report its land at the amount the
company paid to acquire the land, even if the land could be sold today at a significantly higher
amount? a. Cost b. Economic Entity c. Monetary Unit d. All of the above.
36. Which principle allows a company to ignore the change in the purchasing power of the peso
over time? a. Cost b. Economic Entity c. Monetary Unit d. All of the above.
37. Which principle requires the company's financial statements to have footnotes containing
information that is important to users of the financial statements?
a. Conservatism b. Economic Entity c. Full Disclosure d. Monetary Unit
38. Which principle justifies a company violating an accounting principle because the amounts are
immaterial? a. Conservatism b. Full Disclosure c. Materiality d. Monetary Unit
39. Which of the following will be included in the adjusting entry to accrue interest expense?
a. A Debit To Cash b. A Credit To Interest Payable
c. A Debit To Interest Payable d. A Debit To Prepaid Interest
40. Which of the following will be included in the adjusting entry to accrue interest income or
interest revenues? a. A Debit To Cash b. A Debit To Interest Income
c. A Credit To Interest Receivable d. A Debit To Interest Receivable
41. The adjusting entry that reduces the balance in Prepaid Insurance will also include which of the
following? a. A Credit To Cash b. A Credit To Insurance Expense
c. A Debit To Insurance Expense d. A Debit To Insurance Payable
42. The adjusting entry that reduces the balance in Deferred Revenues or Unearned Revenues will
also include which of the following? a. A Debit To Cash b. A Credit To Fees Earned
c. A Debit To Fees Earned d. A Credit To Fees Receivable