Exam (elaborations) Accountancy

Practice Test for Accountancy Board Examination
LICEO DE CAGAYAN UNIVERSITY
Section 1: Financial Accounting

1. Which of the following is not a primary financial statement?

a) Balance Sheet
b) Income Statement
c) Cash Flow Statement
d) Statement of Retained Earnings
e) Profit and Loss Account

Answer: e) Profit and Loss Account

2. What is the formula to calculate the Debt-to-Equity Ratio?

a) Total Assets / Total Liabilities
b) Total Liabilities / Shareholders' Equity
c) Net Income / Total Assets
d) Shareholders' Equity / Total Liabilities

Answer: b) Total Liabilities / Shareholders' Equity

3. If a company has a beginning inventory of $10,000, purchases of $50,000, and an ending
inventory of $12,000, what is the Cost of Goods Sold (COGS)?

a) $48,000
b) $50,000
c) $52,000
d) $58,000

Answer: a) $48,000
Explanation: COGS = Beginning Inventory + Purchases - Ending Inventory
COGS = $10,000 + $50,000 - $12,000 = $48,000

4. Under the accrual basis of accounting, when is revenue recognized?

a) When cash is received
b) When the product is shipped
c) When the service is performed
d) When the payment is collected

Answer: c) When the service is performed