Fundamentals of Accountancy, Business and Management 2 - First Semester (1st Quarter)
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Questions and Answers

Which statement provides information about the financial performance of a company by computing the net income or net loss of the entity?

  • Statement of Comprehensive Income (correct)
  • Statement of Financial Position
  • Statement of Changes in Equity
  • Statement of Cash Flows

    • What is the purpose of the statement of financial position?

  • To provide information about the financial performance of a company
  • To list the total assets, liabilities, and capital of a company
  • To distinguish current from non-current assets and liabilities (correct)
  • To compute the net income or net loss of the entity

    • How can the statement of financial position be presented?

  • Using the report form
  • Using the statement of comprehensive income
  • Using two separate statements
  • Using the accounting form (correct)

    • What is the difference between the statement of comprehensive income of a service company and a merchandising company?

    <p>The computation of net sales and cost of goods sold</p> Signup and view all the answers

    What are the two components of the statement of comprehensive income?

    <p>Other comprehensive income and other comprehensive loss</p> Signup and view all the answers

    Which one of these is true about the statement of financial position?

    <p>It distinguishes current from non-current assets and liabilities</p> Signup and view all the answers

    How is the statement of comprehensive income presented?

    <p>By separating profit and losses and other comprehensive income</p> Signup and view all the answers

    What is the difference between the statement of comprehensive income of a service company and a merchandising company?

    <p>The source of income</p> Signup and view all the answers

    Which one of the following correctly describes the accounting form of the statement of financial position?

    <p>Total assets are presented on the left and liabilities and capital are presented on the right.</p> Signup and view all the answers

    What is the purpose of the statement of comprehensive income?

    <p>To provide information about the financial performance of the company by computing the net income or net loss.</p> Signup and view all the answers

    How does the source of income differ between a service company and a merchandising company in the statement of comprehensive income?

    <p>A merchandising company's source of income primarily comes from selling products.</p> Signup and view all the answers

    Which one of the following is true about the equity section of a sole proprietorship?

    <p>It is called Owners Equity</p> Signup and view all the answers

    What caused the decrease in the Capital balance at the end of the year?

    <p>Net Loss</p> Signup and view all the answers

    What are the three forms of business organizations based on their ownership?

    <p>Sole Proprietorship, Partnership, and Corporation</p> Signup and view all the answers

    What is the purpose of the Statement of Changes in Equity?

    <p>To show the details in the movement of the equity or Capital Account</p> Signup and view all the answers

    What is the difference between the equity section of a sole proprietorship and a partnership?

    <p>Owners Equity vs Partner's Equity</p> Signup and view all the answers

    Which one of the following correctly describes the equity section of a partnership?

    <p>Partner's Equity</p> Signup and view all the answers

    What is the purpose of the statement of changes in equity?

    <p>To provide details of the movement of the equity or capital account</p> Signup and view all the answers

    What are the three forms of business organizations based on their ownership?

    <p>Sole proprietorship, partnership, and corporation</p> Signup and view all the answers

    Which one of the following correctly describes the equity section of a corporation?

    <p>Shareholders' Equity</p> Signup and view all the answers

    What is the purpose of the statement of changes in equity?

    <p>To explain the changes in the equity or capital account</p> Signup and view all the answers

    What are the three forms of business organizations based on their ownership?

    <p>Sole proprietorship, partnership, and corporation</p> Signup and view all the answers

    Which of the following activities is NOT included in operating activities in the cash flow statement?

    <p>Sale of goods</p> Signup and view all the answers

    Which of the following activities is included in investing activities in the cash flow statement?

    <p>Paid cash for purchase of goods</p> Signup and view all the answers

    Which of the following activities is included in financing activities in the cash flow statement?

    <p>Owner withdraws investment</p> Signup and view all the answers

    What is the purpose of the cash flow statement?

    <p>To show the net change in the cash balance of a company</p> Signup and view all the answers

    Which of the following is NOT a category of cash flows in the cash flow statement?

    <p>Administrative activities</p> Signup and view all the answers

    Which one of the following activities is included in operating activities in the cash flow statement?

    <p>Paying rent</p> Signup and view all the answers

    Which one of the following activities is included in investing activities in the cash flow statement?

    <p>Purchasing long-term assets</p> Signup and view all the answers

    Which one of the following activities is included in financing activities in the cash flow statement?

    <p>Withdrawing investment</p> Signup and view all the answers

    Which one of the following is NOT a category of cash flows in the cash flow statement?

    <p>Equity activities</p> Signup and view all the answers

    What is the purpose of the cash flow statement?

    <p>To provide information on the inflows and outflows of the cash account</p> Signup and view all the answers

    What are the three categories of cash flows in the cash flow statement?

    <p>Operating activities, investing activities, financing activities</p> Signup and view all the answers

    Which one of the following is true about common-size analysis?

    <p>It computes all accounts as a percentage of total assets for the statement of financial position.</p> Signup and view all the answers

    What is the purpose of horizontal analysis?

    <p>To show the percentage of change from the current year compared to the previous year.</p> Signup and view all the answers

    What is the percentage of total liabilities to total assets if a firm has liabilities of ₱30,000 and owner’s capital of ₱90,000?

    <p>50 percent</p> Signup and view all the answers

    What is the increase in owner’s capital from 2013 to 2014 if a firm had owner’s capital of ₱150,000 in 2013 and ₱187,500 in 2014?

    <p>12.5 percent</p> Signup and view all the answers

    What is the percentage of total assets that are long-term liabilities if long-term liabilities are ₱300,000 and total assets are ₱2,100,000?

    <p>16.7 percent</p> Signup and view all the answers

    Which one of the following is true about trend analysis?

    <p>It shows the percentage of change from the current year compared to the previous year.</p> Signup and view all the answers

    What is the percentage of total assets that are current assets if current assets are ₱270,000 and total assets are ₱810,000?

    <p>25 percent</p> Signup and view all the answers

    Comparing the amount of a balance sheet item in one year to the amount for the same item in a prior year is called ______.

    <p>horizontal analysis</p> Signup and view all the answers

    Which one of the following is true about common-size analysis?

    <p>Common-size analysis compares the accounts of a company to a base account for each year.</p> Signup and view all the answers

    Which one of the following is true about trend analysis?

    <p>Trend analysis compares the financial position and performance of a company for two periods.</p> Signup and view all the answers

    What is the percentage of total assets that are current assets if current assets are ₱270,000 and total assets are ₱810,000?

    <p>25 percent</p> Signup and view all the answers

    Which ratio measures a company's ability to cover the interest expense on its liability with its operating income?

    <p>Interest coverage ratio</p> Signup and view all the answers

    Which ratio measures the company's ability to pay debts that are coming due (short-term debt)?

    <p>Current ratio</p> Signup and view all the answers

    Which ratio indicates the percentage of the company's assets that are financed by debt?

    <p>Debt ratio</p> Signup and view all the answers

    Which ratio indicates the percentage of the company's assets that are financed by capital?

    <p>Equity ratio</p> Signup and view all the answers

    Which ratio indicates the company's reliance on debt or liability as a source of financing relative to equity?

    <p>Debt ratio</p> Signup and view all the answers

    Which ratio measures the company's ability to cover the interest expense on its liability with its operating income?

    <p>Interest coverage ratio</p> Signup and view all the answers

    What is the formula for calculating the percentage change in a financial statement item using horizontal analysis?

    <p>(Balance of Current Year - Balance of Prior Year) / (Balance of Prior Year)</p> Signup and view all the answers

    What is the base amount for vertical analysis of the statement of financial position?

    <p>Total assets</p> Signup and view all the answers

    Which ratio measures the company's ability to pay its long-term liabilities?

    <p>Debt to equity ratio</p> Signup and view all the answers

    Which ratio is used to evaluate the company’s liquidity?

    <p>Current ratio</p> Signup and view all the answers

    What is the formula to calculate the percentage change in a financial statement item for horizontal analysis?

    <p>Percentage change = (Balance of Current Year - Balance of Prior Year) / (Balance of Prior Year)</p> Signup and view all the answers

    Which of the following is NOT a normal balance for an asset account?

    <p>Credit</p> Signup and view all the answers

    What is the normal balance for a liability account?

    <p>Credit</p> Signup and view all the answers

    What is the normal balance for the owner's capital account?

    <p>Credit</p> Signup and view all the answers

    What is the normal balance for an income account?

    <p>Credit</p> Signup and view all the answers

    What is the normal balance for an expense account?

    <p>Debit</p> Signup and view all the answers

    Which of the following is NOT a normal balance for an expense account?

    <p>Credit</p> Signup and view all the answers

    Which of the following is a compound journal entry?

    <p>A journal entry that requires three or more accounts</p> Signup and view all the answers

    Under the periodic inventory system, how is the cost of goods sold calculated?

    <p>Beginning inventory plus net purchases</p> Signup and view all the answers

    Which of the following is NOT a contra asset account?

    <p>Accumulated Depreciation - Store Equipment</p> Signup and view all the answers

    What is the normal balance for the Owners, Capital account in a partnership?

    <p>Credit</p> Signup and view all the answers

    Which of the following is true about the perpetual inventory system?

    <p>It continuously monitors the movement of inventory</p> Signup and view all the answers

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