Legend - Docx 1

LEGEND:
ELYNE ROSE PIA ARAIZ
Answer ni Abe
1. Entity A is preparing its March 31, 20x1 bank reconciliation. The following information
was determined:
● The cash balance per books is P280,000 while the cash balance per bank statement is
P320,000.
● Credit memo - P20,000
● Debit memo - P15,000
● Deposits in transit - P75,000
● Outstanding checks - P25,000
● The disbursements per book are overstated by P45,000
● The bank debits are understated by P40,000
How much is the adjusted balance of cash?
P 330,000 same same same
2. Statement I: Dividends received from investments in equity securities that were

irrevocable elected on initial recognition to be subsequently measured at FVOCI are
recognized in profit or loss.
Statement II: When financial assets measured at amortized cost are reclassified to the FVPL
measurement category, the initial carrying amount of the financial assets under the new
classification is the reclassification date fair value on the financial assets.
a. TRUE, TRUE
b. TRUE, FALSE (check prob 21-3, FV at reclass date is new investment na. Initial CA
dapat yung purchase price) same same
c. FALSE, TRUE
d. FALSE, FALSE
3. On January 1, 20x1, Entity A receives a financial aid from the government amounting to
P1M as compensation for losses it has incurred on a recent calamity. How much income
from government grant will Entity A recognize in 20x1?
a. P53,334
b. Answer Not Given
c. P0.00 same
d. P1,000,000
e. P100,000
Dr. Cash – 1,000,000; Cr. Grant Income – 1,000,000 same
4. The “amortized cost” of loan is the amount at which

a. The loan receivable is measured initially minus principal repayment, plus or minus
the cumulative amortization of any difference between the initial amount
recognized and the principal maturity amount, minus reduction for impairment.
Same same
b. The loan receivable is measured initially minus principal repayment
c. The loan receivable is measured initially
d. The loan receivable is measured initially minus principal repayment, plus or minus the
cumulative amortization of any difference between the initial amount recognized and the
principal maturity amount
5. ABC Company purchased 40,000 ordinary shares on October 1 for P6,600,000 to be

held for trading. On November 30, the investee distributed a 10% stock dividend when
the market price of the share was P250. On December 31, the entity sold 4,000 shares
for P1,000,000.
What amount of gain on sale of investment for the current year?
a. P400,000 same OKIE SAME
JE on sale of shares
Cash 1,000,000
Trading Securities 600,000 (4,000/44,000*6,600,000)
Gain on sale 400,000
b. 600,000
b. 500,000
b. 340,000
b. Answer not given
6. Accounts receivable shall be initially recognized at
Face Value same same same same

7. Cross Co. accepted delivery of merchandise which it purchased on account. As of
December 31, Cross had recorded the transaction, but did not include the merchandise
in its inventory. The effect of this on its financial statements for December 31 would be
a. Net Income, current assets, and retained earnings were understated same
b. Net income was overstated and current assets were understated
c. Net income was understated and current liabilities were overstated
d. Net income was correct and current assets were understated
8. Con Hotel Corporation recently purchased Hay Hotel and the land on which it is located
with the plan to tear down the Hay hotel and build a new luxury hotel on the site. The
demolition costs of the Hay Hotel should be
a. Capitalized as part of the cost of the new hotel same same
b. Depreciated over the period from acquisition to the date the hotel is scheduled to be torn
down
c. Written off as an extra ordinary loss in the year the hotel is torn down.
d. Capitalized as part of the cost of the land
9. Transactions for the month of June were:
Purchases Sales
June 1(balance) 1,200 @ P3.20 June 2 900 @ P5.50
June 3 3,300 @ 3.10 June 6 2,400 @ 5.50
June 7 1,800 @ 3.30 June 9 1,500 @ 5.50
June 15 2,700 @ 3.40 June 10 600 @ 6.00
June 22 750 @ 3.50 June 18 2100 @ 6.00
June 25 450 @ 6.00
Assuming that the perpetual inventory records are kept in pesos, the ending inventory on
a FIFO basis is
a. ANSWER NOT GIVEN Same (P10,425 / 2,700 units) same

b. P6,195
c. P5,760
d. P6,300
e. P5,700
10. Transit Co. had the following balances at December 31, 2009:
 Cash in Checking Account P35,000
 Cash in Money Market Account P75,000
 Treasury bill, purchased 11/1/2009, maturing 1/31,2010 P350,000
 Treasury bill, purchased 12/1/2009, maturing 3/31,2010 P400,000
Transit policy is to treat cash equivalents all highly liquid investments with a maturity of
three months or less when purchased. What amount should Transit report as cash and
cash equivalents in its December 31, 2009, balance sheet(statement of financial
position)?
a. answer not given

b. 385,000
c. 460,000 same same
d. 110,000
e. 860,000
11. Which of the following is a qualifying asset?

a. Biological asset measured at fair value less costs to sell
b. A Long term note receivable(financial asset)
c. A multi-million dollar executive jet plane that is ready for its intended use upon purchase
d. A second- hand heavy machinery that takes 2 years to refurbish
(renovate/redecorate) and customize for its intended use. same
12. On October 1, 20x1, the warehouse of ABC Co. and all the inventories contained therein
were damaged by flood. Off-site backup database shows the ff info
o Inventory Jan.1 14 500

o Accounts Payable Jan. 1 6 000
o Accounts Payable Sep. 30 3 000
o Payments to suppliers 50 000
o Freight-in 5 000
o Purchase Returns and Discounts 2 500
o Sales from Jan to Sep 75 000
o Sales Returns 5 000
o Sales Discounts 2 000
o Gross profit rate based on sales 20%
Additional Information:
Goods in transit as of October 1, 20x1 amounted to P 2 000, cost of goods out on

consignment is P 1 200 and materials damaged by flood can be sold at a salvage
value of P 500.
How much is the inventory loss due to the flood?
a. P6,800
b. Answer not given same (P6,540) nde ko makuha!!! :(
Solution:
c. P7,200
c. P8,200
c. P7,800
13. Information on Mix Co.’s equipment on June 30, 20x8 is shown below.
Equipment(at cost) 500 000
Accumulated Depreciation 150 000
Carrying Amount 350 000
The equipment consists of two machines, Machine A and Machine B. Machine A has a
cost of P 300 000 and a carrying amount of P 180 000. Machine B has a cost of P 200
000 and a carrying amount of P 170 000. Both machines are measured using the cost
model and depreciated using a straight line basis over a ten-year period.
On December 31, 20x8, Mix Co. decided to change from the cost model to the
revaluation model. Information on this date follows:
Fair Values Remaining Useful life
Machine A 180 000 6 years
Machine B 155 000 5 years

On June 30, 20x9, Machine A and Machine B have fair values of 163 000 and 136 500,
respectively and remaining useful lives of 5 years and 4 years, respectively. The tax rate
is 30%.
How much is the depreciation expense for the fiscal year ended June 30, 20x9?
a. 50,000
b. Answer not given
c. 67,000
d. 55,500
e. 59,900
14. ABC, Inc. acquired 50 000 ordinary shares of AAA for P5 per share and 125 000
ordinary shares of BBB Corp for P10 per share on January 2, 2016. Both AAA and BBB
Corp have 500 000 ordinary shares outstanding. Both securities are being held as long-
term investments. Changes in retained earnings for AAA and BBB for 2016 and 2017 are
as follows
AAA BBB
 Retained Earning 1/1/16 1 000 000 (175 000)

 Cash Dividends 2016 (125 000) -
 Profit for 2016 200 000 325 000
 Retained Earnings 12/31/16 1 075 000 150 000
 Cash Dividends 2017 (150 000) (50 000)

 Profit for 2017 300 000 125 000
 Retained Earnings12/31/17 1 125 000 225 000
Market Value of Share
12/31/16 12/31/17
7 6.50
12 15
The carrying amount in the investment in BBB inc. as at December 31, 2017 is
P325,000
Explanation accdg sa source:
Ownership % in AAA = 50,000 / 500,000 = 0.10 or 10%
Since its ownership % is 10%, the company would use fair value method. Thus, the carrying amount
would be equal to the fair value at the end of the period, which is = 50,000 x 6.50 = P325,000.
15. Information on ABC Co. is shown below:
30-Jul Aug. 31
 Book balance 132,200 180,000

 Book debits 60,000
 Book credits ?
 Bank balance 100,600 169,000
 Bank debits 20,600
 Bank credits ?
 Notes collected by bank 10,000 35,000
 Debit memos 7,800 8,900
 Understatement of book receipts - 2,800
 Deposit in transit 45,000 43,800
 Outstanding checks 11,200 3,900
How much is the adjusted receipts in August?
a. 88,700
b. 87,800
c. Answer not given
d. 80,700
e. 78,800
16. Which of the following is outside the scope of PAS 41?

a. Mango trees and other plants that produce agricultural products repeatedly over a
long period of time same same
b. Chickens used in the production of meat
c. Rice plants and other crops that produce agricultural products only one
d. Daily cattle used in the production of milk
17. The interest method of amortizing discount provides for
Increasing amortization and increasing interest income
As a bond's book value increases, the amount of interest expense increases.
18. These are checks drawn and released to payees but are not yet presented to the bank
by payee.
a. Credit memos
b. Debit memos
c. Deposit in Transit
d. Outstanding checks same same same same
19. ABC received from a customer a one-year, P375,000 note bearing annual interest of 8%.
After holding the note for six months, ABC discounted the note at Super Bank at an effective
interest rate of 10%.
How much did ABC receive from the bank?
a. P392,857.50
b. P371,428.50
c. P405,000.00
d. Answer not given
e. P384,750.00 same OKIE
Solution:
20. Entity A acquires inventories and incurs the following costs:

Purchase price, gross of trade discount 100,000
Trade discount 20,000
Non-refundable purchase tax, not included in the purchase price above 5,000
Freight-in (Transportation costs) 15,000
Commission to broker 2,000
Advertisement costs 10,000
How much is the cost of the inventories purchased?
a. P102,000
b. P100,000 okie
Purchase price - Trade discounts 80,000
Non-refundable tax 5,000
Freight in 15,000
Cost of Inventories 100,000
c. P122,000 (di kasama trade and adv since adv is period cost)
c. P97,000
c. Answer not given
21. Depreciation of noncurrent operating assets in an accounting process for the purpose of
reporting declining asset values on the balance sheet
22. Which of the following is considered an agricultural produce?
Picked or harvested product
23. Which of the following reasons provides the best theoretical support for accelerated
depreciation?
Assets are more efficient in the early years and initially generate more revenue
24. An operating cycle

a. Begins with inventory and ends with cash same same
b. Is the average time required for a company to collect its receivables
c. Is used to determine current assets when the operating cycle is longer than one year
d. Is twelve months or less in length
30-Jul Aug. 31
 Book balance 132,200 180,000

 Book credits ?
 Bank balance 100,600 169,000
 Bank credits ?
How much is the adjusted disbursement in August
a. P13,300 same
b. P17,800
c. P14,300
d. Answer not given
e. P16,200
26. A cash short or over account

a. Is not generally accepted
b. Is a contra- account to cash
c. Is debited when the petty cash fund proves out short Same (tignan niyo dun sa
lecture natin about cash shortage and overage CHAPTER 1) same same
d. Is debited when the petty cash fund proves out over
27. When intangible assets are self-generated, costs incurred in development phase are
a. Expensed or capitalized, as a matter of accounting policy choice and professional
judgement
b. Expensed immediately, unless they meet all of the conditions for capitalization
under PAS 38 Intangible Assets same
c. Capitalized
d. Capitalized only to extent of the limits provided under the standards
28. Which of the following recording procedures would result in the highest cost of goods
sold for 2004?
1. Recording purchases at gross amounts
2. Recording purchases at net amounts, with the amount of discounts not taken shown under
"other expenses" in the income statement
1 same same
29. After being held for 40 days, a 120 day 12% interest-bearing note receivable was
discounted at a bank at 15%. What is the formula for the proceeds received from the bank?
a. Face value less the discount at 15%
b. Maturity value less the discount at 12%
c. Maturity value less discount at 15% same same
d. Face value less the discount at 12%
30. Bank reconciliations are normally prepared on a monthly basis to identify adjustments
needed in the depositor's records and to identify bank errors. Adjustments should be recorded
for
a. Outstanding checks and deposits in transit
b. All items, except bank errors, outstanding checks, and deposit in transit
c. Bank errors, outstanding checks, and deposit in transit
d. Book errors, bank errors, deposit in transit and outstanding checks
31. Which of the following is not a debit memo?

a. Direct deposits of customers to the depositor’s account same same
b. Bank service charge
c. NSF Checks
d. Automatic payment of bills by the bank on behalf of the depositor
32. Statement 1: Investment properties measured under the fair value model are not
depreciated even if the investment property is depreciable, e.g Building. [chap 22: no
depreciation is recorder for Investment Property]
Statement 2: Tupper Co replaces the escalator in its building that is classified as

investment property. The newly installed escalator has a cost of P1M while the carrying
amount of the old escalator that was replaced is P200K. Tupper Co shall recognize loss
of P800K from the replacement of the old escalator. [chap 26: Any allocated ca of the
useable old building is recognized as a LOSS if the new building is accounted for as
PPE or Investment Property]
a. TRUE, TRUE same

b. TRUE, FALSE
c. FALSE, TRUE
d. FALSE, FALSE
33. Changes in amortization method, useful life and residual value are changed in
accounting estimates and are accounted for
Prospectively in the financial statements
34. Which of the following cost may be capitalized?
An asset purchased for a specific R&D project if the asset’s useful life extends beyond
the current year.
35. The composite depreciation method
Excludes salvage value from the base of the depreciation calculation
36. Goods out on consignment are

a. Recorded in a Consignment out account which is an inventory account
b. All of these
c. recorded in a Consignment in account which is an inventory account
d. Included in the consignee’s inventory
37. When determining the cost of an inventory, which of the following should not be
included?
a. Interest on loan obtained to purchase the inventory
b. Labor cost of the inventory when manufactured
c. Commission paid when the inventory is purchases
d. Depreciation of the equipment used in manufacturing same same
38. Quezon Co. records purchases at net amounts. On May 5 Quezon purchased
merchandise on account, ₱32,000, terms 2/10, n/30.
Quezon returned ₱2,000 of the May 5 purchase and received credit on account. At May 31 the
balance had not been paid.
The amount to be recorded as a purchase return is
a. 1,800
b. 1,960
c. 2,000
d. 2,040 same same
e. Answer not given
39. The imprest petty cash fund account is debited
When the fund is created, increased
Created, increased & reversed Same
40. The Company purchased an investment property on January 1, 2014 for a cost of
P2,200,000. The property had a useful life of 40 years and on December 31, 2016 had a fair
value of P3,000,000. On December 31, 2016 the property was sold for net proceeds of
P2,900,000. The entity used the cost model to account for the investment property. What is the
gain or loss to be recognized for 2016 regarding the disposal of the investment property?
700,000 gain same same
41. Which of the following properties falls under the definition of investment property and
therefore within the scope of PAS40 Investment property
I. Land held for long-term capital appreciation
II. Property occupied by an employee
III. Property being constructed on behalf of third parties
IV. A building owned by an entity and leased out under an operating lease
a. I, II
b. I, IV
c. II,III, IV
d. II, IV
I, II and III
42. ABC Company owned three investment properties with the following details:
Initial cost Fair Value Dec 31, 2016 Fair Value Dec 31, 2017
Property 1 2,700,000 3,200,000 3,500,000
Property 2 3,450,000 3,050,000 2,850,000
Property 3 3,300,000 3,850,000 3,600,000
Each property was acquired in 2016 with a useful life of 25 years. The accounting policy is to
use the fair value model for investment property. What is the gain or loss to be recognized
for 2017?
a. 450,000 loss
b. 300,000 gain
c. 189,000 loss
d. 150,000 loss (Cumulative Gain: 500,000 ; Loss for 2017: 150,000) same
e. Answer not given
43. When an entity uses fair value model, changes in the fair values of investment properties
are
a. Not recognized.
b. Recognized in other comprehensive income
c. Directly in equity
d. Recognized in profit or loss. Same same
44. On July 1 of the current year, an entity obtained a two-year 8% note receivable for
services rendered. At that time, the market rate of interest was 10%. The face amount of the
note and the entire amount of interest are due on the date of maturity. Interest receivable on
December 31 of the current year is.
4% of the face amount of the note same same
45. The cash balance of CAPSIZE OVERTURN Co. comprises the following:
Cash on hand 300,000
Cash in bank – savings – BPI 600,000

Cash in bank – current – BPI (240,000)
Cash in bank – deposit in escrow – Metrobank 300,000 escrow is third party
Cash in bank – current – Metrobank (60,000)
Cash in bank – current – BDO (90,000)
Total 810,000
Additional information:
• Cash on hand includes undeposited collections of P60,000.
• The cash in bank – savings maintained at BPI includes a P150,000 compensating balance
which is not restricted. What amount of cash is reported in the financial statements?
900,000 same
46. When using the periodic inventory system, 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. Purchase returns and allowances of merchandise during the period
c. Cash (purchase) discounts taken during the period
d. Cost of transportation-in for merchandise purchased during the period
47. Tent Retailers purchased merchandise with a list price of ₱90,000, subject to trade
discounts of 20% and 10%, with no cash discounts allowable. Tent should record the cost of this
merchandise as
a. P64,800 same same
b. P63,000
c. P70,200
d. P90,000
e. Answer not given
48. Statement I: Subsequent changes in the fair value of a financial asset measured at
amortized cost are ignored.
Statement II: According to PFRS 9 Financial Instruments financial assets measured at

amortized cost are initially measured at fair value.
a. True, True same same

b. False, false
c. True, false
d. False, true
49. The sum-of-the-years’-digits method of depreciation is being used for a machine with a
five-year estimated useful life. What would be the fraction applied to the cost to be depreciated
in the fourth year?
a. 2/15 same same
b. 4/15
c. ⅘
d. ⅖
50. Statement I: Investment in ordinary shares can be classified as financial assets

measured at amortized cost.
Statement II. ABC Co. changes its business model for managing financial assets during
the period. Any reclassification entry is also made on the date the business model was
changed.
a. TRUE, FALSE
b. TRUE, TRUE
c. FALSE, TRUE Same same
d. FALSE, FALSE
51. Yesterday, you wrote a ₱2M check and gave it to a supplier as payment for the goods
you have purchased. Today, you received your bank statement. You noticed that the ₱2M check
is not reflected in the statement. What should you do?
a. Post the incident on your Facebook page and wait for likes
b. Call your friends and celebrate, telling them that you just saved P2M
c. Call the supplier and demand him or her to go to the bank and present the check for
payment.
d. Treat the ₱2m check as outstanding check in your bank reconciliation for today
same same
52. Light Company bought a machine for ₱300,000 on January 1, 20x8. The machine's
useful life is 10 years and it is estimated to have a zero residual value and is depreciated using
the straight-line method. The revalued amount of the machine is as follows:
December 31 Fair values of the machine
20x8 ₱ 360,000
20x9 335,000
2x10 320,000
The enacted tax rate was 30% for each year.
The revaluation surplus in the equity section of Light Company’s December 31, 2x10 statement
of financial position is
a. 36,000
b. 42,500
c. Answer not given (P26,875)
d. 32,500
e. 40,000
53. When accounts receivable are factored
Accounts receivable is credited
54. ABC Company purchased 8,000, P1,000 face amount, 9% bond to yield 10%. The
carrying amount of the bonds on January 1, 2016 was P7,800,000. The bonds mature on June
30, 2019 and pay interest semiannually on June 30 and December 31. The entity sold 4,000
bonds on March 1, 2016 for P3,920,000 after the interest has been received.
What amount should be recognized as gain on sale of bonds?
A. P25,000
B. Answer not given
C. P20,000
D. P0
E. P15,000
Solution:
55. The debit for a non-refundable sales tax properly levied and paid on the purchase of
machinery preferably would be a charge to
The machinery account same same
56. According to PFRS 9 Financial Instruments, trade receivables that do not have a
significant component are initially measured at
a. Fair Value plus transaction costs same same
b. Fair Value
c. Any of these
d. Transaction price
74. Question
214,500
57. On January 1, 20x1, Entity A had the following general borrowings. A part of the
proceeds was used to finance the construction of a qualifying asset:
Principal
12% bank loan (1.5 years) ₱ 1,000,000
10% bank loan (3-year) 8,000,000
Expenditures made on the qualifying asset were as follows:
Jan. 1 ₱ 5,000,000
March 1 4,000,000
August 31 3,000,000
December 1 2,000,000
Construction was completed on December 31, 20x1. How much is the cost of the qualifying
asset on initial recognition?
a. Answer not given
Solution:
b. P13,010,000
b. P15,045,000
b. P14,920,000
b. P14,971,111
14,950,000 SAME
58. Which of the following statements is true?

a. Intangible assets usually have a residual value that must be considered in the
amortization of cost
b. An identifiable tangible asset developed internally is never recognized in the accounts as
an assets.
c. An intangible asset is usually amortized by a credit to an income account.
d. The only costs of an internally developed patent that should be capitalized as
patent costs are legal fees and other registration costs. same
59. Perlas Co. maintains a checking account at the Union Bank. The bank provides a bank
statement along with the canceled checks on the last day of each month. The July bank
statement included the following information:
 Balance, July 1 275,000
 Deposits 900.000
 Checks processed (700,000)
 Service charge 15,000
 NSF Check 60,000
 Monthly automatic loan payment deduction by bank (50,000)
Deposits outstanding [deposit in transit to] totaled P 50,000 and all checks written by the
depositor were processed by the bank except for a check of P75,000. [outstanding check]
A P100,000 July deposit from a credit customer was recorded as P10,000 debit Cash and credit
Accounts receivable. [90,000]
A check correctly recorded by the entity as P15,000 disbursements was incorrectly processed
by the bank as P150,000 disbursement. [135,000]
What is the cash balance per ledger on July 31?
a. Answer not given

b. P495,000
Solution:
c. P585,000
c. P445,000
c. P675,000
60. On October 1, 20x1, the warehouse of ABC Co. and all inventories contained therein
were razed by fire. Off-site back up of data base shows the following information:
Inventory, Jan. 1 20,000
Net purchases 190,000
Net sales from Jan. to Sept. 240,000
Gross profit rate based on cost 25%
Twenty percent of the inventory contained in the warehouse has been salvaged from the fire
while half is partially damaged and can be sold as scrap at thirty percent of its cost. How much
is the inventory loss due to the fire?
A. 18,000 B. 5,400 C. 9,000 d. 11,700 e. Answer not given (11,025?)
Solution: (Pacheck nalang nalilito ako dun sa sold as scrap at 30% of its cost)
61. Which of the following represents a debit memo?

a. Interest expense on a loan that is directly deducted from the depositor’s account
same same
b. Collections made by the bank on behalf of the depositor
c. Interest income earned by the depositor
d. Loan proceeds directly added by the bank to the depositor’s account
62. Investment properties are measured as follows.
Initial: Cost; Subsequent: Cost or Fair Value same same
63. Presented below is information pertaining to ABC Co.:
Cost Retail
Inventory, January 1 21,750 35,000
Purchases 138,250 200,750
Freight-In 5,000 -----
Purchase discounts 1,250 ------

Purchase returns (13,000) (21,500)
Departmental Transfers-In (Debit) 2,500 3,750
Departmental Transfers-Out (Credit) (2,000 ) (3,000)
Markups 15,000
Markup cancellations (5,000 )
Markdowns minus to ha 30,000
Markdown cancellations ( 7,500)
Normal spoilage (shrinkage and breakages) 500 included sa cost
Abnormal spoilage (theft and casualty loss) 12,500 17,500 expensed as incurred
Sales 109,500
Sales returns 6,250
Sales discounts 2,500
Employee discounts 1,250
How much is the ending inventory under the Average cost method?
a. 61,050
b. 60,00
c. 62,400
d. Answer not given (59,312.5) same
e. 60,750
64. On January 13, 2018, ABC Co. sold on account goods with selling price of P300,000
with terms of 2/10, n/30. Freight costs amounted to P5,000. The goods were received by the
buyer on January 15, 2018. ABC Co. collected the receivable on January 23, 2018.
How much net cash did ABC received from the buyer if the terms are FOB shipping
point, freight collect?
299,000
294, 000 same
Kasi FOB shipping, and freight collect na ung nakalagay. Lahat si buyer nakaassign so
ang marereceive nalang niya na cash is P294,000 (300k*0.02) no entry din yung seller sa
freight charges
Example din sa book problem:(Problem 4-3)

Cheat sheet ^
were damaged by flood. Off-site back up of data base shows the following information:
Accounts payable, Jan. 1 3,000
Accounts payable, Sept. 30 2,000
Payments to suppliers 50,000

Freight-in 500
Purchase returns 500
Sales from Jan. to Sept. 80,000
Sales returns 5,000
Sales discounts 2,000
Gross profit rate based on sales 30%
Goods in transit as of October 1, 20x1 amounted to ₱1,000, cost of goods out on

consignment is ₱1,200, and materials damaged by flood can be sold at a salvage value of
₱1,800. How much is the inventory loss due to the flood?
a. 3,860
Solution: (Di ko sinama ung goods in transit kasi kulang sa info? Pwedeng goods in
transit purchased FOB destination or sold FOB shipping point)

30-Jul Aug. 31
 Book balance 132,200 180,000

 Book credits ?
 Bank balance 100,600 169,000
 Bank credits ?
How much is the adjusted receipts in August?
87,800 same okie
Solution:
67. The following information applied to Fly Inc. for 2020:

 Merchandise purchased for resale ₱400,000
 Freight-in 16,000
 Freight-out 10,000 ignored
 Purchase returns 4,000
Fly's 2020 inventoriable cost was

412,000 same same
Purchase Price P400,000
Freight in 16,000
Less: Purchase Return 4,000
Cost of Inventory P412,000
68. Dirt Corporation schedule of depreciable assets at December 31, 20X7 was as follows:
Asset Cost Accum. Depcn Acquisition date Residual value
A 100,000 64,000 20X6 20,000
B 55,000 36,000 20X5 10,000
C 70,000 33,600 20X5 14,000
Dirt takes a full year’s depreciation expense in the year of an asset’s acquisition, and no
depreciation expense in the year of an asset’s disposition. The estimated useful life of each
depreciable asset is 5 years. Dirt depreciates asset A on the double-declining-balance
method. How much depreciation expense should Dirt record in 20X8 for asset A?
a. 14,400 same same

b. Answer not given
c. P25,600
d. P32,000
e. P6,400
DDM = 100%/5eul X 2 = 40% rate
20x6 100,000 COST X 40% = 40,000
20x7 (100k-40k) x 40% = 24,000
20x8 (100k-40k-24k) x 40% = 14,400

69. ECQ2 Co. received merchandise on consignment. As of January 31, the company
included the goods in inventory, but did not record the transaction. The effect of this on its
financial statements for January 31 would be
a. Net income, current assets, and retained earnings were overstated same
b. Net income was correct and current assets were understated
c. Net income, current assets and retained earnings were understated
d. Net income and current assets were overstated and current liabilities were
understated
70. On July 1, 20x1, Town Company purchased for ₱540,000 a warehouse building and the
land on which it is located. The following data were available concerning the property:
Current appraised value Seller’s original cost
Land 200,000 (⅖) 140,000
Warehouse building 300,000 (⅗) 280,000
Totals 500,000 5/5 420,000
Town should record the land at
⅖ land x 540,000 = 216,000

216,000
Current Appraised Value Seller’s Original Cost
Land 40% 200,000 140,000
Warehouse Building 60% 300,000 280,000
TOTAL 500,000 420,000
40% * 540,000 (purchase price) = P216,000
200,000
71. Subsequent to initial recognition, a loan receivable shall be measured at

a. Amortized cost using effective interest method same same
b. Cost
c. Fair Value
d. Amortized Cost using the straight line method
72. Which of the following is correct?

a. Manufacturing overhead costs are product costs same same
b. Selling costs are product costs
c. All of these are product costs
d. Interest costs are product costs
73. Statement 1: In some cases, a building that is being used partly as an owner-occupied
property and partly as held for rentals, under operating lease, is presented in the statement of
financial position as partly PPE and partly investment property.
Statement 2: Heidel Co. exchanges a piece of land for another land with Sol Co. Heidel
classifies the land as investment property. The land given to Sol has a fair value of P20
while the land received from Sol has a fair value of P24. Heidel Co paid P3 cash to Sol
on the exchange. Heidel Co. shall initially recognize the land received from Sol at P23.
a. TRUE, TRUE
b. TRUE, FALSE
c. FALSE, TRUE (Chap 23. Exchange with commercial substance: POV ng Payor that
the fair value given which is the land should be added sa cash payment) yas same
d. FALSE, FALSE
74. The cost of land typically includes the purchase price and all of the following costs
except
a. Assumption of any liens or mortgages on the property #7
b. Improvements, such as grading, filing, draining and clearing #11 sa costs chargeable to
land
c. Survey costs #9
d. Cost of private driveways and parking lots same same
75. ABC granted an 8%, 3-year, P6,000,000 loan to DEF Company on January 1, 2016. The
interest on the loan is payable every December 31. ABC incurred P520,600 of diret origination
cost but an origination fee of P200,000 was charged against DEF Company. The effective rate
on the loan as a result of the origination fee and cost is now 6%. What is the carrying value of
the loan on January 1, 2016 in ABC’s accounting books?
a. P6,113,026
b. P6,219,836
c. P6,000,000
d. Answer not given
e. P6,320,600 same same
Solution:
OR
76. The amount reported as "Cash" on a company's statement of financial position normally
should exclude
a. Postdated checks that are payable to the company
b. Petty Cash
c. Cash in a payroll account
d. Undelivered checks written and signed by the company
77. Perlas Co. maintains a checking account at the Union Bank. The bank provides a bank
statement along with the canceled checks on
the last day of each month. The July bank statement included the following information:
Balance, July 1 275,000 Deposits 900.000
Checks processed 700,000 Service charge 15,000
NSF Check 60,000 Monthly automatic loan payment deduction by bank 50,000
Deposits outstanding totaled P 50,000 and all checks written by the depositor were
processed by the bank except for check of P75,000.
A P100,000 July deposit from a credit customer was recorded as P10,000 debit Cash
and credit Accounts receivable.
A check correctly recorded by the entity as P15,000 disbursements was incorrectly

processed by the bank as P150,000 disbursement.
What is the balance per bank on July 31?
350,000 same same
Solution: (Same problem sa book to Problem 2-19)

78. When the estimate of an asset's useful life is changed,
Only the depreciation expense in the remaining years is changed same same
79. Dance Co. received merchandise on consignment. As of March 31, Dance Co. had
recorded the transaction as a purchase and included the goods in inventory. None of the
consigned goods have been sold during the period. The effect of this on its financial statements
for March 31 would be
a. No effect
b. Net income was correct and current assets and current liabilities were overstated
same same
c. Net income, current assets, and current liabilities were overstated
d. Net income and current liabilities were overstated.
80. The cost of a purchased franchise is classified in the statement of financial position as
a(n):
a. Current Asset
b. Operation Asset
c. Intangible Asset same
d. Deferred charge
81. On January 1, 20x1 Buckle Co. purchased a machine that had a list price of ₱46,320.
Buckle Co. paid cash of ₱18,000 and executed a one-year non-interest-bearing note for the
balance. The going rate of interest was 18%. The machine has a 6-year life and no residual
value. Depreciation expense on the SYD basis at the end of 20x1 is:
a. P8,092
b. P12,000
c. 13,234 same
Solution:
d. P14,690
82. If accounts receivable are pledged against borrowing, the amount of accounts receivable
pledged shall be
a. Excluded from total receivable with disclosure
b. Included in total receivable with disclosure same
c. Included in total receivable without disclosure
d. Excluded from total receivable without disclosure
83. The actual interest earned by the bondholder is

a. Stated rate same same
b. Market rate
c. Effective rate, yield rate or market rate
d. Effective rate
84. On December 31, 2017, the “Receivables” account of ABC Company shows P1,950,000.
Details of the subsidiary ledger show the following:
 Trade accounts receivable P775,000
 Trade notes receivable 100,000
 Trade installment receivable, normally due one to two years 300,000
 Customer’s accounts reporting credit balances arising from sales returns
30,000 Current Liability
 Advance payments for purchase of merchandise 150,000
 Customers’ accounts reporting credit balances arising from advance payments
Current Liability 20,000
 Cash advance to subsidiary 400,000
Long-term investment
 Claims from insurance company 15,000
 Subscription receivable due in 60 days 300,000
 Accrued interest receivable 10,000
How much must be presented as “trade and other receivables” under current assets?
a. Answer not given

b. P725,000
c. P1,290,000
d. P1,650,000 (same problem to sa book 4-1) SAME
Solution:
e. P1,125,000
85. On October 1, Tak, Inc. exchanged 8,000 shares of its ₱25 par value ordinary share for a
parcel of land to be used as site for a new plant. Tak's ordinary share had a fair value of ₱80 per
share on the exchange date. Tak received ₱36,000 from the sale of scrap when an existing
building on the site was razed. The land should be carried at
Solution:
Exchange- with Commercial substance (POV recipient)
FV of asset given (8,000*80) 640,000
Less: cash received (36,000)
Land Account P604,000
b. P200,000
b. P640,000
b. P236,000
b. Answer not given
86. On June 15, 2020, Stilley Corporation accepted delivery of merchandise which it
purchased on account. As of June 30, Stilley had not recorded the transaction or included the
merchandise in its inventory. Stilley uses the periodic inventory system. The effect of the error
on Stilley’s balance sheet on June 30, 2020 would be
Assets and liabilities were understated but stockholders’ equity was not affected
87. Statement 1: An entity may classify assets other than land and/or building as investment
property.
Statement 2: The lump sum acquisition cost of land and building need not be
allocated to the land and building if both assets are classified as investment property
measured under the fair value model.
a. FALSE, TRUE
b. FALSE, FALSE same
c. TRUE, FALSE
d. TRUE, TRUE
88. Transactions for the month of June were:
Purchases Sales
June 1 (balance) 1,200 @ ₱3.20 June 2 900 @ ₱5.50

June 3 3,300 @ 3.10 June 6 2,400 @ 5.50
June 7 1,800 @ 3.30 June 9 1,500 @ 5.50
June 15 2,700 @ 3.40 June 10 600 @ 6.00
June 22 750 @ 3.50 June 18 2,100 @ 6.00
June 25 450 @ 6.00
Assuming that perpetual inventory records are kept in pesos, the ending inventory on a FIFO
basis is
a. P5,700
b. Answer not given (P10,425 / 2,700 pcs.) same
Solution:
c. P6,300
c. P5,760
c. P6,195
89. These are deposits made but not yet credited by the bank to the depositor’s bank
account.
a. Credit Memos
b. Debit Memos
c. Outstanding checks
d. Deposit in transit same same
90. Statement I: An entity acquires debt instruments to be held under a "hold to collect and
sell" business model. The entity shall classify the debt instruments either a fair value through
other comprehensive income or fair value through profit or loss.
Statement II: A financial asset held under a "hold to collect" business model is classified
under the amortized cost measurement category.
a. True, True same same

b. False, true
c. False, false
d. True, False
91. Which of the following would not be classified as cash?

a. Post Dated Checks same same
b. Certified Check
c. Personal Check
d. Manager’s Check
92. Statement 1: The accounts receivable account of Entity X has a gross balance of P100.
If the carrying amount of the accounts receivable is P85, the allowance for bad debts account
must have a balance of P15.
Statement 2: Entity Y uses the percentage of credit sales method in estimating credit losses on
its trade receivables. Entity Y’s estimate of credit losses is 3% of net credit sales. If Entity Y
reports net credit sales of P100, the bad debt expense for the year would be P3.
a. TRUE, TRUE same same
b. TRUE, FALSE
c. FALSE, TRUE
d. FALSE, FALSE
93. Under the equity method, dividends received from an associate

a. Does not affect the investment account (?????? DI KO RIN SURE CASH DIVI LANG
KASI SABI SA NOTE)
b. Does not affect the investment income for the period (Not sure tho sabi kasi sa
book cash dividends is not an income but a return or reduction of investment so
ayun hindi naapektuhan yung investment income)
b. Increases the investment account
b. Increases investment income for the period
94. On the December 31, 2017, Statement of Financial Position of ABC Co., the current
receivables consisted of the following:
 Trade accounts receivable 93,000
 Allowance for uncollectible accounts (2,000)
 Claim against shipper for goods lost in transit (November 2017) 3,000
 Selling price of unsold goods sent by Santos on consignment at 130% of cost (not
included in Santos’ ending inventory) 26,000
 Security deposit on lease of warehouse used for storing some inventories 30,000
At December 31, 2017, the correct total of ABC’s current accounts receivables was
91,000 same
Solution:
123,800
95. In preparing its bank reconciliation for the month of February, James Company has
made available the following information:
Balance per bank statement, February 28 ₱18,025
Deposit in transit, February 28 3,125
Outstanding checks, February 28 2,875
Check erroneously deducted by bank from James' account, February 10 125
Bank service charges for February 25
What is the corrected cash balance at February 28?
18,400 same same
Solution:
30-Jul Aug. 31
Book balance 132,200 180,000
Book debits 60,000
Book credits ?
Bank balance 100,600 169,000
Bank debits 20,600
Bank credits ?
Notes collected by bank 10,000 35,000
Debit memos 7,800 8,900
Understatement of book receipts - 2,800
Deposit in transit 45,000 43,800
Outstanding checks 11,200 3,900
How much is the adjusted balance of Cash in August?
a. P136,200
b. P132,600
c. P134,400
d. Answer not given
e. P208,900 same same
Solution:
97. A depreciable asset has an estimated 15 percent salvage value. At the end of its
estimated useful life, the accumulated depreciation would equal the original cost of the asset
under which of the following depreciation methods?
Straight-line and productive- output same
98. On October 1, ABC Company purchased P200,000 face value 12% bonds for 98 plus
accrued interest and brokerage fees and classified them as amortized cost assets. Interest paid
semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what
amount should this acquisition of bonds be recorded?
a. Answer not given
b. P196,700 same
Investment in Bonds 196,700 (included ung brokerage fees) (200,000 x 98% + 700)
Accrued Interest 24,000
Cash 220,700
c. P202,700
c. P202,000
c. P196,000
99. On January 1, 2016, ABC Company purchased bonds with face amount of P4,000,000.
The business model of the entity in managing the financial asset is not only to collect
contractual cash flows that are solely payment of principal and interest but also to sell the bonds
in the open market. The entity paid P4,206,000 for the bond investment. The bonds mature on
December 31, 2018 and pay 10% interest annually on December 31 each year with 8%
effective yield. The bonds are quoted at 95 on December 31, 2016 and 90 on December 31,
2017. What amount of cumulative unrealized loss should be reported in the statement of
changes in equity on December 31, 2017?
473,878 same
Solution:
100. Entity A is preparing its March 31, 20x1 bank reconciliation. The following information
was determined:
 The cash balance per books is ₱280,000
 The cash balance per bank statement is ₱320,000.
 Credit memo – ₱20,000
 Debit memo – (₱15,000)
 Deposits in transit – ₱75,000
 Outstanding checks – (₱25,000)
 The disbursements per books are overstated by (₱45,000.)
 The bank debits are understated by (₱40,000)
How much is the adjusted balance of cash?
330,000 same same
Solution:
101. A cost may be capitalized (capital expenditure) if
Any of these
Principal
12% bank loan (1.5 years) ₱ 1,000,000
10% bank loan (3-year) 8,000,000
Jan. 1 ₱ 5,000,000
March 1 4,000,000
August 31 3,000,000
Construction was completed on December 31, 20x1.
How much borrowing costs are capitalized to the cost of the constructed qualifying
asset?
a. 920,000
b. 1,045,000
c. 971,111
d. 1,026,667
e. Answer not given (950,000)same
Solution :
103. In order to calculate the third year's depreciation on an asset using the sum-of- the-
years'-digits method, which of the following must be known about the asset?
a. All of these same
b. Its acquisition cost
c. Its estimated useful life
d. Its estimated residual value
104. Merr Co. purchased a machine costing ₱125,000 for its manufacturing operations and
paid shipping costs of ₱20,000. Merr spent an additional ₱10,000 in testing and preparing the
machine for use. What amount should Merr record as cost of the machine?
Solution:
Purchase Price + Shipping cost + testing and preparing
125,000+20,000+10,000 = P155,000
b. P135,000
b. Answer not given
b. P145,000
b. P125,000
105. On March 31, 20x1, Winn Company traded in an old machine having a carrying amount
of ₱16,800 and paid a cash difference of ₱6,000 for a new machine having a total cash price of
₱20,500. On March 31, 20x1, what amount of loss should Winn recognize on this exchange?
2,300 same same
Solution:
Cash Price 20,500

Less: Cash payment 6,000
FMV 14,500
Carrying Amount (16,800)
Loss on exchange P 2,300
106. Entity A acquires equipment on January 1, 20x1. Information on costs is as follows:

 Purchase price, gross of ₱10,000 trade discount 800,000
 Non-refundable purchase taxes 20,000
 Delivery and handling costs 40,000
 Installation costs 30,000
 Present value of decommissioning and restoration costs 10,000
Assume the equipment has a useful life of 10 years and a residual value of ₱90,000.
Entity A uses the straight line method of depreciation. How much are the depreciation
expense in 20x1 and the carrying amount of the equipment on December 31, 20x2,
respectively?
a. DE - P80,000 ; CA 12/31/x2 - P580,000

b. DE - P80,000 ; CA 12/31/x2 - P810,000
c. DE - P80,000 ; CA 12/31/x2 - P640,000
d. Answer not given (DE – 79,000 CA – 722,000) dito q
e. DE - P80,000 ; CA 12/31/x2 - P730,000
Check not sure kung ibabawas ung trade discount pero ganto ung solution kapag di
binawas ung trade:
2017. What is the carrying amount of the bond investment to be reported on December 31,
2017?
4,073,878 same same
108. ABC Company sold its inventory for P300,000 to DEF on January 2, 2017 and received
a one-year note bearing an interest of 12% for the full amount. On December 31, 2017, ABC
determined based on DEF’s recent financial crisis and the amount due on January 2, 2018 will
not be collected and that only P210,000 of the principal will be collected with some delay until
the end of 2019. What is the amount of impairment loss ABC Company must recognize on its
receivable as of December 31, 2017?
----- nde ko sure pero baka isusubtract mo lang??? 126,000?????
109. Which of the following principles best describes the conceptual rationale for the methods
of matching depreciation expense with revenues?
a. Systematic and rational allocation same
b. Partial recognition
c. Immediate recognition
d. Associating cause and effect
110. Statement I: Dividends received from investments in equity securities that were
irrevocable elected on initial recognition to be subsequently measured at FVOCI are recognized
in profit or loss.
Statement II: When financial assets measured at amortized cost are reclassified to the
FVPL measurement category, the initial carrying amount of the financial assets under the
new classification is the reclassification date fair value on the financial assets.
TRUE, TRUE same
111. ABC Co. showed the following balances on December 31, 2018:
Accounts Receivable P2,000,000
Allowance for doubtful accounts (60,000)
The following transactions transpired for ABC Company during the year 2016:
a. On May 1, received a P300,000, six-month, 12% interest bearing note from Ed, a customer
in settlement of an account.
b. On June 30, factored P400,000 of its accounts receivable to a finance company. The finance
company charged a factoring fee of 5% of the accounts factored and withheld 20% of the mount
factored.
c. On August 1, ABC discounted the Ed Note at the bank at 15%.
d. On November 1, Ed defaulted on the P300,000 note. ABC company paid the bank the total
amount due plus a P12,000 protest fee and other bank charges.
e. On December 31, ABC Company assigned P600,000 of its accounts receivable to a bank
under a non notification basis. The bank advanced 80% less a service fee of 5% of the accounts
assigned. ABC Company signed a promissory note for the loan.
f. On December 31, ABC collected from Ed in full including interest on total amount due at 12%
since default date.
g. On December 31, it is estimated that 5% of the outstanding accounts receivable may prove
uncollectible.
Amount of cash received on December 31 assignment of accounts receivable.
456,000
Solution:
112. In preparing a bank reconciliation, interest paid by the bank on the account is
Added to the book balance same same
113. Information on ABC Co. is shown below: 30-Jul Aug. 31 Book balance 132,200
180,000 Book debits 60,000 Book credits ? Bank balance 100,600 169,000 Bank debits 20,600
Bank credits ? Notes collected by bank 10,000 35,000 Debit memos 7,800 8,900
Understatement of book receipts - 2,800 Deposit in transit 45,000 43,800 Outstanding checks
11,200 3,900 How much is the adjusted disbursement in August
13,300 same
Solution:
114. On June 30, 2018, ABC Co. purchased 25% of the outstanding ordinary shares of DEF
Co. at a total cost of P2,100,000. The book value of DEF’s net assets on acquisition date was
P7.2 million. For the following reasons, ABC was willing to pay more than book value for the
DEF shares:
• DEF has depreciable assets with a current fair value of P180,000 more than their book
value. These assets have a remaining useful life of 10 years.
• DEF owns a tract of land with a current fair value of P900,000 more than its carrying
amount.
• All other identifiable tangible and intangible assets of DEF have current fair values that
are equal to their carrying amounts.
DEF reported a net income of P1,620,000, earned evenly during the current year ended
December 31, 2018. Also in the current year, it declared and paid cash dividends of
P315,000 to its ordinary shareholders. Market value of DEF’s ordinary shares at
December 31, 2018, is P9 million. ABC’s financial year-end is December 31. What is the
total amount of goodwill of DEF based on the price paid by ABC?
1,080,000
115. Statement 1. R Co. receives a 3-year, noninterest-bearing note of P1,000,000. R Co

determined that the effective interest rate on the transaction is 10%. The initial carrying amount
of the note receivable is computed as P1,000,000 x PV of 1 @ 10%, n=3.
Statement 2. Wet Co. received a noninterest-bearing note of P3,000,000. The note is

collectible in three equal annual installments of P1,000,000, due at the end of each year.
Wet Co. determines that the effective interest on the transactions is 10%. The initial
carrying amount of the note receivable is computed as P1,000,000 x PV of 1 @ 10%,
n=3.
TRUE, FALSE (not sure) SAME, yung statement 2 ordinary annuity dapat
116. PPE purchased on long-term credit contracts should be initially recognized at
----
117. Entity A acquires equipment on January 1, 20x1. Information on costs is as follows:

Purchase price, gross of ₱10,000 trade discount 800,000
Non-refundable purchase taxes 20,000
Delivery and handling costs 40,000
Installation costs 30,000
Present value of decommissioning and restoration costs 10,000
How much is the initial cost of the equipment?
a. P890,000
b. Answer not given (880,000) (not sure) same!!!
c. P820,000
d. P900,000
e. P870,000
118. ABC, Inc. sells to wholesalers on terms, 2/15, n/30. ABC has no cash sales but 50% of
ABC’s customers take advantage of the discount. ABC uses the gross method of recording
sales and trade receivables.
An analysis of ABC’s trade receivables balance at December 31, 2017 revealed the following:
Age Amount Collectible %uncollectible
 0-15 days 200,000 100% 0 0
16-30 days 120,000 95% 5% 6,000
 31-60 days 10,000 90% 10% 1,000
Over 60 days 5,000 P1,000 P1,000 1,000
8,000
In its December 31, 2017 statement of financial position, what amount should ABC report
as allowance for discount?
a. 2,000
b. P3,240
c. P3,350
d. Answer not given
e. P4,000
119. Supporting records of ABC CORP’s trading securities portfolio show the following debt
and equity securities:
Security Cost. Fair Value
400 ordinary shares Con Co. P254,500 P243,000
P800,000 Tip Co. 7% bonds 796,500 774,000
P1,200,000 Turk Co. 7 ½ % bonds 1,207,500 1,218,900
Totals P2,258,500. P2,235,900
Interest dates on the bonds are January 1 and July 1. ABC Corp uses the income
approach to record the purchase of bonds with accrued interest. During 2017 and 2018,
ABC completed the following transactions related to trading securities:
2017
Jan 1 Received semiannual interest on bonds. Assume that the appropriate adjusting
entry was made on December 31, 2016
April 1 Sold P600,000 of 7 ½% Turk bonds at 102 plus accrued interest.
May 21 Received dividend of P1.25 per share on the Con ordinary share capital. The
dividend had not been recorded on the declaration date.
Jul 1 Received semiannual interest on bonds and then sold the 7% Tip bonds at 97 ½
Aug 25 Purchased 200 shares of New, Inc. ordinary share capital at P580 per share plus
brokerage fees of P500.
Nov 1 Purchased P500,000 of 8% Tol Co. bonds at 101 plus accrued interest. Brokerage
fees were P1,250. Interest dates are January 1 and July 1.
Dec 31 Market price of securities were:
Con ordinary shares P550
7 ½ Turk bonds 101 ¾ 8% Tol bonds 101
New ordinary shares P583.75
2018
Jan 2 Recorded the receipt of semiannual interest on bonds
Feb 1 Sold the remaining 7 ½% Turk bonds at 101 plus accrued interest.
What amount should be reported as gain on sale of trading securities in 2017?
A. P2,550
B. P6,000
C. P3,450
D. Answer not given
E. P8,550
Go elyne
120. 2. Lala Company reported the following information in relation to cash on December 31,
2020:
-Checkbook balance, P2,000,000
-Undeposited collections, P200,000
-Customer check amounting to P100,000 dated January 2, 2021 was included in the
December 31, 2020 checkbook balance.
-Another customer check for P250,000 deposited on December 22, 2020 was included
in the checkbook balance but returned by the bank for insufficiency of fund. This check
was redeposited on December 26, 2020 and cleared 2 days later.
-A P 200,000 check payable to supplier dated and recorded on December 30, 2020 was
mailed on January 16, 2021
-A petty cash fund of P25,000 comprised the following on December 31, 2020: Coins
and currencies P 2,500 Petty cash vouchers 20,000 Refundable deposit for returnable
containers 2,500
-A check of P20,000 was drawn on December 31, 2020 payable to petty cashier.
What total amount should be reported as Cash on December 31, 2020?
a. 2,422,500
b. 2,322,500 same
c. 2,300,000
d. Answer not given (2,282,500)
e. 2,325,000
121. ABC Company owns an office building that is being leased out to various companies.
ABC is required to provide security and maintenance services under the lease contracts. The
building was acquired on January 1, 2014 at a total cost P6,000,000. The accumulated
depreciation at the beginning of the year is P480,000. How much would be shown as
investment property in ABC’s 2016 financial statements?
P6,000,000? Same
buyer on January 15, 2018. ABC Co. collected the receivable on January 23, 2018. How much
net cash did ABC received from the buyer if the terms are FOB shipping point, freight prepaid?
a. P294,000
b. Answer not given
c. P299,000 kasi yung freight shoulder ng seller so A/R same
d. P289,000
e. P305,000
123. The following information was available from the inventory records of Moen Company for
January:
Units Unit Cost Total Cost
Balance at January 1 3,000 ₱9.77 ₱29,310
Purchases:
January 6 2,000 10.30 20,600
January 26 2,700 10.71 28,917
Sales:
January 7 (2,500)
January 31 (3,200)
Balance at January 31 2,000
Assuming that Moen does not maintain perpetual inventory records, what should be the
inventory at January 31, using the weighted average inventory method, rounded to the
nearest peso?
A. P20,520
B. P20,474 same
C. Answer not given 20,735
D. P20,720
D. P21,010
124. On January 1, 20x1, Entity A obtained a 12%, ₱6,000,000 loan, specifically to finance
the construction of a building. The proceeds of the loan were temporarily invested and earned
interest income of ₱180,000. The construction was completed on December 31, 20x1. How
much borrowing costs are capitalized to the cost of the constructed building?
540,000 same (actual interest - interest income)
125. ABC Company uses the allowance method of accounting for bad debts. The following
summary schedule was prepared from an aging of accounts receivable outstanding on
December 31 of the current year
No of days Outstanding Amount Probability of Collection
0-30 days P500,000 .98 .02 10,000
31-60 days 200,000 .90 .10 20,000
Over 60 days 100,000 .80 .20 20,000
The following additional information is available for the current year:
Net credit sales for the year P4,000,000
Allowance for Doubtful Accounts: Balance, January 145,000 (cr)
Balance before adjustment, December 31 2,000 (dr)
If ABC determines bad debt expense using 1.5% of net credit sales, the net realizable
value of accounts receivable on the December 31, Statement of Financial Position will
be
a. P738,000
b. P750,000
c. Answer not given
d. P740,000
e. P742,000 same
were damaged by flood. Off-site back up of data base shows the following information:
 Accounts payable, Jan. 1 6,000
 Accounts payable, Sept. 30 3,000
 Payments to suppliers 50,000
 Freight-in 5,000
 Purchase returns and discounts 2,500
 Sales from Jan. to Sept. 75,000
 Sales returns 5,000
 Sales discounts 2,000
 Gross profit rate based on sales 20%
 Goods in transit as of October 1, 20x1 amounted to ₱2,000

 cost of goods out on consignment is ₱1,200
 materials damaged by flood can be sold at a salvage value of ₱500.
6,540 same
ANSWER NOT GIVEN
127. ABC Company received from a customer a one-year, P500,000 note bearing annual
interest of 8%. After holding the note for 6 months, the entity discounted the note at the bank at
an effective interest rate of 10%. What amount of cash was received from the bank?
a. 513,000 same
b. Answer not given
c. P540,000
d. P523,810
e. P495,238
128. ABC Company had trading and nontrading investments held throughout 2016 and 2017.
The nontrading investments are measured at fair value through other comprehensive income.
The investments had a cost of P3,000,000 for trading and P3,000,00 for nontrading. The
investments had the following fair value at year-end:
December 31, 2016 December 31, 2017
 Trading 4,000,000 3,800,000

 Nontrading 3,200,000 3,700,000
What amount of cumulative unrealized gain or loss should be reported as component of other
comprehensive income in the statement of changes in equity on December 31, 2017?
a. Answer not given

b. 700,00loss
c. 500,00 gain
d. 700,000 gain same
Solution:
e. 500,000 loss
129. On June 1, 2016, ABC Corporation purchased as a long-term investment 4,000 of the
P1,000 face value, 8% bonds of DEF Corporation for P3,645,328. Interest is payable
semiannually on December 1 and June 1. The bonds mature on June 1, 2022. On November 1,
2017, ABC sold the bonds for a total consideration of P3,925,000. ABC intended to hold these
bonds until they matured. The carrying amount of the investment in bonds as of December 31,
2016 is
3,674,884
130. Which of the following should be taken into account when determining the cost of
inventory
a. Storage cost or part- finished goods same same
b. Interest on inventory loan
c. Abnormal freight in
d. Recoverable purchase tax
131. Which of the following checks from customers should not be considered as Cash?
a. Manager’s Check
b. Certified Check
c. Post dated check same same
d. Personal Check
132. In accordance with the PFRSs, which of the following methods of amortization is
normally not recommended for intangible assets?
Units of production
133. ABC, Inc. acquired 50,000 ordinary shares of AAA for P5 per share and 125,000
ordinary shares of BBB Corp for P10 per share on January 2, 2016. Both AAA Inc and BBB
Corp have 500,000 ordinary shares outstanding. Both securities are being held as long-term
investments. Changes in retained earnings for AAA and BBB for 2016 and 2017 are as follows
AAA, Inc. BBB, Corp
 Retained earnings, 1/1/2016 P1,000,000 (P175,000)

 Cash dividends, 2016 (125,000)
 Profit for 2016 200,000 325,0000
 Retained earnings, 12/31/2016 1,075,000 150,000
 Cash dividends, 2017 (150,000) (50,000)
 Profit for 2017 300,000 125,000
 Retained earnings, 12/31/2017 1,125,000 225,000
Market value of share:
12/31/2016 12/312017
 P7.00 6.50
 P12.00 15.00
How much should be reported as accumulated net unrealized gain or loss - OCI in equity as of
December 31, 2017?
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134. Which of the following is a true statement concerning research and development (R&D)
costs?
Kita ko lang sa internet lahat ng statement na to is true: okie
All research costs should be expensed as incurred
Development costs with probable future benefits should be capitalized
Lab research aimed at the discovery of new knowledge is considered to be research
135. On August 15, an entity sold goods for which it received a note bearing the market rate
of interest on that date. The four-month note was dated July 15. Note principal, together with all
interest, is due November 15. When the note was recorded on August 15, which of the following
accounts increased?
Interest Receivable same
Unearned Discount
136. 3. Perlas Co. maintains a checking account at the Union Bank. The bank provides a
bank statement along with the canceled checks on the last day of each month. The July bank
Balance, July 1 275,000
Deposits 900,000
Checks processed 700,000
Service charge 15,000
NSF Check 60,000
Monthly automatic loan payment deduction by bank 50,000
Deposits outstanding totaled P 50,000 and all checks written by the depositor were
processed by the bank except for check of P75,000.
A P100,000 July deposit from a credit customer was recorded as P10,000 debit Cash
and credit Accounts receivable.
A check correctly recorded by the entity as P15,000 disbursements was incorrectly

processed by the bank as P150,000 disbursement. What is the balance per bank on July
31?
a. 475,000
b. 350,000 same
c. Answer not given
d. 275,000
e. 400,000
137. Investment properties are measured as follows:

a. Initial: Cost ; Subsequent: Cost or Fair Value same same
b. Initial: Fair value; Subsequent: Fair Value
c. Initial: Cost ; Subsequent Fair Value
d. Initial: Cost or Fair Value ; Subsequent: Cost or Fair Value
138. Intangible assets have all of the following characteristics, except:
They provide benefits to current operations only
139. 5. Hera Company provided the following information:

 Balance per bank statement, May 31 1,300,000
 Balance per book – May 31 1,405,000
 Deposits outstanding 150,000
 Bank service charge (5,000)
 Checks outstanding (50,000)
 Correct bank balance-May 31 1,400,000
 Correct book balance-May 31 1,400,000
June data are as follows:
Bank Book
 Checks recorded 1,100,000 1,250,000

 Deposits recorded 800,000 900,000
 Service charges recorded 25,000
 Note collected by bank, P 250,000 plus interest 275,000
 NSF checks returned with June 30 statement 50,000
 Balances 1,200,000 1,050,000
What is the adjusted cash balance on June 30?
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140. Ame, Inc. exchanged a truck with a carrying amount of ₱12,000 and a fair value of
₱20,000 for a truck and ₱5,000 cash. The fair value of the truck received was ₱15,000. At what
amount should Ame record the truck received in the exchange?
25,000 same
FV given plus cash payment - 20k + 5k
141. Which of these is not a major characteristic of a PPE?
Must be depreciable for more than a year
142. Which of the following costs is a research and development (R&D) cost?
Cost incurred during commercial production
If the discounting is treated as a borrowing, what amount of loss from discounting should ABC
recognize?
a. 5,250 same same
b. Answer not given
c. P9,750
d. P0
e. P20,250
144. Statement I: Under the effective interest method, the amortization of a bond discount
increases the carrying amount of the financial asset.
Statement II: If the face amount of an investment in bonds exceeds its carrying amount, the
excess is called a discount.
TRUE, TRUE same
Statement I: Kapag discount amort nagiincrease ung carrying amount
145. The following information was available from the inventory records of Mon Company for
January:
Units Unit Cost Total Cost
Balance at January 1 3,000 ₱9.77 ₱29,310

Purchases: January 6 2,000 10.30 20,600
January 26 2,700 10.71 28,917
Sales: January 7 (2,500)
January 31 (3,200)
Balance at January 31 2,000
Assuming that Mon maintains perpetual inventory records, what should be the inventory
at January 31, using the moving-average inventory method, rounded to the nearest
peso?
a. 20,720 same same
Solution:
b. 20, 474
b. 21,010
b. Answer not given
b. 20,520
146. Entity A receives land from the government conditioned that the land will only be used in
Entity A’s primary business activities and should never be sold. If in case, Entity A decides not to
use the land in its primary business activities, it shall return the land to the government. Which
of the following standards is least likely to be relevant in accounting for the land?
a. PAS 20 (government grant related to bearer plants)
b. PAS 2 (Discusses inventories) same
c. PAS 16 (most likeley since PAS 16 discusses land related to agricultural activity,
bearer pland and PPE)
d. All of these are relevant
147. If a note receivable is discounted without recourse

a. The contingent liability may be disclosed in either a contra account to note
receivable or in a note to the financial statements same same
b. The transaction shall be accounted for as a secured borrowing as opposed to sale
c. Note receivable shall be credited
d. Liability for a note receivable discounted shall be credited
148. ABC Company purchased from DEF Corporation a P400,000, 8%, five-year note that
requires five annual year-end installments payments of P100,180. The note was discounted to
yield 9% rate to ABC. At the date of purchase, ABC recorded the note at its present value of
P389,700.
111,200
149. The following information relates to ABC Company’s accounts receivable for 2018:
Accounts receivable, January 1, 2017 P975,000
Credit sales for 2017 4,050,000
Sales returns for 2017 112,500
Impairment of receivables 2017 60,000
Collections from customers during 2017 3,225,000
Estimated future sales returns at December 31, 2017 75,000
Estimated sales discounts accounts at December 31, 2017 25,000
What amount should ABC report for accounts receivable at December 31, 2017 statement of
financial position?
a. 1,627,500
b. 1,527,500
c. 1,627,500
d. 1,800,000
e. Answer not given (652,500)
150. On December 31, 2009, West Company had the following cash balances:
Cash in banks P1,800,000
Petty cash funds (all funds were reimbursed on 12/31/09) P 50,000
Cash in banks includes P600,000 of compensating balances against short-term

borrowing arrangements at December 31, 2009. The compensating balances are not
legally restricted as to withdrawal by West.
In the current assets section of West's December 31, 2009, balance sheet (statement of
financial position), what total amount should be reported as cash?
a. Answer not given

b. P1,250,000
c. P1,200,000
d. P1,850,000 same same
e. P1,800,000
151. Silverchair Airlines purchased airline gate rights at Tomorrow International Airport for
P2,000,000 with a legal life if five years. However, Silverchair has the ability and right to extend
the rights every ten years for an indefinite period of time. Over what period of time should
Silverchair amortize the gate rights?
a. 15 years
b. The rights should not be amortized same same
c. 5 years
d. 40 years
net cash did ABC received from the buyer if the terms are FOB destination, freight prepaid?
294,000
305,000
net cash did ABC received from the buyer if the terms are FOB destination, freight collect?
289,000
bonds until they matured. The interest income for the year 2017 is
a. P310,715
b. P311,218
c. P306,608
d. P304,748
155. The use of a Discounts Lost account implies that the recorded cost of a purchased
inventory item is its
A. Invoice price plus the purchase discount lost
B. Invoice price less the purchase discount allowable where taken or not same
C. Invoice price less the purchase discount taken
D. Invoice price
156. A donated plant asset for which the fair value has been determined, and for which
incidental costs were incurred in acceptance of the asset, should be recorded at an amount
equal to its
Fair Value and incidental costs incurred

157. On January 1, 2018, ABC Co sells inventory with a list price of P100,000 on account
under credit terms of 15%, 20%, 3/10, n/30. Under the gross method, how much should be
debited to Accounts Receivable on January 1, 2018?
68,000
158. Which of the following items would be added to the book balance on a bank
reconciliation?
Credit Memos, Overstated disbursements, Understated deposits
159. During 2019 ABC Corporation transferred inventory to XYZ Co. and agreed to
repurchase the merchandise early in 2020. XYZ Co. then used the inventory as collateral to
borrow from ECQ Bank, remitting the proceeds to ABC. In 2020 when ABC repurchased the
inventory, XYZ used the proceeds to repay its bank loan. This transaction is known as product
financing. On whose books should the cost of the inventory appear at December 31, 2019?
a. ECQ Bank
b. XYZ Co.
c. ABC Corporation same
d. XTZ Bank, with ABC Corporation making appropriate disclosures of the transactions.
160. What is the proper accounting treatment for a stale check?

a. Ignored
b. Revert back to cash and credit to gain
c. Revert back to cash and recognize a loss
d. Revert back to cash and accounts receivable
161. Total interest income recognized over the life of a noninterest-bearing note is
a. Greater than the total interest received on the note
b. Zero
c. Less than the total interest received on the not
d. Equal to the Unearned Interest Income on initial recognition
162. 3. Perlas Co. maintains a checking account at the Union Bank. The bank provides a
bank statement along with the canceled checks on the last day of each month. The July bank
statement included the following information: Balance, July 1 275,000 Deposits 900.000 Checks
processed 700,000 Service charge 15,000 NSF Check 60,000 Monthly automatic loan payment
deduction by bank 50,000 Deposits outstanding totaled P 50,000 and all checks written by the
depositor were processed by the bank except for check of P75,000. A P100,000 July deposit
from a credit customer was recorded as P10,000 debit Cash and credit Accounts receivable. A
check correctly recorded by the entity as P15,000 disbursements was incorrectly processed by
the bank as P150,000 disbursement. What is the balance per bank on July 31?
a. 400,000
b. 475,000
c. Answer not given
d. 275,000
e. 350,000
163. The following information pertains to ABC’s long-term marketable equity securities
portfolio: December 31, 2017 December 31, 2016 Cost P200,000 P200,000 Fair Value 240,000
180,000 Differences between cost and fair values are considered to be temporary. The decline
in market value was properly accounted for at December 31, 2016. At December 31, 2017, what
is the net realizable holding gain or loss to be reported as:
a. OCI: P20,000 loss; Accumulated OCI: P20,000 loss
b. OCI : P60,000 gain; Accumulated OCI: P40,000 gain
c. Answer not given
d. OCI: P0; Accumulated OCI: P0
e. OCI:P40,000 gain; Accumulated OCI: P60,000 gain
164. Statement 1: An intangible asset is not amortized if it has an indefinite useful life.
Statement 2: Grind Co. self-generated a patent. Grind Co shall amortize the patent over the
patent’s estimated useful life, if shorter than 20 years.
a. TRUE, TRUE same
b. TRUE, FALSE
c. FALSE, TRUE
d. FALSE, FALSE
165. An analysis and aging of ABC Corp accounts receivable at December 31, 2017,
disclosed the following: Amount estimated to be uncollectible P1,800,000 Accounts receivable
17,500,000 Allowance for doubtful accounts (per books) 1,250,000 What is the net realizable
value of ABC’s receivables at December 31, 2017?
a. 17,500,000
b. 14,450,000
c. 16,250,000
d. 15,700,000
e. Answer not given
166. Information on Mix Co.’s equipment on June 30, 20x8 is shown below:
Equipment (at cost) ₱ 500,000
Accumulated depreciation 150,000
₱ 350,000
The equipment consists of two machines, Machine A and Machine B.
Machine A has a cost of ₱300,000 and a carrying amount of ₱180,000.
Machine B has a cost of ₱200,000 and a carrying amount of ₱170,000.
Both machines are measured using the cost model and depreciated on a straight line
basis over a ten-year period. On December 31, 20x8, Mix Co. decided to change from
the cost model to the revaluation model. Information on this date follows: Fair values
Remaining useful life Machine A ₱180,000 6 years Machine B ₱155,000 5 years On
June 30, 20x9, Machine A and Machine B have fair values of ₱163,000 and ₱136,500,
respectively, and remaining useful lives of 5 years and 4 years, respectively. The tax rate
is 30%. How much is the depreciation expense for the fiscal year ended June 30, 20x9?
----
DEF shares: • DEF has depreciable assets with a current fair value of P180,000 more than their
book value. These assets have a remaining useful life of 10 years. • DEF owns a tract of land
with a current fair value of P900,000 more than its carrying amount. • All other identifiable
tangible and intangible assets of DEF have current fair values that are equal to their carrying
amounts. DEF reported a net income of P1,620,000, earned evenly during the current year
ended December 31, 2018. Also in the current year, it declared and paid cash dividends of
P315,000 to its ordinary shareholders. Market value of DEF’s ordinary shares at December 31,
2018, is P9 million. ABC’s financial year-end is December 31. What amount should ABC report
in its December 31, statement of financial position as its investment in DEF under the fair value
method?
P2,250,000
168. Statement 1: Trade receivables are classified as current assets only if they are
collectible within one year from the reporting date. Statement 2: The total balance of the
accounts receivable of Entity X is P100, net of P5 credit balance in the account of Customer A.
The adjusted balance of accounts receivable is P95.
a. TRUE, TRUE
b. TRUE, FALSE
c. FALSE, TRUE
d. FALSE, FALSE
169. On January 1, 2016, ABC Company purchased 100,000 ordinary shares at P80 per
share to be classified as nontrading through other comprehensive income. On September 30,
2016, the entity received 100,000 stock rights to purchase an additional 100,000 shares at P90
per share. The stock rights had an expiration date of February 1, 2017. On September 30, 2016,
each share had a market value of P114 and the stock right had a market value of P6. What
amount should be reported on September 30, 2016 as investment in stock rights?
600,000
Principal
12% bank loan (1.5 years) ₱ 1,000,000
10% bank loan (3-year) 8,000,000

Jan. 1 ₱ 5,000,000
March 1 4,000,000
August 31 3,000,000
Construction was completed on December 31, 20x1. How much is the cost of the
qualifying asset on initial recognition?
14,000,000
Solution:
171. On January 1, 20x1, Entity A received land with fair of ₱200,000 from the government
conditioned on the construction of a building on the lot. Entity A started immediately the
construction and it was completed on December 31, 20x1 for a total cost of ₱1,000,000. The
building has an estimated useful life of 10 years and zero residual value. How much is the
income from government grant in 20x1 and 20x2, respectively?
Remaining Income from grant : 160,000 ; total income: 40,000
172. These are additions made by the bank to the depositor’s bank account but not yet
recorded by the depositor.
A. Deposits in transit
B. Credit memo *( see CHAPTER 2 pg. 44) same
C. Outstanding checks
D. Debit memos
Security Cost. Fair Value 400 ordinary shares Con Co. P254,500 P243,000 P800,000
Tip Co. 7% bonds 796,500 774,000 P1,200,000 Turk Co. 7 ½ % bonds 1,207,500
1,218,900 Totals P2,258,500. P2,235,900 Interest dates on the bonds are January 1 and
July 1. ABC Corp uses the income approach to record the purchase of bonds with
accrued interest. During 2017 and 2018, ABC completed the following transactions
related to trading securities: 2017 Jan 1 Received semiannual interest on bonds.
Assume that the appropriate adjusting entry was made on December 31, 2016 April 1
Sold P600,000 of 7 ½% Turk bonds at 102 plus accrued interest. May 21 Received
dividend of P1.25 per share on the Con ordinary share capital. The dividend had not
been recorded on the declaration date. Jul 1 Received semiannual interest on bonds
and then sold the 7% Tip bonds at 97 ½ Aug 25 Purchased 200 shares of New, Inc.
ordinary share capital at P580 per share plus brokerage fees of P500. Nov 1 Purchased
P500,000 of 8% Tol Co. bonds at 101 plus accrued interest. Brokerage fees were
P1,250. Interest dates are January 1 and July 1. Dec 31 Market price of securities were:
Con ordinary shares P550 7 ½ Turk bonds 101 ¾ 8% Tol bonds 101 New ordinary
shares P583.75 2018 Jan 2 Recorded the receipt of semiannual interest on bonds Feb 1
Sold the remaining 7 ½% Turk bonds at 101 plus accrued interest. What is the total
interest and dividend income for 2017?
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174. Statement 1: Fold Co. receives a 2-year, noninterest-bearing note of P1,200,000 in

exchange for the sale of an inventory item. If the customer had paid in cash at the sale date, the
purchase price would have been P800,000. At initial recognition, Fold Co. records unearned
interest of P400,000.
Statement 2: Gather Co. receives a P1,000,000 note during the year. The note does not
bear interest and is due in three years’ time (lumpsum). The carrying amount of the note
on initial recognition is equal to the present value of P1,000,000 discounted at an
effective interest rate using PV of 1 and an “n” of 3.
a. TRUE, FALSE
b. TRUE, TRUE
c. FALSE, TRUE
d. FALSE, FALSE
175. On October 1 of the current year, an entity received a one-year note receivable bearing
interest at the market rate. The face amount of the note receivable and the entire amount of the
interest are due on September 30 of next year. The interest receivable on December 31 of the
current year would consist of an amount representing
The accrued interest receivable on December 31 is for the period October 1 to December
31 of the current year (December 31 but not October 1)
176. The effective interest rate on bond is lower than the stated rate when bond sells
a. At maturity value
b. Above face amount same
c. Below face amount
d. At face amount
178. When using a periodic inventory system
----
179. On January 1, 20x1, Entity A received land with fair of ₱200,000 from the government
conditioned on the construction of a building on the lot. Entity A started immediately the
construction and it was completed on December 31, 20x1 for a total cost of ₱1,000,000. The
building has an estimated useful life of 10 years and zero residual value. How much is the
depreciation expense recognized in 20x3 under the gross and net presentations?
100,000
180. The effective interest rate on bond is higher than the stated rate when bond sells
Discount Amortization/ Carrying Amount is lower than face amount
181. PAS 23 does not require which of the following disclosures?

a. The capitalization rate used to determine the capitalize borrowing costs
b. The amount of borrowing costs capitalized during the period
c. Separate presentation of qualifying asset from other assets either on the face of
the statement of financial position or in the notes.
d. PAS 23 requires the disclosure of all of these information.
182. Statement 1: In some cases, a building that is being used partly as an owner-occupied
property and partly as held for rentals, under operating lease, is presented in the statement of
financial position as partly PPE and partly investment property. Statement 2: Heidel Co.
exchanges a piece of land for another land with Sol Co. Heidel classifies the land as investment
property. The land given to Sol has a fair value of P20 while the land received from Sol has a
fair value of P24. Heidel Co paid P3 cash to Sol on the exchange. Heidel Co. shall initially
recognize the land received from Sol at P23.
FALSE, TRUE
183. On January 1, 2016, ABC Company purchased 30% interest in an investee for
P2,500,000. On this date, the investee’s shareholder’s equity was P5,000,000. The carrying
amounts of the investee’s identifiable net assets approximated their fair value except for the
land whose fair value exceeded carrying amount by P2,000,000. The investee reported net
income of P1,000,000 for the current year and paid no dividend. On December 31, 2016, what
amount should be reported as investment in associate?
a. 2,760,000
b. 2,200,000
c. 2,700,000
d. 2,800,000 same
184. On January 1, 2018, ABC Company has investment in equity designated as at FVOCI
with a fair value of P600,000. These securities were acquired a year ago at a cost of P625,000.
On March 31, 2018, ABC exchanged these securities for a piece of land from Mars Company.
The carrying amount of the land in books of Mars Company was P480,000 and has a zonal
value of P800,000. At the time of exchange, the shares, which was publicly listed, has a fair
value of P650,000. The necessary journal entry on March 31, will include a
----
185. Queen Co. records purchases at net amounts. On May 5 Queen purchased
merchandise on account, ₱32,000, terms 2/10, n/30. Queen returned ₱2,000 of the May 5
purchase and received credit on account. At May 31 the balance had not been paid. By how
much should the Account payable be adjusted on May 31?
a. P640
b. P680
c. Answer not given
d. P600
e. P0.00
186. In a case of a patent infringement suit, the suit may be either successful or lost. The
results of the legal decision are accounted for as follows:
ABC Company provided some information on their financial records on December 31, 2017:
Accounts Receivable, January 1 P1,920,000
Collections of accounts receivable 6,240,000
Bad debts 200,000
Inventory, January 1 2,880,000
Inventory, December 31 2,640,000
Accounts payable, January 1 1,000,000
Accounts payable, December 31 1,500,000
Cash sales 1,200,000
Purchases 4,800,000
Gross profit on sales 2,160,000
What is the ending balance of accounts receivable on December 31, 2017?
a. 4,080,000 (not sure ginaya ko ung format sa Problem 13-7 sa book)

b. 3,120,000
c. 2,880,000
d. 1,680,000 (not sure din got this answer from Mindanao state Univ exam)
187. A method that ignores residual value in calculating periodic depreciation expenses in the
earlier part of an asset’s useful life is the
----
188. Credit balances in accounts receivable shall be classified as

a. Part of account payable
b. Deduction from accounts receivable
c. Long-term liabilities
d. Current liabilities
189. Transit Co. had the following balances at December 31, 2009:
Cash in checking account P 35,000
Cash in money market account P 75,000
Treasury bill, purchased 11/1/2009, maturing 1/31/2010 P350,000
Treasury bill, purchased 12/1/2009, maturing 3/31/2010 P400,000
Transit policy is to treat as cash equivalents all highly liquid investments with a maturity of
three months or less when purchased. What amount should Transit report as cash and cash
equivalents in its December 31, 2009, balance sheet (statement of financial position)?
a. P385,000
b. P110,000
c. P460,000
d. Answer not given
e. P860,000
190. The present value of a debt instrument is computed by
a. Dividing the future cash flows from the note by an appropriate PV factor
b. Multiplying the future cash flows from the note by an appropriate PV factor
c. Adding the future cash flows
d. Adding the future cash flows from the principal to the sum of the periodic interests
receivable
191. On January 2, 2017, ABC Co. acquired 2,00 shares of DEF Co. common stock for
P8,000 and classified these shares as fair value through other comprehensive income
securities. During 2017, ABC received P6,000 of cash dividends. ABC’s share of DEF’s 2017
earnings was P5,000. The fair value of DEF’s stock on December 31, 2017, was P7 per share.
ABC should report what amount in 2017 related to DEF Co?
14,000
192. If there is evidence that an impairment loss on loan receivable has been
incurred, the amount of the loss is equal to the
Excess of the carrying amount of the loan receivable over the present value
of the cash flows related to the loan. Same

193. On october 1, 20x1, the warehouse of ABC Co. and all inventories contained therein
were razed by fire. Off-site backup of data base shows the following information:
Inventory Jan 1 20,000
Net purchases 190,000
Net sales from jan 1 to sep 240,000
Gross profit rate based on cost 25%
20%of the inventory contained has been salvaged from the fire
Half is partially damages and can be sold as scrap at 30% of it cost
How much is the inventory loss due to the fire?
a. P11,700
b. P5,400
c. Answer not given (di ko makuha 2,700 nalabas sakin)
d. P18,000
e. P9,000
194. As of december 31, 20x1, the petty cash fund of TUMULT COMMOTION Co. with a
general ledger balance of P15,000 comprises the following:
Coins and currencies: P2,550
Petty cash vouchers:
Gasoline for delivery equipment P3.000
Medical supplies for employees P2,040
IOU’s
Advances to employees 2,220

A sheet of paper with names of several employees together with contribution to
bereaved employee, attached is a currency of 2,400
Checks:
Checks drawn to the order of the petty cash custodian 3,000
Personal checks drawn by the petty cash custodian 2,400
The entry to record the replenishment of the petty cash fund includes:
a. Answer not given
b. A credit to cash short/overage account of P810 and a credit to cash of P12,450
c. A debit to cash short/overage account of P2,190 and a credit to cash on hand of P9450
d. A debit to cash short/overage account of P2190 and a credit to cash in bank of P9450
195. The sale of a depreciable asset resulting in a loss indicates that the proceeds from the
sale were
a. Less than the assets carrying amount
b. Greater than the asset’s carrying amount
c. Greater than the asset’s cost
d. Less than the asset’s current market value
P1,000 face value, 8% bonds of DEF Corporation for P3.645,328. Interest is payable
semiannually on december 1 and june 1. The bonds mature on june 1, 2022. On November 1,
bonds until they mature.
The gain on sale of investment in bonds on November 1, 2017 is
a. P27,632
b. Answer not given
c. 21,195
d. 104,045
e. 80,235
197. Which of the following utilizes the straight - line depreciation method
a. Composite depreciation -No ; group depreciation - no
b. Composite depreciation - yes ; group depreciation - yes same
c. Composite depreciation - no ; group depreciation - yes
d. Composite depreciation - yes ; group depreciation - no
198. What is the proper accounting treatment for a stale check?
a. Revert back to cash and credit to gain
b. Revert back to cash and recognize as a loss
c. Ignored
d. Revert back to cash and accounts receivable
199. Statement 1: trade receivables are classified as current assets only if they are collectible
within one year from reporting date
Statement 2: the total balance of the accounts receivable of entity x is P100, net of P5
credit balance in the account of customer A. the adjusted balance of accounts receivable is P95.
a. False;true
b. True; true same
c. True; false
d. False; false
200. The advantage of relating a company’s bad debt expense to its outstanding receivable is
that this approach
a. Is the only generally accepted method by valuing accounts receivable
b. Makes estimates of uncollectible accounts unnecessary
c. Gives a reasonably correct statement of receivables in the balance sheet same

d. Best relates bad debt expense to the period of sale
201. if there is objective evidence that an impairment loss on loan receivable has been
incurred, the loss is equal to the
a. Excess of the present value of ash flows related to the laan over the carrying amount of
the loan receivable
b. Excess of the carrying amount of the loan over the principal amount of the loan
c. Excess of the principal amount of the loan
d. Excess of the carrying amount of the loan receivable over the present value of the cash
flows related to the loan same
202. During 2017, ABC Company purchased marketable equity securities as a short-term
investment and classified them as held for trading securities. The cost and fair value at
December 31, 2017, were as follows:
Security cost fair value
X 200 shares 8,400 10,200
Y 2,000 shares 51,000 45,900
Z 4,000 shares 94,500 88,500
ABC sold 1 ,000 shares of company Y stock on March 16, 2018, for P25 per share, incurring
P1,200 in brokerage commission and taxes. On the sale, ABC should report a realized loss of
a. Answer not given

b. P0 same
c. P500
d. P850
e. P1,700
203. Which of the following items would be added to the books balance on a bank
reconciliation
a. Deposits in transit
b. Check written for P63 entered as P36 in the accounting records same
c. Outstanding checks
d. Interest paid by the bank
204. Which of the following is an unidentifiable asset?
a. Unearned rent
b. Deferred charges
c. Private-to-private franchise
d. Goodwill same
205. These are deductions made by the bank to the depositor’s bank account but not yet
recorded by the depositor
a. Debit memos same

b. Outstanding checks
c. Deposits in transit
d. Credit memos
206. Jam co. has the following data related to an item of inventory
inventory , march 1 200units @ P4.20
Purchase, march 7 700units @ P4.40
purchase , march 16 140 units @ P4.50
Inventory, march 31 300units
The value assigned to cost of goods sold if jam uses FIFO is
a. 1,334
b. 3,270
c. 3,216
Solution:
d. 1,280
d. Answer not given
207. In which of the following instances is the capitalization of borrowing costs under PAS 23
would most likely be suspended
a. The construction bridge is disrupted by troubled waters

b. The construction of a building is discontinued because it is condemned by the
government and the consumption of development is uncertain
c. Active development is stopped to give time for engineers to reevaluate a design flaw
d. Construction is temporarily stopped for the curing of concrete. same
208. On January 1, 2017, ABC owns 15,000 ordinary shares representing 15% of the shares
outstanding of DEF Corporation. The ordinary shares were acquired on November 12, 2017 at a
cost of P1,500,000 and have a fair value of P1,600,000 on December 31,2017. On January 2,
2018, ABC sold half of its investment for P100 per share incurring a brokerage and commission
expense of P20,000
Assume that the above securities are designated as at fair value through other comprehensive
income, the unrealized gain (loss) on december 31, 2017 to be presented in the statement of
financial position is
a. (P100,000)
b. P0
c. P20,000
d. P100,000
e. Answer not given
209. Which of the following receivables may be presented as part of current assets?
a. Advances to affiliates, the settlement data is not yet agreed upon

b. Receivable from a subscriber of the entity’s own shares collectible within 12
months from ends of the reporting period
c. Loan receivables from the entity’s officers collectible beyond 12 months
d. Long-term receivables of a construction firm. The firm’s normal operating cycle extends
beyond one year.
210. Statement 1: R. Co. receives a 3-year non-interest bearing note of P1,000,000. R co

determined that the effective interest rate on the transaction is 10%. The initial carrying amount
of the note receivable is computed as P1,000,000 x PV of 1 @ 10% , n=3
Statement 2: wet. Co. received a non-interest bearing note of P3,000,000.The note is collectible
in 3 equal annual installments if P1,000,000, sue at the end of each year. Wet Co. determines
that the effective interest on the transactions is 10%. The initial carrying amount of the note
receivable is computed as P1,000,000 x PV of 1 @ 10%, n=3.
a. False, false
b. False, true
c. True, false
d. True, true
211. As an internal control, bank reconciliation statements are usually prepared
a. On a monthly basis same

b. Whenever the accountant needs to
c. Annual at year-end
d. On a daily basis
212. On october 1, 20x1, the warehouse of ABC Co.and all of
213. The “amortized cost” of loan receivable is the amount at which

a. the loan receivable is measured initially minus principal repayment, plus or minus
the cumulative amortization of any difference between the initial amount
recognized and the principal maturity amount, minus reduction for impairment
b. The loan receivable is measured initially minus principal repayment
c. The loan receivable is measured initially
d. The loan receivable is measured initially minus principal repayment, plus or minus the
cumulative amortization of any difference between the initial amount recognized and the
principal maturity amount
214. Which of the following is not a basic characteristic of a system of cash control
a. Combined responsibility for handling and recording cash

b. Use of a voucher system
c. Daily deposit if all cash received
d. Internal audit at regular intervals
215. PAS 23 does not require which of the following?
a. Separate presentation of qualifying assets from other assets either in the face of
the statement if financial position or in the notes
b. The capitalization rate used to determine the capitalizable borrowing costs
c. The amount of borrowing costs capitalized during the period
d. PAS 23 required the disclosure of all of these information
216. {similar to #18} On October 1, 20x1, the warehouse of ABC Co. and all the inventories
contained therein were damaged by flood. Off-site back up data base shows the following
information
Inventory Jan.1 10,000
Accounts Payable Jan. 1 3, 000
Accounts Payable Sep. 30 2,000
Payments to suppliers 50,000
Freight-in 500
Purchase Returns 500
Sales from Jan to Sep 80,000
Sales Returns 5,000
Sales Discounts 2,000
Gross profit rate based on sales 30%
Additional Information:
Goods in transit as of October 1, 20x1 amounted to P1,000, cost of goods out on
consignment is P1,200 and materials damaged by flood can be sold at a salvage value
of P1,800.
a. 4 400
b. 2 500
c. 4 900
d. 3 000
e. Answer not given
Solution:
If the discounting is treated as a sale, what amount off loss from discounting should
ABCrecognize?
a. 5 250
b. Answer not given
c. 9 750
d. 20 250
e. 0
218. Mar Manufacturing Company purchased a machine on January 2, 20x2. The invoice price
of the machine was P40,000, and the vendor offered a 2 percent discount for payment within
ten days. The following additional costs were incurred in connection with the machine.
Transportation-in 1,200
Installation cost 700
Testing costs prior to regular operation 550
If the invoice is paid within the discount period, Mar should record the acquisition cost of the
machine at
A. P41,650
B. P40,400
C. 41,100
D. P39,200
E. Answer not given
219. The entity starts the capitalization of borrowing costs to the cost of a qualifying asset
when
a. Expenditures for the asset are being incurred

b. Activities necessary to prepare the asset for its intended use or sale are being
undertaken
c. All of these conditions are met
d. Borrowing costs are being incurred
factored.
since default date.
uncollectible.
Amount of cash received on August 1 discounting
a. Answer not given (310,800)

b. 318,000
c. 300,000
d. 329,925
e. 306 075
221. ABC Co had the following account balances at December 31,2017:
Accounts receivable P 900,000
Allowance for doubtful accounts (before any provision for 1027 doubtful accounts expense)
P16,00
Credit sales for 2017 P1,750,00
ABC is considering the following methods of estimating doubtful accounts expense for 2017:
 Based on credit sales at 2%

 Based on accounts receivable at 5%
What amount should ABC charge to doubtful accounts expense under each method?
a. Percentage of credit sales: P35,000 ; percentage of accounts receivable: P45,000

b. Percentage of credit sales: P51,000 ; percentage of accounts receivable: P45,000
c. Percentage of credit sales: P51,000 ; percentage of accounts receivable: P29,000
d. Percentage of credit sales: P35,000 ; percentage of accounts receivable: P25,000
e. Answer not given (% of sales : 35K ; % of A/R : 29k)
222. At what amount should the investment in bonds be recorded?
a. 1 960 000
b. 2 070 000
c. 2 020 000
d. 2 010 000
e. Answer not given
223. Jerry company had the following account balances on December 31, 2020:
Petty cash fund 25,000
Cash on hand 250,000
Cash in bank-current account 2,000,000
Cash in bank-payroll account 500,000
Cash in bank-restricted account for plant addition for disbursement in early 2021 250,000
Cash in sinking fund set aside for bond payable, due june 30 2021 750,000
Time deposit 1,000,000
The petty cash fund included unreplenished December 2020 PCF vouchers of 2,500 and
employee IOUs of 2,500. The cash on hand included a P50,000 check payable to the entity
dated January 21, 2021
What total amount should be reported as Cash and Cash equivalents on December 31, 2020?
a. 4 470 000
b. 3 970 000
c. 3 720 000
d. 3 470 000
e. Answer not given
224. On January 2, 2016, ABC Corporation bought 15% of DEF Corporation’s capital stock
for P60,000 and classified it as fair value through other comprehensive income securities. DEF’s
profits for the years ended December 31,2016 and 2017 were P20,000 and P100,000,
respectively. During 2017, DEF declared a dividend of P140,000. No dividends were declared in
2016. On December 31, 2017, the fair value of the DEF stock owned by ABC had increased to
P90,000. How much should ABC show on its 2017 income statement as income from this
investment?
a. P21,000
b. Answer not given
c. P3,150
d. P15,000
e. 51,000
225. When does the cost of land affect an entity’s profit or loss?
a. As the asset is used through periodic charges for cost allocation

b. When the asset is impaired or when it is sold above or below its carrying amount
c. When the asset is revalued upwards
d. When the related revaluation is recognized on a piecemeal basis as the asset is used.
226. ABC Company had trading and nontrading investments held throughout 2016 and 2017.
The nontrading investments are measured at fair value through other comprehensive income.
The investments had a cost of P3,000,000 for trading and P3,000,00 for nontrading.
The investments had the following fair value at year-end:
December 31, 2016 December 31, 2017
Trading 4,000,000 3,800,000
Nontrading 3,200,000 3,700,000
What amount of unrealized gain or loss should be reported in the income statement for 2017?
a. P200,000 loss
b. Answer not given
c. P300,000 gain
d. P200,000 gain
e. P300,000 loss
227. All of the following costs should be expensed in the period they are incurred except for
a. Storage costs that are necessary in bringing the asset to its intended condition.
b. Depreciation of idle manufacturing capacity resulting from an unexpected plant
shutdown.
c. Costs which will not benefit any future period
d. Manufacturing overhead costs for a product manufactured and sold in the same
accounting period.
228. On July 1, 2017, ABC Co. purchased as investment measured at amortized cost
P1,000,000 of DEF, Inc. 's 8% bonds for P946,000, including accrued interest of P40,000. The
bonds were purchased to yield 10% interest. The bonds mature on January 1, 2024 and pay
interest annually on January 1. ABC uses the effective method of amortization. In its December
31,2017 balance sheet, what amount should ABC report as investment in bonds?
a. P953,300 (Jul 1. Acquisition so 6 months lang sakop neto hanggang 12/31/17)

b. P960,000
c. Answer not given
d. P916,600
e. P911,300
229. Statement I : According to PFRS 9 Financial Instruments, financial assets are classified
on the basis of the entity’s business model for managing financial assets.
Statement II : Only debt instruments can be classified under the amortized cost or the fair value
through other comprehensive income (mandatory) measurement categories.
a. FALSE, TRUE
b. TRUE, FALSE
c. TRUE, TRUE
d. FALSE, FALSE
DEF shares:
• DEF has depreciable assets with a current fair value of P180,000 more than their book
value. These assets have a remaining useful life of 10 years.
• DEF owns a tract of land with a current fair value of P900,000 more than its carrying
amount.
• All other identifiable tangible and intangible assets of DEF have current fair values that
are equal to their carrying amounts.
DEF reported a net income of P1,620,000, earned evenly during the current year ended
December 31, 2018. Also in the current year, it declared and paid cash dividends of
P315,000 to its ordinary shareholders. Market value of DEF’s ordinary shares at
December 31, 2018, is P9 million. ABC’s financial year-end is December 31.
What amount of investment income should ABC report in the income statement for the year
ended December 31, 2018, under the fair value method?
a. P78,750
b. Answer not given
c. P202,500
d. P228,750
e. P71,250
Asset Cost Accum. Depreciation Acquisition date Residual value
A 100,000 64,000 20X6 20,000
B 55,000 36,000 20X5 10,000
C 70,000 33,600 20X5 14,000
depreciable asset is 5 years.
Using the same depreciation method as used in 20x5, 20x6, and 20x7, how much
depreciation expense should Dirt record in 20X8 for asset B?
a. P11,000
b. Answer not given
c. P12,000
d. P9,000
e. P6,000
Security Cost. Fair Value
400 ordinary shares Con Co. P254,500 P243,000
P800,000 Tip Co. 7% bonds 796,500 774,000
P1,200,000 Turk Co. 7 ½ % bonds 1,207,500 1,218,900

Totals P2,258,500. P2,235,900
Interest dates on the bonds are January 1 and July 1. ABC Corp uses the income
approach to record the purchase of bonds with accrued interest. During 2017 and 2018,
ABC completed the following transactions related to trading securities:
2017
Jan 1 Received semiannual interest on bonds. Assume that the appropriate adjusting
entry was made on December 31, 2016
April 1 Sold P600,000 of 7 ½% Turk bonds at 102 plus accrued interest.
May 21 Received dividend of P1.25 per share on the Con ordinary share capital. The
dividend had not been recorded on the declaration date.
Jul 1 Received semiannual interest on bonds and then sold the 7% Tip bonds at 97 ½
Aug 25 Purchased 200 shares of New, Inc. ordinary share capital at P580 per share plus
brokerage fees of P500.
Nov 1 Purchased P500,000 of 8% Tol Co. bonds at 101 plus accrued interest. Brokerage
fees were P1,250. Interest dates are January 1 and July 1.
Dec 31 Market price of securities were:
Con ordinary shares P550
7 ½ Turk bonds 101 ¾ 8% Tol bonds 101
New ordinary shares P583.75
2018
Jan 2 Recorded the receipt of semiannual interest on bonds
Feb 1 Sold the remaining 7 ½% Turk bonds at 101 plus accrued interest.
What is the carrying amount of the remaining trading securities on December 31, 2017?
a. Answer not given

b. P1,452,250
c. P1,473,450
d. P1,450,450
e. P1,481,000
233. Property, plant, and equipment may properly include
a. Land held for speculation, rather than for use in the entity’s normal business activities
b. Deposits on machinery not yet received
c. None of these
d. Idle equipment classified as held for sale asset under PFRS 5
234. At the end of its first year of operations, December 31, 2017, ABC Company had
accounts receivable of P500,000 which were net of related allowance for doubtful accounts.
During 2017, ABC recorded charges to bad debts expense of P80,000 and wrote off
uncollectible accounts receivable of P20,000.
How much should ABC Company report in its December 31, 2017 balance sheet as accounts
receivable before the allowance for doubtful accounts?
a. P520,000
b. P500,000
c. P600,000
d. Answer not given
e. P560,000
235. Statement 1: Cut Co. received a long-term, noninterest-bearing note of P100,000. The
note requires a lump sum payment at maturity date Cut Co determines that the effective interest
rate on the transaction is 10% while the appropriate present value factor is 0.9. The interest
income in Year 1 is P9,000
Statement 2: Use the same information in the preceding statement, the interest income in Year
2 is P9,900
a. TRUE,TRUE (Di q sure pero ganto understanding ko)
Carrying Amount (100k*0.9) = 90,000
Interest Income (90k*0.1) = 9,000
Next Year:
Carrying Amount =99,0000
Interest Income =9,900
b. TRUE, FALSE
b. FALSE, TRUE
b. FALSE, FALSE
236. The following information pertains to ABC Co.’s accounts receivables at December 31,
2017:
Age Amount %Uncollectible
0 - 60 days 120,000 1%
61 -120 days 90,000 2%

Over 120 100,000 6%
During 2017, ABC wrote off P7,000 in receivables and recovered P4,000 that had been written
off in prior years. ABC’s December 31,2017, allowance for uncollectible accounts was P22,000.
Under the aging method, what amount of allowance for uncollectible accounts should ABC
report at December 31, 2017?
a. Answer not given

b. P13,000
c. P10,000
d. P9,000
e. P19,000
237. Which of the following should not be taken into account when determining the cost of
inventory?
a. Storage cost of pre- finished goods

b. Trade discounts
c. Import duties on shipping of inventory inward
d. Recoverable purchase taxes
238. A 90- day 15% interest-bearing note receivable is sold to a bank without recourse after
being held for 60 days. The proceeds are calculated using a 12% interest rate. The amount
credited to note receivable at the date of the discounting transaction would be
a. The face value of the note

b. The maturity value of the note
c. Less that the face value of the note
d. The same as the cash proceeds
239. On December 1, 20x1, Bod Co. purchased a P400,000 tract of land for a factory site.
Bod razed an old building on the property to make way for the construction of the new factory.
Bod sold the materials it salvaged from the demolition. Bod incurred additional costs and
realized salvage proceeds during December 20x1 as follows:
Demolition of old building P50,000
Legal fees for purchase contract and recording ownership 10,000
Title guarantee insurance 12,000
Proceeds from sale of salvaged materials 8,000
In its December 31, 20x1 statement of financial position, Bod should report a balance in the land
account of
a. P464,000
Purchase Price 400,000
Demolition - salvage value 42,000
Legal Fees 10,000
Title guarantee insurance 12,000
Land Account P464,000
b. Answer not given

b. P442,000
b. P422,000
b. P460,000
240. At the end of its first year of operations, December 31,2017, ABC, Inc. reported the
following information:
Accounts receivable, net allowance for doubtful accounts P9,500,000
Customer accounts written off as uncollectible during 2017 240,000
Bad debts expense for 2017 840,000
What should be the balance in accounts receivable at December 31, 2017, before subtracting
the allowance for doubtful accounts?
a. Answer not given

b. P10,100,000
c. P9,740,000
d. P10,580,000
e. P10,340,000
Asset Cost Accum. Depreciation Acquisition date Residual value
A 100,000 64,000 20X6 20,000
B 55,000 36,000 20X5 10,000
C 70,000 33,600 20X5 14,000
depreciable asset is 5 years.
Dirt depreciates asset C by the straight- line method. On June 30, 20x8, Dirt sold asset C for
P28,000 cash. How much gain (loss) should Dirt record in 2008 on the disposal of asset C?
a. (P5,600)
b. Answer not given
c. P2,800
d. (P2,800)
e. (P8,400)
242. The use of a Purchase Discounts account implies that the recorded cost of a purchased
inventory item is its
a. Invoice price less the purchase discount allowable whether taken or not
b. Invoice price plus any purchase discount lost
c. Invoice price
d. Invoice price less the purchase discount taken
243. ABC, Inc. acquired 50,000 ordinary shares of AAA for P5 per share and 125,000
ordinary shares of BBB Corp for P10 per share on January 2, 2016. Both AAA Inc and BBB
Corp have 500,000 ordinary shares outstanding. Both securities are being held as long-term
investments. Changes in retained earnings for AAA and BBB for 2016 and 2017 are as follows
AAA, Inc. BBB, Corp
Retained earnings, 1/1/2016 P1,000,000 (P175,000)
Cash dividends, 2016 (125,000)
Profit for 2016 200,000 325,0000
Retained earnings, 12/31/2016 1,075,000 150,000
Cash dividends, 2017 (150,000) (50,000)
Profit for 2017 300,000 125,000
Retained earnings, 12/31/2017 1,125,000 225,000
Market value of share:
12/31/2016 12/312017
P7.00 6.50
P12.00 15.00
The income from investment in BBB, Inc. in 2016 is
a. P81,250
b. P2,500
c. Answer not given
d. P31,250
e. P0 (Si AAA, Inc. lang nakareceive ng dividend income)
244. On December 1, 2017, ABC Company assigned P400,000 of accounts receivable to

DEF Company as a security for a loan of P335,000. ABC Company charged a 2% commission
on the amount of the loan; the interest rate on the note was 10%. During December, ABC
collected P110,000 on assigned accounts after deducting P380 of discounts. ABC accepted
returns worth P1,350 and wrote off assigned accounts totaling P2,980.
What is the carrying value of the accounts receivable assigned as of December 31, 2017?
a. P0
b. P290,000
c. P289,620
d. Answer not given
e. P285,290
Solution:
Total A/R - Assigned 400,000
Less: Collections 110,000
Sales Discount 380
Sales Return 1,350
Worthless Accounts 2,980
Carrying Value of AR assigned 285, 290
245. On January 1, 2020, Kay Corporation established a petty cash fund of P400. On
December 31, 2020, the petty cash fund was examined and found to have receipts and
documents for miscellaneous expenses amounting to P364. in addition, there was cash
amounting to P44. What entry would be required to record replenishment of the petty cash fund
on December 31, 2020?
A. Dr. Miscellaneous expense P365; Dr. Cash short or over; Cr Cash in bank P364
B. Dr. Miscellaneous expense P364; Cr Cash short or over P8; Cr Petty cash P356
C. Dr. Petty cash fund P364; Cr Cash short or over P8; Cr Cash in bank P356
(Fluctuating ung ginamit ko) Same
D. Answer not given
E. Dr. Miscellaneous expense P364; Cr Cash short or over P8; Cr Cash in bank P356
246. The composite depreciation method
A. Is applied to a group homogenous assets

B. Does not recognize gain or loss on the retirement of specific assets in the group
C. Is an accelerated method of depreciation
D. Excludes salvage value from the base of the depreciation calculation
247. During 2017, ABC Company purchased marketable equity securities as investment.
These securities are classified as FVOIC. The cost and market value at December 31, 2017,
were as follows:
Security Cost Fair Value
A- 100 shares 2,800 3,400
B- 1,000 shares 17,000 15,300
C- 2,000 shares 31,500 29,500
ABC sold 1,000 shares of Company B stock on January 31, 2018 for P15 per share, incurring
P1,500 brokerage commission and taxes. On the sale, Rex should report a realized loss of
A. P2,000
B. P300
C. P1,800
D. Answer not given
E. P3,500
248. On January 1, 2018 , ABC Co sells inventory with a list price of P100,000 on account
under credit terms of 15%, 20%, 3/10, n/30
Under the gross method, how much should be debited to Accounts Receivable on January 1,
2018?
A. P65,960
B. P100,00
C. Answer not given
D. P85,000
E. P68,000
249. Pearls Co. maintains a checking account at the Union Bank. The bank provides a bank
statement along with the canceled checks on the last day of each month. The July bank
Balance, July 1 275,000 ; Deposits 900,000
Checks processed 700,000 : Service Charge 15,000
NSF Check 60,000 : Monthly automatic loan payment deduction by bank 50,000
Deposits outstanding totaled P50,000 and all checks written by the depositor were processed
by the bank except for check of P75,000.
A P100,000 July deposit from a credit customer was recorded as P10,000 debit Cash and credit
Accounts receivable.
A check correctly recorded by the entity as 15,000 disbursements was incorrectly processed by
the bank as receivable.
by the bank as receivable.
by the bank as P150,000 disbursement.
What is the cash balance per ledger on July 31?
A. Answer not given

B. 585,000
C. 495,000
Solution:
D. 675,000
D. 445,000
250. Peter, Inc. purchased a machine under a deferred payment contract on December 31,
20x1. Under the terms of the contract, Peter is required to make eight annual payments of
P140,000 each beginning December 31, 20x2. The appropriate interest rate is 8%. The
purchase price of the machine is
A. P868,900
B. 804,520
C. 1,120,000 (walang effective rate so di ko sure kung gagamit ba ng PV diyan-
140k*8 ginawa ko)
D. Answer not given
E. P1,389,190
251. Statement 1: When amortizing intangible assets, residual value is normally disregarded
unless the entity can reasonably expect, and had the ability, to sell the intangible asset at the
end of its useful life.
Statement 2: Trademarks are more commonly accounted for as intangible assets with indefinite
useful life. Therefore , they are not amortized but tested for impairment at least annually.
A. TRUE, FALSE
B. FALSE, FALSE
C. FALSE,TRUE (hula ko lang)
D. TRUE, FALSE
252. Clat company started construction of a new office building on January 1, 20x3, and
moved into the finished building on July 1, 20x4. Of the building’s P2,500,000 total cost,
P2,000,000 was incurred in 20x3 evenly throughout the year. Clay’s incremental borrowing rate
was 12% throughout 20x3, and the total amount of interest incurred by Clay during 20x3 was
P102,000. What amount should Clay report as capitalized interest at December 31,20x3?
A. P102,000
B. P120,000
C. P150,000
D. P240,000
253. On october 1 of the current year, an entity received a one-year note receivable bearing
interest at the market rate. The face amount of the note receivable and the entire amount of the
interest are due on September 30 of next year. The interest receivable on December 31 of the
current year would consists of an amount representing
A. Nine months of accrued interest income

B. Three months of accrued interest income (not sure tho basta alam ko dr Accrued
Interest Receivable ng Oct to Dec irerecord sa end year)
C. Twelve months of accrued interest income
D. The excess on October 1 of the present value of the note receivable over its face
amount.
254. ABC Co has a single investment property which had an original cost of P5.8M on
January 1, 2014. On December 31, 2016 the fair value was P6M and on December 31, 2017
the fair value was P5.9M. On acquisition, the property had a useful life of 40 years.
What is the expense recognized in profit or loss for 2017 under the fair value model and cost
model?
A. Fair Value: P147,500; Cost P145,000

B. Fair Value: P100,000; Cost P145,000
Solution:
C. Fair Value: P100,000; Cost P147,500
C. Answer not given
C. Fair Value P145,000; Cost P100,000
255. Which of the following is considered a biological asset?
A. Carcass
B. Pig same same
C. Piggy bank
D. Ham
256. ABC Company provided the following information:
Balance per bank statement, May 31 1,300,000; Balance per book- May 31 1,405,000
Deposit outstanding 150,000 : Bank Service Charge (5,000)
Check Outstanding (50,000)
Correct Bank Balance - May 31 1,400,000 ; Correct Book Balance - May 31 1,400,000
June Data are as follows: Bank Book
Checks recorded 1,100,000 1,250,000
Deposits recorded 800,000 900,000
Service charges recorded 25,000 -
Note collected by bank,
P250,000 with interest 275,000
NSF checks returned
With June 30 statement 50,000
Balances 1,200,000 1,050,000
What is the amount of outstanding checks on June 30?
A. Answer not given

B. 50,000
C. 100,000
D. 200,000
E. 150,000 (mininus ko lang ung Checks recorded sa book and bank HAHAHAH)
257. A method that ignores residual value in calculating periodic depreciation expenses in the
earlier part of an asset’s useful life is the
A. Productive-output method
B. Double declining balance method same same
C. Group composite method
D. Sum-of-the-year’s digits method
258. Good in transit which are shipped FOB shipping point should be
A. Included in the inventory of the seller

B. Not included in anyone’s inventory
C. Included in the inventory of the buyer same same
D. Included in the inventory of the shipping company
259. Which of the following statements is the assumption on which straight-line depreciation
is based?
A. Physical wear and tear are more important than economic obsolescence.
B. Service value declines as a function of time rather than use same same
C. Service value decline as a function of obsolescence rather than time
D. Operating efficiency of the asset decreases in later years.
260. A consideration in determining the useful life of an intangible asset is not the
A. Legal, regulatory, or contractual provisions

B. Provisions for renewal or extension
C. Initial cost
D. Expected actions of competitors (not sure tho)
261. ABC Co. showed the following balances on December 31,2018
a. On May 1, received a P300,000, six month, 12% interest bearing note from Ed, a
customer in settlement of an account
b. On june 30, factored P400,000 of its accounts receivable to a finance company. The
finance company charged a factoring fee of 5% of the accounts factored and withheld
20% of the amount factored.
c. On August 1, ABC discounted the Ed Note at the bank at 15%
d. On November 1, Ed defaulted on the 300,000 note. ABC company paid the bank the
total amount due plus a p12,000 protest fee and other bank charges.
e. On December 31, ABC company assigned P600,000 of its account receivable to a bank
under a nonnotification basis. The bank advanced 80% less a service fee of 5% of the
accounts assigned. ABC company signed a promissory note for the loan.
f. On December 31, ABC collected from Ed in full including interest on total amount due at
12% since default date.
g. On December 31, it is estimated that 5% of the outstanding accounts receivable may
prove uncollectible.
The net realizable value of the accounts receivable is
A. P1,330,000
B. P1,900,000
C. P1,235,000
D. P1,520,000
E. Answer not given
Solution:
262. Of the methods to record cash discounts related to accounts receivable, which more
theoretically correct?
A. Gross method
B. All three methods are theoretically correct
C. Net method (Chapter 10 pg. 284 first paragraph) same same
D. Allowance method
263. According to PAS 23, borrowing costs are capitalized when
A. The entity chooses to capitalize them

B. They relate directly to the acquisition, construction or production of a qualifying asset
C. All of these are required (Chapter 25) same same
D. They are material and are expected to be incurred over more than one reporting period
264. Which of the following items would be added to the book balance on a bank
reconciliation?
A. Check written for P63 entered as P36 in the accounting records same (ang explanation
ko naman si book ang nagkamali kaya si book din ang gagawa ng paraan para maayos
yun so para ma attain yung P63 na check magdadagdag pa si book. Understatement
siya of cash receipts on the books of depositor so add sa book “JE dr CIB cr A/R”)
(HAHAHAHAHA NASAGUTAN KO NA TO NAGSAME AKO SA ANSWER NI ROSE)
same
B. Interest paid by the bank
C. Deposit in transit
D. Outstanding checks
265. Which of the following is a qualifying asset?
a. Investment property measured at fair value

b. Building that is ready for its intended use upon purchase
c. Inventories that are routinely produced in large quantities on a continuous basis
d. An application software (intangible asset) that takes 2 years to develop
266. ABC Company provides for doubtful accounts based 3% of credit sales. The following
data are available for 2017:
Credit sales during 2017. P21,000,000
Allowance for doubtful accounts 1/1/17 P170,000
Collection of accounts written off in prior years (customer credit was reestablished)
P80,000
Customer accounts written off as uncollectible during 2017 P300,000
What is the balance in allowance for doubtful accounts at December 31,2017?

a. P580,000
b. Answer not given
c. P500,000
d. P420,000
e. P630,000
267. The Oscar Corporation acquired land, buildings, and equipment from a bankrupts
company at a lump-sum price of P180,000. At the time of acquisition, Oscar paid P12,000 to
have the assets appraised. The appraised disclosed the following values:
a. P64,000, P64,000 and P64,000
b. P120,000, P80,000 and P40,000
c. Answer not given
d. P90,000, P60,000 and P30,000
e. P96,000, P64,000 and P32,000
268. On December 1, 2017, ABC Company assigned P400,000 of accounts receivable to
DEF Company as a security for a loan of P335,000. ABC Company charged a 2% commission
on the amount of the loan; the interest rate on the note was 10%. During December, ABC
collected P110,000 on assigned accounts after deducting P380 of discounts. ABC accepted
returns worth P1,350 and wrote off assigned accounts totaling P2,980.
How much cash did ABC receive from DEF at the time of transfer?
a. Answer not given
b. P335,000
c. P301,500
d. P328,300
e. P327,000
269. Statement 1: The cost of an internally generated patent that is subject to amortization is
confined to legal and registration fees only.
Statement 2: An intangible asset with finite useful life is amortized over the shorter of its useful
life and legal life
a. FALSE, TRUE
b. FALSE, FALSE
c. TRUE, TRUE
d. TRUE, FALSE
270. Which of the following checks from customers should not be considered as Cash?
a. Travelers Check
b. Cashiers’ Check
c. Postdated check same
d. Personal Check
271. Light Company bought a machine for ₱300,000 on January 1, 20x8. The machine's
useful life is 10 years and it is estimated to have a zero residual value and is depreciated using
the straight-line method. The revalued amount of the machine is as follows:
December 31 Fair values of the machine
20x8 ₱ 360,000
20x9 335,000
2x10 320,000
The enacted tax rate was 30% for each year.
The amount of revaluation surplus transferred to retained earnings in 20x9 is
a. P4,333
b. P10,000
c. P7,000
d. Answer not given
e. P6,667
272. Saan Co. purchased manufacturing equipment from Said Co. on January 1, 20x8 at a
total cost of P9,000,000. Saan uses the straight-line method of depreciation and estimates that
the equipment has a useful life of 10 years. On July 1, 20x8 and July 1,20x9 Saan performed
major regular inspections on the equipmen costing P380,000 and P425,000, respectively. The
costs of inspection satisfied the recognition criteria for capitalization. How much is the carrying
amount of the equipment on December 31, 2009?
a. P7,529,412
b. P7,875,000
c. P7,600,000
d. Answer not given
e. P7,920,000
a. On May 1, received a P300,000, six-month, 12% interest bearing note from Ed, a
customer in settlement of an account.
b. On June 30, factored P400,000 of its accounts receivable to a finance company. The
finance company charged a factoring fee of 5% of the accounts factored and withheld
20% of the mount factored.
d. On November 1, Ed defaulted on the P300,000 note. ABC company paid the bank
the total amount due plus a P12,000 protest fee and other bank charges.
e. On December 31, ABC Company assigned P600,000 of its accounts receivable to a

bank under a non notification basis. The bank advanced 80% less a service fee of 5%
of the accounts assigned. ABC Company signed a promissory note for the loan.
f. On December 31, ABC collected from Ed in full including interest on total amount due
at 12% since default date.
g. On December 31, it is estimated that 5% of the outstanding accounts receivable may

prove uncollectible.
Amount of cash received on June 30 factoring
a. P200,000
b. P300,000
c. Answer not given
d. P304,000
e. P380,000
274. ABC Company acquired a building on January 1, 2016 for P9M. At the date, the building
had a useful life of 30 years. On December 31, 2016 the fair value of the building was P9.6M
and on December 31, 2017, the fair value is P9.8M. The building was classified as an
investment property and accounted for under the fair value model.
What amount should be carried in the statement of financial position and recognized in profit or
loss for 2017?
a. Carrying Amount: P9,000,000; Profit or Loss: P800,000 gain
b. Carrying Amount: P9,800,000; Profit or Loss: P200,000 gain
c. Answer not given
d. Carrying Amount: P8,700,000; Profit or Loss: P300,000 expense
e. Carrying Amount: P8,400,000; Profit or Loss: P300,000 expense
bonds until they matured.
The interest income for the year 2016 is
a. P211,612
b. P215,521
c. P212,829
d. Answer not given

e. P218,850
2017.
What amount of unrealized loss should be reported as component of other comprehensive

income on 2017?
a. Answer not given
b. P473,878
c. P0
d. P200,000
e. P131,398
277. On February 1, 2017, ABC Corporation factored receivables with a carrying amount of
P2,000,000, to DEF Corporation. ABC Corporation assesses a finance charge of 3% of the
receivables and retains 5% of the receivables.
Assume that ABC Company retained significant amount of risks and rewards of
ownership and had a continuing involvement on the factored financial asset, what
amount of loss from factoring should the company recognized?
a. Answer not given
b. P60,000
c. P0
d. P160,000
e. P100,000
278. When the allowance method of recognizing bad debts expense is used, the entry to
record the write-off of a specific uncollectible accounts would decrease
a. Working capital
b. Net Income
c. Net realizable value of accounts receivable
d. Allowance for doubtful accounts
279. ABC Company acquired 100,000 ordinary shares of DEF Company and 300,000
ordinary shares of XYZ Company. Both DEF Company and XYZ Company had 1,000,000
ordinary shares outstanding.
DEF Company reported net income of P3,000,000 and paid dividends of P2,000,000 during the
current year.
XYZ Company reported net income of P4,000,000 and paid dividends of P1,000,000 during the
current year.
What total amount of net income from the investments should be reported for the current year?
a. Answer not given
b. P1,500,000
c. P500,000
d. P1,400,000
e. P1,200,000
280. A company purchased land to be used as the site for the construction of a plant. Timber
was cut from the building site so that construction of the plant could begin. The proceeds from
the sale of the timber should be
a. Deducted from the cost of the plant
b. Netted against the cost to clear the land and expensed as incurred
c. Classified as other income
d. Deducted from the cost of the land

281. On January 1, 2018, ABC Company has investment in equity designated as at FVOCI
with a fair value of P600,000. These securities were acquired a year ago at a cost of P625,000.
On March 31, 2018, ABC exchanged these securities for a piece of land from Mars Company.
The carrying amount of the land in books of Mars Company was P480,000 and has a zonal
value of P800,000. At the time of exchange, the shares, which was publicly listed, has a fair
value of P650,000. The necessary journal entry on March 31, will include a
a. Answer not given
b. Debit to loss on exchange, P25,000
c. Debit to financial asset at FVOCI, P600,000
d. Debit to land, P650,000
e. Credit gain on exchange, P25,000
282. Information on Mix Co.’s equipment on June 30, 20x8 is shown below:
Equipment (at cost) ₱ 500,000
Accumulated depreciation 150,000
₱ 350,000
The equipment consists of two machines, Machine A and Machine B.
Machine A has a cost of ₱300,000 and a carrying amount of ₱180,000.
Machine B has a cost of ₱200,000 and a carrying amount of ₱170,000.
Both machines are measured using the cost model and depreciated on a straight line
basis over a ten-year period. On December 31, 20x8, Mix Co. decided to change from
the cost model to the revaluation model. Information on this date follows:
Fair values Remaining useful life
Machine A ₱180,000 6 years
Machine B ₱155,000 5 years
On June 30, 20x9, Machine A and Machine B have fair values of ₱163,000 and
₱136,500, respectively, and remaining useful lives of 5 years and 4 years, respectively.
The tax rate is 30%.
How much is the carrying amount of the equipment on June 30, 20x9?
a. Answer not given
b. P335,000
c. P163,000
d. P299,500
e. P300,000
283. According to PAS 38 Intangible Assets, if an entity cannot identify in which phase a cost
is incurred, the cost
a. Is capitalized and amortized over the shorter of the intangible asset’s useful life and
legal life
b. Is allocated to research and development phases
c. Is expensed as a regular expense
d. Is regarded as incurred in research phase
284. Subsequent expenditures on intangible assets are
a. Expensed immediately
b. A or b as a matter of accounting policy choice
c. Capitalized only to extent that the litigation is successful
d. Expensed unless they meet the recognition criteria for intangible assets.
285. An entity starts the capitalization of borrowing costs to the cost of a qualifying asset
when
a. Expenditures for the asset are being incurred
b. Activities necessary to prepare the asset for its intended use or sale are being
undertaken.
c. Borrowing costs are being incurred
d. All of these conditions are met

factored.
since default date.
uncollectible.
Amount of cash received on December 31 collection of the account of Ed
a. P336,600
b. P312,000
c. Answer not given
d. P318,000
e. P330,000
buyer on January 15, 2018. ABC Co. collected the receivable on January 23, 2018.
How much net cash did ABC receive from the buyer if the terms are FOB destination, freight
prepaid?
a. Answer not given

b. 294,000
c. 289,000
d. 299,000
e. 305,000

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LEGEND:

ELYNE ROSE PIA ARAIZ

● Credit memo - P20,000

● Debit memo - P15,000

● Deposits in transit - P75,000

● Outstanding checks - P25,000

● The disbursements per book are overstated by P45,000

● The bank debits are understated by P40,000

How much is the adjusted balance of cash?

P 330,000 same same same

2. Statement I: Dividends received from investments in equity securities that were

Dr. Cash – 1,000,000; Cr. Grant Income – 1,000,000 same

4. The “amortized cost” of loan is the amount at which

5. ABC Company purchased 40,000 ordinary shares on October 1 for P6,600,000 to be

What amount of gain on sale of investment for the current year?

a. P400,000 same OKIE SAME

Trading Securities 600,000 (4,000/44,000*6,600,000)

Gain on sale 400,000

6. Accounts receivable shall be initially recognized at

Face Value same same same same

9. Transactions for the month of June were:

June 1(balance) 1,200 @ P3.20 June 2 900 @ P5.50

June 3 3,300 @ 3.10 June 6 2,400 @ 5.50

June 7 1,800 @ 3.30 June 9 1,500 @ 5.50

June 15 2,700 @ 3.40 June 10 600 @ 6.00

June 22 750 @ 3.50 June 18 2100 @ 6.00

June 25 450 @ 6.00

a. ANSWER NOT GIVEN Same (P10,425 / 2,700 units) same

a. answer not given

11. Which of the following is a qualifying asset?

o Inventory Jan.1 14 500

Goods in transit as of October 1, 20x1 amounted to P 2 000, cost of goods out on

How much is the inventory loss due to the flood?

Equipment(at cost) 500 000

Accumulated Depreciation 150 000

Carrying Amount 350 000

Fair Values Remaining Useful life

Machine A 180 000 6 years

Machine B 155 000 5 years

 Retained Earning 1/1/16 1 000 000 (175 000)

 Cash Dividends 2017 (150 000) (50 000)

Market Value of Share

Explanation accdg sa source:

Ownership % in AAA = 50,000 / 500,000 = 0.10 or 10%

 Book balance 132,200 180,000

How much is the adjusted receipts in August?

16. Which of the following is outside the scope of PAS 41?

17. The interest method of amortizing discount provides for

Increasing amortization and increasing interest income

As a bond's book value increases, the amount of interest expense increases.

How much did ABC receive from the bank?

20. Entity A acquires inventories and incurs the following costs:

Purchase price - Trade discounts 80,000

Non-refundable tax 5,000

Cost of Inventories 100,000

reporting declining asset values on the balance sheet

22. Which of the following is considered an agricultural produce?

Picked or harvested product

24. An operating cycle

25. Information on ABC Co. is shown below:

 Book balance 132,200 180,000

How much is the adjusted disbursement in August