A financial statement that provides information about the inflows and outflows of cash and

cash equivalents during the period is called

a.Statement of Financial Operation
b. Statement of Changes in equity
c. Statement of cash flows
d.Statement of financial position
Statement of cash flows

Which of the following will not qualify as cash and cash equivalents at the end of December
31, 2020.
a. Three-month BSP treasury bill due February 1, 202
b.Nine-month BSP treasury bill due February 1, 2021
c.Thirty-day time deposit
d.Three-year treasury bill acquired on December 31, 2020 and due February 1, 2021
Nine-month BSP treasury bill due February 1, 2021

These come in the form of audit costs which is geared towards monitoring managerial
actions, and restructuring the company that would regulate undesirable managerial actions.
a.Material cost
b Management Cost
c.Agency costs
d.Historical cost
Agency costs

The agency theory states a potential conflict of interest between the stockholders a nd the
managers.
a.Agency theory
b.Agency relationship
c. Agency conflict
agency conflict
d.Theory of Accounts
Agency conflic

Which of the following statements is not correct?

a.Different users have different objectives and priorities in analyzing financial statements.
b.The ability of an entity to pay its currently maturing obligations is the concern of short-
term creditors
c. Long-term creditors are more concerned with the solvency of a business entity
d. Financial statements are called general purpose financial statements, because different
users have common needs and objectives in analyzing the statements.
Financial statements are called general purpose financial statements, because different
users have common needs and objectives in analyzing the statements.
The traditional analytical tool that gives equivalent of 100% to total assets is called
a. trend analysis
b.Financial ratio analysis
c. vertical analysis
d. Horizontal analysis
vertical analysis

Which of the following does not belong to the list?

a.common-size statement
b.performance report
c.trend analysis
d.Horizontal analysis
performance report

The traditional analytical tool used to evaluate the financial statements that compares the
current operating performance of an entity with the immediate preceding year is called
a.trend analysis
b.vertical analysis
c.Horizontal analysis
d.financial ratio analysis
Horizontal analysis

When prospective buyers analyze the financial statements, their main concern is
a.to assess return on their investment
b. To evaluate management efficiency in utilizing resources
c.To check the reliability of financial statements
d. To determine compliance of an entity to regulatory requirements
to assess return on their investment

The following statements are correct, except

a.The percentage of change in horizontal analysis is computed by dividing the amount of
change by the current year.
b. The Percentage of change in horizontal analysis is computed by dividing the amount of
change by the base.
c.There is no percentage change in horizontal analysis if the base year is nil
d.The percentage of change in horizontal analysis is more meaningful than the change
measured in absolute amount.
The percentage of change in horizontal analysis is computed by dividing the amount of
change by the current year.

The group of ratios that determines the extent a firm has utilized debt financing is called
a. Liquidity ratio
b.growth ratios
c.profitability ratios
d.financial leverage ratios
financial leverage ratios

The following assets are included in the determination of quick assets, except
a.trading securities
b.Cash
c.trade receivables
d.inventories
inventories

It is the efficient allocation of funds to specific assests

a.value
b.dividend
c.financing
d.investing
investing

the finance manager is responsible in maximizing the value of the utility owned by these
people
a.suppliers
b.board of directors
c.creditors
d.stockholders/investors
stockholders/investors

Jethro Company has an acid-test ratio of 2 to 1 and had no prepaid expenses at the end of
2020. If the current assets and inventory amounted to P40,000 and P16,000 respectively,
the value of current liabilities would be
a.P24,000
b.P12,000
c.P28,000
d.P20,000
P12,000

Beak Company provided the following

Dec. 31/2020 Dec. 31, 2019
Net credit sales 1,241,000
Cost of sales 867,000
Trade receivables 70,000 64,000
Inventory 192,000 156,000
The number of days to convert inventory to sales using a 360-day year would be
a.70.53 days
b.71.57 days
c.64.00 days
d.50.48 days
71.57 days 360/(Cogs/ave inv)=360/(867000/((192000+156000)/2))

Jack Company provided the following

Dec. 31/2020 Dec. 31, 2019
Net credit sales 1,241,000
Cost of sales 867,000
Trade receivables 70,000 64,000
Inventory 192,000 156,000
The average number of days to collect trade receivables using a 360-day year would be
a.20.60 days
b.19.72 days
c.19.44 days
d.18.83 days
19.44 days 360/(Net Credit Sales/ ave accounts
receivable)=360/((1241000/((70000+64000)/2)

Blue Sky company provided the following information for the year ended 2020;
Net cash
sales P450,000
Cost of goods
sold 2,700,000
Inventory, January 1, 2020 900,000
Purchases 3,600,
000
Accounts receivable, January 1, 2020 3,000,000
Accounts receivable, December 31, 2020 3,300,000
The accounts receivable turnover for 2020 was 4.0 to 1. The net credit sales for 2020 would
be
a.P12,600,000
b.P12,000,000
c.P13,200,000
d.13,050,000
P12,600,000 → 4.0((3M+3300000)/2)

Sky company provided the following information for the year ended 2020;
Net cash
sales P450,000
Cost of goods
sold 2,700,000
Inventory, January 1, 2020 900,000
Purchases 3,600,
000
Accounts receivable, January 1, 2020 3,000,000
Accounts receivable, December 31, 2020 3,300,000
The accounts receivable turnover for 2020 was 4.0 to 1. The inventory turnover for 2020
would be

a.1.2 times
b.1.5 times
c.3.0 times
d.2.0 times
2.0 times
Ending inv=900K+3600000-2700000=1800000
Inv Turnover= 2700,000/((900,000+1800,000)/2)=2

The following information is based on the data taken from the statement of financial
position of Island Company at the end of the current year:
Accounts Payable P145,000
Accounts receivable 110,000
Accrued liabilities 4,000
Cash 80,000
Income tax payable 10,000
Inventory 140,000
Marketable securities 250,000
Notes payable, short-term 85,000
Prepaid expenses 15,000
The amount of working capital for the company is

a.336,000
b.361,000
c.211,000
d.351,000
Working Capital =CA-CL

The following information is based on the data taken from the statement of financial
position of Island Company at the end of the current year:
Accounts Payable P145,000
Accounts receivable 110,000
Accrued liabilities 4,000
Cash 80,000
Income tax payable 10,000
Inventory 140,000
Marketable securities 250,000
Notes payable, short-term 85,000
Prepaid expenses 15,000
The company’s current ratio as of the balance sheet date is

a.2.44:1
b. 1.95:1
c.2.02:1
d.2.67:1
2.44:1 CR= CA/CL

The following information is based on the data taken from the statement of financial
position of Island Company at the end of the current year:
Accounts Payable P145,000
Accounts receivable 110,000
Accrued liabilities 4,000
Cash 80,000
Income tax payable 10,000
Inventory 140,000
Marketable securities 250,000
Notes payable, short-term 85,000
Prepaid expenses 15,000
The company’s acid-test ratio as of the balance sheet date is
a.1.80:1
b.2.02:1
c.2.40:1
d.1.76
1.80:1
= (CA-Inv)/CL

Selected information from the accounting records of Blue Lagoon Company is as follows:
Net sales for 2020 900,000
Cost of goods sold for 2020 600,000
Inventory at December 31, 2019 180,000
Inventory at December 31, 2020 156,000
Blue Lagoon’s inventory turnover is for 2020 is
a. 5.77 times
b. 3.57 times
c.3.85 times
d.3.67 times
3.57 times
=Cogs/ave inv

The Beam Company presents the following data for 2020.

Net
sales,2020 3,007,124
Net Sales,
2029 930,247
Cost of goods sold,
2020 2,000,326
Cost of goods sold,
2019 1,000,120
Inventory, beginning -
2020 341,149
Inventory, end -2020 376,526
The merchandise inventory turnover for 2020 is
a.15.6
b.5.6
c.7.5
d.7.7
5.6
=Cogs/ave inv

Based on the following data for the current year, what is the inventory turnover?
Net sales on account during year 500,000
Cost of goods sold during year 330,000
Accounts receivable, beginning of year 45,000
Accounts receivable, end of year 35,000
Inventory, beginning of year 90,000
Inventory, end of year 110,000
a. 3.0
b.3.7
c.3.3
d. 8.3
3.3
=Cogs/ave inv
 Selected information from the accounting records of Eternity Manufacturing Company
follows:
Net sales 3,600,000
Cost of goods sold 2,400,000
Inventory at January 1 672,000
Inventory at December 31 576,000
What is the number of days’ sales in average inventories for the year?
a.68.1
b.87.6
c.102.2
d.93.51
93.51
=360/((cogs/ave inv)

Selected data from Jaya Company’s year -end financial statements are presented
below. The difference between average and ending inventory is immaterial.
Current
ratio 2.0
Quick ratio 1.5
Current liabilities 120,000
Inventory turnover (based on cost of sales) 8 times
Gross profit margin 40%
Jaya’s net sales for the year were
a.672,000
b.800,000
c.1,200,000
d.480,000
800,000
Quick A=1.5X120,000=180,000
Current A= 2X 120,000=240000
Inv= 240,000-180,000=60,000
Cogs=8X60,000=480,000

Selected data from the year-end financial statements of World Cup

Corp. are presented below. The difference between average and ending inventories is
immaterial.
Current ratio 2.0
Quick ratio 1.5
Current liabilities 600,000
Inventory turnover 8 times
Gross profit margin 40%
World’s net sales for the year were;

a.4.0 million
b.6.0 million
c.2.4 million
d.1.2 million
4.0 million

OTW Corporation has current assets totaling 15 million and a current ratio of 2.5 to 1. What
is OTW’s current ratio immediately after it has paid 2 million of its accounts payable?
a.3.75 to 1*
b.4.75 to 1
c.3.25 to 1
d.2,75 to 1
3.25 to 1

Bulacan Corporation’s net accounts receivable were 250,000 at December 31, 2019 and
300,000 at December 31, 2020. Net cash sales for 2020 were 100,000. The accounts
receivable turnover for2020 was 5.0. What was Bulacan’s total net sales for 2020.
a.1,600,000
b. 1,500,000
c.2,750,000
d.1,475,000
1,475,000
1375000

Lancaster Inc. had net accounts receivable of 168,000 and 147,000 at the beginning and end
of the year, respectively. The company’s net income for the year was 240,000 on 1,700,000
in total sales. Cash sales were 6% of total sales. Lancaster’s average accounts receivable
turnover ratio for the year is
a.9.51
b.10.79
c.10.87
d.10.15
10.15
=1598000*/((168,000+147,000)/2)
*Net credit sales=1700,000X(1-.06)=1,598,000

The following information has been derived from the financial statements of Boutwell
Company
Current Assets 640,000
Total assets 990,000
Long-term liabilities 130,000
Current ratio 3.2 times
The company’s debt-to-equity ratio is

a.0.13 to 1
b.0.33 to 1
c. 0.37 to 1
d. 0.50 to 1
0.50 to 1

Neelty Corporation has interest expense of 16,000 sales of 600,000, a tax rate of 30, and
after-tax net income of 56,000. What is the firm’s times interest earned ratio?
a.4.5
b.3.5
c.6.0
d.5.0
5.0

For the year ended December 31, 2020, a corporation had cash flow from operating
activities of P10,000, cash flow from investment activities of P4,000, and cash flow from
financing activities of P9,000. The statement of cash flows would show a _----------- in cash
and marketable securities.

a.net increase of 3,000

b.Net decrease of 3,000
c.net increase of 5,000
d.net decrease of 5,000
net increase of 5,000

Blue Mountain Corporation reported these data for 2019 and 2020.
Interest payable, December 31,2019 3,200
Interest payable, December 31, 2020 10,200
Interest expense, 2020 22,000
How much cash paid for interest in 2020?
a.29,000
b.15,000
c.30,200
d.25,200
15,000
The following pieces of information are available from the current period financial
statements:
Net income 150,000
Depreciation expense 28,000
Increase in accounts receivable 16,000
Decrease in accounts payable 21,000
The net cash flow from operating activities using the indirect method is

a.117,000
b.173,000
c.215,000
d.141,000
150,000+28,000-16000-21,000=141,000
150,000+28,000-16,000+ 21,0 00

Hamco Company reported the following data for 2019 and 2020.
Prepaid insurance, 12/31/2019 14,000
Prepaid insurance, 12/31/2020 11,500
Insurance expense, 2020 25,200
How much cash was paid for insurance during 2020?
a.22,700
b. 36,700
c.39,200
d.27,400
14,000-11,500=2500+25200=22,700

Cold and Flu Corporation presented in the following information for 2019 and
2020. Inventory was not reported as there was no change in inventory from December 31,
2019 to December 31, 2020.
Accounts Payable, 12/31/2019 95,000
Accounts Payable, 12/31/2020 50,000
Cost of goods sold, 2020 560,000
How much cash was paid for inventory during 2020?

a.605,000
b.655,000
c.610,000
d.515,000
45,000+160,000=605,000

On January 1, 2020, FLT Company's beginning inventory was P400,000. In 2020, FLT
company purchased P1,900,000 of additional inventory. On December 31, 2020, the
inventory was P500,000. What is the inventory turnover for 2020.
a.4.0
b.4.6
c.3.6
d.3.8
4.0
Cogs=(400k+1900,000-500K)=1,800,000
Inv turnover=1,800,000/((400K+500K)/2)=4

It is an not an objective of financial analysis

a.profitability
b.safety of investment
c.financial statement preparation
d.liquidity
financial statement preparation