MOVERS ACADEMY, INC.

Pob. West, Natividad, Pangasinan, Philippines

Contact Numbers: 09176819627/09055527530 Email:moversacademy@yahoo.com.ph
Government Recognition #: PE-014, S.2010 / E-003, S.2013 / SE-009, S.2013 / SH-184, S. 2015

MIDTERM EXAMINATION IN BUSINESS FINANCE

Name: _______________________________________________ Date: _____________________

LRN: ________________________ Score: ____________________

___1. It is the science of managing money.

a. Business finance c. Financial statement
b. Business Mathematics d. Financial institution
___2. The ______ is created by a financial relationship between suppliers and users of short-term
funds. A financial market
a. money market b. stock market c. capital market d. financial market
___3. It refers to the company’s ability to satisfy its short-term obligations as they come due
a. liquidity b. stability c. profitability d. leverage
___4. The goal for profit maximization would result in priority for _____.
a. cash flows available to stockholders c. risk of the investment
b. earnings per share d. timing of the returns
___5. Intermediaries that channel the savings of individuals, businesses, and governments into loans
or investments.
a. private placement c. Financial Institutions
b. Public offering d. Financial instrument
___6. Information about business opportunities is available from _____.
a. Yellow book b. Library c. thesaurus d. All of the above
___7. Money performs all of the following functions EXCEPT:
a. serves as an asset of the government c. serves as a standard of value
b. may be held as a store of value d. serve as medium of exchange
___8. Which of the following are not thrift banks?
a. savings and mortrage banks c. Private development banks
b. Rural banks d. Stocks saving and loan associations
___9. Adjusting journal entries are formally recorded in the ______.
a. Journal b. Ledger c. Trial balance d. Worksheet
___10.Adjusting entries are prepared _____.
a. anytime during the accounting period
b. always at the end of accounting period
c. at the beginning of the accounting period
d. recorded directly in the ledger
___11.A financial manager must choose between four alternative Assets: 1,2,3 and 4. Each assets
cost costs $35,000 and is expected to provide earnings over three-year period as described
below. Asset Year 1 Year 2 Year 3
a. Asset 1
1 $ 21,000 $ 15,000 $ 6,000
b. Asset 2
c. Asset 3 2 $ 9,000 $ 15,000 $ 21,000
d. Asset 4 3 $ 3,000 $ 20,000 $ 19,000
4 $ 6,000 $ 12,000 $ 12,000

___12.A financial manager must choose between three alternative investments. Each asset is
expected to provide earnings over a three-year period as described below. Based on the wealth
maximization goal, what would the financial manager choose?
a. Asset 1 Asset Year 1 Year 2 Year 3
b. Asset 2
1 $ 21,000 $ 9,000 $ 15,000
c. Asset 3
d. Asset 4 2 $ 15,000 $ 15,000 $ 15,000
3 $ 9,000 $ 21,000 $ 15,000
$ 45,000 $ 45,000 $ 45,000
___13.The company paid wages of 6 staffs
worth Php 15,000 each. Which of the following is true about the said transaction?
a. Assets and Owner’s equity decrease of Php 15,000
b. Assets and Liability increase of 15,000
c. Assets and Liability decrease of Php 90,000
d. Assets and Owner’s equity decrease of Php 90,000
___14.On August 15, the company purchased detergents and fabric conditioners from Ivana
Cleaning Scents, worth Php 12,000. They paid Php 8,000 and the balance on account. Which of
the following true about the said transaction?
a. Asset: Increase of Php 12,000(Laundry supplies)
b. Liability: Increase of Php 4,000(Accounts payable)
c. Asset:Decrease of Php 8,000(cash)
d. All of the above
___15. Before buying franchise, we should __________.
a. determine all costs and royalty fees.
b. have an attorney examine the agreement
c. find out if you are guaranteed an exclusive territory
d. all of the above
___16. Career options available to finance professionals include the following EXCEPT:
a. Dean of finance school c. CFO of a global enterprise
b. BIR collection officer d. none of these
___17. If a resource has been consumed but the invoice has not yet been received so the
account is unpaid at the end of the accounting period, then.
a. an expense should be recorded when the invoice is received
b. an expense should be recorded when the cash is paid out.
c. an adjusting entry should be made to recognize the expense.
d. it Is optional whether to record the expense before or after the invoice is received.
___18. Failure to prepare an adjusting entry at the end of a period to record accrued revenue
would cause ______.
a. income to be overstated
b. an understatement of assets and an understatement of revenue
c. an understatement of revenue and an understatement liabilities.
 d. an understatement of revenue and on overstatement of liabilities
___19. On January 1, 2002, Monroe, Inc. purchased oil pumping equipment for Php 62,000. The
equipment has an estimated life of 5 years. Monroe expects to sell the equipment at the end
of its life for Php 2,000. Compute depreciation expense using Straight Line Depriciation.
a. Php 5,000 b. Php 8,000 c. Php 10,000 d. Php 12,000
___20. Asset: Increase of Php 50,000 cash (Bank loan), Liability: Increase of Php 50,000. Which
of the following transactions or situations best describe the changes in Liability and Asset?
a.Received Php 50,000 from customers in Laundry services.
b. Received proceeds of Php 50,000 from a bank loan for business use.
c. Received proceeds of Php 50,000 from revenue.
d. Received Php 50,000 from expenses.
II. TRUE OR FALSE
Direction: Write BUSINESS if the statement is true and FINANCE if the statement is False.
________1. The concepts of finance are only applicable to established business.
________2. Finance and accounting are synonymous.
________3. A share represents an ownership interest in a corporation.
________4. Money is anything generally accepted as a means of paying for goods and
services and for paying off debts or liabilities.
________5. Corporations only issue one class of share which is ordinary share.
________6. The complete set of basic financial statements includes four formal statements.
________7. The first step in the accounting cycle is journalizing.
________8. Initial business investments cannot include liabilities.
________9. All journal entry require an explanation.
________10. When an accounting period begins on January 1 and ends on December 31, such
an accounting period is called a calendar year.
III. Answer the following.
1. Why do we need to study finance?
2. Explain the roles of financial manager.
3. Analyze the business transactions from source documents.
August 3 – Paid six month advance rent to Cyrene Commercial Complex, Php 30,000
August 11 – Purchased office sofa set from Renzo Designs for Php 15,000.
August 15– Paid office assistant with a monthly salary of Php 6,000.
August 24 – Paid the electrical bill worth Php 12,000.