Fundamentals of Accountancy, Business, and Management (FABM) 2 Practice Exam

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• Which statement is true about UITF market-to-market valuation?
• Savings accounts are described as the easiest to maintain and typically earn what level of interest?
• What is a post-dated check?
• If a company has a high times interest earned ratio, what does it imply about its ability to meet interest payments?
• Which term best describes a sole proprietor or independent contractor whose income comes purely from professional practice and not from an employer-employee relationship?
• Which item describes funds credited to the company's account by the bank that can include loan proceeds transferred to the company's account?
• Which ratio indicates the average number of days to collect receivables?
• Which statement best defines Working Capital in the context of liquidity?
• If current assets are 200,000, inventory 50,000, and current liabilities 100,000, the quick ratio equals which value?
• What is the effect of a high debt to total assets ratio on financial risk?
• Which liquidity ratio measures the ability to pay current liabilities using only quick assets?
• What term describes charges when a company arranges for its bank to handle the recording of its checks?
• Which are the methods of financial statement analysis?
• Time deposit account is characterized by what?
• Which is an example of a deferral?
• Which term is the government levy that funds public expenditures and is not optional?
• Vertical Analysis is also called common-size analysis and expresses each financial statement item as a percent of a base amount. This statement describes what?
• A higher debt to equity ratio indicates what about a company's financing?
• Why is cost allocation necessary and what is a common method?
• Which measure assesses liquidity using the most liquid assets?
• Which type of income is derived from the conduct of trade or business or the exercise of profession?
• What is depreciation and what are two common methods of recognizing it?
• Which of the following is NOT listed as a source of tax or revenue?
• Return on assets (ROA) assesses profitability relative to what base?
• Why must the basic accounting equation always balance?
• Solvency / Stability describes a company's ability to meet which type of obligations?
• Which statement best defines a time deposit account?
• Which statement about time deposits describes liquidity?
• The gross profit ratio shows the relationship between gross profit and which figure?
• Return on equity (ROE) measures the ability of a firm to generate profits from its what?
• Assets turnover ratio measures the relationship between sales and what?
• Debt to total assets ratio is a leverage ratio indicating which of the following?
• Which ratio best measures how efficiently a company uses its assets to generate sales?
• Estate tax is best described as?
• When a new partner is admitted to a partnership, which of the following is typically performed?
• Which type of income has tax withheld that depends on the salary bracket of the employee?
• Which phrase best defines Gross Income?
• Which ratio is primarily used to assess profitability by comparing profits to revenue?
• What is a bank account?
• Which objective analyzes the economic environment where the business operates?
• Which form corresponds to Annual Income Tax Return for Individuals Earning Purely from Business?
• Who is a depositor?
• Incremental analysis is typically used for which decisions?
• Name two key internal controls over cash.
• Which statement accurately reflects compensation income regarding tax withholding?
• The profit margin ratio compares a company's profit to what?
• Operating expenses to sales ratio shows the efficiency of management by comparing which figures?
• Which analysis method is used to assess relationships between financial statement items using ratios?
• If common stock is issued at a price above par value, which account reflects the excess over par?
• Define and calculate the current ratio given current assets of 150,000 and current liabilities of 90,000.
• Which tax is described as a tax on the production, sale, or consumption of a commodity?
• In a period of rising prices, which statement is true about COGS under different inventory methods?
• What is the primary purpose of planning in management?
• Which statement best describes leadership and management?
• Which statement best describes a key internal control over cash besides segregation of duties?
• Which statement correctly defines income tax?
• Which tax is included among the listed revenue sources and commonly applies to consumption?
• Which item refers to charges in processing the checking account activity and deducted from the bank statement?
• Taxable Income is defined as which of the following?
• Donor's tax is levied on the gratuitous transfer of property between which parties?
• Which term describes a check that has been issued but cannot be cashed yet because the date on the check is in the future?
• What describes an outstanding check?
• Which type of income is earned from sources other than employment or active business activities?
• Which item refers to collections made by the bank and credited to the company's account, including loan proceeds transferred to the company's bank account?
• Which item is an adjusted trial balance?
• Number of days in operating cycle measures how long it would take for the company to transform its inventory back to cash.
• Drawer is?
• Accounts receivable turnover ratio measures what?
• Which term is described as one of the simplest liquidity ratios?
• Which term refers to the total sales transactions net of Value-Added Tax (VAT), if applicable, reported during the period, without deductions?
• Which tax is a levy on the production, sale, or consumption of a commodity, often included in the price?
• Quick assets are defined as which of the following?
• Which form of business organization has the advantage of simplicity and the disadvantage of unlimited liability?
• BIR Form 2316 is best described as?
• Which combination correctly lists the four types of bank accounts mentioned?
• Payee is?
• Which form is used for Annual Income Tax Return for Individuals Earning Income purely from Business or Profession?
• In the Bank to Book Method, which balance is adjusted to reflect the other?
• Which tax is a tax on the production, sales, or consumption of a commodity in a country?
• Which item would be added to the bank's balance to arrive at the company's book balance?
• Which term refers to the total amount of money representing the contract price, compensation, service fee, rental or royalty?
• Inventory turnover ratio measures what?
• Which tax is a tax on documents, instruments, loan agreements, or papers evidencing the transfer of rights or obligations?
• What is the term for a status of a checking account that does not have enough money to cover transactions?
• Which ratio measures a company's ability to pay short-term obligations within one year?
• What does NSF check mean?
• Horizontal analysis is also known as what type of analysis?
• Which category includes income earned by entrepreneurs or individuals who practice their profession, such as private accountants, doctors, and private lawyers?
• Income is best described as what?
• Which term refers to the total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty?
• Which term describes the income earned by entrepreneurs or individuals practicing their profession, such as private accountants, doctors, and private lawyers?
• Which objective focuses on the stability of a business and its financing for ongoing operations?
• In a period of rising prices, which inventory costing method results in the lowest COGS and highest ending inventory?
• Which objective describes how well a business uses its resources to maximize earnings?
• Which term describes a check that has been paid and cleared?
• Return on investment (ROI) is defined as profits of an investment as a percentage of what?
• Gross Income is income derived from what?
• Return on assets (ROA) is an indicator of how profitable a company is relative to which base?
• What criteria determine when revenue should be recognized under accrual accounting?
• Which expression correctly represents gross profit margin?
• BIR Form No. 1700 is used for which taxpayer category?
• Which type of income includes salaries, bonuses, and allowances received by an employee?
• Which statement defines Working Capital as part of liquidity?
• Which check is issued by bank tellers and guarantees funds by the bank?
• What is the closing process and what is its purpose?
• How does accrual accounting affect the timing of cash flows in financial statements?
• Which tax is described as a form of sales tax?
• Which term describes charges that are recorded as a debit from the depositor's account, such as a service charge?
• Which objective explicitly focuses on the stability of the business and its financing structure?
• Which objective is primarily concerned with the stability and financing of a business?
• Which statement explains Interest Earned in the context of bank reconciliations?
• Which of the following is NOT a main step in the accounting cycle?
• Which statement about double-entry bookkeeping is true?
• Which form covers the Annual Income Tax Return for individuals including mixed-income earners, estates, and trusts?
• Which statement accurately describes the difference between a journal and a ledger?
• Unit Investment Trust Fund (UITF) is listed as a type of bank account along with savings, current/checking, and time deposit.
• Current/checking account is used for frequent transactions
• The Times Interest Earned ratio, also known as the interest coverage ratio, measures how much earnings are available to cover future interest costs.
• Donor's tax is a tax on what type of transfer?
• Maslow’s hierarchy of needs is described as which model?
• What is incremental analysis and when is it used in decision making?
• How do you calculate the break-even point in units when given fixed costs and contribution margin per unit?
• Which turnover ratio measures how many times a company has sold and replaced its inventory during a period?
• Which term best describes the income earned by professionals who run their own practices, such as accountants or doctors, as a business activity?
• Unit Investment Trust Funds (UITFs) are defined as:
• What does NSF stand for in banking terms?
• Differentiate between accrual basis and cash basis accounting.
• If quick assets are low relative to current liabilities, which ratio best reflects immediate liquidity?
• Herzberg’s two-factor theory distinguishes which factors?
• Which term refers to taxes that may be imposed and collected by the BIR beyond those already listed?
• Which tax is a levy on documents and papers evidencing an obligation transfer?
• Which term denotes the tax that each business pays to the government as part of the normal operation of the business?
• Which term describes a check returned due to insufficient funds?
• Which term refers to a bank entry that lists charges deducted from the depositor's account?
• What is the primary purpose of the business taxation process?
• Which ratio is used to assess liquidity by comparing current assets to current liabilities?
• In standard costing, what are materials price variance and materials quantity variance?
• In check processing, which party is the drawee?
• What is the basic accounting equation?
• Average collection period measures what?
• What does UITF stand for?
• Why is ethics important in financial reporting and business decision making?
• Which of the following statements best describes a signature card?
• Which BIR form is used for the Annual Income Tax Return of individuals earning purely compensation income?
• What are the main financial statements and the typical order in which they are prepared?
• Which objective focuses on the acquisition and maintenance of financing for operations?
• If total liabilities are 900,000 and total equity is 600,000, the debt-to-equity ratio is which value?
• Which term refers to the total sales transactions net of VAT, reported during the period, without deductions?
• What is the term for the process of comparing the bank's account balance with the company's balance?
• Which term refers to checks paid by the bank that were deducted from the depositor's account and returned to the depositor with the monthly bank statement?
• Which formula correctly defines the quick ratio?
• Which statement lists the four fundamental management functions?
• Average days in inventory is defined as what?
• Which is an example of an accrual?
• Which statement about admitting a new partner to a partnership is true?
• How do standard costing and actual costing differ?
• In the Book to Bank Method, which balance is adjusted to agree with the other?
• What is an organizational structure and why is it important for management?
• In the Adjusted Method of bank reconciliation, how are the balances determined?
• What is the matching principle in expense recognition?
• Which method yields the Bank to Book process?
• Which type of income is earned from other sources, not tied to employment or primary business?
• Solvency focuses on what aspect of a business?
• Which term describes a company's ability to meet its currently maturing obligations?
• Which tax is a business tax imposed on persons, entities, or transactions?
• Which statement correctly defines a stale check?
• The form used to certify compensation payment and tax withheld for employees is which one?
• NOT a type of bank account?
• What is the allowance method for accounts receivable and why is it used?
• What does the debt to equity ratio primarily indicate?
• Which tax is commonly used to tax goods like alcohol and tobacco?
• Taxation refers to which concept?
• Tax is commonly described as which of the following?
• The concept that describes how a business acquires and maintains financing for its operations using different sources such as debt and equity is called:
• Which term refers to cash or property that flows into the taxpayer?
• What is the purpose of a bank reconciliation and which items are typically reconciling items?
• Which formula defines debt-to-equity ratio?
• Which statement best describes a traveler's check?
• What is a personal check?
• Which tax is a form of tax on goods that are often charged at points of production or sale?
• Which statement correctly defines Mixed-Income Earners?
• How is interest on notes payable recognized in the accounting records?
• Which tax is a levy on documents and papers evidencing an obligation?
• Which statement correctly describes the formulas for gross profit margin and net profit margin?
• What are adjusting entries and why are they necessary?
• Which objective is defined as the ability to generate profit?
• Which tax is described as a tax on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale or transfer of an obligation?
• What is a likely consequence of a poorly designed organizational structure?
• Under rising prices, which inventory costing method is typically between FIFO and LIFO in terms of results and is often used as a middle ground?
• Which tax is commonly applied at multiple stages of production and distribution?
• Which is a typical disadvantage of forming a corporation?
• What term describes the collections made by the company during the day but not yet deposited to the bank?
• Which sequence of entries correctly records declaration and payment of cash dividends?
• Which term describes a check that has been paid by the bank and returned to the depositor with the monthly statement?
• Which variables are central to Cost-Volume-Profit (CVP) analysis?
• Which statement about savings accounts is true?
• Which tax is a broad-based consumption tax applied during the production process?
• Which term describes a bank service charge shown on the bank statement?
• Which concept describes the difference where the bank's records are ahead and more updated than the company's records due to timing differences?
• Income Taxes are taxes that are deducted from which sources?
• Distinguish between accruals and deferrals with examples.
• Which check is issued by the bank to the payee and drawn on the bank's own funds?
• In double-entry bookkeeping, how is the balance maintained when equipment is purchased with cash?
• Which of the following is a common cost allocation method?
• Which term refers to taxes that are or hereafter may be imposed and collected by the Bureau of Internal Revenue (BIR)?
• Which method determines balances separately?
• Withdrawals are defined as?
• What is the main purpose of a trial balance?
• What is the purpose of a master budget and what are its major components?
• When a corporation issues common stock for cash, which accounts are affected?