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- 1. Multiple Choice
EASY
1. Net realizable value is
A. Fair value less cost to sell
B. Estimated selling price less normal margin and cost to sell
C. Estimated selling price less cost to complete and cost to sell
D. Fair vale less normal margin and cost to complete.
- 2. Multiple Choice
2. When using periodic inventory method, which of the following generally would not be separately accounted for in the computation of cost of goods sold?
A. Trade discounts applicable to purchases during the period.
B. Cash discounts taken during the period.
C. Purchase returns and allowances of merchandise during the period.
D. Cost of transportation in for merchandise purchased during the period.
- 3. Multiple Choice
3. On December 28, Year 2, Kerr Manufacturing Co. purchased goods costing P50,000. The terms were FOB destination. Some of the costs incurred in connection with the sale and delivery of the goods were as follows:
Packaging for shipment P1,000; shipping P1,500;and special handling charges P2,000. These goods were received on December 31, Year 2. In Kerr’s December 31, Year 2 balance sheet, what amount of cost for these goods should be included in inventory?
A. 54,500
B. 53,500
C. 52,000
D. 50,000
- 4. Multiple Choice
4. Loans and receivables may be classified under IFRS 9 at
A. Financial asset at amortized cost
B. Financial asset at fair value through profit or loss
C. Either A or B
D. Neither A nor B
- 5. Multiple Choice
5. Expected credit losses of loan receivables are required to be measured through a loss allowance at an amount equal to (choose the exception)
A. 12-month expected credit losses
B. Full lifetime expected credit losses
C. Monthly expected credit losses
D. None of the foregoing
- 6. Multiple Choice
6. Which cash fund is included from the cash and cash equivalent balance?
A. Fund set aside for acquisition of equipment and machinery.
B. Fund set up in a bank exclusively for payment of employees’ compensation.
C. Fund for the redemption of preference shares.
D. Fund established for settlement of long-term obligations.
- 7. Multiple Choice
7. The use of the gross profit method assumes
A. The amount of gross profit is the same as in prior years.
B. Sales and cost of goods sold have not changed from previous years.
C. Inventory values have not increased from previous years.
D. The relationship between gross profit and sales remains stable over time.
- 8. Multiple Choice
8. A COMPANY reported current net receivables on December 31, Year 2 which consisted of the following:
Trade accounts receivable 930,000
Allowance for uncollectible accounts 20,000
Claim against shipper for goods in transit on November Year 1 30,000
Selling price of unsold goods sent by Paolo on consignment at 130% of cost and not
included in the ending inventory 260,000
Security deposit on lease of warehouse used in storing inventories 300,000
What is the correct total of current net receivables on December 31, Year 2?
A. 1,500,000
B. 1,200,000
C. 1,240,000
D. 940,000
- 9. Multiple Choice
9. Which of the following would not be deducted in the cost portion when calculating the cost ratio under retail method?
A. Purchase allowance
B. Purchase returns
C. Net markdown
D. Departmental transfer out
- 10. Multiple Choice
10. E COMPANY adopted a new method for estimating doubtful accounts at an amount indicated by aging of accounts receivable.
Allowance for doubtful accounts, January 1 250,000
Provision for doubtful accounts recorded during the year (2% of credit sales
of P10,000,000) 200,000
Accounts written off 205,000
Uncollectible accounts per aging, December 31 220,000
What is the year-end adjustment to the allowance for doubtful accounts?
A. 175,000 debit
B. 175,000 credit
C. 25,000 debit
D. 25,000 credit
- 11. Multiple Choice
AVERAGE
11. At December 31 of the current year, an entity had cash accounts at three different banks. One account balance is segregated solely for payment into a bond sinking fund. A second account, used for branch operations, is overdrawn. The third account, used for regular corporate operations, has a positive balance. How should three accounts be reported in the December 31 classified balance sheet?
A. The segregated account should be reported as a noncurrent asset, the regular account should be reported as a current asset, and the overdraft should be reported as a current liability.
B. The segregated and regular accounts should be reported as current assets, and the overdraft should be reported as a current liability.
C. The segregated account should be reported as a noncurrent asset, and the regular account should be reported as a current asset net of the overdraft.
D. The segregated and regular accounts should be reported as current assets net of the overdraft.
- 12. Multiple Choice
12. Which of the following statements regarding standard costing is incorrect?
A. Standard costing takes into account the normal capacity of the manufacturing process
B. Standard costing records the inventory at standard prices and rates using the actual quantity used.
C. Standards used should be regularly reviewed and, if necessary, revised in the light of current conditions.
D.Standard costing is a control tool that helps promote cost efficiency
- 13. Multiple Choice
13. Mirr, Inc. was incorporated on January 1, 2017, with proceeds from the issuance of P750,000 in stock and borrowed funds of P 110,000. During the first year of operations, revenues from sales and consulting amounted to P82,000, and operating costs and expenses totaled P64,000. On December 15, Mirr declared a P3,000 cash dividend, payable to stockholders on January 15, 2018. No additional activities affected owners' equity in 2017. Mirr's liabilities increased to P120,000 by December 31, 2017. On Mirr's December 31, 2017 balance sheet, total assets should be reported at:
A. P885,000
B. P882,000
C. P878,000
D. P875,000
- 14. Multiple Choice
14. Z COMPANY incurred the following costs during the current year:
Cost of purchases based on invoices 5,000,000
Trade discount already deducted from invoices 500,000
Import duties 400,000
Freight and insurance on purchases 600,000
Other handling costs on imports 100,000
Commission paid to agents for arranging imports 200,000
Sales commission paid to sales agents 300,000
Salaries of accounting department 1,000,000
After sales warranty costs 250,000
What is the total cost of purchases?
A. 6,300,000
B. 5,800,000
C. 6,100,000
D. 6,600,000
- 15. Multiple Choice
15. Yumul Company provided the following data:
Assuming the company uses the average retail inventory method, the estimated inventory shortage is ________
A. P104,000
B. P130,000
C. P200,000
D. P 4,000
- 16. Multiple Choice
16. To increase consistency and comparability in fair value measurements and related disclosures, PFRS 13 establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. Which of the following provides the most reliable evidence of fair value?
A. Quoted prices in active markets for identical assets that the entity can access at the measurement date.
B. Quoted prices for similar assets in active markets.
C. Quoted prices for identical or similar assets in markets that are not active.
D. Inputs other than quoted prices that are observable for the asset.
- 17. Multiple Choice
17. Royal COMPANY reported the following information in relation to imprest petty cash fund at year-end:
Coins and currency 22,000
Petty cash vouchers:
Gasoline 3,000
Medical supplies 1,000
Repairs 1,500
IOU from an employee 3,500
Check drawn payable to the order of Rose Anne, petty cash custodian, representing
her salary. 15,000
Check of an employee returned by bank marked “NSF” 3,000
A sheet of paper with names of several employees together with contribution for a
birthday party and attached to the sheet of paper is a currency of 5,000
The petty cash ledger account had a balance of P50,000. What amount of petty cash fund should be reported at year-end?
A. 42,000
B. 27,000
C. 37,000
D. 22,000
- 18. Multiple Choice
18. Your audit of the December 31, 2006, financial statements of Mato Corporation reveals the following:
1. Current account at PBCom P (35,000)
2. Current account at PNB 65,000
3. Treasury bills (acquired 3 months before maturity) 200,000
4. Treasury bills (maturity date is 12/31/07) 500,000
5. Payroll account 175,000
6. Foreign bank account - restricted (translated using the
12/31/06 exchange rate) 900,000
7. Postage stamps 600
8. Employees’ checks marked “DAIF” 10,000
9. IOU from the vice-president 50,000
10. Credit memo from a supplier for a purchase returns 25,000
11. Traveler’s check 60,000
12. Money order 10,000
13. Company’s check dated 12/30/06 but not mailed at year-end 30,000
14. Petty cash fund (P4,000 in currency and expense receipts for
(P6,000) 10,000
MATO CORPORATION’S adjusted cash and cash equivalents balance at December 31, 2006 is:
A. P 560,000
B. P 544,000
C. P 514,000
D. P 509,000
- 19. Multiple Choice
HARD
19. On December 31, Year 1, L COMPANY sold used equipment with carrying amount of P2,000,000 in exchange for a noninterest bearing note requiring ten annual payments of P500,000. The first payment was made on December 31, Year 2. The market interest for similar note was 12%. The present value of an ordinary annuity of 1 is 5.65 for ten periods and 5.33 for nine periods. What is the carrying amount of the note receivable on December 31, Year 1?
A. 5,000,000
B. 2,825,000
C. 2,665,000
D. 4,500,000
- 20. Multiple Choice
20. The following data were taken from the records of Z COMPANY for the year ended December 31, Year
Accounts receivable determined to be worthless 25,000
Collections received in settlement of notes 180,000
Collections received to settle accounts 2,450,000
Discounts allowed by creditors 260,000
Discounts taken by customers 40,000
Merchandise returned by customers 15,000
Merchandise returned to suppliers 70,000
Notes given to creditors in settlement of accounts 250,000
Notes received to settle accounts 400,000
Payment to creditors 3,200,000
Payments on notes payable 100,000
Provision for doubtful accounts 90,000
Purchases on account 3,900,000
Sales on account 3,600,000
What is the net realizable value of accounts receivable on December 31, Year 1?
A. 605,000
B. 890,000
C. 825,000
D. 670,000
- 21. Multiple Choice
21. Good Thing PH provided the following details at year-end December 31, 2020: (5 mins)
Authorized share capital- 10,000,000
Unissued share capital- 5,000,000
Subscribed share capital- 2,000,000
Subscription receivable- 800,000
Share premium- 650,000
Retained earnings unappropriated- 750,000
Retained Earnings appropriated- 300,000
Revaluation Surplus- 250,000
Treasury shares, at cost- 200,000
What must be reported as shareholder’s equity?
A. 3,200,000
B. 3,800,000
C. 3,400,000
D. 3,550,000
- 22. Multiple Choice
22. 1. Los Angeles Lakers issued 1,000 shares with 10 par to Lebron James as compensation for 1,000 hours of playing basketball for the Lakers basketball team. Lebron James usually bills 200 per hour for playing basketball. On the date of issuance, the share was worth 150 per share in the public exchange.
How much should the share premium account increase as a result of the transaction?
A. 155,000
B.160,000
C.140,000
D. 135,000
- 23. Multiple Choice
23. N COMPANY provided the following information during the current year:
At year end, the manufacturer of the products has been completed but no selling cost has yet been incurred. What total amount should be reported as inventory at year-end?
A. 6,400,000
B. 6,600,000
C. 4,900,000
D. 5,800,000
- 24. Multiple Choice
24. Q COMPANY loaned P7,500,000 to a borrower on January 1, Year 1. The terms of the loan were payment in full on January 1, Year 5 plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, Year 2. However, due to financial setbacks, the borrower was unable to make the Year 3 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, Year 3. The bank had accrued the interest on December 31, Year 2 but did not accrue interest for Year 3 due to the impairment of the loan. The projected cash flows are:
Date of cash flows Amount projected
December 31, Year 4 500,000
December 31, Year 5 1,000,000
December 31, Year 6 2,000,000
December 31, Year 7 4,000,000
The PV of 1 at 12% is 0.89 for one period, 0.80 for two periods, 0.71 for three periods and 0.64 for four periods.
What is the loan impairment loss to be recognized on December 31, Year 3?
A. 2,275,000
B. 3,175,000
C.5,225,000
D.2,175,000
- 25. Multiple Choice
25. Queen COMPANY had the following account balances on December 31, Year 1:
Petty cash fund 50,000
Cash on hand 500,000
Cash in bank – current account 4,000,000
Cash in bank – payroll account 1,000,000
Time deposit 2,000,000
Cash in bank – restricted account for plant addition, expected to be disbursed
in Year 2 500,000
Cash in sinking fund set aside for bond payable due June 30, Year 2 1,500,000
The petty cash fund included unreplenished December 31, Year 1 petty cash expense vouchers of P5,000 and employee IOU of P5,000. The cash on hand included a P100,000 check payable to the entity dated January 31, Year 2. In exchange for a guaranteed line of credit, the entity has agreed to maintain a minimum balance of P200,000 in the unrestricted current bank account.
What amount should be reported as cash and cash equivalents on December 31, Year 1?
A. 6,940,000
B. 8,940,000
C. 7,940,000
D. 7,440,000
- 26. Multiple Choice
26. G COMPANY reported accounts payable of P2,200,000 on December 31, Year 1 before considering the following data:
· Goods shipped to the entity on December 31, Year 1 FOB shipping point were lost in transit. The invoice cost of P40,000 was not recorded. On January 15, Year 2, the entity filed a P40,000 claim against the common carrier.
· On December 31, Year 1, a vendor authorized the entity to return for full credit goods shipped and billed at P70,000 on December 15, Year 1. The returned goods were shipped by the entity on December 31, Year 1. A P70,000 credit memo was received and recorded by the entity on January 15, Year 2.
· On December 31, Year 1 the entity has a P500,000 debit balance in accounts payable to a supplier resulting from an advance payment for goods to be manufactured to the entity’s specifications.
What amount should be reported as accounts payable on December 31, Year 1?
A. 2,170,000
B. 2,680,000
2,730,000
2,670,000
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