Republic of the Philippines

Department of Education
Region III
Division of Nueva Ecija
CUYAPO NATIONAL HIGH SCHOOL
Brgy. Bulala, Cuyapo, Nueva Ecija

SUMMATIVE TEST No. 2

FUNDAMENTALS OF ACCOUNTANCY,BUSINESS AND MANAGEMENT II
First Semester 2018-2019 (First Quarter)

Name:____________________ Score:_____________________
Section: __________________ Date: _____________________

I. Multiple Choice
Direction: Encircle the correct answer
1. It is the process of evaluating risks, performance, financial health, and future prospects of a business using
computational and analytical techniques with the objective of making economic decisions.
a. Financial Statement analysis b. Ratio Analysis
c. Comparative Statements Analysis d. Financial Performance Analysis

2. It also known as trend analysis. It is a technique that involves the comparison of line item (account) over a
number of periods.
a. Horizontal analysis b. Vertical analysis
b. Comparative Statements Analysis d. Financial Performance Analysis

3. It is the preparation of common-size financial statements. It is a technique that expresses each financial
statement line item as a percentage of a base amount.
a. Horizontal analysis b. Vertical analysis
c. Comparative Statements Analysis d. Financial Performance Analysis

4. Four areas that financial ratios concentrate on are:

a. liquidity, profitability,operational efficiency, solvency
b. profitability, strategy, liquidity, auditing, share prices;
c. liquidity, current ratio, quick ratio, interest cover, dividend cover;
d. market related, share prices, dividend policy, debt policy, strategy;

5. Ratios that measure the ability of the company to pay debts that are coming due are called:
a. debt ratios b. cover ratio c. liquidity ratios d. profitability ratio

6. Ratios that measure the ability of the company to generate income from the use of its assets and invested
capital called:
a. Profitability ratios b. Solvency ratio c. Liquidity ratios d. Operational efficiency

7. Ratios that measure the ability of the company to utilize its assets are called:
a. Profitability ratios b. Solvency ratio c. Liquidity ratios d. Operational efficiency

8. Ratios that measure the ability of the company to pay their long term liabilities are called:
a. Profitability ratios b. Solvency ratio c. Liquidity ratios d. Operational efficiency

9. Current assets divided by current liabilities is the definition of the:

a. interest cover ratio b. dividend cover ratio c. quick ratio d. current ratio

10. The quick ratio is defined as:

a. current assets divided by current liabilities;
b. current assets divided by total debt;
c. current assets less inventory, divided by total liabilities;
d. quick assets divided by current liabilities;

11. Return on sales, return on assets and return on equity are examples of:
a. liquidity ratios b. profitability ratios c. debt ratios d. efficiency ratios

12. Return on assets is defined as:

a. operating income divided by owners’ equity;
b. operating income divided by sales;
c. operating income divided by total assets;
d. operating income divided by long-term assets plus debt;

13. It is composed of a numerator and a denominator. It expresses the relationship between specific financial
statement data.
a. Horizontal Analysis b. Comparative Financial Statements
c.. Vertical Analysis d. Financial Ratio
 14. Total asset turnover, receivables turnover and inventory turnover ratios measure:
a. liquidity ratio b. profitability c.operational efficiency d. solvency ratio

15. The receivables turnover ratio is defined as:

a. sales divided by receivables;
b. receivables divided by sales;
c. receivables divided by one days’ sales;
d. receivables plus bad debt allowances.

16. How are current liabilities used in the computation of the following?
Current Ratio Quick Ratio
a. Numerator Denominator
b. Denominator Numerator
c. Numerator Numerator
d. Denominator Denominator

17. Which of the following is not a measure of profitability.?

a. Return on Equity b. Gross Profit rate c. Return on assets d. asset turnover

18. Current assets minus current liabilities is

a. Current ratio b. Working Capital c. Debt Ratio d. Quick Ratio

19. Cost of sales divided Average Inventory

a. Debt Ratio b. Average Inventory c. Days of Inventory d. Inventory turnover

20. Total liabilities divided by total equity

a. Return on Assets b. Return on Equity c. Equity Ratio d. Debt-to Equity Ratio

II. Problems/Application: -Show your solutions

1. Minden Co has current assets that consist of cash: P20,000, receivables: P70,000 and inventory: P90,000.
Current liabilities are P75,000. The current ratio is:

2. Minden Co has current assets that consist of cash: P20,000, receivables: P70,000 and inventory: P90,000.
Current liabilities are P75,000. The quick ratio is:

3. Minden Co has sales of P500,000, Cost of sales of P350,000, operating expenses of P100,000, average
assets of 500,000. Their return on assets is:

4. Minden Co has sales of P200,000 with net income of 50,000, average assets of 500,000 . Their return on
equity is:

5. Minden Co has current assets of P180,000 (cash: P20,000, accounts receivable: P70,000, inventory:
P90,000), and long-term assets that had cost P400,000, with accumulated depreciation to date of P180,000.
Sales were P500,000, and operating profit was P50,000. Tax was P20,000 and interest paid was P10,000.
Their receivables turnover ratio was:

6. Entity A has 10,000 ending inventory, P 20,000 beginning inventory, and 20,000 cost of goods sold. What
is Entity turnover?

7. Entity A has 35,000 ending inventory, P 76,000 beginning inventory, and 95,000 cost of goods sold. What
is Entity A’s average sale period (days of inventory)?

8. Entity A has 80,000 credit sales, 50,000 beginning accounts receivable, and 73,000 ending accounts
receivable. What is entity’s accounts receivable turnover.

9. Entity A has 100,000 credit sales, 67,000 beginning accounts receivable, and 89,000 ending accounts
receivable. What is Entity’s average collection?

10. Entity A’s assets consist of 60,000 accounts receivable, P 50,000 cash and 20,000 inventory. The liabilities
are 20,000 notes payable and 10,000 accounts payable. What is Entity A’s debt ratio?
III. Compute for the following:
a. Compute for the profitability ratio
b. Compute for the solvency and liquidity ratio

C&F Store
Statement of Financial Position
As of December 31

2014 2013
Cash 110,000 87,400
Accounts Receivable 90,000 69,920
Inventory 129,000 218,500
Prepaid Rent 12,000 4,370
Delivery Van 550,000 493,810
Total Assets 891,000 874,000

Accounts Payable 75,000 67,298

Loan Payable 400,000 393,300
Anistle Cruz, Capital 416,000 413,402
Total Liabilities and Equity 891,000 874,000

C&F Store
Statement of Comprehensive Income
For the period ending December 31

2014 2015
Sales 810,000.00 686,000.00
Cost of Goods Sold 348,300.00 301,750.00
Gross Profit 461,700.00 384,250.00
Operating Expenses 234,900.00 205,800.00
Interest Expense 40,500.00 17,150.00
Net Income 186,300.00 161,300.00

“There are no secrets to success. It is the result of preparation, hard work learning from failure.” ~ General
Colin Powell
Good luck!!!!!

Prepared by: Checked by: Noted by:

RAUL S. CABANTING NENITA C. BUISEL AURORA T. AGUILA

Teacher II (SHS) ASP – II School Principal IV