April 3, 2018 | Author: alyssagd | Category: Income Statement, Investing, Debits And Credits, Historical Cost, Bonds (Finance)



TOA1. In reconciling net income on an accrual basis to net cash provided by operating activities. What adjustment is needed to net income because of (1) an increase during the period in prepaid expenses, and (2) the periodic depreciation expense of company properties? a. (1) Add (2) Add b. (1) Add (2) Deduct c. (1) Deduct (2) Add d. (1) Deduct (2) Deduct 2. In calculating diluted earnings per share (EPS), which of the following should not be considered? a. The weighted number of shares outstanding b. The amount of cash dividends declared on ordinary shares c. The amount of dividends declared on cumulative preference shares d. The number of ordinary shares resulting from the assumed conversion of debentures outstanding 3. The following statements are based on PFRS for SMEs: Statement I: If an entity has no items of other comprehensive income, it may present only an Income Statement. Statement II: If an entity has no items of other comprehensive income, it may present a Statement of Comprehensive Income in which the bottom line is “profit or loss.” Statement III: If only changes to equity arise from profit or loss, payments of dividends, corrections of prior period errors, and changes in accounting policy, the entity may present a single Statement of Income and Retained Earnings in lieu of separate statements of comprehensive income and changes in equity. a. True, true, true b. True, False, False c. True, False, True d. True, True, False 4. Which of the financial statement should an investor primarily use to assess the amounts, timing, and uncertainty of investing and financing activities of ABC Company? a. Statement of Comprehensive Income b. Statement of Financial Position c. Statement of Changes in Equity d. Statement of Cash flows 5. Which of the following is not an appropriate basis for measuring the historical cost of fixed assets? a. The purchase price, freight costs, and installation costs of a productive asset should be included in the asset’s cost b. Proceeds obtained in the process of readying land for its intended purpose, such as from the sale of cleared timber, should be recognized immediately in income c. The cost of improvement to equipment incurred after its acquisition should be added to the asset’s cost if they provide future service potential d. All costs incurred in the construction of a plant building, from excavation to completion of a plant building, from excavation to completion, should be considered as part of the asset’s cost 6. The following statements are based on PAS 40 (Investment Property): Statement I: An investment property is a property held to earn rentals or for capital appreciation or both. Statement II: An investment property shall be measured initially at costs. Transaction costs shall be excluded in the initial measurement. Statement III: Under the cost model, a gain or loss arising from a change in the fair value of investment property shall be recognized in profit or loss for the period in which it arises. a. True, true, true b. True, False, False c. True, False, True d. True, True, False 7. In accordance with PFRS 7- Financial instruments: disclosure, which of the following best describes the risk that an entity will encounter if it has difficulty in meeting obligations associated with its financial liabilities a. Liquidity risk b. Credit risk c. Financial risk d. Payment risk 8. Under the principles of PAS 16 – Property, Plant and Equipment, which of the following should be included in the cost of an item of property, plant and equipment? I. Initial delivery and handling cost. II. Cost of training staff on new asset. III. Apportioned general overhead costs. IV. Installation and assembly cost. a. I, II, III and IV b. I, II, III only c. II and IV only d. I and IV only 9. If a note receivable is exchanged for a PPE an no interest rate is stated, the note is to be recorded at a. Book value of PPE c. Note’s maturity value b. Note’s face value d. Fair value of PPE or note 10. Which is(are) correct concerning the FRSC? I. The FRSC replaces the ASC as the standard setting body in the Philippines II. The FRSC is composed of 15 members with a Chairman and 14 representatives from various sectors III. The Chairman and members of FRSC shall have a term of 2 years renewable for another term IV. Any member of the ASC shall be disqualified from being appointed to FRSC a. I and II only b. I, II, and III only c. III and IV only d. I, II, III, and IV MAS 1. Which of the following will decrease the break-even point? Margin of Safety Operating Leverage A. Increase Increase B. Increase Decrease C. Decrease Increase D. Decrease Decrease 2. What does a credit balance in a direct labor efficiency variance account indicate? A. The average wage rate paid to direct labor employees was less than the standard rate. B. Actual total direct labor costs incurred were less than standard direct labor costs allowed for the units produced. C. The standard hours allowed for the units produced were greater than actual direct labor hours used. D. The number of units produced was less than the number of units budgeted for the period. 3. The high-low method of cost estimation A. Uses two data points to predict the dependent variable B. Uses judgment to plot the cost line on a graph C. Uses two data points to predict the independent variable D. Is considered more accurate than the least squares technique 4. In the cost of quality, which of the following is an example of internal failure? A. Cost of inspecting products on the production line by quality inspectors B. Labor cost of product designers whose task is to design components that will not break under extreme temperature conditions C. Cost of reworking defective parts detected by the quality assurance group D. Cost of parts returned by customers 5. Sarah Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of machine hours. During February, the company used a denominator activity of 80,000 machine hours in computing its predetermined overhead rate. However, only 75,000 standard machine hours were allowed for the month's actual production. If the fixed overhead volume variance for February was P6,400 unfavorable, then the total budgeted fixed overhead cost for the month was: A. P96,000. B. P102,400. C. P100,000. D. P98,600. 6. The following activity and cost data were provided by Hammer Corp., which would like help in estimating its future maintenance costs: Units Maintenance Cost 3 P450 7 P530 11 P640 15 P700 Using the least-squares regression method to estimate the cost formula, the expected total cost for an activity level of 10 units would be closest to: A. P612.50. B. P581.82. C. P601.50. D. P595.84. 7. Old equipment with a book value of PhP15,000 will be replaced by new equipment with a purchase price of PhP50,000, exclusive of freight charges of PhP2,000. The market value of the old equipment is PhP11,000. Repair costs of PhP2,000 can be avoided if the new equipment is acquired. Assume a tax rate of 35%. What is the initial (net) investment of the project? A. Php 33,800 C. Php 39,700 B. Php 38,300 D. Php 52,000 8. North Korea Company produces three products with the following production and cost information: Model A Model B Model C Unit Produced 2000 6000 13000 Direct labor hours 4000 2000 4000 Number of setups 100 150 250 Number of shipments 200 225 275 Engineering change 15 10 5 orders Overhead costs include setups of PhP45,000; shipping costs PhP70,000 and engineering costs, PhP90,000. What would be the per unit overhead cost for Model C f activity based costing were used? A. Php 5.00 C. Php 122.64 B. Php 16.25 D. Php 15.00 9. A company’s return on assets is determined to be 15% while debt ratio remains relative constant at 40%. What is the company’s return on equity? A. 2.67% C. 25.00% B. 6.00% D. 37.50% 10. Cost-volume-profit analysis is a technique available to management to understand better the interrelationships of several factors that affect a firm's profit. As with many such techniques, the accountant oversimplifies the real world by making assumptions. Which of the following is not a major assumption underlying CVP analysis? A. All costs incurred by a firm can be separated into their fixed and variable components. B. The product selling price per unit is constant at all volume levels. C. Operating efficiency and employee productivity are constant at all volume levels. D. For multi-product situations, the sales mix can vary at all volume levels. P1 1. Wonder Company is experiencing financial difficulty and is negotiating trouble debt restructuring with its creditors to relieve its financial stress. Wonder has a P3,000,000 note payable to Megabank. The bank is considering acceptance of an equity interest in Wonder Company in the form of 200,000 ordinary shares with a fair value of P12 per share. The par value of the ordinary share is P10 per share. Wonder Company incurred total transaction costs of P80,000 related to the issue of shares. What is the amount of share premium to be reported by Wonder in its statement of financial position as a result of the restructuring applying IFRIC 19? A. P320,000 B. P400,000 C. P920,000 D. P1,000,000 Use the following information for the next two questions. On December 31, 2015, Detty Inc. acquired Bernice Corporation’s P1,000,000 bonds for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10% payable annually. The bonds mature in five years and met the requisites of being classified as financial asset measured at amortized cost under PFRS 9. Unfortunately, because of lower sales, Bernice’s financial condition worsened. On December 31, 2017 Detty Inc. determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity. In 2018, Ms. Bernice’s officers consulted a feng shui expert to seek pieces of advice of advice to improve the company’s financial condition. Fortunately, the company’s sales started to pick up and the credit rating of Bernice improved. At December 31, 2018, Detty Inc. reassessed the collectability of the bonds and now expects to collect P1,300,000 from Bernice at maturity. 2. Under PFRS 9, how much should be recognized as impairment loss on 2017? A. P572,920 B. P524,900 C. P332,740 D. P284,720 3. Under PFRS 9, how much should be recognized as interest income in 2018? A. P51,250 B. P 100,000 C. P114,232 D. P115,940 4. The shareholders’ equity of Joyful Corporation on December 31, 2012 shows the following account balances: 10% Preference share, 5,000 shares, P100 par P500,000 12% Preference share, 6,000 shares, P100 par 600,000 Ordinary share, 10,000 shares, P40 par 400,000 Share premium 320,000 Accumulated profits 480,000 The 10% preference share is cumulative and fully participating, while the 12% preference share is non-cumulative and fully participating. The last payment of dividends was on December 31, 2010. What is the book value per share of ordinary shares? A. P44.00 B. P59.68 C. P60.27 D.P102.80 5. The trial balance of Revenge Company showed inventories of P164,000. The inventories include some goods that have a production cost of P18,000. These goods have a manufacturing defect that will cost P6,000 to correct. The normal selling price for these goods would be P25,000, but after the remedial work they will be sold through an agent as refurbished goods at a discount of 20% on the normal selling price. The agent will receive a commission of 10% of the reduced selling price. In relation to the defective goods, the company will recognize a loss on inventory write down of A. P-0- B. P1,000 C. P4,000 D. P6,000 6. On July 31, 2012, American Idol Company discounted at the bank, a customer’s P1.2 million, 6-month, 10% notes receivable dated May 31, 2012. The bank discounted the note at 12%. How much net proceeds did American Idol Company received from the discounted note? A. P1,128,000 B. P1,152,000 C. P1,209,600 D. P1,234,800 7. The following information was included in the bank reconciliation for The Next, Inc., for June. Assume all other reconciling items are listed: Checks and charges recorded by bank in June (excluding a June service charge of P1,200) – P687,200; Service charge made by bank in May and recorded in the books in June – P800; Total credits to Cash in all journals during June – P792,080; Customer’s check marked NSF returned as a bank charge in June (no entry made on books) – P4,000; Customer’s check marked NSF returned in May and re-deposited in June (no entry made on books in either May or June) – P10,000; Outstanding checks at June 30 – P530,400; Deposits in transit at June 30 – P24,000. What was the total outstanding checks at the beginning of June? A. P422,320 B. P426,320 C. P438,720 D. P638,480 8. On December 3, Oliver Company purchased inventory listed at P8,600 from Laurel Corp. Terms of the purchase were 3/10, n/20. Oliver Company also purchased inventory from Tommy Company on December 10 for a list price of P7,500. Terms of the purchase were 3/10, n/30. On December 16, Oliver paid both suppliers for these purchases. If Oliver uses the net method of recording purchases, the journal entry to record the payment on December 16 will include A. A credit to Purchase Discounts of P258 B. A credit to cash of P15,617 C. A debit to Accounts payable of P15,875 D. A debit to Purchase Discounts Lost of P258 9. Covenant Co. purchased land as a factory site for P1,000,000. Covenant paid P40,000 to tear down two buildings on the land. Salvage was sold for P5,400. Legal fees of P3,480 were paid for the title investigation and making the purchases. Income of P8,000 was earned through using the land as a car park before construction started. Architect’s fees were P41,200. Title insurance cost P2,600. Excavation cost P10,440. The contractor was paid P2,400,000. An assessment made by the city for pavement was P6,400. Interest costs during construction were P170,000. Liability insurance cost during construction amounted to P2,600. The cost of the building that should be recorded by Covenant Co. is A. P2,622,640 B. P2,616,640 C.2,630,640 D. P2,624,640 10. On July 1, 2012, Piscor Corporation purchased factory equipment for P450,000. Residual value was estimated to be P12,000. The equipment will be depreciated over ten years using the double-declining balance method. Counting the year of acquisition as one-half year, Piscor should report depreciation expense for 2013 on this equipment of: A. P90,000 B. P81,000 C. P78,840 D. P72,000 P2 1. On June 1, 2013, FNBC Corporation, franchisor, receives P200,000 from PP Fad representing down payment on the franchise agreement signed that PP Fad gave FNBC a 12% interest bearing note for the balance of P1,000,000, payable in four semi-annual installments. Franchise services was substantially completed by FNBC on November 15 at a cost of P900,000. On December 31, 2013, the first semi-annual installment became due was accordingly paid by PP Fad. FNBC appropriately uses the accrual method of recording franchise revenues. In its December 31, 2013 financial statements, how much will FNBC report as realized franchise income for the year? A. P112,500 B. P300,000 C. P250,000 D. 187,000 2. A municipality of the province of Cavite received the following operating and service income for the month of January 2014: Garbage Fees P300,000 Markets 200,000 Hospitals 100,000 Cemeteries 50,000 Slaughterhouse 50,000 All receipts and collections of operating and service income were deposited. The entry to record the deposit of collections from operating and service income includes a: A. Debit to Cash in Vault, P700,000 B. Debit to Cash in Bank, Local Currency – Current Account, C. Credit to Cash in Vault, P700,000 D. Both b and c 3. The governing board of Samaritan Hospital, which is operated by a religious organization designated P 500,000 of cash for future expansion of the hospital. On the hospital's balance sheet, the cash designated for future plant expansion would be disclosed in which of the following classes of net assets? A. Temporarily restricted net assets B. Plant replacement and expansion. C. Board designated net assets D. Unrestricted net assets 4. A private, not-for-profit geographic society received cash contributions which were restricted by the donors for the acquisition of fixed assets. In which section of the statement of cash flows would these cash contributions be reported? A. Financing activities B. Investing activities C. Operating activities D. Capital and related financing activities 5. Janine and Nicole formed a general professional partnership (practicing law) in the Philippines on January 1, 2014. Their capital contributions were credited to their respective capital accounts as follows: Janine, Capital – P600,000 Nicole, Capital – P1,000,000. During the year, the partnership earned profit before tax of P4,000,000. The income tax rate was 30%. How much is the share of Nicole in the partnership profit? A. P1,750,000 B. P2,500,000 C. P1,500,000 D. P2,000,000 6. Partial list of accounts from the trial balances of the John Rey Corporation, Branch A and Branch B at December 31, 2013 are as follows: Home Office Branch A Branch B Inventory, Jan 2013 34,000 5,500 8,800 Branch A 100,000 - - Branch B 81,000 - - Purchases 500,000 - - Expenses 120,000 35,000 38,000 Shipments from home- 68,200 41,800 office Home office 94,000 75,000 Sales 500,000 150,000 120,000 Shipments to Branch A 73,700 Shipments to Branch B 46,200 Loadings in Branch Inventory – Jan 1 1,300 Additional information: Shipments to the branches are made at billed prices. Inventory on hand on December 31, 2013 – Home office – P 31,000; Branch A – P 7,260; Branch B – P 8,250. The merchandise inventory on the combined balance sheet as of December 31, 2013. A. P 68,400 B. P 65,000 C. P 46,500 D. P 45,100 Use the following information for the next two items Minor Corporation reports net assets of P300,000 at book value. These assets have an estimated market value of P350,000. If Major Corporation buys 80 percent ownership of Minor for P275,000, 35. 7. Goodwill will be reported in the consolidated balance sheet in the amount of: A. P0 B. P25,000 C. P35,000 D. P40,000 8. The non-controlling interest will be reported in the amount of: A. P55,000 B. P60,000 C. P70,000 D. P71,250 9. A government agency ordered an office equipment for P1,000,000 on August 20, 2013. The equipment was delivered to the government agency on September 11, 2013. The asset has an estimated useful life of 10 years. The book value of the equipment on December 31, 2014 is: A. P 787,500 B. P 977,500 C. P 887,500 D. P 857,500 10. Answer Key: TOA MAS 1. C 1. A 2. B 2. C 3. A 3. A 4. D 4. C 5. B 5. B 6. B 6. C 7. A 7. B 8. D 8. A 9. D 9. C 10. A 10. D P1 P2 1. C 1. B 2. B 2. D 3. A 3. D 4. B 4. S 5. D 5. B 6. C 6. B 7. A 7. A 8. D 8. C 9. D 9. C 10. B
Copyright © 2020 DOKUMEN.SITE Inc.