FINAL TERM 2NDSEMESTER

FUNDA OF ABM 2 REVIEWER

KNOWLEDGE
TRUE OR FALSE
DIRECTIONS: Read each statement below carefully. Choose TRUE if the statement is correct,
and FALSE if otherwise.

________ 1.Capital Stock reflects the par value (minimum price of stocks that
can be issued) of the total share capital that a company is authorized to
issue.
________ 2. Security Exchange Commission provides a platform where
investors can buy and sell stocks of listed corporations.
________ 3. Sole Proprietorship is subjected to double taxation (an income
tax and withholding tax).
________ 4. SoCE is prepared to obtain the ending balance of the equity to
be reflected in the SFP.
________ 5. Corporation uses capital stock, additional paid-in capital and
retained earnings as equity accounts.
________ 6. The statement of changes in equity is dated as of the year ended.
________ 7. There are two equity accounts reported on the SoCE of a
sole proprietorshipnamely, owner’s capital and owner’s drawings.
________ 8. The Drawings account is used for sole proprietorship,
partnership, and corporation.
_______ 9. Cash payments for bank loans are reported under cash
flows from operating activities.
_______ 10. A negative cash flow from investing activities is a bad
indicator of the company’s ability to generate cash.
_______ 11. A common-size Statement of Comprehensive Income
presents accounts expressed as percentage of net income.
_______ 12. A common-size Statement of Financial Position presents
accounts expresses as a percentage of total liabilities and equity.
_______ 13. Business activities are classified into operating, investing,
and funding activities in Statement of Cash Flows.
______ 14. Payments for acquisition of merchandise inventory are
reported as investing activities.
______ 15. Statement of Cash Flows explains the observed
difference in the cash balance from the beginning to the end
of the period.
1. TRUE
TRUE OR FALSE
2. FALSE
3. FALSE
4. TRUE
5. TRUE
6. FALSE
7. TRUE
8. TRUE
9. FALSE
10. FALSE
11. FALSE
12. TRUE
13. FALSE
14. FALSE
15. TRUE

DIRECTIONS: Read the following statements carefully and identify what is being described in each item. Choose the
letter of your answer from the options inside the box and write the CAPITAL LETTER on the space provided
A. Paid-in Capital
B. Retained Earnings
C. Horizontal Analysis
D. Corporation
E. Capital Stock
F. Common size-SFP
G. Common size
financial statement
H. Operating Activities
I. Financing Activities
J. Vertical Analysis
K. Net Profit Margin
L. Sole Proprietorship
M. Net Profit Margin
N. Common size SCI
O. Fixed Asset
Turnover
P. Partnership
Q. Dividends
II. IDENTIFICATION
1. It refers to the par value of the total share capital that a
company is authorized to issue.
2. It is the amount of contributions given to the corporation in
exchange for the shares of stocks.
3. It is a form of business organization where partners are
involved in the management of business.
4. It refers to the distribution of profits by a corporation to its
shareholders.
5. It shows standardized or relative amounts that enable the
readers to make comparison of companies of different sizes.
6. It is an indicator of the efficiency of fixed assets in
generating sales.
7. It is a technique that expresses each financial statement line
item as a percentage of a base amount.
8. It refers to the undistributed earnings of the corporation.
9. Is a technique that involves the comparison of an account
over a number of periods.
10. This shows the composition of assets and the percentage
of assets financed by liability and equity.
 IDENTIFICATION

1. E
2. A
3. P
4. Q
5. G
6. O
7. J
8. B
9. C
10. F
DIRECTIONS: Read each item carefully. Write the letter of the correct
answer in your paper.
 

26-27. ABC Company has retained earnings of P105, 600 at

the beginning of the fiscal year. The company reported net
income of P91, 700. On September 30, cash dividends of
P35, 000 were distributed to stockholders. What is the
amount of the ending balance of the retained earnings? (2
points)

A. 48,000 D. 162,300

B. 126,000 E. 182,300

C. 138,700
 The following are taken from the accounting records of XY Partnership
December 31, 2014
Xavier, Capital P 22,140
Yannie, Capital 52,240
The partnership generated net income of P 100, 000 in 2015.
According to the partnership contract, the profit and loss sharing ratios
are as follows: Xavier (40%) and Yannie (60%). The following were
transactions with the partners during the year:
Xavier withdrew P 12, 140 from the business.
Yannie withdrew P20, 240.
 
___________29-30. What is the capital balance of Xavier as of December
31, 2015?
(2 points)
A. Php 50,000 D. Php 82,000
B. Php 60,000 E. Php 92,000
C. Php 72,000
Solution:
 
30-31. On November 25, Connie’s Office Supplies business
generated various activities such as payment to suppliers
worth P 22, 500. During the year, new activities were
generated such as payment of rent amounting to P 8, 000
and cash received from customers worth P 22, 400. How
much is the net cash generated by operating activities?

A. (Php 8, 100) D. (Php 8,400)

B. (Php 8, 200) E. (Php 8,500)

C. (Php 8, 300)
Cash receipts from rendering of services 45,000.00

Cash payment to suppliers of goods and (15,500.00)

services

Proceeds from bank loan 10,000.00

Payment of interest (6,000.00)

Payment of rent (10,000.00)

Proceeds from sale of equipment 11,000.00

Purchase of equipment (8,500.00)

Withdrawal of owner (7,500.00)

Cash at the beginning of the year 22,500.00

Below are the cash transactions of Santos General Services
for December 31, 2016

Based on the data above, the choices below are the

answers for questions 32-33, 34-35, 36-37. Show your
solution.

Choices for 33-37.

A. Php 2,500 D. Php 25,000
B. Php 14,000 E. Php 31,000
C. Php 19,000
___________32-33. How much is the cash flow from
operating activities?
Solution:
___________34-35. How much is the investing activities?
Solution:
___________36-37. How much is the cash flow from
financing activities?
Solution:
___________38. If current assets are ₱210,000 and total assets
are ₱710,000, what percentage of total assets are current
assets?
A. 20% D. 50%
B. 30% E. 60%
C. 40%
___________39. If long-term liabilities are 300,000 and total
assets at 3,200,000. What percentage of total assets are long-
term liabilities?
A. 12.4% D. 9.4%
B. 11.5% E. 8.2%
C. 10. 7%
___________40. If owner’s equity are 10,000 and
total assets at 800,000. What percentage of total
assets are OE?
A. 3.3% D. 1.7%
B. 2.5% E. 1.3%
C. 2.3%
Use the Statement of Comprehensive Income of Garcia’s
Company provided below.

2012 2011

Net Sales 1,375,000 1,700,000

Cost of Goods Sol 2,000,500 1,355,000

Selling Expenses 440,000 320,000

Admin Expenses 170,000 143,000

Other Expenses 130,500 101,000

Net Income 314,000 250,000

__________41. What is the peso change in net sales?
A. Php 375, 000 D. (Php 375,000)
B. Php 325, 000 E. Php 300,000
C. (Php 325,000)
__________42. What is the percentage change in net
income?
A. There is a net income decay of 20%.
B. There is a net income decay of 32%.
C. There is a net income growth of 26%.
D. There is a net income growth of 20%.
E. There is a net income decay of 28%.
Use the statement of Comprehensive Income of Lucky Trading
Company provided below.

2012 2013

Sales Revenue ₱6,375.60 ₱4,951.50

Cost of Goods Sold 1,174.79 1,054.86

Gross Profit 3,011.07 2,666.99

Selling and Administrative

Expenses 1,406.46 2,127.15

Operating Income 804.61 639.84

Interest Expense 10.82 20.04

Net Income ₱792.79 ₱616.80

__________43. What is the peso change in
operating income?
A. Php 64.77
B. Php 81.77
C. Php 100.77
D. Php 124.77
E. Php 164.77
 Lucky Trading Company
Vertical Analysis of Statement of Financial Position
As of December 31,  
  2014 % 2015 %
Cash and Cash ₱470.31 14.0 ₱519.86 16.5
equivalents
Accounts Receivable, net 660.11 20.0 565.17 17.9

Inventory 653.06 19.8 555.48 17.6

Prepaid Expenses 173.74 228.82

Total Current Assets 1,957.22 59.3  1,869.32 59.3 

Property, Plant, and 600.55 18.2 560.66 17.8

Equipment, net

Intangible Assets 745.20 22.6 721.91 22.9

Total Assets ₱3,302.93 100 ₱3,151.89 100

         
Current Liabilities ₱1,273.05 38.5 ₱1,123.70 35.7

Long-Term Liabilities 577.58 17.5 541.54 17.2

Total Liabilities 1,850.63 56.0 1,665.24 52.8

Season’s Capital 1,452.31   1,486.65  

Total Liabilities and ₱3,302.93 100 ₱3,151.89 100

Owner’s Equity

44-45. Solve the missing percentage.

44. _______
45. _______
 MULTIPLE CHOICE
26-27. D
Solution:
91,700
- 35,000
56,700
+ 105,600
162,300

28-29. A
Solution:
Xavier’s Capital 22,140 Yannie 52,240
Net Income 40,000 Net Income 60,000
Xavier’s Drawings (12,140) Yannie’s Drawings (20,240)
Xavier’s, Ending Cap 50,000 Yannie’s, Ending Cap 92,000
 MULTIPLE CHOICE
30-31. A
Solution:

Cash received 22,400

Payment to suppliers (22,400)
Rent Payment ( 8,000)
Net Cash generated from operating act ( 8,100)

32-33. B
Cash receipts 45,500
Payment to suppliers (15,000)
Interest Payment ( 6,000)
Rent Payment (10,000) (31,000)
Cash Flow Generated from OA 13,500
 MULTIPLE CHOICE
34-35. A
Solution:

Proceeds from Equipment 11,000

Purchase of Equipment ( 8,500)
Cash flow generated from IA 2,500

36-37. A
Proceeds from Bank loan 10,000
Withdrawal ( 7,500)
Cash flow generated from FA 2,500
38. B MULTIPLE CHOICE
Solution:
210,000/710,000X100% = 30%

39. D
300,000/3,200,000X100=9.4%

40. E
10,000/800,000X100=1.3%

41. C
1,375,000-1,700,000=(325,000)

42. C
314,000-250,000=64,000/250,000X100=25.6 or 26%

43. E
804.61
- 639.84
164.77

44. 5.3% 45. 7.3% or 44 and 47

A. PREPARATION OF STATEMENT OF CHANGES IN EQUITY
DIRECTIONS: Presented below are accounts of Beng’s Gift Shop
for the year ended December 31, 2020. Prepare the statement of
changes in equity for a sole proprietorship. Be guided by the
scoring rubric.

Criteria Points
Correct Heading of Financial Report 1 point
Correct Placement of Values 2 points
Correct Value of Ending Capital 2 points
Total Score 5 points

Beng opened Beng’s Flower Shop on January 25, 2020. She

invested P500, 000 to purchase gifts and shop’s furniture. She
invested an additional P 100, 000 on June 12, 2020. Net income for
2019 was reported at P 200, 400. Beng drawing account has a
balance of P 55, 000 on December 20, 2019.
Prepare Beng’s Gift Shop Statement of Changes in Equity for the
year ended December 31, 2020, to compute for Beng’s Gift Shop
ending capital.
 BENG’S GIFT SHOP
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2020

Beng’s, Capital, Jan 1, 2020 0

Add:
Owner’s Contribution 500,000
Net Income 200,000
Additional Investment 100,000

Less:
Withdrawals (55,000)

Beng’s, Capital, December 31, 2020 745,400

B. PREPARATION OF DIRECT APPROACH STATEMENT OF CASH FLOWS
DIRECTIONS: Presented below are accounts of Ice’s Milk Shake with a beginning
balance of Php 50, 000. Prepare the statement of cash flows using direct approach
for the year ended December 31, 2021. Be guided by the scoring rubric.

Criteria Points
Correct Heading of Financial Report 1 point
Correct Balance of Net Cash Flows from Operating Activities 1 point
Correct Balance of Net Cash Flows from Investing Activities 1 point
Correct Balance of Net Cash Flows from Financing Activities 1 point
Correct Balance of Ending Cash 1 point
Total Score 5 points

Sale of goods Php 210, 200

Purchase of goods 75, 100
Paid utilities 50, 000
Paid rent 60, 000
Sold furniture 28, 000
Owner’s Withdrawals 30, 900
 ICE MILK SHAKE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,2021

Cash Flow from Operating Activities

Sale of Goods Php 210,200
Purchase of Goods (75,100)
Paid utilities (50,000)
Paid rent (60,000)
Net cash flow from operating activities Php 25,100
Cash Flow from Investing Activities
Sold Furniture 28,000
Net cash flow from investing activities Php 28,000
Cash Flow from Financing Activities
Owner’s Withdrawals (30,900)
Net cash flow from financing activities Php (30,900)
Net Change in Cash Php 22,200
Cash, January 1, 2021 Php 50,000
Cash, December 30, 2021 Php 72,200
ANSWERS