1. What is the main objective of a business?

a. To invest money b. To earn profit c. To serve customers

2. To grow, business has to meet its two basic tests of survival:
a. Profitability b. Solvency c. Both a and b d. Neither a nor b
3. A business that cannot meet its obligations as they fall due is said to be ______
a. Non-operating b. Solvent c. Insolvent d. operating
4. Below are the three major types of business except
a. Service enterprise b. Charitable institution c. Merchandising d. Manufacturing
5. In this business, the activity is buy and sell
a. Service enterprise b. Merchandising c. manufacturing
6. In this business, normal activity is the conversion of raw materials into finished product
a. Service enterprise b. Merchandising c. manufacturing

7-10. What are the four (4) forms of business ownership?

Sole proprietorship
Partnership
Corporation
government

11. Below are the definitions of sole proprietorship except

a. There is no legal distinction between the owner and the business.
b. There is a shared risk and management
c. A business that is wholly owned by a single person, who has unlimited liability
d. Easiest and most inexpensive to set up

12. A PARTNERSHIP is an arrangement in which two or more individuals share the profits and liabilities of a business
venture.

13. Which of the following statements is incorrect about corporation?

a. A corporation is a legal entity that is separate and distinct from its owners.
b. It is often referred to as a "legal person.
c. Difficult to raise capital from investors or financials institutions.
d. Easy transferability of the ownership of shares from one stockholder to another investor.

14. It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and
communicating financial information.
a. Bookkeeping b. Accounting c. Journalizing d. Classifying

15 20. Give three (3) internal users and three (3) external users of financial statements.
INTERNAL:
- MANAGEMENT
- EMPLOYEES
- OWNERS

EXTERNAL
- CUSTOMERS
- INVESTORS
- CREDITORS
- TAX AUTHORITIES
- REGULATORY AUTHORITIES

21. The components of Financial statement include, except

a. Balance sheet b. Management report c. Income statement d. Statement of cash flows
22. The main objective of financial statements is to help users in making DECISIONS

23. What is the accounting equation? ASSETS = LIABILITIES + EQUITY

24-25. The normal balance of Assets is DEBIT while Liabilities and Equity is CREDIT.

26. The company receives collection of Accounts receivable. To journalize, a credit of Accounts receivable and a debit of
a. Capital b. Sales c. Cash

27. In ledger, posting of events is made per

a. Transaction b. Account c. Per total

28 30. Give one example each of an Asset, Liability and Equity.

ASSETS:
CASH
ACCOUNTS RECEIVABLES
EQUIPMENT
MERCHANDISE INVENTORY
SUPPLIES

LIABILITIES:
ACCOUNTS PAYABLE
LOANS PAYABLE
NOTES PAYABLE

EQUITY:
WITHDRAWALS
INITIAL INVESTMENT
ADDITIONAL INVESTMENT
NET INCOME / NET LOSS