ASIAN DEVELOPMENT FOUNDATION COLLEGE

P. Burgos St. Tacloban City

MIDTERMS EXAMINATION IN FIN 1

I. Multiple Choice. Choose the letter of the correct answer.

A. Current Assets F. Inventories

B. Fixed Assets G. Pre-paid Expenses
C. Cash H. Accounts Payable
D. Marketable Securities I. Notes Payable
E. Accounts Receivable J. Operating Expenses

1. Items which can be converted readily into some other forms of assets or used within the
operating period.
2. Items which are intended to be utilized for a much longer period.
3. It includes all money items whether kept in office or deposited in the bank, available for
payment of obligations.
4. Refers to temporary investments of excess working capital in negotiable financial
instruments.
5. An open account that generally arises from sale of goods on credit that are due for
collection.
6. An account due for collection that are evidenced by written promissory notes.
7. Refers to the stock of goods of the company.
8. These are expenses paid in advance where part of the benefit will accrue beyond the
balance sheet date.
9. These are obligations due within the current year and without a written evidence of the
debt.
10. A kind of expense that include salaries, taxes, advertising, premium on insurance,
transportation, depreciation and bad debts.

II. Identification. Provide the correct answers for the items asked. Write your answers in
UPPERCASE letters.
1. It refers to all items of value, whether owned or borrowed, used in business operations to
generate profit.
2. It consists of the collective contributions of the owners and the accumulated business
earnings.
3. This refers to the borrowed capital either in cash or in kind.
4. The ability to procure money, property or services for the use of the debt or in a current
period on a promise to the creditor to pay at some determinable future.
5. It refers to the amount borrowed.
6. It refers to the charge for the use of the capital over a specified period.
7. A loan term payable within a year or less.
8. A loan term wherein the maturity period is five years or more.
9. A loan term payable within one to five years.
10. A written commitment where the debtor promises to pay the payee/creditor a definite
amount of money at a specified date.
11. A written order by the drawer ordering the drawee to pay a definite amount of money
either on demand or at a fixed date in the future.
 12. These are compact reports that summarize the financial position of a firm as of a given
date or the result of financial operation over a given period.
13. A financial statement that show the financial position of the firm as of the specified date.
14. Items of value owned and used for business operations.
15. Refers to the obligation of a firm to outside creditors.
16. It reflects the capital contribution of the owners and the accumulated earnings of the
business.
17. A financial statement that shows the result of the financial operations over a given period
is an income statement.
18. A financial plan or a projection of a future course of action on some specific project or on
overall operations.
19. A yearly report on the performance of the corporation is customarily distributed among
stockholders.
20. An in-depth inquiry into a firm’s financial data.

III. Enumeration
A. Types of Credit (3)
B. Types of Budget (4)
C. Types of Financial Analysis (3)

IV. Categorization. Write A if the item is an asset, write L if it is under liabilities, and write
E if the item is an equity.
1. Cash 9. Inventories
2. Accounts Payable 10. Common Stock
3. Land 11. Retained Earnings
4. Notes Payable 12. Office Supplies
5. Accrued Taxes 13. Pre-paid Insurance
6. Plants & Equipments 14. Notes Payable
7. Accumulated Depreciation 15. Mortgage Payable
8. Notes Receivable

V. Create a Balance Sheet using the following data. (15 pts)

Cash 500,000 Notes Receivable 100,000
Accounts Payable 500,000 Inventories 1,500,000
Land 6,000,000 Common Stock 5,000,000
Notes Payable 100,000 Retained Earnings 3,000,000
Treasury Bills (MS) 40,000 Office Supplies 200,000
Accrued Taxes 500,000 Pre-paid Insurance 200,000
Plants & Equipments 5,000,000 Notes Payable 1,500,000
Accumulated Depreciation (P/E) 1,000,000 Mortgage Payable 3,500,000
Allowance for Doubtful Acc. 100,000 Margin Deposit on L/C 500,000

~Good Luck!~

Prepared by:

MARELLE MARIE T. MENDOZA

Instructor