MINDANAO MISSION ACADEMY Fundamentals of Accountancy, Business and Management-2

Accountancy, Business and Management

Midterm Examination
Name: ___________________________________________ Score: __________________

“Let your eyes look straight ahead; fix your gaze directly before you. Give careful thought to the paths for your feet and be steadfast in
all your ways. Do not turn to the right or the left; keep your foot from evil”
Proverbs 4:25-27
General Instructions
º Use blue or black ball pens.
º No borrowing of calculators
º When you have questions, ask directly to the teacher in-charge.
º No talking while taking the exam. Talking to his/her seatmates while taking the exam is considered cheating

I. Multiple Choice: Encircle the letter of your choice

1. Which of the following is not considered revenue?
a. Ticket sales revenue c. Interest Revenue
b. Rent Revenue d. Deferred Revenue

2. Income generated from the primary operations of the business

a. Sales Revenue c. Service Revenue
b. Net income d. Revenue

3. A statement that reports the results of operations of the business for one accounting period.
a. Statement of changes in equity c. Statement of Financial position
b. Statement of comprehensive income d. statement of cash flows

4. Which of the following is not considered an expense?

a. Cost of goods sold c. Dividends
b. Depreciation d. Utilities

5. An SCI format which is generally used by small businesses and service businesses because of its simplicity.
a. Simple format c. Multi-step
b. function format d. Single-step
6. Wata Fun, a corporation engaged in the operations of a resort with different types of swimming pools, has the following revenues. Which is not
operating revenue?
a. Fees earned from the entrance fees to the resort’s premise
b. Sale of food and beverages by a restaurant also operated by corporation
c. Sale of used pool water to a research firm
d. Fees earned from a water spa the corporation owns and manages

7. Statement I: In Periodic inventory Accounting, inventory is determined by conducting a physical count of

merchandise owned
Statement II: In Perpetual inventory Accounting, Inventory is determined by updating the cost of goods sold account every time a sale is
made.
a. Both statements are true c. Both statements are false
b. Only statement II is true d. Only statement I is true

8. Statement I: Revenue result in increase in equity and therefore has a credit normal balance.
Statement II: Depreciation expense is a line account found in an SCI prepared following the multi-step format.
a. Both statements are true c. Both statements are false
b. Only statement II is true d. Only statement I is true

9. Statement I: Goods returned by customers are immediately deducted to the sales revenue account.
Statement II: Expenses decrease asset and therefore have credit normal balances.
Statement III: Cost of sales is computed cost of goods available for sale less ending inventory.
a. Statement I and II are True c. Statement I and III are True
b. Statement II and III are False d. All statements are True

10. Statement I: The major element for the SCI are income and expenses
Statement II: Bad debts is the estimated amount of loss resulting from uncollectible accounts
a. Both statements are true c. Both statements are false
b. Only statement II is true d. Only statement I is true

11. Current year sales of the store amounted to P120,000. Of this, P55, 000 is cash sales. Based on the company’s experience, bad debt is 4% of the
credit sales. How much is the bad debts expense?
a. P2, 200
b. P4, 800
c. P2, 600
d. P2, 200

12. Bea, owner of Beetz trading, asked for your help to determine the cost of sales of her store. This is the first year of operations for Beetz trading.
Bea provided the following data to you.

Purchases (based on supplier’s receipts) 70,500

Freight-in 2,500
 Purchase returns 4,360
Purchase discounts 1,340
Based on the inventory count taken at the last day of the year, the ending inventory is valued at P8, 300. How much is the cost of sales
a. P59, 000 c. P64, 800
b. P67, 300 d. P70, 400

Mary sold 30 packs of sugar to Martha on account at a price of P60.00 per pack. Mary gave Martha one month to pay the account. Moreover,
Mary told Martha that she will deduct 3% discount if she pays within two weeks. Martha returned one week later and returned 2 packs of sugar
and took advantage of the discount.

Use the information above for numbers 13 and 14

13. How much is the discount obtained by Martha?

a. P54 c. P50
b.P50.40 d. P54.40

14. How much is the Net Sales of Mary?

a. P1,800.00 c. P1,629.60
b. P1,680.00 d. P1,746.00

15. How much of the goods are returned by Martha?

a. P60.00 c. P20.00
b. P120.00 d. P30.00

II. Identification: Identify the Normal Balances of the following accounts whether DEBIT or CREDIT.

1. Sales 6. Purchase discount

2. Purchases 7. Sales discount

3. Expenses 8. Cost of goods sold

4. Purchase returns
III. 9. Bad debts expense Differentiate
periodic and
5. Sales returns 10. Freight-in perpetual
method of
inventory accounting by writing a pro forma journal entry of the following:

purchase of goods sale of goods

Perpetuall

periodic

IV. Comprehensive Problem

Mr. Lester, a businessman, knows how to journalize his business transactions up to preparing an adjusted trial balance.
Unfortunately, he doesn’t know how to make financial statements. So, knowing that you are an ABM student and good
in preparing Financial Statements, he asked you to help him prepare a Statement of Comprehensive Income. He gave
you the following adjusted trial balance.

Lester’s Merchandise
Adjusted Trial Balance
As of December 31, 2019
 Cash 120,000
Accounts Receivable 73,500
Equipment 400,750
Accounts Payable 30,500
Accrued Expenses 12,000
Notes payable 500,000
L, Capital 51,750
Sales Revenue 475,830
Sales return 11,500
Sales discount 4,590
Interest Income 2,200
Purchases 220,000
Purchase return 3,000
Purchased discount 4,500
Freight-in 21,950
Utilities Expense 15,800
Salaries expense 67,000
Depreciation expense 40,000
Rent expense 24,690
Bad debts expense 50,000
Insurance expense 30,000
TOTAL 1,079,780 1,079,780

Required: Prepare a single-step Statement of Comprehensive Income. Use the space below for your answer.