FAR

Question 1

A physical count of inventory is usually taken

Answer 1

at the end of fiscal year

Question 2

The periodic inventory system is used commonly by companies that sell

Answer 2

Low priced, high volume merchandise

Question 3

Gross margin equals the difference between net sales and

Answer 3

COGS

Question 4

A trade discount is

Answer 4

not shown anywhere

Question 5

A merchandiser will earn an operating income of ZERO when

Answer 5

Operating expenses = Net Sales

Question 6

Who shoulders the transpo cost:

FOB destination

Answer 6

Seller

Question 7

Who shoulders the transpo cost:

FOB shipping point

Answer 7

Buyer

Question 8

Net sales minus Cost of Sales

Answer 8

Gross Profit

Question 9

Gross profit plus or minus Income or Expenses

Answer 9

Profit

Question 10

System that records Low priced, High volume merchandise

Answer 10

Perpetual inventory

Question 11

The inventory account is continuously updated

Answer 11

Perpetual

Question 12

Amount deducted from the catalog price for an item of merchandise is called

Answer 12

Trade discount

Question 13

Which account is used in Periodic but not in Perpetual inventory system

Answer 13

Purchases

Question 14

COGS

Answer 14

Net purchase+ Beginning inventory+Transportation - Ending inventory

Question 15

Profit

Answer 15

Net Sales - COGS - Expenses

Question 16

If beginning and ending inventory is ignored profit would be

Answer 16

Understated

Question 17

The amount of Cost of goods available for sale during the year depends on the amounts of

Answer 17

Beginning inventory and net purchases

Question 18

When a seller of merchandise inventory allowed a customer a reduction from the original price for defective goods the seller will issue to the customer a

Answer 18

Credit Memo

Question 19

When the seller advances the transportation costs and the terms of sales are FOB Shipping point the seller records the payment of transportation costs by debiting

Answer 19

Accounts Receivable

Question 20

Net Sales - COGS

Answer 20

Gross Profit

Question 21

T or F

There is no need for physical inventory count in the perpetual inventory system.

Answer 21

True

Question 22

T or F

The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash

Answer 22

True

Question 23

T or F

A business can shorten its operating cycle by increasing its percentage of cash sales and reducing its percentage of credit sales

Answer 23

True

Question 24

Net Purchase + Transportation In

Answer 24

Net Cost of Purchases

Question 25

Accounts that would not appear on a worksheet that uses periodic inventory system

Answer 25

COGS

Question 26

The closing entries for a merchandising entity using the perpetual inventory system do not affect the

Answer 26

Merchandise inventory account

Question 27

Which of the following accounts would not be closed by a merchandising entity that uses perpetual inventory system?

Answer 27

Merchandise inventory account

Question 28

Which account is closed by debiting the account

Answer 28

Purchase Returns and Allowances

Question 29

Alibangbang and Sol decided to go business together They started the essential terms of their agreement along with their rights and duties. Alibangbang and Sol created an

Answer 29

Articles of Partnership

Question 30

Cabrera inherited a large amount of money from his parents. Cabrera wishes to start his own business in Batangas. His lawyers encourage him to make it a corporation. What disadvantage of a sole proprietorship are the lawyers trying to avoid

Answer 30

Unlimited Liability

Question 31

The person who assumes full co-ownership of a partnership including unlimited liability is a

Answer 31

General Partner

Question 32

The partner who can lose only what he has invested in a business is the

Answer 32

Limited Partner

Question 33

A budding entrepreneur wants to start a business but is unsure of the legal form suited for her. Short of cash, she has to take the form that is least expensive and most flexible in terms of decision making and implementation. Which would you recommend?

Answer 33

Sole Proprietorship

Question 34

Jumawan loves to cook. She receives unqualified praise whenever she prepares a meal for someone. Encouraged by these compliments and eager to put her culinary talents to good use, Jumawan decides to open a boutique restaurant in Dumaguete City. Since she plans to maintain complete control of the business, she will most likely organize it as

Answer 34

Sole Proprietorship

Question 35

Penetrante owns and operates a large hardware store in Cabanatuan City that employs about forty-five personnel. She delegates some of the decision making to two supervisors. Penetrante’s business is organized as

Answer 35

Sole Proprietorship

Question 36

Burgos, Del Mundo and Gonzales are partners in an accounting firm with each partner owningan equal share of the business. Del Mundo died suddenly of a heart attack. What will most likelybecome of the partnership

Answer 36

Burgos and Gonzales will be able to purchase Del Mundo's interest from his estate

Question 37

Non –cash assets invested into a partnership are recorded at their

Answer 37

Fair Market Value

Question 38

Essence of Partnership

Answer 38

Divide Profit and Loses

Question 39

Kinds of Partner One is liable to the extent of his separate property after all the assets of the partnership are exhausted

Answer 39

General Partner

Question 40

Kinds of Partner One who is actually not a partner but who represents himself as one.

Answer 40

Nominal partner or partner by estoppel

Question 41

Kinds of Partner One who is designated to wind up or settle affairs of partnership after dissolution

Answer 41

Liquidating Partner

Question 42

Kinds of Partner One who does not take active part in the business of the partnership though may be known as a partner

Answer 42

Silent Partner

Question 43

Kinds of Partner One who does not take active part in the business of the partnership and is not known as a partner

Answer 43

Dormant Partner

Question 44

Kinds of Partner One who takes active part in the business of the partnership but is not known to be a partner by outside parties.

Answer 44

Secret Partner

Question 45

Kinds of Partner One who is liable only to the extent of his capital contribution. He is not allowed to contribute industry or services only.

Answer 45

Limited Partner

Question 46

Kinds of Partner One who contributes money or property to the common fund of the partnership

Answer 46

Capitalist Partner

Question 47

Kinds of Partner One who contributes his knowledge or personal service to the partnership

Answer 47

Industrial Partner

Question 48

Kinds of Partner One whose partners appointed as manager of the partnership

Answer 48

Managing Partner

Question 49

One which failed to comply with all the legal requirements for its establishment

Answer 49

De facto partnership

Question 50

One which has complied with all the legal requirements for its establishment

Answer 50

De jure partnership

Question 51

The price which an asset or liability could be exchanged in a current transaction between knowledgeable, unrelated willing parties.

Answer 51

Fair Value

Question 52

Estimated amount that a willing seller would receive from a financially capable buyer for the sale of the asset in a free market.

Answer 52

Fair market value

Question 53

is a person who takes initiative in founding and organizing the corporation and receives consideration therfor.

Answer 53

Promoter

Question 54

All incorporators are

Answer 54

corporators

Question 55

not all corporators are

Answer 55

incorporators

Question 56

These shares entitle the holder to certain advantages or benefits over the holders of ordinary shares.

Answer 56

Preference Shares

Question 57

Share One without any value appearing on the face of the certificate of stocks

Answer 57

No par value shares

Question 58

Shares. One in which a specific amount is fixed in the articles of incorporation and appearing on the certificate stock.

Answer 58

Par value shares

Question 59

The minimum issue price of the shares

Answer 59

Par value shares

Question 60

Minimum stated value of a no par value share

Answer 60

P5

Question 61

These shares entitle the holder to an equal pro rata division of profits without any preference.

Answer 61

Ordinary shares

Question 62

Shares. may be issued by the corporation when expressly provided in the articles of incorporation.

Answer 62

Redeemable shares

Question 63

A stock that has been issued by the corporation as fully paid and later reacquired but not retired.

Answer 63

Treasury shares

Question 64

Those issued to promotors as compensation in promoting the incorporation.

Answer 64

Promotion shares

Question 65

A stock which is convertible or changeable from one class to another class.

Answer 65

Convertible shares

Question 66

Government organization registered ( Corporation and Partnership)

Answer 66

SEC Securities and Exchange Commission

Question 67

81.What is the primary disadvantage of both a sole proprietorship and a partnership that a corporation overcomes?

Answer 67

Unlimited Liability

Question 68

A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a

Answer 68

Open corporation

Question 69

The arbitrary value assigned to a share of stock is called

Answer 69

Par value

Question 70

The owners of shares in a stock corporation

Answer 70

shareholders

Question 71

FOB destination

Answer 71

Credir Accounts Payable

Question 72

Freight Collect

Answer 72

Buyer

Question 73

starting capital of partnership to register

Answer 73

3K

Question 74

it enjoys the right of succession

Answer 74

corporation

Question 75

perpetual existence

Answer 75

Corporation

Question 76

artificial being

Answer 76

corporation

Question 77

the subscription that is failed to payed

Answer 77

deliquent

Question 78

Corpus

Answer 78

Corporation

Question 79

kita ng shares

Answer 79

Dividends

Question 80

The directors of a corporation are responsible

Answer 80

for declaring dividends

Question 81

The difference between issued shares and outstanding shares of stock is

Answer 81

Treasury stock

Question 82

Which of the following are changed when a corporation buys equipment for cash?

Answer 82

Current Assets

Question 83

The purchase of treasury ordinary shares

Answer 83

Decreases issued ordinary shares

Question 84

When shares without par value are sold

Answer 84

the proceeds shall be credited to Share capital

Question 85

In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the

Answer 85

safe payments computations

Question 86

The accumulated balance of periodic earnings, net of dividend distributions, prior period adjustments and other capital adjustments.

Answer 86

Retained earnings

Question 87

In accounting for liquidation of a partnership, cash payments to partners after all outside creditors' claims have been satisfied, but before final cash distribution, should be according to

Answer 87

safe payments computations