BULACAN STATE UNIVERSTY

College of Business Administration

QUALIFYING EXAMINATION – LEVEL 2 (FinAcct 1, 2 & Cost Acctg.)

Name: __________________________________ Date: __________ Score: ____ / 100 items

1. Good Company leased a new machine from Bye Corporation on May 1, 2014 under a lease with
the following information:
Annual rental payable at beginning of each lease year P400,000
Lease term 10 years
Economic life of machine 12 years
Implicit interest rate 14%
Present value of an annuity of 1 in advance for 10 periods
At 14% 5.95
Present value of 1 for 10 periods at 14% 0.27
Good has the option to purchase the machine on May 1, 2024, by paying P500,000, which
approximates the expected fair value of the machine on the option exercise date. On May 1,
2014, how much should Good record the leased asset?
a. 1,980,000 d. 2,380,000
b. 2,245,000 e. 2,515,000
c.
2. Manganese Company, a lessee, records a finance lease of machinery on January 1, 2014. The
seven annual lease payments of P200,000 are made at the end of each year. The present value of
the lease payments at 10% is P973,700. Manganese uses the interest method of amortization
and sum-of-the-years’-digit depreciation (no residual value). What is the carrying value of the
liability and the amount of depreciation, respectively, on December 31, 2015?
a. 0 and 0 d. 758,177 and 243,425
b. 758,177 and 208,650 e. 871,070 and 278,200
c.
3. The following information pertains to an operating sale and leaseback of equipment by Cheerful
Co. on December 31, 2014:
4. Sales price P480,000
5. Carrying amount 520,000
6. Monthly lease payment 37,316
7. Present value of lease payments / Fair market value 420,000
8. Estimated remaining life 12 years
9. Lease term 1 year
10. Implicit rate 12 %
11. What amount of deferred gain on the sale should Cheerful report at December 31,
2014?
a. None d. 60,000
b. 40,000 e. 100,000
c.
12. Steam Company disclosed the following information for the year ended December 31, 2014:
13. Bonds payable P300,000
14. Share premium on ordinary share 50,000
15. Donated capital 40,000

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 16. Treasury shares at cost 20,000
17. Ordinary share capital, par P100 500,000
18. Ordinary share option warrants 100,000
19. Investments in Available for sale securities 70,000
20. Share premium 15,000
21. Retained earnings 135,000
22. What is the total shareholders’ equity of Steam Company for the year ended December
31, 2014?
a. 720,000 d. 820,000
b. 760,000 e. 860,000
c.
23. Corridor Company issued 6,000 shares of its P100 par ordinary share to Max L. as compensation
for 1,000 hours of legal services performed. Max L. usually bills P500 per hour for legal services.
On this date of issuance, the share was selling at a public trading at P150 per share. By what
amount should the share premium account of Corridor Company increase as a result of the
issuance of those shares?
a. 300,000 d. 900,000
b. 600,000 e. 3,000,000
c.
24. Ribbon Company issued 10,000 of its 6% preference share; par P100, at P125 per share. Each
share carried a detachable share warrant for one share of Ribbon’s ordinary share, P40 par, at a
specified option price of P50 per share. Immediately after issuance, the market value of Ribbon’s
preference share was P1,140,000 and the warrants was P60,000. What portion of the proceeds
should be credited to ordinary share warrants outstanding?
a. None d. 62,500
b. 60,000 e. 250,000
c.
25. On July 1, 2014, Solo Company has 200,000 shares of P10 par ordinary share outstanding and
the market price of the share is P12 per share. On the same date, Solo declared a 1 for 2 reverse
share split. The par of the share was increased from P10 to P20. Immediately before the split,
the total Share Premium was P900,000. What should be the balance in Solo’s Share Premium
account after the reverse stock/share split is effected?
a. None d. 1,300,000
b. 900,000 e. 1,700,000
c.
26. Imitation Company’s capital structure at December 31, 2013 is shown below:
27. Shares issued and outstanding:
28. Ordinary share 200,000
29. Nonconvertible preference share 50,000
30. On October 1, 2014, Imitation issued a 10% share dividend on its ordinary shares, and
paid P200,000 cash dividends on the preference shares. Net income for the year ended
December 31, 2014 was P1,920,000. How much should be the 2014 earnings per share of
Imitation Company?
a. 7.82 d. 8.72
b. 8.20 e. 9.36
c.
31. On January 1, 2011, Monochromatic Company had 56,000 ordinary shares outstanding that did
not change during 2011 and 2010. The company granted options to certain executives to

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 purchase 9,000 shares of its ordinary share at P70 each. The average market price of ordinary
share was P105 per share during 2011. What is the total number of shares to be used in
computing diluted earnings per share for 2011?
a. 56,000 d. 62,000
b. 59,000 e. 65,000
c.
32. An analysis of Cool Company’s liabilities disclosed the following:
33. Accounts payable, after deducting debit balances in
34. suppliers’ accounts amounting to P22,500 (accounts
35. payable included non-trade liabilities of P32,500) P105,000
36. Accrued expenses 15,000
37. Credit balances of customers’ accounts 13,500
38. Stock dividends payable 70,000
39. Claims for increase in wages and allowances by employees
40. Of the company, covered in a pending lawsuit 125,000
41. Estimated liabilities for premiums 60,000
42. How much should be presented as total current liabilities in the statement of financial
position?
a. 6,000 d. 183,500
b. 168,500 e. 216,000
c.
43. The balance in Stem Corporation’s accounts payable account at December 31, 2014 was
P1,350,000 before any necessary year-end adjustments relating to the following:
 Goods were in transit to Stem from a vendor on December 31, 2014. The invoice cost
was P75,000. The goods were shipped FOB shipping point on December 29, 2014 and
were received on January 2, 2015.
 Goods shipped FOB destination on December 21, 2014, from a vendor to Stem, were
received on January 6, 2015. The invoice cost was P37,500.
 On December 27,2014, Stem wrote and recorded checks totaling P60,000 which were
mailed on January 10,2015.
44. In Stem’s December 31, 2014 statement of financial position, how much should be the
accounts payable?
a. 1,410,000 d. 1,462,500
b. 1,425,000 e. 1,485,000
c.
45. Bugs Appliance Company’s accountant has been reviewing the firm’s past television sales. For
the past years, Bugs has been offering a special service warranty on all televisions sold. With the
purchase of a television, the customer has the right to purchase a 3-year service contract for an
extra P600.
46. Information concerning past television and warranty contract sales is given below:
47. 2012 2011
48. Television sales in units 550 460
49. Sales price per unit P 5,000 P 4,000
50. Number of service contracts sold 350 300
51. Expenses relating to television warranties P38,520 P13,400
52. BUGS’ accountant has estimated from past records that the pattern of repairs has been
40% in the year of sale, 36% first year after sale and 24% on 2 nd year of sale. Sales of the
contracts are made evenly during the year.

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 53. What is the adjusted balance of the unearned service contract as December 31, 2012?
a. 111,600 c. 211,200
b. 168,600 d. 243,600
54.
55. Apex Company’s employees earn two weeks of paid vacation for each year of employment.
Unused vacation time can be accumulated and carried forward to succeeding years and will be
paid at the salary in effect when the vacation is taken. As of December 31, 2014, when Paul’s
salary was P6,000 per week. Paul had earned 18 weeks’ vacation time and had used 12 weeks of
accumulated vacation time. At December 31, 2014, how much should Apex carry as a liability for
Paul’s accumulated vacation time?
a. None d. 36,000
b. 12,000 e. 72,000
c.
56. On January 1, 2011, Break Company agreed to grant its employees ten vested vacation days each
year, with the provision that vacation days earned in a particular year could not be taken until
the following year. For the year ended December 31, 2011, all ten of Break’s employees earned
P300 per day each and earned ten vacation days each. These vacation days were taken during
the first half of 2012. Wage rates remained the same for 2012. In Break’s 2011 profit or loss, how
much expense should be reported for compensation absences?
a. None d. 15,000
b. 3,000 e. 30,000
c.
57. The Puncher Corporation launched a sales promotional campaign on June 30, 2011. For every
ten empty packs returned to Puncher, customers will receive an attractive food container. The
company estimates that only 30% of the packs reaching the market will be redeemed. Additional
data are as follows:
58. Units Amount
59. Sales of food packs P3,000,000 P9,000,000
60. Food containers purchased 60,000 180,000
61. Prizes distributed to customers 37,000
62. At the end of the year, Puncher recognized a liability equal to the estimated cost of
potential prizes outstanding. What is the amount of this estimated liability?
a. 69,000 d. 159,000
b. 90,000 e. 180,000
c.
63. On July 1, 2011, Sydney Company started a sales promotional campaign. In each box of cereal
sold, Sydney inserted a coupon redeemable for a premium. To receive a premium, each
customer must submit five coupons. Sydney’s cost for each premium is P6. Sydney estimated
that 60% of the coupons issued would be redeemed. For the six months ended December 31,
2011, the following information is available:
64. Boxes of cereal sold 800,000
65. Coupons redeemed 200,000
66. How much should be the estimated liability for premium claims outstanding at
December 31, 2011?
a. 240,000 d. 423,000
b. 336,000 e. 576,000
c.

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67. During 2014, Hansel Company issued 3,000 of its 9%, P1,000 face value bonds at 102. In
connection with the sale of these bonds, Hansel paid the following expenses:
68. Promotion costs P50,000
69. Engraving and printing ` 60,000
70. Underwriter’s commission 200,000
71. What amount should Hansel record as bond issue costs to be amortized during the term
of the
72. bonds?
a. 50,000 d. 110,000
b. 60,000 e. 310,000
c.
73. On March 1, 2014, Mother Goose Corporation issued at 103 excluding accrued interest, 1,000 of
its 15%, P1,000 bonds. The bonds are dated January 1, 2014 and mature on January 1, 2024.
Interest is payable semi-annually on January 1 and July 1. Mother Goose paid transaction costs
P60,000. Mother Goose would realize net cash receipts from the bond issuance of:
a. 995,000 c. 1,055,000
b. 1,030,000 d. 1,095,000

5
 e.
f. For items 19 & 20: On January 1, 2009, Faith Company issued its 8%, 5-year convertible debt
instrument with a face amount of P8,000,000 for P7,700,000. Interest is payable every December 31
of each year. The debt instrument is convertible into 50,000 ordinary shares with a par value of P100.
When the debt instruments were issued, the prevailing market rate of interest for similar debt
without conversion option is 10%.
g. On December 31, 2011, all the convertible debt instruments were retired for P8,000,000. The
prevailing rate of interest on a similar debt instrument as of December 31, 2011 is 9% without the
conversion option.
h. 19. What is the carrying value of the debt instruments as of December 31, 2011?
a. 7,393,473
b. 7,492,820
c. 7,602,102
d. 7,722,313
i.
j. 20. On the date of retirement, what amount of the proceeds represents the equity component?
a. 136,878
b. 140,729
c. 165,760
d. 305,760
k.
l. 21. Which of the following would be most indicative of a simple capital structure?
m. a. Equity represented materially by liquid assets
n. b. Common stock, preferred stock, and convertible securities outstanding
o. c. Earnings derived from one primary line of the business
p. d. Ownership interests consisting solely common stock
q.
r. 22. When EPS is computed, dividends on preferred stocks are
s. a. Added because they represent earnings to preferred shareholders
t. b. Subtracted because they represent earnings to preferred shareholders
u. c. Reported separately on the income statement
v. d. Ignore because so they do not pertain to the common stock
w.
x. 23. When shares are issued for services received, the measure should be the
y. a. Fair value of such services c. Fair value of shares issued
z. b. Par value of shares issued d. Book value of shares issued
aa.
bb. 24. It is an equity that is subordinate to all other classes of equity instrument.
cc. a. Ordinary share c. Warrants
dd. b. Potential ordinary share d. Options
ee.
ff. 25. Which of the following differences would result in future taxable amounts?
gg. a. Expenses or losses that are deductible after they are recognized n financial income
hh. b. Revenues or gains that are recognized in financial income but are never included in
taxable income
ii. c. Revenues or gains that are taxable before they are recognized n financial income
jj. d. Expenses or losses that are deductible before they are recognized n financial income
kk.
 ll. 26. Which of the following statements is correct regarding the provision for income taxes in the
financial statements of a sole proprietorship?
mm. a. The provision for income taxes should be based on business income using individual
tax rates
nn. b. The provision for income taxes should be based on business income using corporate
tax rates
oo. c. No provision for income taxes is required
pp. d. The provision for income taxes should be based on the proprietor’s total taxable
income, allocated to the proprietorship at the percentage that business income bears to the
proprietor’s total income
qq.
rr. 27. Under PAS 26, investments held by retirement benefit plans should be stated at which of the
following values in their statement of net assets?
ss. a. Net realizable value c. Value in Use
tt. b. Fair value d. Par value
uu.
vv. 28. Under PAS 19, plan assets include all of the following, except
ww. a. Non-transferable financial instruments issued by the reporting enterprise
xx. b. Assets held by a long-term benefit fund
yy. c. Qualifying insurance policies
zz. d. Assets that are available to be used only to pay fund employee benefits and are not
available for payments to creditors even in bankruptcy
aaa.
bbb. 29. If the lessor and lessee use different interest rates to account for a finance lease,
then
ccc. a. The lessor will use different account titles to record the leasing transaction
ddd. b. Total expense and revenues will be different
eee. c. Total expenses and revenues will be equal
fff. d. The lessee and lessor cannot use different interest rates
ggg.
hhh. 30. Which of the following loss contingencies is usually not accrued?
iii. a. Product warranty obligations c. Risk or loss from fire
jjj. b. Premium offer obligations d. Non-collectability of receivables
kkk.
lll. 31. Which of the following provides the best explanation for why warranty expense should be
estimated and recorded in the year of related sales?
mmm. a. Matching c. Materiality
nnn. b. Full disclosure d. Revenue Recognition
ooo.
ppp. 32. Which of the following is an essential characteristic of a liability?
qqq. a. The identity of the creditor must be known
rrr. b. It must be an obligation to transfer assets or provide services in the future
sss. c. It may be the result of future transactions
ttt. d. The exact amount due must be known
uuu.
vvv. 33. A gain or loss from one of the following transactions should not be included in determining
income.
www. a. Sale of treasury shares c. Sale of products
 xxx. b. Receipt of interest from bank deposits d. Sale of plant and equipment
yyy.
zzz. 34. Major factors contributing to the growth of corporation business includes all of the following,
except:
aaaa. a. The facility to accumulate large amounts of resources
bbbb. b. Easy transferability of the share of ownership
cccc. c. Limited liability of the shareholders
dddd. d. The lack of government regulation
eeee.
ffff. 35. Which could never be subject to inter period tax allocation?
gggg. a. Rent revenue c. Estimated warranty expense
hhhh. b. Depreciation expense on assets d. Interest revenue on municipal bonds
iiii.
jjjj.36. Brad Company has correctly computed its economic order quantity as 500 units. However,
management would rather order in quantities of 600 units. How will Brad's total annual
purchase order cost and total annual carrying cost for an order quantity of 600 units
compare to the respective amounts for an order quantity of 500 units?
kkkk. A. higher purchase order cost and lower carrying cost
llll. B. lower purchase order cost and higher carrying cost
mmmm. C. higher purchase order cost and higher carrying cost
nnnn. D. lower purchase order cost and lower carrying cost
oooo.
pppp. 37. Ziffel Company had the following account balances and results from operations for the
month of July: direct materials consumed, $10,400; direct labor, $8,000; factory overhead,
$8,800; July 1, work in process inventory, $2,400; July 31, work in process inventory, $1,800;
finished goods inventory, July 1, $1,200; finished goods inventory, July 31, $1,000. The total
manufacturing cost for the month of July was:
qqqq. A. $27,800
rrrr. B. $28,000
ssss. C. $18,400
tttt. D. $27,200
uuuu.
vvvv. 38. Cherokee Company applies factory overhead on the basis of direct labor hours.
Budget and actual data for direct labor and overhead for the year are as follows:
wwww.
xxxx. Budget
Actual
yyyy. Direct labor hours.......................................................... 600,000 650,000
zzzz. Factory overhead costs.................................................. $720,000 $760,000
aaaaa.........................................................................................
bbbbb. The factory overhead for Cherokee for the year is:
ccccc. A. overapplied by $20,000
ddddd. B. overapplied by $40,000
eeeee. C. underapplied by $20,000
fffff. D. underapplied by $40,000
ggggg.
hhhhh. 39. The Waitkins Company estimated Department A's overhead at $255,000 for the
period based on an estimated volume of 100,000 direct labor hours. At the end of the
 period, the factory overhead control account for Department A had a balance of $265,500;
actual direct labor hours were 105,000. What was the over- or under-applied overhead for
the period?
iiiii. A. $2,250
jjjjj. B. $(2,250)
kkkkk. C. $15,000
lllll. D.$(15,000)
mmmmm.
nnnnn. 40. Howell Corporation has a job order cost system. The following debits (credits)
appeared in Work in Process for the month of July:
ooooo...................................................................................................................
ppppp...........................................................................................July 1, balance
$ 12,000
qqqqq............................................................................July 31, direct materials
40,000
rrrrr. July 31, direct labor................................................................................... 30,000
sssss. July 31, factory overhead.......................................................................... 27,000
ttttt. July 31, to finished goods.......................................................................... (100,000)
uuuuu.
vvvvv.Howell applies overhead to production at a predetermined rate of 90% based on the
direct labor cost. Job 1040, the only job still in process at the end of July, has been charged
with factory overhead of $2,250. What was the amount of direct materials charged to Job
1040?
wwwww. A. $6,750
xxxxx. B. $2,250
yyyyy. C. $2,500
zzzzz. D. $4,250
aaaaaa.
bbbbbb. 41. A hospital has a $100,000 expected utility bill this year. The Janitorial,
Accounting, and Orderlies Departments are service functions to the Operating, Hospital
Rooms, and Laboratories Departments. Floor space assigned to each department is:
cccccc.
dddddd. ..................................................................................Department Square
Footage
eeeeee....................................................................................................
Janitorial....................................................................................... 1,000
ffffff. ...................................................................................................... Accounting
.............................................................................................2,000
gggggg.....................................................................................................
Orderlies....................................................................................... 7,000
hhhhhh....................................................................................................
Operating...................................................................................... 4,000
iiiiii. ............................................................................Hospital Rooms
30,000
jjjjjj. ...................................................................................................... Laboratories
........................................................................................... 6,000
kkkkkk. ......................................................................................................
50,000
 llllll.
mmmmmm. How much of the $100,000 will eventually become the Hospital Rooms
Department total costs, assuming use of the direct method of allocation based on square
footage?
nnnnnn. A. $60,000
oooooo. B. $72,000
pppppp. C. $75,000
qqqqqq. D. $80,000
rrrrrr.
ssssss. 42. An example of a fringe benefit is:
tttttt. A. the employer portion of SSS , Pagibig and Philhealth
uuuuuu. B. the direct labor wage rate
vvvvvv. C. the straight rate for overtime hours
wwwwww. D. withheld taxes
xxxxxx.
yyyyyy. 43. Uno Manufacturing Corporation has found that the production of a certain product is
subject to an 80% learning curve. Production is in lots of 100 units, with 8 hours required for
the first lot each time the product is manufactured. The total time to produce 400 units is:
zzzzzz. A. 19.52 hours
aaaaaaa. B. 24 hours
bbbbbbb. C. 32 hours
ccccccc. D. 20.48 hours
ddddddd.
eeeeeee. 44. An employee is paid a base rate of $800 per week for 52 weeks. The employee is
entitled to a two-week vacation each year. Factory Overhead Control is debited each week
for accrued vacation pay of:
fffffff. A. $15.38
ggggggg. B. $30.77
hhhhhhh. C. $20
iiiiiii. D. $32
jjjjjjj.
kkkkkkk. 45. Avery Co. uses a predetermined factory overhead rate based on direct labor
hours. For the month of October, Avery's budgeted overhead was $300,000 based on a
budgeted volume of 100,000 direct labor hours. Actual overhead amounted to $325,000
with actual direct labor hours totaling 110,000. How much was the overapplied or
underapplied overhead?
lllllll. A.$5,000 overapplied
mmmmmmm. B. $5,000 underapplied
nnnnnnn. C. $30,000 overapplied
ooooooo. D. $30,000 underapplied
ppppppp.
qqqqqqq. 46. Estimated factory overhead is $600,000, and the hours usage of machinery is
expected to be 150,000. Factory overhead is applied at the rate of $10 per direct labor hour.
The wage rate for direct labor is $6 per hour, and the total number of estimated direct labor
hours for the period is:
rrrrrrr. A. 100,000
sssssss. B. 150,000
ttttttt. C. 300,000
 uuuuuuu. D. 60,000
vvvvvvv.
wwwwwww. 47. J. D. Doonesbury Company manufactures tools to customer
specifications. The following data pertain to Job 1501 for April:
xxxxxxx.
yyyyyyy...............................................................................Direct materials used $
4,200
zzzzzzz.........................................................................Direct labor hours worked
300
aaaaaaaa.....................................................................Direct labor rate per hour $
8.00
bbbbbbbb............................................................................Machine hours used
200
cccccccc..................................Applied factory overhead rate per machine hour $
15.00
dddddddd..............................................................................................................
eeeeeeee. What is the total manufacturing cost recorded on Job 1501 for April?
ffffffff. A.$9,600
gggggggg. B. $10,300
hhhhhhhh. C. $11,100
iiiiiiii. D.$5,400
jjjjjjjj.
kkkkkkkk. 48. Selected cost data (in thousands) concerning the past fiscal year's operations of
the Moscow Manufacturing Company are presented below.
llllllll.
mmmmmmmm. Inventories
nnnnnnnn. Beginning
Ending
oooooooo.................................................................................. Materials
.....................................................................................$75 $ 85
pppppppp.................................................................................. Work in process
.......................................................................................80 30
qqqqqqqq.................................................................................. Finished goods
.......................................................................................90 110
rrrrrrrr.......................................................................................
ssssssss.

Materials used, $326

tttttttt. Total
manufacturing costs charged to production during the year (including direct materials,
direct labor, and factory overhead applied at the rate of 60% of direct labor cost), $686
uuuuuuuu. Cost of
goods available for sale, $826
vvvvvvvv. Selling
and general expenses, $25
wwwwwwww.
xxxxxxxx. The cost of goods sold during the year was:
yyyyyyyy. A. $716
zzzzzzzz. B. $691
aaaaaaaaa. C. $801
bbbbbbbbb. D. $736
ccccccccc.
ddddddddd. 49.Rudolpho Corporation makes aluminum fasteners. Among Rudolpho's 19--
manufacturing costs were:
eeeeeeeee.
fffffffff..........................................................................................................................
Materials and supplies:
ggggggggg..................................................................................................................
...........................................................................................................Aluminum
$400,000
hhhhhhhhh.................................................................................................................
....................................................................................................Machine parts
18,000
iiiiiiiii............................................................................................................................
.....................................................................................Lubricants for machines
5,000
jjjjjjjjj...........................................................................................................................
kkkkkkkkk. Direct materials amounted to:
lllllllll. A. $23,000
mmmmmmmmm. B. $400,000
nnnnnnnnn. C. $405,000
ooooooooo. D. $418,000
ppppppppp.
qqqqqqqqq. 50. At the end of the year, Paola Company had the following account balances after
applied factory overhead had been closed to Factory Overhead Control:
rrrrrrrrr.
sssssssss........................................................................................................... Factory
Overhead Control...................................................................................... $ 1,000 CR
ttttttttt.............................................................................................................. Cost of Goods
Sold............................................................................................................ 980,000 DR
uuuuuuuuu...................................................................................................... Work in
Process....................................................................................................... 38,000 DR
vvvvvvvvv......................................................................................................... Finished
Goods........................................................................................................ 82,000 DR
wwwwwwwww.
xxxxxxxxx. The most common treatment of the balance in Factory Overhead Control would
be to:
yyyyyyyyy. A. carry it as a deferred credit on the balance sheet
zzzzzzzzz. B. report it as miscellaneous operating revenue on the income statement
aaaaaaaaaa. C. credit it to Cost of Goods Sold
bbbbbbbbbb. D. prorate it between Work in Process and Finished Goods
cccccccccc.
dddddddddd. 51. A company expects to produce an average of 75,000 units per year, but
last year production equaled 60,000 units. For the coming year, estimated production is
90,000 units. Estimated overhead costs are $900,000, and overhead is applied at the rate of
$10 per unit. The company bases its overhead rates on:
 eeeeeeeeee. A. theoretical (engineering) capacity
ffffffffff. B. a short-term planning approach
gggggggggg. C. historical capacity costs
hhhhhhhhhh. D. expected actual capacity
iiiiiiiiii.
jjjjjjjjjj. 52. Rapid Falls Corp. has three producing departments, A, B, and C, with 50, 30, and 20
employees, respectively, in each department. Factory payroll costs other than direct labor
are accumulated in a Payroll Department account and are assigned to producing
departments on the basis of number of employees. The total payroll in each department
was: A, $300,000; B, $275,000; C, $325,000; and Payroll, $50,000. Other costs accumulated
in the Payroll Department amounted to $200,000. The amount of Payroll Department costs
chargeable to Department C is:
kkkkkkkkkk. A. $125,000
llllllllll. B.$100,000
mmmmmmmmmm. C. $40,000
nnnnnnnnnn. D. $50,000
oooooooooo.
pppppppppp. 53. The measurement of performance and the control of costs is aided the
most by:
qqqqqqqqqq. A. organizational charts
rrrrrrrrrr. B. continuous supervision
ssssssssss. C. preparation for the future
tttttttttt. D. budgets and standards
uuuuuuuuuu.
vvvvvvvvvv. 54. In service businesses using job order costing, the most commonly used base for
applying overhead to jobs is:
wwwwwwwwww. A. machine hours
xxxxxxxxxx. B. direct materials consumed
yyyyyyyyyy. C. direct labor cost
zzzzzzzzzz. D. meals, travel, and entertainment
aaaaaaaaaaa.
bbbbbbbbbbb. 55. For its economic order quantity model, a company has a $10 cost of
placing an order and a $2 annual cost of carrying one unit in stock. If the cost of placing an
order increases by 20%, the annual cost of carrying one unit in stock increases by 25%, and
all other considerations remain constant, the economic order quantity will:
ccccccccccc. A. decrease
ddddddddddd. B. increase
eeeeeeeeeee. C. remain unchanged
fffffffffff. D. either increase or decrease, depending on the reorder point
ggggggggggg.
hhhhhhhhhhh. 56. In a perpetual inventory system, the sale of items for cash consists of
two entries. One entry is a debit to Cash and a credit to Sales. The other entry is a
debit to
A. jjjjjjjjjjj.Work in Process Inventory and a credit to Finished Goods Inventory.
B. lllllllllll.Finished Goods Inventory and a credit to Cost of Goods Sold.
mmmmmmmmmmm. nnnnnnnnnnn. Cost of Goods Sold and a credit to Finished Goods Inventory.

D. ppppppppppp. Finished Goods Inventory and a credit to Work in Process Inventory.

 qqqqqqqqqqq.
rrrrrrrrrrr. 57. Plastic used to manufacture dolls is a
sssssssssss.
prime cost product cost wwwwwwwwwww.fixed
direct cost cost
A. b. no yes yes yes
B. d. yes no yes no
C. f. yes yes no yes
D. h. yes yes yes no
xxxxxxxxxxx.
yyyyyyyyyyy. 58. Which of the following would not generally be considered a fixed
overhead cost?
zzzzzzzzzzz.
aaaaaaaaaaaa.
bbbbbbbbbbbb.Factor cccccccccccc. Uni
Straight-line y ts-of-
productio
n
dddddddddddd.
eeeeeeeeeeee.insuran ffffffffffff. depreciati
depreciation ce on
gggggggggggg.
hhhhhhhhhhhh.iiiiiiiiiiii. no no no

B. kkkkkkkkkkkk. yes no yes

C. mmmmmmmmmmmm. yes yes no
nnnnnnnnnnnn.oooooooooooo. no yes no

pppppppppppp.
qqqqqqqqqqqq. 59. The term "relevant range" as used in cost accounting means the range
over which
rrrrrrrrrrrr. ssssssssssss. costs may fluctuate.
a.
tttttttttttt. uuuuuuuuuuuu. cost relationships are valid.
b.
vvvvvvvvvvvv.wwwwwwwwwwww. production may vary.
c.
xxxxxxxxxxxx.yyyyyyyyyyyy. relevant costs are incurred.
d. zzzzzzzzzzzz.
aaaaaaaaaaaaa. 60. The process of ___________ causes the need for cost accounting.
bbbbbbbbbbbbb. ccccccccccccc. conversion
a.
ddddddddddddd. eeeeeeeeeeeee. sales
b.
fffffffffffff. ggggggggggggg. controlling
c.
hhhhhhhhhhhhh. iiiiiiiiiiiii. Allocating
d. jjjjjjjjjjjjj.
 kkkkkkkkkkkkk. 61. Financial accounting and cost accounting are both highly
concerned with
lllllllllllll. mmmmmmmmmmmmm. preparing budgets.
a.
nnnnnnnnnnnnn. ooooooooooooo. determining product cost.
b.
ppppppppppppp. qqqqqqqqqqqqq. providing managers with information necessary for
c. control purposes.
rrrrrrrrrrrrr. sssssssssssss. determining performance standards.
d. ttttttttttttt.
uuuuuuuuuuuuu. 62. Broadly speaking, cost accounting can be defined as a(n)
vvvvvvvvvvvvv. wwwwwwwwwwwww. external reporting system that is based on
a. activity-based costs.
xxxxxxxxxxxxx.yyyyyyyyyyyyy. system used for providing the government and creditors
b. with information about a company's internal operations.
zzzzzzzzzzzzz. aaaaaaaaaaaaaa. internal reporting system that provides product costing
c. and other information used by managers in performing their functions.
bbbbbbbbbbbbbb. cccccccccccccc. internal reporting system needed by manufacturers to be
d. in compliance with Cost Accounting Standards Board pronouncements.
dddddddddddddd.
eeeeeeeeeeeeee. 63. Compared to an ABC system, a traditional costing system
reports:
ffffffffffffff. A. a lower unit cost for high-volume products and a higher unit
cost for low-volume products
gggggggggggggg. B. a higher unit cost for high-volume products and a lower
unit cost for low-volume products
hhhhhhhhhhhhhh. C. the same unit costs for high- and low-volume
products as does an ABC system
iiiiiiiiiiiiii. D. either higher or lower unit cost for high-volume products than
an ABC system depending upon the level of fixed costs
jjjjjjjjjjjjjj.
kkkkkkkkkkkkkk. 64. A company manufactures plastic products for the home and
restaurant market. The company also does contract work for other customers and utilizes a
job order costing system. The flexible budget covering next year's expected range of activity
is:
llllllllllllll.
mmmmmmmmmmmmmm................................................. Direct labor hours
50,000 80,000...................................................110,000
nnnnnnnnnnnnnn................................................................. Machine hours
40,000 64,000.....................................................88,000
oooooooooooooo................................................................ Variable overhead costs
$100,000 $160,000.............................................$220,000
pppppppppppppp................................................................. Fixed overhead costs
150,000 150,000.............................................. 150,000
qqqqqqqqqqqqqq................................................................. Total overhead costs
 $250,000 $310,000.............................................$370,000
rrrrrrrrrrrrrr.
ssssssssssssss. A predetermined overhead rate based on direct labor hours at expected
actual capacity is used to apply total overhead. Management has estimated that 100,000
direct labor hours will be used next year. The predetermined overhead rate per direct labor
hour to be used to apply total overhead to individual jobs next year is:
tttttttttttttt. A. $3.70
uuuuuuuuuuuuuu. B. $3.88
vvvvvvvvvvvvvv. C. $3.36
wwwwwwwwwwwwww. D. $3.50
xxxxxxxxxxxxxx.
yyyyyyyyyyyyyy. 65. The department that has the responsibility for the financial
administration of a company is:
zzzzzzzzzzzzzz. A. Tax
aaaaaaaaaaaaaaa. B. Controller's
bbbbbbbbbbbbbbb. C. Cost
ccccccccccccccc. D. Treasury
ddddddddddddddd.
eeeeeeeeeeeeeee. 66. Lipton Company shows the following account balances in their financial
records as of December 31, 2010:

fffffffffffffff. Checking account at Morgan bank, P(20,000); Checking account at Land bank,
P500,000; Payroll account – National bank, P100,000; Foreign bank account-restricted,
P750,000; Postage stamps, P22,000; Employees’ postdated check, P30,000; I.O.U. from
president’s brother, P75,000; Traveler’s check P50,000; No-sufficient funds check,
P18,000; Petty cash fund (P16,000 in currency and expenses receipts for P84,000),
P100,000 and Cashier’s checks, P36,000
ggggggggggggggg. What is the correct cash balance to be reported in the balance sheet of
Lipton Company on December 31, 2010?
a. 582,000 c. 702,000
b. 686,000 d. 704,000

hhhhhhhhhhhhhhh.67. The cash account in the current asset section of the balance sheet for Heater
Company showed a balance of P555,000. It was found to include the following items:

iiiiiiiiiiiiiii. Petty cash fund (P1,000 is in the form of paid vouchers), P5,000; Checking
account balance, per bank statement (A P25,000 check is still outstanding), P255,000;
Unearned receipts (including a post-dated check for P5,000), P120,000; Currencies and
coins awaiting deposit, P55,000; Bond sinking fund – cash, P100,000; Check drawn by
manager, returned by bank marked NSF, P20,000.
jjjjjjjjjjjjjjj. What is the correct cash balance for Heater Company’s balance sheet?
a. 404,000 c. 430,000
b. 429,000 d. 529,000

kkkkkkkkkkkkkkk. 68. On the December 31, 2011 balance sheet of Microwave Company, the
current receivables consisted of the following:
 lllllllllllllll.
Trade accounts receivable
P232,500
mmmmmmmmmmmmmmm. Allowance for uncollectible accounts
( 5,000)
nnnnnnnnnnnnnnn.Claim against shipper for goods lost in transit (Oct. 2012)
7,500
ooooooooooooooo.Selling price of unsold goods sent by Microwave to consignee
65,000
ppppppppppppppp.Security deposit on lease of warehouse used for storing inventories
75,000
qqqqqqqqqqqqqqq.Total
P375,000
rrrrrrrrrrrrrrr. At December 31, 2011, how much should be Microwave’s total current
net receivables?
a. 235,000 c. 310,000
b. 300,000 d. 375,00

sssssssssssssss. 69. On December 20, 2010, Rolex Company purchase goods costing P100,000.
The term was FOB destination. Some of the cost incurred in connection with the sale and
delivery of the goods were as follows: Packaging for shipment, P2,000; Shipping P3,000 and
special handling charges, P4,000. These goods were received on December 31, 2010. In the
December 31, 2010 statement of financial position, what amount of these goods should be
included in inventory?

a. 100,000 c. 107,000
b. 104,000 d. 109,000
ttttttttttttttt.
uuuuuuuuuuuuuuu.70. Timber Company provided the following data for the purpose of reconciling
the cash balance per book.
vvvvvvvvvvvvvvv. Balance per book
P170,000
wwwwwwwwwwwwwww. Outstanding checks (including certified check of P20,000)
100,000
xxxxxxxxxxxxxxx. Deposit in transit
40,000
yyyyyyyyyyyyyyy. December NSF checks (of which P10,000 had been re-deposited
zzzzzzzzzzzzzzz. And cleared on December 27)
30,000
aaaaaaaaaaaaaaaa. Erroneous credit to Timber’s account, representing proceeds of
bbbbbbbbbbbbbbbb. loan granted to another company
60,000
cccccccccccccccc. Proceeds of note collected by bank for Timber, net of service
dddddddddddddddd. charge of P4,000
150,000
 eeeeeeeeeeeeeeee. Erroneous bank charge
3,000
ffffffffffffffff. A check of P5,000 in payment of account was recorded by the
gggggggggggggggg. company as
500
hhhhhhhhhhhhhhhh. The correct cash balance to be shown in the company’s
December 31, 2010 balance sheet is:
a. 285,500 c. 335,500
b. 295,500 d. 345,500

iiiiiiiiiiiiiiii. 71. Information pertaining to the inventory of Paper Company as of December 31, 2010
follows:
jjjjjjjjjjjjjjjj. A B C
kkkkkkkkkkkkkkkk. Historical cost 2,000,000
2,500,000 3,500,000
llllllllllllllll. Estimated selling price 2,200,000 3,600,000
4,000,000
mmmmmmmmmmmmmmmm. Estimated cost of disposal
300,000 800,000 600,000
nnnnnnnnnnnnnnnn. Normal profit margin 440,000
720,000 800,000
oooooooooooooooo. Current replacement cost 2,500,000
3,000,000 2,700,000
pppppppppppppppp. Paper records losses that result from applying the lower of cost or NRV
rule, what amount should the inventory be valued on December 31, 2010?
a. 7,800,000
b. 7,900,000
c. 8,000,000
d. 8,100,000
qqqqqqqqqqqqqqqq.
rrrrrrrrrrrrrrrr. 72. Based on the physical inventory taken on December 31, 2010, Marian
Company has an ending inventory costing P950,000 but with a fair value less cost to sell of
P750,000. During the year 2011, Marian Company has yet to sell this inventory due primarily to
the nature of the business. On December 31, 2011 the inventory has a fair value less cost to sell
of P1,100,000. In the December 31, 2011 balance sheet, what amount should the inventory be
valued?
a. 750,000 c. 950,000
b. 900,000 d. 1,100,000
ssssssssssssssss.
tttttttttttttttt. 73. The records of Morning Company show the following for the current year:
uuuuuuuuuuuuuuuu. Cost
Retail
vvvvvvvvvvvvvvvv. Beginning Inventory
340,000 640,000
wwwwwwwwwwwwwwww. Purchases
4,500,000 7,300,000
 xxxxxxxxxxxxxxxx. Freight in
100,000
yyyyyyyyyyyyyyyy. Purchase return
150,000 250,000
zzzzzzzzzzzzzzzz. Purchase allowance 90,000
aaaaaaaaaaaaaaaaa. Departmental transfer in
100,000 160,000
bbbbbbbbbbbbbbbbb. Net markup
150,000
ccccccccccccccccc. Net markdown
500,000
ddddddddddddddddd. Sales
6,600,000
eeeeeeeeeeeeeeeee. Sales allowance
50,000
fffffffffffffffff. Sales returns
150,000
ggggggggggggggggg. Employee discount
100,000
hhhhhhhhhhhhhhhhh. Spoilage and breakage
200,000
iiiiiiiiiiiiiiiii.
jjjjjjjjjjjjjjjjj. What is the amount of estimated ending inventory under the conventional retail
and average cost retail, respectively?
a. 480,000 and 512,000
b. 480,000 and 450,000
c. 450,000 and 480,000
d. 512,000 and 480,000
kkkkkkkkkkkkkkkkk.
lllllllllllllllll. 74. On October 1, 2010, Smart Corporation purchase an industrial building by an issue of
P5,000,000 ordinary shares of P1 par each to the vendor. Smart Corporation’s shares have been
actively traded on the stock exchange but its quoted price has been erratic, ranging from a low
of P3.50 to a high of P13.50 for the year. On the date of purchase of the building, Smart
Corporation’s shares are quoted at P8.80. At the time of acquisition the industrial building has a
fair value of P35,000,000. At what amount should the building be initially recorded?
a. 17,500,000 c. 44,000,000
b. 35,000,000 d. 67,500,000
mmmmmmmmmmmmmmmmm.
nnnnnnnnnnnnnnnnn. 75. During 2009, Sun Company exchanged its equipment which has a
carrying amount of P2,000,000 for other equipment in the same line of business with fair value
of P2,100,000. The exchange was completed without any delivery or receipt of cash. Also, the
exchange is considered with the necessary commercial substance. What is the cost of the new
equipment and the amount of gain or loss to be recorded, respectively?
a. 2,100,000 and 0
b. 2,100,000 and 100,000 gain
 c. 2,000,000 and 0
ooooooooooooooooo. d. 2,000,000 and 100,000 gain

ppppppppppppppppp. 76. The following information is provided for related to cash generating
unit as of December 31, 2012:
qqqqqqqqqqqqqqqqq. Carrying Value if no
Individual
rrrrrrrrrrrrrrrrr. Carrying value previous impairment
recoverable amount
sssssssssssssssss. Goodwill none P100,000
none
ttttttttttttttttt. Boiler machine P200,000 240,000
P250,000
uuuuuuuuuuuuuuuuu. Strainer machine 40,000
50,000 48,000
vvvvvvvvvvvvvvvvv. Total P240,000 P390,000
P298,000
wwwwwwwwwwwwwwwww. There is an indicator of reversal, the new total recoverable
amount of the cash generating unit is determine to be P330,000. What is the amount of
impairment reversal should be recognized related to the boiler machine?
a. None c. 40,000
b. 8,000 d. 48,000
xxxxxxxxxxxxxxxxx.
yyyyyyyyyyyyyyyyy. 77. In your audit of Glamour Company as of December 31, 2010, you gathered
the following:
zzzzzzzzzzzzzzzzz. Balance per book, P600,000; Bank charges, P1,500; Balance per bank,
P605,000; Deposit in transit, P180,000; Customer note collected by bank, P225,000;
Interest on customer note, P9,000; customer check returned NSF, P37,500; Depositor’s
note charged to account, P150,000.
aaaaaaaaaaaaaaaaaa. What is the total amount of outstanding checks?
a. 140,000
b. 150,000
c. 160,000
d. 165,000
bbbbbbbbbbbbbbbbbb.
cccccccccccccccccc. 78. On January 1, 2010, F Company’s Loans and Receivable has an outstanding
balance of P500,000. Below are the transactions in its Loans and Receivables and other related
accounts during 2010:
dddddddddddddddddd. Sales on account, P7,200,000; Accounts receivable written due
to impairment, P50,000; Notes receivable to settle accounts, P800,000; Purchases on
account, P7,800,000; Payments to creditors, P6,400,000; Purchase discounts, P520,000;
Sales returns P30,000; Collections received to settle accounts, P4,900,000; Notes given
to settle accounts, P500,000; Purchase returns, P140,000; Payments of notes, P200,000;
 Discounts taken by customers, P80,000; Collection on notes receivable, P360,000;
Provision for future returns and discounts on outstanding receivables, P25,000.
eeeeeeeeeeeeeeeeee. What is the carrying value of the Loans and Receivable on
December 31, 2010?
a. 1,815,000
b. 1,840,000
c. 2,255,000
d. 2,280,000
ffffffffffffffffff.
gggggggggggggggggg. 79. Meadow Manufacturing Company incurred the following costs
related to its manufacture and distribution of its inventory for the month of December 2010:
hhhhhhhhhhhhhhhhhh. Costs of materials used (including the total costs of indirect
material consumed in the production process of P20,000), P300,000; Costs of labor
(including the total costs indirect for laborers who were assigned in the production area,
P35,000),P400,000; Other indirect costs that were allocated on a reasonable basis,
P100,000; Costs of transport from factory to company’s stockroom, P20,000; Storage
cost, P10,000; Administrative costs, P45,000 and delivery cost, P5,000. What amount
should Meadow assigned to its inventory prior to its distribution?
a. 765,000
b. 775,000
c. 820,000
d. 830,000
iiiiiiiiiiiiiiiiii.
jjjjjjjjjjjjjjjjjj. 80. The accounting records of Token Company show the following information for 2011:
kkkkkkkkkkkkkkkkkk. In store:
llllllllllllllllll. Inventory, December 31, P290,000; Inventory, January 1, P220,000; Purchase,
P960,000; Freight in, P20,000; Freight out, P60,000.
mmmmmmmmmmmmmmmmmm. Out on consignment:
nnnnnnnnnnnnnnnnnn. Inventory, December 31, P40,000; Inventory, January 1, P24,000;
Shipment from consignor, P120,000; Freight out to consignees, P10,000; Freight out,
P16,000.
oooooooooooooooooo. What would be the cost of sales of Token for 2011?
a. 904,000 c. 1,014,000
b. 970,000 d. 1,024,000
pppppppppppppppppp.
qqqqqqqqqqqqqqqqqq. 81. On June 1, 2010 Concept Corp. sold merchandise with a list price of
P200,000 to Randall on account. Concept allowed trade discounts of 30%, 20% and 10%. Credit
terms were 2/15, n/40 and the sale was made FOB shipping point. Concept prepaid P4,000 of
delivery costs for Randall as an accommodation. On June 3, 2010, Concept received from Randall
returned merchandise with an invoice price of P50,000 due to minor defects. On June 14, 2010,
Randall settled its account in full to Concept. How much net cash remittance did Concept
receive?
a. 49,784 c. 60,760
b. 53,784 d. 74,088
rrrrrrrrrrrrrrrrrr. 82. During January 2010 Forlorn Company recorded the following information
pertaining to its inventory:
ssssssssssssssssss. Units Unit Cost
Total cost
tttttttttttttttttt. January 1 balance 20,000 P10
P200,000
uuuuuuuuuuuuuuuuuu. January 15 sales 15,000
vvvvvvvvvvvvvvvvvv. January 18 purchase 20,000 11
220,000
wwwwwwwwwwwwwwwwww. January 20 purchase 15,000
12 180,000
xxxxxxxxxxxxxxxxxx. January 25 sales 24,000
yyyyyyyyyyyyyyyyyy. January 30 purchase 14,000 15
210,000
zzzzzzzzzzzzzzzzzz. January 31 sales 10,000
aaaaaaaaaaaaaaaaaaa.
bbbbbbbbbbbbbbbbbbb. Using the moving average method, what amount of inventory
should Forlorn Company report in its January 31, 2010 statement of financial position?
a. 240,000
b. 260,000
c. 280,000
d. 300,000
ccccccccccccccccccc.
ddddddddddddddddddd. 83. The inventory on hand at December 31, 2010 for Victory Company is
valued at a cost of P947,800. The following items were not included in this inventory amount:
A. Purchased goods in transit, shipped FOB destination. Invoice price P32,000, which includes
freight charges of P1,600
B. Goods held on consignment by Victory at a sales price of P28,000, including sales
commission of 20% of the sales price.
C. Goods sold to Sensual Company, under terms FOB destination, invoiced for P24,400 which
includes P1,000 freight charges to deliver the goods. The goods are in transit.
D. Purchased goods in transit, terms FOB shipping point. Invoice price P48,000, Freight costs,
P3,000.
E. Goods out on consignment to Can Company, sales price, P36,400. Shipping cost of P2,000.

eeeeeeeeeeeeeeeeeee. Mark-up cost for all sales is 30%. What is the correct cost of inventory to
be reported in Victory’s financial statements?

a. 1,022,400
b. 1,041,800
c. 1,046,800
d. 1,078,800
fffffffffffffffffff.
ggggggggggggggggggg. 84. Marker Company has the following information pertaining to its
merchandise inventory as of Dec. 31, 2014
hhhhhhhhhhhhhhhhhhh. Inventory on hand (including merchandise received on
consignment of P20,000) P200,000
 iiiiiiiiiiiiiiiiiii. Inventory purchased with a buyback agreement
100,000
jjjjjjjjjjjjjjjjjjj. Merchandise in transit, FOB shipping point, excluding P5,000 freight cost
155,000
kkkkkkkkkkkkkkkkkkk. Merchandise in transit, Free Alongside including delivery cost
alongside the
lllllllllllllllllll. Vessel of P6,000 but excluding the cost of shipment of P3,000
250,000
mmmmmmmmmmmmmmmmmmm. Merchandise in transit, CIF (excluding insurance
costs and freight of P8,000) 175,000
nnnnnnnnnnnnnnnnnnn. What amount should Marker Company report as value of its
inventory in its 2014 balance sheet?
a. 749,000
b. 760,000
c. 770,000
d. 876,000
ooooooooooooooooooo.

ppppppppppppppppppp. 85. Owl Company reported the following investment in long-term

marketable equity securities investment to other comprehensive incomes in its December 31,
2013, statement of financial position:
qqqqqqqqqqqqqqqqqqq. Investment in non-current equity securities, at cost
P2,600,000
rrrrrrrrrrrrrrrrrrr. Fair value adjustment
( 400,000)
sssssssssssssssssss. Fair market value, December 31, 2013
P2,200,000
ttttttttttttttttttt. On December 31, 2014, the market value of the portfolio was
P2,500,000. How much should Owl report in its 2014 statement of comprehensive
income as a result of the increase in the market value of the investments in 2014?
a. None
b. 200,000
c. 300,000
d. 400,000
uuuuuuuuuuuuuuuuuuu.
vvvvvvvvvvvvvvvvvvv. 86. On November 1, 2010, Ribbon Company invested in P600,000 in
equity securities representing 20,000 ordinary shares of Carbon Company. Ribbon Company
incurred transaction cost of P5,000 related to the acquisition of the security. On December 31,
2010, this investment has a market value of P580,000. On April 15, 2011, Ribbon Company sold
the investment for P630,000.
wwwwwwwwwwwwwwwwwww. What amount of realized gain should Ribbon Company
recognized on the disposal of the security assuming the security was classified as investment in
profit or loss?
 a. 20,000 c. 45,000
b. 30,000 d. 50,000
xxxxxxxxxxxxxxxxxxx.
yyyyyyyyyyyyyyyyyyy. 87. Mutant Company purchased 20,000 shares of Twister Company
ordinary shares on February 29, 2011, for P924,000. Mutant received a P40,000 cash dividend on
twister shares on July 1, 2011. Twister declared a 10% share dividend on December 1, 2011, to
shareholders of record as of December 31, 2011. The dividend was distributed on January 31,
2011. The market price of the shares was P38 on December 1, 2011, P40 on December 31, 2011
and P42 on January 1, 2012. What is the carrying value of the investment and the amount of
dividend income respectively, that should appear in the December 31, 2011 financial statement?
a. 880,000 and 40,000
b. 924,000 and 120,000
c. 924,000 and 40,000
d. 964,000 and 120,000
zzzzzzzzzzzzzzzzzzz.
aaaaaaaaaaaaaaaaaaaa. 88. Guess Company purchased 50,000 shares (5% ownership) of Casio
Company on January 15, 2012. Guess received a share dividend of 15% on March 31, 2012 when
the market price of the share is P40. On November 30, Guess paid P20/share special assessment
on the shares. On December 15, 2012 Guess received a cash dividend of P8 per share. In the
income statement for the year ended December 31, 2012, what amount should Guess report as
dividend income?
a. 60,000
b. 150,000
c. 400,000
d. 460,000
bbbbbbbbbbbbbbbbbbbb.
cccccccccccccccccccc. 89. The Mimic Company imported a new machine at a peso equivalent
of P330,000. The company has to pay additional cost of importing the asset such as P10,000
import duties and P15,000 non-refundable purchase taxes. Costs of transporting the asset was
P5,000 and cost of preparing the asset for its intended use include P5,000 installation. How
much is the initial cost of the new machine?
a. 330,000 c. 360,000
b. 355,000 d. 365,000
dddddddddddddddddddd.
eeeeeeeeeeeeeeeeeeee. 90. On September 1, 2010, Mendez Corporation purchased a new
machine on a deferred payment basis. A down payment of P20,000 was made and 4 annual
instalments of P60,000 each are to be made beginning on September 1, 2010. The cash
equivalent price of the machine was P230,000. Due to an employee strike, Mendez could not
install the machine immediately, and thus incurred P3,000 of storage costs. Costs of installation
(excluding the storage costs) amounted to P8,000. The amount to be capitalized as the cost of
the machine is:
a. 230,000 c. 241,000
 b. 238,000 d. 260,000
ffffffffffffffffffff.
gggggggggggggggggggg. 91. A general feature of FS preparation that requires an entity to present
separately each material class of similar items and present separately items of dissimilar nature
or function unless they are immaterial.
hhhhhhhhhhhhhhhhhhhh. a. Consistency of presentation c. Comparative
information
iiiiiiiiiiiiiiiiiiii. b. Materiality and aggregation d. Fair presentation and
compliance with PFRS
jjjjjjjjjjjjjjjjjjjj.
kkkkkkkkkkkkkkkkkkkk. 92. An employee asks for an authorized reimbursement of
transportation charges out of the Imprest petty cash fund. To document this transaction, the
petty cashier should
llllllllllllllllllll. a. Debit “transportation expense” c. Credit “cash”
mmmmmmmmmmmmmmmmmmmm. b. Debit “Receivable from employee” d.
Prepare the petty cash voucher
nnnnnnnnnnnnnnnnnnnn.
oooooooooooooooooooo. 93. Which of the following is an incorrect application of the Imprest
system of cash control?
pppppppppppppppppppp. a. Cash receipts must be deposited on a regular basis
qqqqqqqqqqqqqqqqqqqq. b. Cash disbursement must be made in the form of checks,
regardless of amount
rrrrrrrrrrrrrrrrrrrr. c. Material cash disbursement must be made in the form of checks
ssssssssssssssssssss. d. Insignificant cash disbursements must be made out of the petty cash
fund
tttttttttttttttttttt.
uuuuuuuuuuuuuuuuuuuu. 94. Balance per bank is LESS than the correct balance. No error was
committed. There must be
vvvvvvvvvvvvvvvvvvvv. a. Deposits credited by the bank but not yet recorded by the company
wwwwwwwwwwwwwwwwwwww. b. Outstanding check
xxxxxxxxxxxxxxxxxxxx. c. Deposits in transit
yyyyyyyyyyyyyyyyyyyy. d. Bank charges not yet recorded by the company
zzzzzzzzzzzzzzzzzzzz.
aaaaaaaaaaaaaaaaaaaaa. 95. Which is not required note disclosure for inventories under PAS 2?
bbbbbbbbbbbbbbbbbbbbb. a. The carrying amount of inventories pledge as security for
liabilities
ccccccccccccccccccccc. b. The events or circumstances that led to reversal of write down of
inventories
ddddddddddddddddddddd. c. The accounting policy adopted in measuring inventories,
including the cost formula used
eeeeeeeeeeeeeeeeeeeee. d. The suggested selling price of inventories in the form of goods
stated in the balance sheet.
 fffffffffffffffffffff.
ggggggggggggggggggggg. 96. Capitalization of borrowing costs shall be suspended
hhhhhhhhhhhhhhhhhhhhh. a. Only during temporary periods of delay
iiiiiiiiiiiiiiiiiiiii. b. Only during extended periods of delay in which active development is delayed
jjjjjjjjjjjjjjjjjjjjj. c. Only upon agreement by management and the construction company
kkkkkkkkkkkkkkkkkkkkk.d. At no insurance at all, as capitalization has already commenced
lllllllllllllllllllll.
mmmmmmmmmmmmmmmmmmmmm. 97. Which is not a requisite of “reliability” of FS?
nnnnnnnnnnnnnnnnnnnnn. a. The statements are presented in accordance with GAAP
ooooooooooooooooooooo. b. The statements are examined by independent auditors who
prepare adequate statements
ppppppppppppppppppppp. c. An effective system of internal control is maintained
qqqqqqqqqqqqqqqqqqqqq. d. Income tax returns are properly filed
rrrrrrrrrrrrrrrrrrrrr.
sssssssssssssssssssss. 98. Which is not considered a research and development activity?
ttttttttttttttttttttt. a. Routine on-going efforts to refine enrich or improve quality of existing
product
uuuuuuuuuuuuuuuuuuuuu. b. Laboratory research aimed at discovery of new knowledge
vvvvvvvvvvvvvvvvvvvvv.c. Conceptual formulation and design of possible product or process
wwwwwwwwwwwwwwwwwwwww. d. Design, construction and operation of a pilot plant
xxxxxxxxxxxxxxxxxxxxx.
yyyyyyyyyyyyyyyyyyyyy. 99. Unrealized gains or losses on HTM are
zzzzzzzzzzzzzzzzzzzzz. a. Recognized in the income statement
aaaaaaaaaaaaaaaaaaaaaa. b. Recognized in asset section of the balance sheet
bbbbbbbbbbbbbbbbbbbbbb. c. Recognized in equity section of the balance sheet
cccccccccccccccccccccc. d. Not recognized
dddddddddddddddddddddd.
eeeeeeeeeeeeeeeeeeeeee. 100. Goodwill arising from an investment in associate is
ffffffffffffffffffffff.a. Charged immediately to profit or loss
gggggggggggggggggggggg. b. Separately recognized as an intangible asset subject to
impairment
hhhhhhhhhhhhhhhhhhhhhh. c. Included in the carrying amount of the investment and not
amortized
iiiiiiiiiiiiiiiiiiiiii. d. Included in the carrying amount of the investment and amortized over the
useful life
jjjjjjjjjjjjjjjjjjjjjj.
kkkkkkkkkkkkkkkkkkkkkk. ***END***
llllllllllllllllllllll. Good Luck!!!
mmmmmmmmmmmmmmmmmmmmmm.
nnnnnnnnnnnnnnnnnnnnnn.
oooooooooooooooooooooo.
pppppppppppppppppppppp.