Midterm Exam

BUSINESS FINANCE
General Instructions: No Handbook, No Exams Write your answer on the test booklet.

I. Choose the letter that corresponds to the best answer. 1. All of the following are current assets, except one.
a. Equipment b. Cash c. accounts receivable d. Inventories

2. These are composed of debts payable within a few days, weeks or months, like those incurred in the
purchase of raw materials and stocks. a.bonds payable b. accounts payable c. accrued expenses d.advances from customers

3. It is one of the sections in the balance sheet which shows everything that the firm owns and which has
monetary value. a.bonds payable b. assets c. liabilities d. advances from customers

4. These are debts evidenced by promisory notes and oftentimes backed up by collaterals.
a.bonds payable b. loans and notes payable c.accrued expenses d. advances from customers

5. These items present goodwill, patents, copyright which are attributed to the firm.
a.intangible assets b. assets c. current assets d. fixed assets

6. These are composed of investments in subsidiary or associated companies.

a.trade investments
HELEN JOY BARCEBAL
BUSINESS FINANCE INSTRUCTOR

b. assets c. current assets d. fixed assets

7. When a large amount of long-term debt is sought by the firm from a large number of creditors , bonds
are usually issued. a mortgage payable b. bonds payable c.accrued expenses d. advances from customers

8. This comprises borrowings and other sources of funds.

a.bonds payable b. loans and notes payable c.accrued expenses d. mortgage payable

9. Sometimes, customers are to make downpayments before orders are processed.

a.bonds payable b. loans and notes payable c.accrued expenses d. advances from customers

10. It is the statement produced periodically, normally at the end of a financial year, showing an
organization s assets, liabilities, and the interest of the owners. a.bonds payable b. assets c.balance sheet d. liabilities

11. These represent marketing, general, and administrative expenses.

a.revenues b.expenses c.operating expenses d.cost of goods manufactured and sold

12. This term refers to the gross income from the production and sale of a firm product or service.
a.revenues b.expenses
HELEN JOY BARCEBAL
BUSINESS FINANCE INSTRUCTOR

c.operating expenses d.cost of goods manufactured and sold

13. This item presents a summary of the cost of raw materials, labor, and various overhead costs directly
involved in the manufacturing process. a.revenues b.expenses c.operating expenses d.cost of goods manufactured and sold

14. This refers to the monetary values of the goods and services used in the production and delivery
process in order to obtain revenues. a.revenues b.expenses c.operating expenses d.cost of goods manufactured and sold

15. These include interest expense and sales discounts.

a.other expenses b.expenses c.operating expenses d.cost of goods manufactured and sold

II. Determine wether the following statement is an ASSET or LIABILITIES.

1. unused supplies 2. furniture and fixture 3. rent expenses 4. overhead cost 5. withholding tax payable 6. equipment 7. SSS payable 8. notes recievable 9. copyrights 10. store building

HELEN JOY BARCEBAL

BUSINESS FINANCE INSTRUCTOR

III. True or false.(2 PTS EACH)

1. When a firm decides on obtaining a higher rate of return on its investment, it is said to be maximizing profit. 2. Time value of money indicates that the money increase in value with the passing of time. 3. Private finance is that category of general finance, which deals with with the revenue and expenditure patterns of the government and thier various effects on the economy. 4. Finance , in general is divided into categories according to the typeof entity or organization served. 5. The term public finance refers to the provision of money for commercial use.

IV. fill in the blanks.(2pts EACH)

1. The net income generated by use of investments or the net worth of a firm is refered to as . 2. Uncertainty as to loss is called . 3. Return of investment when expressed in percentage is called . 4. Means realizing the highest possible peso or dollar income. 5. Private finance deals with the area of general finance not classified under .

V. APPLICATION
1. At the beggining of the week, Mrs. TAN an owner of a restaurant has last week total cost of raw materials of P1600.00.She purchase another raw materials which cost her P 6,500.00. At the end of the week the total cost of raw materials left was P 950.00. What is the cost of materials used? 2. Disccuss briefly the significance of financial statements and budget to each of the following; a. the owners b. the management c. the creditors d. the government e. prospective investors

HELEN JOY BARCEBAL

BUSINESS FINANCE INSTRUCTOR