OUR LADY OF FATIMA UNIVERSITY

QUEZON CITY CAMPUS

COLLEGE OF BUSINESS AND ACCOUNTANCY
ACCTG. 2B-FUNDAMENTALS OF ACCOUNTING 2
FINAL EXAMINATION
FIRST SEMESTER: A.Y.2017-2018
GENERAL INSTRUCTIONS:
1. Use no.2 pencil only.
2. Supply all the information needed in the answer card.
3. Read each question carefully.
4. Write eligibly your answers in the given answer sheet. (STRICTLY NO ERASURES)
5. Do not use your mobile while the exam is going on.
6. Sign the attendance sheet before you leave the examination room.

1. One of the following is not an attribute of a 5. Which of the following is incorrect?

corporation:
a. Created by agreement
b. Artificial being with personality separate and
distinct from its shareholders or members
c. It enjoys the right of succession
d. It has powers, attributes and properties
expressly authorized by law or incident to its
existence.
2. Which is not included in articles of incorporation?
a. Term of existence
b. Principal place of business which must be within
the Philippines
c. Name of the stockholders
d. Name of directors or trustees
3. Which of the following is incorrect?
a. All incorporators are subscribers
b. All corporators are incorporators
c. Members are corporators of a non-stock
corporation
d. Shareholders are corporators of a stock
corporation
4. Which of the following is correct?
a. The ultimate control of a corporation rests with
the President
b. The president may act as a president and a
secretary at the same time
c. Corporate secretary must be a resident and
citizen of the Philippines
d. A shareholder is provided to be a director or
officer of two or more corporations
a. At least twenty percent of the authorized
capital must be subscribed
b. At least twenty five percent of the total
subscription must be paid upon subscription
c. In no case shall the paid-in capital be less than
five thousand pesos
d. It is not necessary that each and every
subscriber shall paid twenty-five percent of his
subscription.
6. Which of the following is incorrect?
a. Ordinary shares entitle the holder to an equal
pro-rata division of profits without preference.
b. Preference shares entitle the holder to certain
advantages or benefits over holders of ordinary
shares.
c. Banks are allowed to issue no-par value shares
of stocks.
d. Minimum stated value of a no-par value share is
five pesos per share.
7. Which of the following is incorrect?
a. A domestic corporation is a corporation
organized under Philippine laws.
b. An international corporation is a corporation
organized under foreign laws.
c. Civil corporations are those established for
business or profit.
d. De facto corporation is a corporation existing in
fact but not in law.

ACCOUNTING 2B-Fundamentals of Accounting 2 Page 1

8. Which of the following is incorrect? 13. The accounts below appeared in the trial balance of
a. A corporation is relatively easy in formation and Desperado Company as of December 31, 2016
management. Ordinary shares, P150 par, 20,000 2,700,000
b. A corporation is subject to a heavier taxation authorized, 18,000 shares issued
than other forms of business organization. Subscriptions receivable 170,000
c. Shareholders are not general agents of the Subscribed ordinary shares 270,000
Retained earnings 2,000,000
business.
Share premium 950,000
d. Shareholders have limited liability.
Treasury shares, 1,000 shares, at cost 250,000

9. Which of the following is wrong?
a. Non-stock corporations may be formed for
charitable purposes
b. Profits of a non-stock corporation should be
distributed to its member as dividends.
c. Stock corporations are authorized to distribute
allotments of the surplus profits on the basis of
shares held.
d. Preference shares of stocks may be issued only
as par value shares.
10. Which is not a right of a stockholder?
a. Absolute pre-empted right
b. Right to receive dividends when declared
c. Right to elect and remove directors
d. Right to adopt, amend and repeal the by-laws.
11. Unli-Rice Company reported the following equity
accounts:
Preference share, P15 par 2,550,000
Share Premium-Preference 150,000
Ordinary share,no par, P50 stated value 3,000,00
How much is the Total Shareholders’ Equity?
a. 5,840,000
b. 5,300,000
c. 5,500,000
d. 5,400,000
14. Based on number 13, what is the number of
outstanding shares?
a. 18,000
b. 18,667
c. 17,000
d. 17,667
15. Beep Corporation is authorized to issue 10,000
shares with a par value of P100 per share. The
following are the transactions during the year 2016:
June 1, 2016: sold 2,000 shares at P150 per share.
October 31, 2016: issued 800 shares for a liability.
The fair market value of share and the liability is
P200 per share and P100,000 respectively.

How much is the total share premium?

What is the number of issued and outstanding
a. 120,000
Ordinary shares?
b. 100,000
a. 60,000
c. 180,000
b. 6,000
d. 80,000
c. 600,000
d. 66,000
16. Based on number 15, how much is the total
shareholders’ equity?
12. Based on number 11, what is the number of issued
a. 460,000
and outstanding Preference share?
b. 400,000
a. 180,000
c. 280,000
b. 170,000
d. 380,000
c. 18,000
d. 17,000

Fundamentals of Accounting 2 Page 2

17. At the beginning of the current year, Brozas P100. Prior to the split, the entity had 100,000
Company issued 10,000 ordinary shares of P20 par shares of P10 par value issued and outstanding.
value and 20,000 preference shares of P20 par
value for a total of P800,000. At this date, the After the split, what is the par value of the share?
ordinary share was selling for P36 and the a. 10
preference share was selling for P27. b. 20
c. 50
What amount is allocated to Ordinary shares? d. 2
a. 320,000
b. 400,000 22. Based on number 21, what is the number of
c. 266,667 outstanding shares after the split?
d. 533,333 a. 20,000
b. 500,000
18. Based on number 17, what amount is allocated to c. 100,000
preference shares? d. 200,000
a. 480,000
b. 400,000 23. Catu Company had 80,000 ordinary shares
c. 266,667 outstanding in January 2015. The entity distributed
d. 533,333 a 15% stock dividend in March and 10% stock
dividend in June. After acquiring 10,000 shares of
19. The shareholders of Andres Company approved a 2- treasury in July, the entity split the share 4 to 1 in
for-1 split of the entity’s share capital and an December.
increase in authorized shares from 100,000 shares
with P20 par value to 200,000 shares with P10 par How many ordinary shares are outstanding on
value. Shareholders’ equity accounts immediately December 31, 2015?
before the split were share capital P1,000,000, a. 364,800
share premium P150,000 and retained earnings b. 488,000
P1,350,000. c. 498,000
What is the balance of the share premium after the d. 451,500
share split?
a. 0 24. Dy Company reported the following shareholders’
b. 150,000 equity on January 1, 2015:
c. 300,000 Share capital, P10 par, 225,000 shares 2,250,000
d. 1,150,000 outstanding
Share premium 900,000
20. Based on number 19, what is the balance of Retained earnings 2,190,000
During the year, the entity had the following share
retained earnings after the share split?
transactions:
a. 1,350,000
b. 2,700,000  Acquired 6,000 shares for P270,000
c. 0  Sold 3,600 shares at P50 a share
d. 4,700,000  Sold the remaining treasury shares at P41
per share
21. During the year, Reyes Company declared a 1 for 5 What is the amount of share premium on December
share split, when the market value of shares was 31, 2015?
a. 891,600

Fundamentals of Accounting 2 Page 3

 b. 870,000 For number 28 to 37:
c. 908,400 Easy To Get Company has the following selected
d. 927,600 accounts in its shareholders’ equity:
12% Preference share, P100 par, P200,000
25. During 2015, Lozano Company issued 5,000 4,000 shares authorized, 2,000 shares
convertible preference share of P100 par value for issued and outstanding
P110 per share. One preference share can be Ordinary shares, P100 par, authorized 300,000
6,000 shares, 3,000 shares issued and
converted into three ordinary shares of P25 par
outstanding
value at the option of the holder. On December 31, Retained earnings 260,000
2015, when the market value of ordinary shares
was P40, all of the preference shares were The board failed to declare dividends for the past two
converted. years. The current year’s results of operation gave the
What amount should be credited to Ordinary share board the reason to declare dividends of P200,000.
as a result of the conversion?
a. 375,000 28. If the preference shares are non-cumulative and
b. 357,000 non-participating, how much is the dividends for
c. 500,000 the ordinary shares?
d. 600,000 a. 120,000
b. 128,000
26. Based on number 25, how much is the resulting c. 176,000
share premium? d. 91,200
a. 175,000
b. 225,000 29. Based on number 28, how much is the dividends for
c. 50,000 preference shares?
d. 0 a. 108,800
b. 72,000
27. Bakasyon Na Company had 10,000 shares issued c. 24,000
and outstanding on January 1, 2015. On March d. 80,000
2015, the entity declared a 2 for 1 share split when
the fair value of share was P80. On December 15, 30. If the preference shares are non-cumulative and
the entity declared a P5 per share cash dividend. participating, how much is the dividends for the
ordinary shares?
What amount should be reported as dividends? a. 176,000
a. 50,000 b. 128,000
b. 100,000 c. 120,000
c. 850,000 d. 91,200
d. 950,000 31. Based on number 30, how much is the dividends for
preference shares?
a. 108,800
b. 24,000
c. 80,000
d. 72,000

Fundamentals of Accounting 2 Page 4

32. If the preference shares are cumulative and non- 6% Cumulative Non-participating P400,000
participating, how much is the dividends for the preference shares, P1000 par, 5000
ordinary shares? shares authorized, 400 shares issued
a. 176,000 and outstanding
Ordinary shares, P100 par, 20,000 550,000
b. 120,000
shares authorized, 5500 shares issued
c. 128,000 and outstanding
d. 91,200 Share premium- preference 40,000
Share premium-ordinary 720,000
33. Based on number 32, how much is the dividends for Retained earnings 850,000
preference shares?
a. 24,000 Suppose that the preference shares has a
b. 80,000 liquidation value of P1,300 and dividends are
c. 72,000 arrears for three years, how much is the book value
d. 108,800 per ordinary shares?
a. 1,450
34. If the preference shares are cumulative and b. 1,240
participating, how much is the dividends for the c. 1,540
ordinary shares? d. 1,480
a. 120,000
b. 128,000 39. Based on number 38, how much is the book value
c. 91,200 per ordinary share?
d. 176,000 a. 357.82
b. 366.55
35. Based on number 34, how much is the dividends for c. 353.45
the preference shares? d. 370.91
a. 80,000
b. 72,000 40. Super Easy company reported the following
c. 108,800 information for the current year:
d. 24,000 Ending goods in process 1,000,000
Depreciation on factory building 320,000
36. Based on number 34, how much is the dividend per Beginning raw materials 400,000
Direct labor 1,980,000
preference share?
Factory supervisor’s salary 560,000
a. 40
Depreciation on headquarters bldg. 210,000
b. 36 Beginning goods in process 760,000
c. 54.40 Ending raw materials 340,000
d. 12 Indirect labor 360,000
Purchases of raw materials 2,300,000
37. Based on number 34, how much is the dividend per
ordinary share? What is the cost of goods manufactured during the
a. 40 year?
b. 42.67 a. 5,580,000
c. 30.40 b. 5,550,000
d. 58.67 c. 5,340,000
38. Easy company showed the following shareholders’ d. 5,820,000
equity accounts:

Fundamentals of Accounting 2 Page 5

41. Caballero Company has a current ratio of 3:1. If the
total shareholders’ equity is P450,000, total liability 47. Based on number 43, if the Receivable turnover is
is P200,000(65% current), how much is the non- 10 times and the ending Accounts Receivable is
current assets? P80,000, how much is the beginning Accounts
a. 440,000 receivable?
b. 390,000 a. 160,000
c. 260,000 b. 120,000
d. 250,000 c. 80,000
d. 40,000
42. Based on number 41, assuming that inventory is
P130,000 and the rest of the current assets are 48. Based on number 43. Using 360 days a year, what is
quick assets, what is the company’s quick ratio? the average age of inventories?
a. 1:1 a. 36.5
b. 1:2 b. 30
c. 2:1 c. 36
d. 2:2 d. 30.5

43. Based on number 41, what is the Debt to Equity 49. Based on number 43. Using 365 days a year, what is
Ratio? the average age of Accounts Receivable?
a. 28.89% a. 30
b. 15.56% b. 36
c. 44.44% c. 36.5
d. 225% d. 30.5

44. Based on number 41, what is the Equity Ratio? 50. Based on number 43, how long is the entity’s
a. 69% operating cycle (Days)?
b. 70.67% a. 70.5
c. 69.23% b. 76
d. 144.44% c. 72.5
d. 61
45. Based on number 41, what is the Debt Ratio? =============================================
a. 325% =============================================
b. 144.44%
c. 30.77%
d. 225% “HOLD ON TO YOUR DREAM. BE A CPA”
PREPARED BY:
46. Conejos Company maintains a gross profit JAY RODANTE NANO
percentage of 20%. Sales for the year is
Faculty/CBA
P1,000,000(80%-credit sales). If the Inventory
turnover is 10 times and the Ending inventory is CHECKED AND APPROVED BY:
P100,000, how much is the beginning inventory?
VICTOR JEROD ANDRES
a. 40,000
b. 50,000 Program Head-Accountancy

c. 60,000
d. 80,000

Fundamentals of Accounting 2 Page 6

Fundamentals of Accounting 2 Page 7