Angadanan National High School

Centro 1, Angadanan, Isabela

Senior Hish School
3rd quarter Examination

Name:_______________________________________________ Score:________________

Grade&Section:_______________________________________Date:________________

General Instructions: Read thoroughly the instruction given in each item. Answers not in
compliance to given instruction will not earn a point. Use pens with permanent ink only.
No erasures allowed. Do not make unnecessary marks on the examination paper.

PART I - Multiple Choice: Write the answer on the space provided. Select the best answer.
_________1. It describes the amount of time that is expected to elapse until an asset is
converted into cash or until a liability has to be paid.
a. Solvency
b. Liquidity
c. Flexibility
d. All of the above
_________2. Which of the following is not a major limitation of the statement of financial
position.
a. The values stated are generally historical and not at fair value.
b. Estimates have to be used in many instances, such as in the determination of
collectability of receivables or finding the approximate useful life of long-term
tangible and intangible assets.
c. Many items, even though they have financial value to the business, presently
are not recorded. One example is the value of a company’s human
resources.
d. None of the above
_________3. Which of the following is not an asset.
a. Loss on sale of equipment
b. Collections from clients
c. Interest earned in an investment
d. Paid rent in advance
_________4. It is the most complex form of business organization.
a. Sole Proprietorship
b. Partnership
c. Corporation
d. Cooperative
________5. It is a business owned by two or more owners.

a. Sole Proprietorship
b. Partnership
c. Corporation
 d. Cooperative
_________6. The amount left after deducting all expenses from the revenues.
a. Profit
b. Gross Profit
c. Gross Margin
d. Net income
_______7. Involve the cash effects of transactions that enter into the determination of
net income.
a. Investing activities
b. Operating activities
c. Financing activities
d. Revenue collection
_________8. Include making and collecting loans and acquiring and disposing of debt
and equity instruments; property, plant, and equipment and intangibles.
a. Investing activities
b. Operating activities
c. Financing activities
d. Revenue collection
_________9. Ana Purchase an equipment amounting to P98,000 on cash and Borrowed
in bank amounting to 60,000. What is the effect on Owner’s Equity?
a. Increased by P158,000
b. Increased by P38,000
c. Decreased by P38,000
d. Decreased by P158,000
________10. Given the following information, calculate ABM Corp’s Net Income:

Sales: P260,000
Cost of Goods Sold: 100,000
Salaries and Wages: 20,000
Rent Expense: 15,000
Advertising Expense: 35,000
Cost of repairs resulting from fire: 50,000
a. P60,000
b. P10,000
c. P40,000
d. 20,000

Part II – Identification.
1. The amount received by the business from selling main goods or services to its
customers during the period. _______________________
2. A division in the cash flow statement that constitute the revenue-generating
activities of the business. ______________________
3. A division in the cash flow statement that constitute payments made to acquire the
long-term assets, as well as cash received from their sale.____________________
4. The accounting equation. ___________________
5. A division in the cash flow statement that constitute activities that will alter the
equity or borrowings of the business. ___________________
6. Liabilities that are not due for settlement within 12 months after the reporting
period.___________________
7. This term is used to describe the owner’s act of utilizing the business’ asset for his
personal expenditures.
8. The amount left after deducting all expenses from the revenues._________________
9. These ratios measure the business’ ability to meet its current
obligation.________________________
10. The term used to mean the total earnings of the business.___________________________
11. These ratios measure the degree of protection of suppliers of long-term
funds._________________
12. The most liquid asset.____________________
13. This shows the changes in the capital account due to contributions, withdrawals,
net income, or net loss._______________________
14. This focuses on trends and changes in financial statement items over time. This
helps financial statement users to see relative changes overtime and identify
trends._____________________
15. The terms that refers to what the business earns on selling assets which are not
inventories of the business.___________________

Part III. Financial Statement Preparation

The following accounts relate to Kalayaan Graphic Arts:

Accounts Payable P 122,500

Accounts Receivable 219,000
Accumulated Depreciation – Building 60,000
Accumulated Depreciation – Equipment 60,000
Advertising Expense 105,000
Art Revenues 1,437,500
Building 450,000
Cash 36,200
Depreciation Expense - Building 30,000
Depreciation Expense - Equipment 217,000
Interest Expense 37,000
Land 120,000
Miscellaneous Expense 24,600
Mortgage Payable 395,000
Notes Payable 213,000
Office Supplies 17,200
 Kalayaan, Capital 1/1/2019 50,500
Kalayaan, Withdrawals 148,600
Representation Expense 164,000
Salaries Expense 673,200
Salaries Payable 17,300
Travel Expense 159,000

During the year, Mario Kalayaan invested additional P75,000 in his business.
Required:
(1 - 15) Prepare the Statement of Financial Performance using function of
expense method.
(16-20) Prepare the Statement of Changes in Equity.

(21-35) prepare the Statement of Financial Position using the report form.
(36-40) The following transactions pertain to the operations of Happiness Accounting and
Business Consultant, an Accounting and Business Consultancy operated by Sorrowful Joy
Dimaano. The entity had the following transactions during the month:
a. Received a P180,000 cash investment from owner.
b. Provided P400,000 services on account.
c. Incurred P220,000 operating expenses on account.
d. Collected P320,000 cash from accounts receivable.
e. Allowed a P30,000 cash withdrawal to the owner of the business.
f. Paid P160,000 cash on accounts payable.
g. Performed services for P30,000 cash.
h. Paid 12, 000 cash for expenses.

Required:
Prepare a Statement of Cash Flows, using the direct method, for Happiness Accounting
and Business Consultant.
 Part IV. Financial Statement Analysis.
Instruction: Using the information in Part III: 1-35, compute and give your evaluation of
Kalayaan Graphic Arts’:
(5 points each)
A. Current Ratio
Computation: Evaluation:

B. Net Profit Margin

Computation: Evaluation: