- END OF EXAMINATION - Polytechnic University of the Philippines College cf Accountancy and Finance ACCO4083 2nd Evaluation Exams - January 24, 2018 Answer Key 1) B 11) B 21) B 31) D 41) D aoc 2) A 22) B32) B 42) ¢ - 3) B 3B) ¢ 23) D 33) dD 43.) ¢ 4) 8B 14.) B 24) B 34a) c 44.) B 5) D 15.) C 25.) A 35.) D 45) A 6) A 16.) B 26) C 36) ¢ 46.) D 7) D 17.) A 27.) D 37) 8B 47.) ¢ 8) ¢ 18.) D 28.) B 38.) A 48.) B 9) ¢ 19.) D 29) A 39) p 49.) B 10) A 20) ¢ 30) A 40) @ 50,) APOLVIECANI OSIU KSHV OF WHE PHIFER ES. COLEGE OF ACCOUNT IPP FINAN HCCO O88 Advanced Fama 2 AL ATION EAM wil Sceonmiag ard heparan 110M tanaay 24, 200 {ULTIPLE CHOICE THEORIES (2 points each), Shavte the letter of the best answer on the seannable answer sheet L 6 o° 7 8 ‘Statement I' Assuming that there was no profit sharing scheme agreed, partnership profit must be allocated te the partners on the basis of start-up capital of the partners. Statement Il: If the agreement specifies only how profits are shared but silent as to the division of losses, then losses are to be divided based on the ratio of capital contribution. True, True 6 True, False Which ofthe following is incorrect during corporate liquidation: ‘A. Statement of Affairs 1s the statement of «financial condition of an insolvent corporation as of a given date presenting the assets and lcblities from a liquidation viewpoint B, Accompanying a Statement of Affairs is « Statement of Realization and Liquidation that shows the gains or losses on realization of assets and a list of additional costs associated ‘withthe liquidation, Free assets are a 1B. None of the above, le to secured and unsecured creditors, The date when revenue from consignment seles must be properly recognized by the consignor is when: A\ remittance was made by the consignee tothe consignor (5) notification about sales of consigned goods was received by the consignor. ‘C. merchandise was shipped to the consignee by the consignor, , all the consigned goods were already sold by the consignee. Under the percentage of completion method ‘A ‘Thestage of completion ofthe transaction atthe inception of the constuction contact can be estimated reliably Income is recognized as work on a contract (or group of related contracts) progresses © Revenue is recognized tothe extent of coss incurred that are expected to be recovered D. Revenue, comvact costs and income are recognized proportcnately based on cos-to-cost method ony. Repossession under installment sales ‘A. Involves writing off the related accounts receivable B. Involves recording the repossessed merchandise at its fair market value Happens when payment stopped All of the above. ‘An entity shall recognise revenue to depict the transfer of promised goods or services to customers inthe _ ‘amount that reflects the consideration to which the entity expects to be entitled in ‘exchange for those goods or services, @rea B Residual © Gross D. Cumulative ‘A good or service that is promised to a customer is distinet if: "A. The customer can benefit from the good or service on its own B. The customer can benefit from the good or service together with other resources that are readily available to the customer . ‘The entity's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract © All of the above Which of the following does not qualify for over time revenue recognition? A ‘Ihe customer simultaneously receives and consumes the benefits provided by the entity's — rage 12 performance BB, The entity's performance creates or enhances an asset thatthe the may a customer controls asthe asset (G) The customer obtains the significant risks and rewards oF ownership ofthe asset 1D’ The entity's performance does not create an asset with an alternative use to the entity and the ‘entity has an enforceable right to payment Tata Lino Consulting entered into a contract with Alamkonato Company to provide consulting services that result in Tata Lino providing a professional opinion to Alamkonato. The professional opinion relates to facts and circumstances that are specific to Alamkonato. If Alamkonato were 10 terminate the consulting contract for reasons ether than Tata Lino's failure to perform as promised, the contact requires Alamkonato to compensate Tata Lino for its costs incurred plus a 15% margin ‘The 1% margin approximates the profit margin that Tata Lino eam from similar contracts Tata Lino should recognize revenue over a period of time by measuring the progress towards ‘complete satisfaction of the performance obligation because A. Alamkonato simultaneously receives and consumes the benefits of Tata Lino's performance B, Tata Lino’s performance enhances the assets that are controlled by Alamkonato as the asset ‘senhanced 9g The development of the professional opinion does no create an asset with alternative use Allofthe above Statement |. In the absence of any errors or reconciling tem, oF when transactions between the hoine office and the branch ave properly recorded, itis expected thal the reciprocal account, home office and branch aceounts, are ofthe same amount ‘Statement 2: Excessive freight costs for interbranch transfers should be absorbed as an expense by the office directing the transfers, because Mt represents management mistakes o inefficiencies True, True C False, False B True, False D False, True Statement 1 An agency is an unincorporated entity in which orders are received and then ‘wansmitied to the home office for processing, shipping and billing of merchandise Statement Il. Upon sending the agency a check in replenishment of the fund, the home office debits the Agency account and credits cash True, True © False, (8) True, False D False, True ‘An entity shall determine whether a transaction or other event is a business combination by applying the definition in PFRS 3, which requites that the assets acquired and liabilities assumed constitute « business BE all of the combinung entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, . all of the combining entities transfer their net assets, or the owners of those entities transfer their equity interests, to a newly formed entity D. Allofthe above, In accordance with PIC Q&A 2011-02, a business combination under common control should be accounted for under: ‘A. Acquisition method under PERS 3 ooling of interests method ither A or Br D. None of the above Which of the following is incorrect regarding measurement period? ‘A. If the initial accounting for a business combination is ineomplete by the end of the reporting, Period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete, @ During the ‘measurement period, the acquirer shall prospectively adjust the provisional amounts recognised at the acquisition date (0 reflect new information obtained about facts Page