How should a gain from the sale of used equipment for cash be reported in a statement

of cash flows using the indirect method? *

a. In investing activities as a reduction of the cash inflow from the sale

b. In investing activities as a cash outflow

c. In operating activities as a deduction from income

d. In operating activities as an addition to income.

_____ include acquiring and selling, or otherwise disposing of securities that are not
cash equivalents and productive assets that are expected to benefit the firm for long
periods of time, and lending money and collecting loans. *

a. Investing activities

b. Operating activities

c. Financing activities

d. Cash flows activities

The management accountant helps formulate a strategy by answering the following
questions except: *

Do the Controller performs his work?

b. How sensitive are their purchases to price, quality, and service?

c. What substitute products exists in the marketplace, and how do they differ from our product in terms
of price and quality?

d. Is the industry demand growing or shrinking?

The main focus of managerial accounting is: *

a. The preparation of financial statements

b. Documenting cash flows

c. The preparation of budgets

d. Decision making
Managerial accounting provides data to achieve all of the following major objectives
except: *

a. Planning and control of costs

 b. Supporting management planning

c. Compliance with SEC reporting requirements

d. Determining the costs of products

The statement that shows the net changes in cash from the operating, investing and
financing activities. *

a. Cash Analysis

b. Cash Receipts

c. Cash Disbursements

d. Cash Flows
Solvency is a firm’s ability to survive in the long-term by paying its long-term obligations.
Its key ingredients are capital structure and earning power. Capital structure consists of
*

a. The capital stocks of the firm

b. The firm’s total assets

c. The firm’s sources of financing, whether long-term or short-term, of its assets

d. The stockholders’ equity accounts

Performance reports may not provide definitive answers, but they still extremely useful.
Managers can use them to _____ areas that need closer attention and to avoid areas
that are under control. *

a. Flag

b. Control

c. Plan

d. Interpret
Financial ratios, which assess the profitability of a company, include all of the following
except the *

a. Dividend yield ratio

b. Gross profit percentage

c. Earnings per share ratio

 d. Return on sales ratio
Management accounting’s role in the control processes is to provide *

a. Managers with information that can be used to determine customer satisfaction levels.

b. Investors and creditors the information about financial stability of the company.

c. Managers with relevant information to compare actual results with expectations.

d. Input to managers on the best ways to achieve continuous improvement in the production process.
Mr. Kanobi, the owner of Galactic Company is arguing with his accountant as to the
best measure of liquidity. He was considering the following and you are to advise him
which one is the best. Which one will you choose? *

a. Current assets minus inventories to current liabilities

b. Total assets minus goodwill to total liabilities

c. Net income minus dividends to interest expense

d. Sales minus returns to total debt

A more radical approach to improvement than TQM, is an approach where a business
process is diagrammed in detail, questioned and then completely redesigned in order to
eliminate unnecessary steps, to reduce opportunities for errors and to reduce costs. *

a. Balanced Scorecard

b. Benchmarking

c. Total Quality Management

d. Process reengineering
Compare statements of two or more companies or statement of one company with the
statements for an entire industry and evaluate their current financial position and
operating results. *

a. Trend Percentage

b. Horizontal Analysis of Comparative Statements

c. Financial Ratios

d. Common-size statements
_____ is the use of computers in product development, analysis, and design
modification to improve the quality and performance of the product. *

a. Computer-aided design

b. Computer-aided manufacturing

c. Computer-integrated manufacturing

d. Flexible manufacturing system

This involves the evaluation of how well assets have been employed by management in
terms of generating revenues and maximizing returns on such assets. *

a. Operating efficiency and profitability analysis

b. Short-term solvency analysis

c. Capital structure and long-term solvency analysis

d. Background study and evaluation of firm industry, economy and outlook

This account reflects the amount by which the original sales price of the stock shares
exceeded par value as well as from other sources such as donated capital, treasury
stock transactions, etc. *

a. Share capital

b. Other equity account

c. Additional paid-in capital

d. Preferred stock
These obligations include bonded indebtedness, long-term notes payable, mortgages,
obligations under leases, pension liabilities, long-term warranties, and deferred income
taxes. *

a. Current maturities of long-term debt

b. Noncurrent liabilities

c. Current liabilities

d. Accrued liabilities
An enterprise should report cash flows from operating activities using the _____,
whereby net income or loss is adjusted for the effects of transaction of a non-cash
nature, any deferrals or accruals of past or future operating cash receipts or payments,
and items of income or expense associated with investing or financing cash flows. *

a. Indirect method

b. Direct method

c. Single step method

d. Multiple step method

Financial statements are prepared according to _____ that have been adopted in order
to achieve a presentation of financial information that is both understandable by users
and relevant and reliable for decision making. *

a. BIR

b. SEC

c. GAAP

d. PFRS
The ____ is an analysis tool that firms use to identify the specific steps required to
provide a product or service of a company. *

a. Product innovation

b. Competitive advantage

c. Strategic Management

d. Value chain
Securing of funds for investment at a fixed rate of return to fund suppliers to enhance
the well being of common stockholders. *

a. Financial leverage

b. Fund management

c. Operating leverage

d. Investing leverage
Which of the following does not describe managerial accounting? *

a. Internally focused
 b. Emphasis on the future

c. Externally focused

d. Detailed information
______ is a process by which a firm determines its critical success factors, studies the
best practices of other firms (or other units within a firm) for achieving these critical
success factors, and then implements improvements in the firm’s processes to match or
beat the performance of those competitors. *

a. Balanced Scorecard

b. Benchmarking

c. Total Quality Management

d. Process reengineering
_____ is a much more rigorous test of a company’s ability to meet its short-term debts.
This is designed to measure how well a company can meet its obligations without
having to liquidate or depend too heavily on its inventory. *

a. Current ratio

b. Acid-test ratio

c. Cash flow liquidity ratio

d. Debt ratio
Which of the following not cash inflows activities? *

a. Sales of long-lived assets

b. Returns on equity securities

c. Collection of loans

d. Loan to others
Statement 1. Financial accounting is aimed primarily at internal users of accounting
information, whereas managerial accounting is aimed primarily at external users.
Statement 2. Financial accounting is primarily concerned with presenting the results of
past performance, whereas managerial accounting places considerable emphasis on
the future. *

a. Statement 1 is True, Statement 2 is False

 b. Statement 1 is False, Statement 2 is True

c. Both Statement 1 and 2 are True

d. Both Statement 1 and 2 are False

The set of ratios that are most useful in evaluating profitability is *

a. ROA, ROE, and debt to equity ratio

b. ROA, ROE, and dividend yield

c. ROA, ROE, and acid-test ratio

d. ROA, ROE, and cash flow to debt

Which of the following would be most detrimental to a firm’s current ratio if that ratio is
currently 2.0? *

a. Buy raw materials on credit

b. Sell marketable securities at cost

c. Pay off accounts payable with cash

d. Pay off a portion of long-term debt with cash

______ is another important measure or perspective on operating performance. This
measures the ability of the firm to translate sales to cash to enable it to service debt,
pay dividends or invest in new capital assets. *

a. Gross profit margin

b. Operating profit margin

c. Net profit margin

d. Cash flow margin

Which of the following does not belong to the list? *

a. Common-size financial statements

b. Peso and percentage changes on financial statements

c. Financial ratios

d. Long-term report
The ratios that are used to determine a company’s short-term debt paying ability are *
 a. Asset turnover, times interest earned, current ratio, and receivable turnover.

b. Times interest earned, inventory turnover, current ratio, and receivable turnover.

c. Times interest earned, acid-test ratio, current ratio, and inventory turnover.

d. Current ratio, acid-test ratio, receivable turnover, and inventory turnover.

Which of the following statements is true regarding ratio analysis? *

a. A ratio for a particular company is often compared to industry standards using various publications.

b. A ration for a particular company is unique and, therefore should not be compared to other
companies ratios.

c. Ratio analysis should be kept as simple as possible, often accomplished by using just one ratio to
measure a company’s performance.

d. Ratio analysis will not be affected by different accounting methods or assumptions.

The percentage analysis of increases and decreases in individual items in comparative
financial statements is called *

a. Vertical analysis

b. Solvency analysis

c. Profitability analysis

d. Horizontal analysis
Delivering or producing goods for sale and providing a services and cash effects of
transactions and other events that enter into the determination of income. *

a. Investing activities

b. Operating activities

c. Financing activities

d. Cash flows activities

The _____ approach is a perfect complement to Total Quality Management and
Process Reengineering – it focuses improvement efforts where they are likely to be
more effective. *

a. Cost Leadership

b. Customer focus
 c. Activity-Based Manufacturing

d. Theory of Constraints
MULTIPLE CHOICES : Computational. Click the circle of your chosen answer. No need
to submit solutions. Three (3) points each.

Sun Company provided the following data for the preparation of the statement of cash
flows for the current year:Increase in account receivable 300,000Decrease in income
tax payable 170,000Depreciation 1,000,000Net income 250,000Gain on sale of
equipment 440,000Loss on sale of building 210,000Using the indirect method, how
much should be reported as net cash flow from operating activities? *

a. 780,000

b. 700,000

c. 880,000

d. 550,000
The following common-size statement are available for Sparky Corporation for the two
years ended December 31, 2020, and 2019:2020 2019 Sales 100% 100% Cost of sales
55 70 Gross profit on sales 45 30 Operating expenses (including income tax expense)
20 18 Net income 25% 12% The trend percentage for sales are as follows: 2018 130%
2017 100% What should be the trend percentage for gross profit on sales for 2020? *

a. 58.5%

b. 130%

c. 150%

d. 195%
Nory Company preparing its common-size financial statements and revealed the
following information.Accounts receivable 10,000Inventory 20,000Total current assets
35,000Total assets 84,000Bonds payable 21,000Retained earnings 7,000Sales
revenue 75,000Cost of goods sold 62,000Income taxes expense 22,000How would
Nory’s inventory appear on a common-size balance sheet? *
 a. 11.9%

b. 23.8%

c. 57.15%

d. 65.3%
On December 31, 2020 and 2019, Simon Company had 100,000 shares of common
stock and 50,000 shares of non-cumulative and non-convertible preferred stock issued
and outstanding. Additional information is as follows:Stockholder’s equity at December
31, 2020 P4,500,000Net Income for the year ended December 31, 2020
1,200,000Dividend on prepared stock for the year ended, December 31, 2020
300,000Market price per share common stock at December 31, 2020 72The price-
earning ratio on common stock at December 31, 2020 was *
 a. 5 to 1

b. 6 to 1

c. 8 to 1

d. 9 to 1
Information from Davao Corporation’s balance sheet is as follows:Current Assets: Cash
P 2,400,000 Marketable securities 7,500,000 Accounts receivable 57,600,000
Inventories 66,300,000 Prepaid expenses 1,200,000 Total current assets
P135,000,000Current Liabilities: Notes payable P 1,500,000 Accounts payable
19,500,000 Accrued expenses 12,500,000 Income taxes payable 500,000 Payments
due within one year on long-term debt 3,500,000 Total current liabilities P
37,500,000What is the quick (acid) test ratio? *
 a. 1.60 to 1

b. 1.80 to 1

c. 1.99 to 1

d. 3.60 to 1
Crown Clothing Store had a balance in the Account Receivable account of P390,000 at
the beginning of the year and a balance of P410,000 at the end of the year. The net
credit sales during the year amounted to P4,000,000. Using 360-day year, what is the
average collection period of the receivables? *
 a. 30 days

b. 65 days

c. 73 days

d. 36 days
Selected data from Claudine Company’s year-end financial statements are presented
below. The difference between average and ending inventory is immaterial.Current ratio
2.0Quick ratio 1.50Current liabilities P120,000Inventory turnover 8 timesGross profit
margin 40%Claudine’s net sales for the year were *

a. P 800,000

b. P 672,000
 c. P 480,000

d. P1,200,000
Net sales are P6,000,000, beginning total assets are P2,800,000, and the asset
turnover is 3.00. What is the ending total asset balance? *

a. P2,000,000

b. P1,200,000

c. P2,800,000

d. P1,600,000
Selected financial data of Chiller Corporation for the year ended December 31, 2020 is
presented below:Operating income P900,000Interest expense (100,000)Income before
income taxes 800,000Income tax (120,000)Net income 480,000Preferred stock dividend
(200,000)Net income available to common stockholders 280,000Common stock
dividends were P120,000. The payout ratio is: *
 a. 42.9 percent

b. 66.7 percent

c. 25.0 percent

d. 71.4 percent
During 2020, Central Company purchased P960,000 of inventory. The cost of goods
sold for 2010 was P900,000, and the ending inventory at December 31, 2020 was
P180,000. What was the inventory turnover for 2020? *

a. 6.4

b. 6.0
c. 5.3

d. 5.0