Basic Finance

He is in charge of all the organization's finance and accounting functions and typically reports to the chief executive officer.

• Chief Financial Officer
• Treasurer
• Controller
• Operations Manager

Finance is the art and science that describes the management, creation and study of money, banking, credit, investments, assets and liabilities.

• True
• False

It provides information about cash receipts and cash disbursements of an entity at a given period of time

• Statement of Financial Position
• Statement of Cash Flows
• statement of Changes in Equity
• Income Statement

If current assets is Php100,000 and current liabilities is Php50,000. What is the Net working capital?

• Php 150,000
• Php 200,000
• Php 100,000
• Php 50,000

"In this part, the financial manager may continue the same course of action, expand the current situation, change the current situation or take a new course of action."

• Evaluation of Alternatives
• Identification of Alternative Courses of Action
• Development of financial goals
• Reevaluation and Revision of Plan

These is being issued by the borrower to signify its indebtedness to the creditor.

• Notes
• Stocks
• Bonds
• None of these

The economic order quantity involves determining the optimal order size for an inventory item given its expected usage, carrying costs, and ordering costs.

• True
• False

A statement of financial position and income statement stated in future date are examples of ________________.

• Cash budget
• Projected financial statements
• Financial planning
• Budgeting

This is a liquidity ratio that measures a firm's ability to pay off its short-term liabilities with its current assets

• Long-term Ratio
• Gross Profit Margin
• Current ratio
• Receivable turnover ratio

This step in financial planning involves the assessment of risks.

• Evaluation of Alternatives
• Reevaluation and Revision of Plan
• Development of financial goals
• Identification of Alternative Courses of Action

What type of budget must be made first?

• Sales budget
• Production budget
• Selling and administrative expense budget
• Direct materials budget

According to XYZ balance sheet, the accounts payable was Php50,000 and annual credit purchases amounted to Php250,000. Average payment period?

• 73.00
• 0.49
• 5.00
• 0.73

This may be defined as a contractual arrangement in which a party owning an asset provides the asset for use to another, the right to use the assets to the user over a certain period of time, for consideration in form of periodic payment, with or without a further payment.

• Lease financing
• Debentures
• Factoring
• Public deposits

The Statement of Assets, Liabilities and Net Worth (SALN) is a form of

• Income Statement
• Statement of Financial Position
• Statement of Cash Flows
• statement of Changes in Equity

At the end of 2016 ABC merchandise balance sheet shows Php30,000 in accounts receivable, Php100,000 of annual sales. The 2015 year-end balance sheet showed Php10,000 of accounts receivable. This amount became the beginning inventory for the year 2016. What is the receivables turnover ratio?

• 1.33
• 0.66
• 73.00
• 5.00

Ben is the owner of B-Merchandise. He wants to know the total sales the cost of sales, expenses and net income. What financial statement does he need?

• Statement of Financial Position
• Income Statement
• Statement of Cash Flows
• Statement of Changes in Equity

ABC Merchandise has inventories worth Php15,000, cash worth Php20,000, Prepaid expenses worth Php5,000 and equipment worth Php10,000. She has a current liability of Php30,000. How much is the current ratio?

• 73.00
• 0.66
• 5.00
• 1.33

WXY Store paid Php200,000 on inventory bought for the year. The business was able to sell all of the inventory for Php750,000. Business expenses were 30,000 and tax rate is 30%. What is the net profit margin?

• 73.00
• 0.49
• 5.00
• 0.73

A business has total assets worth Php400,000 and total liabilities worth Php175,000. Equity can be computed by deducting liabilities from assets. What is the debt to equity ratio?

• 56.25
• 73.00
• 43.75
• 0.73

In FPL's Balance sheet, Cash is Php5,000,000, Total Current Assets is worth Php 40,000,000 and Total Liabilities is 40,000,000 and Total Equity is Php100,000,000. If you will make a common size balance sheet, what is the percentage of Total non-current Assets?

• 67.85%
• 71.43%
• 12.5%
• 32.14%

This is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

• Stocks
• Bonds
• Notes
• None of these

He is responsible for the accounting operations of the company.

• Operations Manager
• Controller
• Treasurer
• Chief Financial Officer

This is defined as the process of making decision resulting to the investment of funds in these assets which will result in maximizing the overall return on the investment of the firm.

• Working capital management
• Receivable management
• Transaction
• Accounts receivable

When classified on the basis of period, which does not belong to the group?

• Loan from banks
• Factoring
• Public deposits
• Lease financing

He is responsible for the safekeeping of cash

• Controller
• Operations Manager
• Treasurer
• Chief Financial Officer

If a business entity has a larger current assets than its current liabilities, the entity has _______ working capital.

• Negative
• Current liabilities
• Positive
• Inventory management

When classified on the basis of ownership, which does not belong to the group?

• Loan from banks
• Commercial papers
• Debentures
• Equity shares

According to XYZ balance sheet, the accounts payable was Php50,000 and annual credit purchases amounted to Php250,000. What is the payable turnover?

• 73.00
• 5.00
• 0.73
• 0.49

The finance manager has a regular meeting with all the heads of each department. What is being described in the situation?

• Acquiring Necessary Capital
• Interrelation with Other Departments
• Cash Management
• Forecasting Financial Requirements

Stocks is a debt security in which an investor lends his money to an entity which borrows the funds for a defined period of time at defined interest rate.

• True
• False

A Business has a a total sales of Php300,000 and cost of sales of Php100,000. It also incurred operating expenses of Php35,000 and tax worth 30%. If you will make a common size analysis, what will be the percentage of gross profit?

• 66.66%
• 38.50%
• 11.66%
• 55%

This is financing method in which a business owner sells accounts receivable at a discount to a third-party funding source to raise capital

• Debentures
• Lease financing
• Public deposits
• Factoring

Which situation is an example of indirect financing?

• Aimee borrowed money from a bank
• John bought stocks of Choca Loka Company
• Challa went to Western Union and have her US dollar currencies converted into Philippine peso.
• Ben engaged in online buying of fixed income securities

This involves proper purchasing of raw material, handling, storing and recording.

• Current liabilities
• Inventory management
• Positive
• Negative

WXY Store paid Php200,000 on inventory bought for the year. The business was able to sell all of the inventory for Php750,000. Business expenses were 30,000 and tax rate is 30%. What is the gross profit margin?

• 0.73
• 0.49
• 5.00
• 73.00

This budget calculates the materials that must be purchased, by time period, in order to fulfill the requirements of the production budget.

• Production budget
• Direct materials budget
• Sales budget
• Selling and administrative expense budget

Preference shares are unsecured promissory note issued by a firm to raise funds to meet short-term debt obligations.

• True
• False

In FPL's Income statement, Total sales is Php32,000,000 Cost of sales is Php20,000,000 and Operating expenses is Php5,000,000. If you will be making a vertical analysis what is the percentage of net income?

• 65%
• 78%
• 22%
• 35%

A business has total assets worth Php400,000, total liabilities worth Php175,000. What is the debt to total assets ratio?

• 0.73
• 73.00
• 56.25
• 43.75

Which of the following institutions has the power to accept drafts and issue letters of credit; discount and negotiate promissory notes, drafts, bills of exchange, and other evidences of debt; accept or create demand deposits; receive other types of deposits and deposit substitutes; buy and sell foreign exchange and gold or silver bullion; and acquire marketable bonds and other debt securities; and extend credit.

• Multipurpose Cooperative
• Palawan Pawnshop
• PhilHealth
• Metrobank

In this step in financial planning, one should periodically analyze your financial values and goals.

• Reevaluation and Revision of Plan
• Identification of Alternative Courses of Action
• Evaluation of Alternatives
• Development of financial goals

This is used to calculate the number of labor hours that will be needed to produce the units itemized in the production budget.

• Sales budget
• Direct materials budget
• Production budget
• Direct labor budget

Which is not a duty of the treasurer?

• Projecting cash flow needs
• Managing short-term investments
• Managing cash
• Solving for tax dues

This is an approach to inventory management and control in which inventories are acquired and inserted in production at the exact times they are needed.

• Exact Inventory Management
• ABC Method of inventory Control
• Economic Order Quantity
• Just-in-time inventory management

This type of institution focuses on assisting entities in raising capital by underwriting or acting as the client's agent in the issuance of securities

• Commercial Banks
• Savings & Loan Association
• Investment banks
• Credit Unions

Which of the following statements is wrong?

• The finance manager must carefully select best investment alternatives and consider the reasonable and stable return from the investment.
• After deciding the financial requirement, the finance manager should concentrate on how, where and when to obtain finances.
• In forecasting financial requirements, the controller is the one who should estimate how much resources are required to acquire fixed assets and forecast the amount needed to meet the working capital requirements in future.
• The financial manager should have sound knowledge not only in finance related area but also in other areas as well.

At the end of 2016 ABC merchandise balance sheet shows Php30,000 in accounts receivable, Php150,000 of annual sales. The 2015 year-end balance sheet showed Php10,000 of accounts receivable. This amount became the beginning inventory for the year 2016. What is the average collection period? (365 days in a year)

• 73.00
• 1.33
• 5.00
• 0.66

This budget contains all manufacturing costs other than the costs of direct materials and direct labor.

• Sales budget
• Manufacturing overhead budget
• Direct materials budget
• Production budget

This includes budgets for direct material, direct labor and manufacturing overhead.

• Selling and administrative expense budget
• Direct materials budget
• Production budget
• Sales budget

Which is a short term source of financing?

• Selling of accounts receivable.
• Loan from a bank
• The amount of net earnings not paid out as dividends.
• A debt instrument used by large companies to borrow money, at a fixed rate of interest.

In conducting a vertical analysis, which of the following accounts are not used as a base?

• Sales
• Net Income
• Total Assets
• Total Liabilities and Equity

This is an ongoing process to help you make sensible financial decisions aimed at generating greater return on assets, growth in market share and solving foreseeable problems.

• Projected financial statements
• Cash budget
• Financial planning
• Budgeting

It is the true value or net worth of business

• Revenue
• Wealth
• Profit
• Income

ABC Merchandise has inventories worth Php15,000, cash worth Php20,000, Prepaid expenses worth Php5,000 and equipment worth Php10,000. She has a current liability of Php30,000. How much is the quick ratio?

• 0.66
• 1.33
• 73.00
• 5.00

This statement provides a narrative description or disaggregation of items presented in the financial statements and information about items that do not qualify for recognition since these items are non-accountable or not quantifiable.

• Statement of Changes in Equity
• Income Statement
• Notes to Financial Statements
• Statement of Financial Position

This is the process of estimating the revenue and expenses over a specified future period of time.

• Projected financial statements
• Financial planning
• Budgeting
• Cash budget

This budget is used to ascertain whether company operations and other activities will provide a sufficient amount of cash to meet projected cash requirements.

• Projected financial statements
• Financial planning
• Cash budget
• Budgeting

A finance professional is using a percent change analysis of financial statements. He used the formula (Most recent value - Base period value)/Base period value. He is using a _________ type of analysis.

• Zigzag
• Vertical
• Horizontal
• Diagonal

One of the motives of holding inventory is to meet payments arising in the ordinary course of business.

• True
• False

If a business entity has a larger current liabilities than current its assets, the entity has _______ working capital.

• Current liabilities
• Negative
• Inventory management
• Positive

Which of the following statements is correct

• The controller must concentrate to principles of safety, liquidity and profitability while investing capital.
• The finance manager must maintain a good relationship with the head of all functional departments only if they are in agreement with his business decisions.
• The finance manager must carefully select the best investment alternatives and select the one with reasonable and unstable return from.
• The controller is the one responsible for the management of financial transaction recording and not on the investment decision of the company.

This type of budget usually includes expenses regarding advertising, insurance, rent, salaries, and utilities.

• Selling and administrative expense budget
• Sales budget
• Production budget
• Direct materials budget

The business has Php100,000 current assets, Php150,000 non-current assets, Php50,00 current liabilities and Php25,000 non-current liabilities. If you will apply the common size analysis. What is the percentage of the current liabilities?

• 150%
• 100%
• 175%
• 200%