ACCO 20063 - Conceptual Framework and Accounting Standards

3/1/22, 6:34 PM ACCO 20063: Conceptual Framework and Accounting Standards
ACCO 20063: Conceptual

Framework and
Accounting Standards
Identify the best answer for every item. Work INDEPENDENTLY, do not cheat.
Good luck and God bless!
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2. For supply the answer-type of questions, type your final answer without pesos sign, space,
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if your final answer is 120,500; you should only type 120500 If your final answer has
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answer is 120,500.567; you should only type 120500.57.
3. A solution manual will be available upon submission of this form. You may access it for
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4. The questions included in this mock examination may or may not appear in the actual final
examination given by your professors. This mock examination was verified by Prof.
Concepcion Vedasto CPA.
"The more you practice the better you’ll be, the harder you train the great in you they’ll
see." – Alcurtis Turner
Points: 40/68
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SECTION (ex: BSA 2-1 / BSMA 2-1) *
BSA 2-1
Song Inc. reported the following payments made to the entity’s non-executive
officer during the current year:
Annual Salary 3,000,000
Share options 800,000
Contribution to PhilHealth 300,000
Long-term benefits 200,000
Travel expenses for a business trip 850,000
SSS contributions 300,000
What total amount should be included in the disclosure of the compensation of

non- executive officers? *
(2 Points)
P0
P4,400,000
P4,000,000 
P4,300,000
Monnie Company reported the following remuneration and other payments

made to the entity’s chief executive officers during the current year:
Share options 1,000,000
Contribution to retirement benefit plan 800,000
Travel expenses for a business trip 1,500,000
What is the total amount of compensation that is not included in the key
management personnel compensation disclosure?
*
(2 Points)
2,300,000
2,000,000
2,500,000
1,700,000 
For which of the segments would information have to be disclosed in

accordance with professional pronouncements? *
(2 Points)
Alpha, Beta, Omicron
Alpha, Delta, Omicron
Beta, Delta, Omicron 
Alpha, Beta, Delta
What is the correct adjusting entry for prepaid rent. *

(1 Point)
Prepaid rent expense is debited and Cash is credited.
Unearned rent income is debited and Cash is credited.
Rent expense is debited and Prepaid rent is credited. 
Rent expense is debited and Cash is credited.
Aespa Company incurred a P 600,000 net loss from disposal of a business

section on June 30, 2022. Also, the company paid P 100,000 property taxes for
the calendar year 2022 on the same date. What total amount of expenses
should be included in the income statement for the six-month interim period
ended June 30, 2022? *
(2 Points)
P 700,000
P 650,000 
P 616,667
P 100,000
Statement 1: A related party transaction is a transfer of resources and obligation

between related parties just when a price is charged.
Statement 2: The minimum disclosure about related party transactions includes

the amount of the transaction, amount of outstanding balance, allowance for
doubtful accounts related to the outstanding balance and nature of the
relationship. *
(1 Point)
Only statement 1 is true
Only statement 2 is true
Both statements are correct
Both statements are incorrect 
Statement 1: An enterprise must refer and conform to the requirements of IAS

34 Interim Financial Reporting regarding the form and content of a complete set
of financial statements if it intends to publish it as its interim financial report.
Statement 2: Basic and diluted earnings per share must be presented on the
face of the statement of changes in equity, regardless of whether condensed or
complete. *
(1 Point)
First statement is true, second statement is false
First statement is false, second statement is true
Both statements are true
Both statements are false 
An enterprise shall disclose all of the following in financial reporting for

segments of a business, except *
(1 Point)
Types of products and services from which each reportable segment derives its revenues.
The title of the chief operating decision maker of each reportable segment. 
Factors used to identify the enterprises reportable segments.
The basis of measurement of segment profit or loss and segment assets.
10
How many reportable segments does Spice Company have? *

(3 Points)
11
Which of the following falls within the definition of “related parties” as defined
in IAS 24? *
(1 Point)
Two entities simply because they have a director in common
A supplier with whom the reporting entity has a one-year contract for the supply of raw
materials
The wife of a key management personnel who has the authority to plan, direct, and control

the activities of the reporting enterprise
Providers of finance, trade unions, public utilities and government agencies in the course of
their normal dealings with an entity be virtue only of those dealings
12
Question *
(2 Points)
Option 1
Option 2
13
Statement I: Cash basis is most commonly used basis in accounting than accrual
basis.
Statement II: Cash basis better illustrates income as it is recorded when the cash
is received. *
(1 Point)
Statement I is True; Statement II is False
Statement I is False; Statement II is True
Both statements are True
Both statements are False 
14
Related parties include all of the following, except *

(1 Point)
Associates
Government agencies 
Venturer
Key Management Personnel
15
During the first quarter of 2021, You And I Company sold a piece of equipment
at a loss of P80,000. What portion of the loss should You And I report on its
statement of comprehensive income for the first quarter of 2021? *
(2 Points)
P80,000 
P60,000
P20,000
P0
16
Which of the following is true about operating segments that do not meet any
of the quantitative thresholds? *
(1 Point)
May be considered reportable and is disclosed separately if this is the practice within the
economic environment.
May be considered reportable and is disclosed separately if this information is to be used insid
the entity only.
May be considered reportable and is disclosed separately if the management thinks that

the information would be useful to the users of the financial statements.
Cannot be considered reportable.
17
Red Velvet Company had the following transactions during the first quarter:
Loss from typhoon P 400,000
Payment of fire insurance premium, calendar year P 80,000
What total amount of expenses should be included in the income statement for
the first quarter? *
(2 Points)
P 480,000
P 400,000
P 420,000 
P 80,000
18
When using the cash basis accounting, revenue is recorded at the time of the
transaction. *
(1 Point)
True
False 
19
Interim financial reports should include at a minimum *

(1 Point)
a complete set of financial statements complying with IAS 1
a statement of financial position and a statement of comprehensive income only
a condensed set of financial statements and selected notes 
a statement of financial position, a statement of comprehensive income and a statement of

cash flows
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20
Monnie Company reported the following remuneration and other payments

made to the entity’s chief executive officers during the current year:
Share options 1,000,000
Contribution to retirement benefit plan 800,000
Travel expenses for a business trip 1,500,000
What total amount should be disclosed as compensation to key management

personnel? *
(2 Points)
5,800,000
4,800,000 
5,000,000
6,500,000
21
Lia Enterprise, a calendar-year entity, prepares quarterly interim financial

reports. If the current period is the second quarter of 2022, which among the
following must the interim report include?
I. Statement of comprehensive income for the quarter ended June 30, 2022
II. Statement of comprehensive income for the six months ended June 30,
2022
III. Comparative statements of comprehensive income for the quarter ended

June 30, 2021
IV. Comparative statements of comprehensive income for the six months

ended June 30, 2021
*
(1 Point)
I only
I and III
II and IV
I, II, III, and IV 
22
A company preparing its financial statements in accordance with the IFRS must
apply the following tests to determine if a unit is an operating segment for
segment reporting purposes *
(1 Point)
Revenue test and asset test
Revenue test, asset test, and profit or loss test 
Revenue test, asset test, and expense test
Revenue test, asset test, and cash flow test
23
With regards to selected explanatory notes and other disclosures, such

information presented must include the following except: *
(1 Point)
litigation settlements
correction of current period errors 
unremedied loan default and breach of loan agreement
recognition of asset impairment loss and reversal of such impairment
24
Itzy Company reported the following remuneration and other payments made
to the entity’s chief executive officer during the current year:

Annual salary P 930,000
Share options and other share-based payments 400,000
Contributions to retirement benefit plan 200,000
Reimbursement of travel expense for business trips 650,000
How much should be disclosed as compensation to key management

personnel? *
(2 Points)
P 2,180,000
P 1,530,000 
P 1,330,000
P 1,250,000
25
Hey Company has a net PPE balance of P5,230,000 as at January 1, 2021. During
the year, a new PPE was purchased costing P1,500,000. However, a PPE was sold
with a selling price of P900,000 and a carrying value of P750,000. It was
determined that the net PPE balance at the end of the year amounts to
P5,643,500. How much is the depreciation expense for the year? *
(3 Points)
336500
26
Prepaid Insurance has a balance at the beginning of the year. During the year,
insurance in the amount of P3,000 was purchased. At the end of the year,
December 31, the amount of insurance still unexpired was P2,400. What is the
amount of Prepaid Insurance after the adjustment? *
(3 Points)
2400
27
On June 1, 2021, Jungkook Company acquired a building at the amount of

P4,000,000. The estimated salvage value is P500,000 and its estimated useful life
is 4 years. On December 31, 2021, what amount must be recorded as
depreciation expense? *
(3 Points)
437500
28
Cash basis of accounting records expenses when paid in cash *

(1 Point)
True 
False
29
Liwanag Company reported the following remuneration and other payments

made to the entity’s chief executive officer during the current year:
Annual salary 3,000,000
Share options and other share-based payments 1,400,000
Reimbursement of travel expenses for business trips 1,900,000

personnel? *
(2 Points)
P5,200,000 
P4,100,000
P2,200,000
P4,900,000
30
Office supplies account has a balance at the beginning of the year. During the
year, supplies in the amount of P6,000 was disbursed. At the end of the year,
supplies on hand was P1,500. What amount must be adjusted to the office
supplies expense? *
(3 Points)
4500
31
Wages are paid every Saturday for a 6-day work week (Mon-Sat) Wages per
week is P2,400. What is the amount accrued on June 30, assuming July 1 falls on
a Thursday? *
(3 Points)
1200
32
It is in Margot Company’s policy that key management personnel include all

officers with a position of vice president and up. The company reported the
following remuneration and other payments made to the entity’s corporate
secretary during the current year:
Annual salary 60,000
Share options and other share-based payments 10,000
Reimbursement of travel expenses for business trips 12,000

personnel? *
(2 Points)
P92,500
P0 
P104,500
P32,500
33
According to IAS 24 Related Party Disclosures, close family members of an

individual include all, except *
(1 Point)
Children of the individual’s spouse
Brothers and sisters of the individual 
The individual’s spouse and children
Dependents of the individual or individual’s spouse
34
How much income tax expense is to be reported for the third quarter? *
(2 Points)
P1,782,000 
P1,980,000
P2,112,000
P4,950,000
35
During the first quarter of the year, Kang Taehyun Incorporated paid P96,000 for
commercial auto insurance for the whole year. In addition, the entity incurred a
loss on inventory write-down of P215,000 upon applying LCNRV and suffered a
loss from fire, amounting to P385,000. What amount should be reported as the
total losses and expenses for the first quarter income statement? *
(2 Points)
P174,000
P335,250
P624,000 
P696,000
36
This method is used to determine what information must be reported for

business segments. *
(1 Point)
Segment approach
Operating approach
Enterprise approach
Management approach 
37
Song Inc. reported the following payments made to the entity’s non-executive
officer during the current year:
Share options 800,000
Contribution to PhilHealth 300,000
Travel expenses for a business trip 850,000
What is the total amount of payments made to the non-executive officers that
should not be included in the disclosure.
*
(2 Points)
P1,450,000 
P5,450,000
P1,600,000
P2,450,000
38
What adjusting entries are reversed at the beginning of the next accounting
period? *
(1 Point)
Accrued income, depreciation expense, accrued expense, and unearned revenue (using revenue
method)
Accrued income, accrued expense, unearned revenue (using the income method), and

prepaid expense (using the expense method)
Accrued income, accrued expense, unearned revenue (using the revenue method), and prepaid
expense (using the asset method)
Accrued expense, depreciation expense, unearned revenue (both methods), and prepaid
expense (using the both methods)
39
Statement I: Revenues and expenses are recorded when they are earned and
incurred, regardless when cash is received and paid.
Statement II: It is useful for keeping track of how much cash the company has
on hand at any particular moment. *
(1 Point)
Statement I is True; Statement II is False 
Statement I is False; Statement II is True
Both statements are True
Both statements are False
40
Which of the following statements is/are true in relation to IAS 24 Related Party
Disclosures?
Statement I. Two entities are related parties when both are joint ventures of the
same third party.
Statement II. Key management personnel compensation excludes social security

contributions paid by the entity.
Statement III. A related party transaction is a transfer of resources or obligations

between related parties when a price is charged.
Statement IV. Intragroup-related party transactions and outstanding balances

are included in the preparation of consolidated financial statements of the
group. *
(1 Point)
I and II
III and IV
II, III, and IV
I only 
41
Find the amount of purchases for the period using the ff. information:
Accounts Payable Payments P50,000
Accounts Payable, Dec. 31 10,000
Purchase Discount 3,000
Purchase Returns 1,000
Accounts Payable, Jan 1 6,000 *

(3 Points)
50000
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3/1/22, 6:34 PM ACCO 20063: Conceptual Framework and Accounting Standards

ACCO 20063: Conceptual

Good luck and God bless!

SECTION (ex: BSA 2-1 / BSMA 2-1) *

Annual Salary 3,000,000

Share options 800,000

Contribution to PhilHealth 300,000

Long-term benefits 200,000

Travel expenses for a business trip 850,000

SSS contributions 300,000

What total amount should be included in the disclosure of the compensation of

Monnie Company reported the following remuneration and other payments

Share options 1,000,000

Contribution to retirement benefit plan 800,000

Long-term benefits 500,000

Travel expenses for a business trip 1,500,000

SSS contributions 200,000

For which of the segments would information have to be disclosed in

Alpha, Beta, Omicron

Alpha, Delta, Omicron

Beta, Delta, Omicron 

Alpha, Beta, Delta

What is the correct adjusting entry for prepaid rent. *

Prepaid rent expense is debited and Cash is credited.

Unearned rent income is debited and Cash is credited.

Rent expense is debited and Prepaid rent is credited. 

Rent expense is debited and Cash is credited.

Aespa Company incurred a P 600,000 net loss from disposal of a business

Statement 1: A related party transaction is a transfer of resources and obligation

Statement 2: The minimum disclosure about related party transactions includes

Only statement 1 is true

Only statement 2 is true

Both statements are correct

Both statements are incorrect 

Statement 1: An enterprise must refer and conform to the requirements of IAS

First statement is true, second statement is false

First statement is false, second statement is true

Both statements are true

Both statements are false 

An enterprise shall disclose all of the following in financial reporting for

Factors used to identify the enterprises reportable segments.

The basis of measurement of segment profit or loss and segment assets.

How many reportable segments does Spice Company have? *

Two entities simply because they have a director in common

Statement I is True; Statement II is False

Statement I is False; Statement II is True

Both statements are True

Both statements are False 

Related parties include all of the following, except *

Key Management Personnel

Cannot be considered reportable.

Loss from typhoon P 400,000

Payment of fire insurance premium, calendar year P 80,000

Interim financial reports should include at a minimum *

a complete set of financial statements complying with IAS 1

a statement of financial position and a statement of comprehensive income only

a condensed set of financial statements and selected notes 