FABM 2

Fundamentals of Accountancy, Business, and Management 2

2nd Quarter Examination

NAME:
SECTION/BLOCK: SCORE:

GENERAL DIRECTION: Answer the following questions on the answer sheet

provided. Don’t rely to the answers of your seatmates. Unethical actions
or movement will not be tolerated, anyone caught will be marked.

Part 1: Fill in the blanks

In simple terms, (1)_______________ are columnar notebooks used

for recording transactions. There are two basic accounting books,
(2)__________ and ledger.
The Journal is known as the book of(3) ___________ entry. Writing
on the journal is called (4)____________.
The (5)_________________ also known as the book of accounts,
maintains at least one sheet per account. Writing on this notebook is
referred to as (6)___________.
The (7)_________________ is used to record credit sales, the purchases
journal is used to record purchases of (8)____________. The
(9)____________ is used to record all receipts of cash. While the cash
disbursement journal is used to record all (10)__________ of cash.

Part 2: Matching Type

1. A bank reconciliation
a. A formal financial statement that lists all of the bank
account balances of an entity.
b. A merger of two banks that previously were competitors
c. A statement sent by the bank to depositor on a monthly
basis
d. A schedule that accounts for the differences between an
entity’s cash balance as shown on its bank statement and
the cash balance shown in its general ledger.
2. Which of the following items must be added to the cash balance
per ledger in preparing a bank reconciliation which ends with
adjusted cash balance?
a. Note receivable collected by bank in favor of the
depositor and credited to the account of the depositor
b. NSF customer check
c. Service charge
d. Erroneous bank debit
3. Which of the following must be deducted from the bank
statement balance in preparing a bank reconciliation which
ends with adjusted cash balance?
a. Deposit in Transit
b. Outstanding Check
c. Reduction of loan charged to the account of the depositor
d. Certified Check
4. In preparing a monthly bank reconciliation, which of the
following items would be added to the balance per bank
statement to arrive at the correct cash balance?
a. Outstanding checks
b. Bank service charge
c. Deposits in Transit
d. A customer’s note collected by the bank on behalf of the
depositor
5. When preparing a bank reconciliation, bank credits are
a. Added to the bank statement balance.
b. Deducted from the bank statement balance.
c. Added to the balance per book.
d. Deducted from the balance per book.
6. If the balance shown on an entity’s bank statement is less
than the correct cash balance and neither the entity or the
bank has made any errors, there must be
a. Deposits credited by the bank but not yet recorded by the
entity.
b. Outstanding checks
c. Deposits in transit
d. Bank charges not yet recorded by the entity.
7. If the cash balance shown on an entity’s accounting records is
less than the correct cash balance and neither the entity nor
the bank has made any errors, there must be
a. Deposits credited by the bank but not yet recorded by the
entity.
b. Outstanding checks
c. Deposits in transit
d. Bank charges not yet recorded by the entity.
8. Bank Reconciliation are normally prepared on a monthly basis
to identify adjustments needed in the depositor’s records and
to identify bank errors. Adjustment on the part of the
depositor shall be recorded for
a. Bank errors, outstanding checks and deposits in transit
b. All items except bank errors, outstanding checks and
deposit in transit
c. Book errors, bank errors, deposits in transit and
outstanding checks.
d. Outstanding checks and deposit in transit.
9. Which of the following statements in relation to bank
reconciliation is true?
a. Bank service charge will cause the cash balance per
ledger to be higher than that reported by the bank, all
other things being equal.
b. Credit memos will cause the cash balance per ledger to be
higher than that reported by the bank, all other things
being equal.
c. Outstanding checks will cause the cash balance per ledger
to be greater than the balance reported by the bank, all
other things being equal.
 d. The cash amount reported in the statement of financial
position must be the balance reported in the bank
statement.
10. Which of the following is a credit memo?
a. Service charge of the bank.
b. NSF check returned by the bank.
c. Note receivable collected by the bank.
d. Automatic debit payments made by the bank.

Part 3: True or False

1. Philippine individual income tax is progressive.
2. The tax rate decreases as the tax base increases in a
regressive taxation.
3. For married couple with children, both can claim additional
exemption for dependents.
4. BIR Form 1700 – Annual Income Tax Return for individual
earning purely compensation income including
business/profession related income.
5. The Optional Standard Deduction scheme allows the proprietor
to claim deductions up to a maximum of 40% of gross sales or
gross receipts.
6. Adjusting entries are prepared based on the reconciling items
on the bank side of the bank reconciliation.
7. Time deposit normally has a fixed interest rate and fixed
placement period.
8. The account holder may issue a bank check from savings account
9. Time deposits can never be withdrawn before its maturity.
10. Outstanding checks refer to deposits that did not meet the
bank’s cut-off time and is not recorded in the bank statement
until the following period.

Part 4: Journal Entries

1.
a. On Jan. 1, 2017, Mr. All Might invested P10,000,000 cash
to establish his business Midoriya Company.
b. On Jan. 2, Midoriya Co. paid the Elric Brothers Corp. for a
building worth P3,000,000.
c. On Jan. 4, Midoriya Co. bought supplies from Urahara shop
worth P800,000 on account.
d. Midoriya Co. received P400,000 for the services rendered to
Saiyan Corporation.
e. On Feb 14, the wife of Mr All Might was caught on a fire
caused by the terrorist Dragneel, resulting to her death.
Mr. All Might paid P500,000 on funeral expenses.
f. Depressed, Mr. All Might bought a yacht named Thousand
Sunny worth P2,000,000 for his personal use with the cash
of the business
g. On June 12 Mr. All Might paid P400,000 for the supplies
bought on January.
h. On December 25, Midoriya Co. billed Lelouch P500,000 for
services rendered.
i. What is the ending balance of Cash?
j. What is the ending balance of Accounts Receivable?

Use the following accounts: Cash, All Might Capital, Service Revenue,
Building, Accounts Receivable, Accounts Payable, and Supplies.
 Part 5: Problem Solving
1. Bank Reconciliation
Huawii Company provided the following data for the purpose of
reconciling the cash balance per book with the balance per
bank statement on December 31, 2017
Balance per bank Statement 2,000,000
Outstanding Checks 400,000
Deposit in Transit 200,000
December NSF Check 100,000
Erroneous Credit to
Huawii’s Account, representing
proceeds of loan granted to
another company 300,000
Proceeds of note collected
by bank for Huawii. Net of
service charge of P20,000 750,000

a. What is the adjusted Cash Balance? (2 pts)

b. What is the unadjusted Book Balance? (3 pts)

2. Tax Computation
a. Naruto, married with 2 legitimate children aged 12 and 6
years old respectively, Taxable income of Naruto is
P500,000.

I. What is the Total Income of Naruto?

II. What is the Income Tax Due of Naruto?

b. Luffy, single with no dependent had a gross receipts of

P1,000,000 from his business this year, he opted for OSD
method of deduction. His 1701Q payments amounted to
P50,000.
I. What is the Taxable Income of Luffy?
II. What is the Income Tax Due of Luffy?
III. What is the Income Tax Payable of Luffy?

Taxable Income Tax Due

Above But not more than
0 P250,000 0%
20% of the Excess over
P250,000 P400,000 P250,000
P30,000 + 25% of the
P400,000 P800,000 Excess over P400,000
P130,000 + 30% of the
P800,000 P2,000,000 Excess over P800,000
P490,000 + 32% of the
P2,000,000 P8,000,000 Excess over P2,000,000
P2,410,000 + 35% of the
P8,000,000 Excess over P8,000,000

Prepared by: Checked by:

MR. CHRISTIAN D. TONOGBANUA, CPA MR. LYNDON JOHN S. DE LEON, LPT
Adviser Senior High School Program Head
Noted by:
PROF. TITA C. AGSUNOD, LPT, PhD
High School Principal
For Computation Purposes
For Computation Purposes