Ce Mas

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
Junior Philippine Institute of Accountants Manila

E500, 5/F Main Bldg., A. Mabini Campus, Anonas St., Sta. Mesa, Manila
JPIA Review
Management Advisory Services
Theories
FINMAR | CHAPTER 1: FINANCIAL MARKETS FINMAR | CHAPTER 2: FINANCIAL INTERMEDIARIES
77% got it correct. 31% got it correct.
QUESTION 1 QUESTION 2
It is the sector of the financial system It occurs when borrowers have the
where financial instruments that will tendency to take undesirable or immoral
mature or be redeemed in one year or less risks (for the lender) with the money,
from issuance date are traded. after they receive it, not disclosed during
a) Money market the loan granting process.
b) Capital market a) Creation of money
c) Primary market b) Adverse selection
d) Secondary market c) Moral hazard
d) Price discovery
FINANCIAL MARKETS
Investor Financial Instrument Business

FINANCIAL MARKETS
Money Market Capital Market

Maturity: 1 year or less Maturity: more than 1 year

Theories
d) Price discovery
FINANCIAL MARKETS
Money Market Capital Market

Maturity: 1 year or less Maturity: more than 1 year
Primary Market
corporation to investor
FINANCIAL MARKETS
Others Types
- Domestic Market Money Market Capital Market
- International Market Maturity: 1 year or less Maturity: more than 1 year
- Broker Market
- Dealer Market
Investor 2 Investor Financial Instrument Business
Secondary Market Primary Market

investor to investor corporation to investor
FINANCIAL MARKETS
Others Types
- Broker Market
- Dealer Market

Risks
1. Adverse Selection - before
2. Moral Hazard - after
Theories
d) Price discovery
FINANCIAL MARKETS
Others Types
- Broker Market
- Dealer Market

Risks FINANCIAL INTERMEDIARIES

1. Adverse Selection - before 1. information about borrowers
2. Moral Hazard - after 2. capacity to monitor borrower
Theories
FINMAR | CHAPTER 4: FINANCIAL INSTRUMENTS
40% got it correct.
QUESTION 3
Which of the following are essentially

unsecured?
a) Treasury Bills - securities issued by Government (Bureau of Treasury)
b) Certificates of Deposit - securities issued by banks
c) Commercial Paper - unsecured promissory notes
d) Repurchase Agreement - contract involving two security transactions
FINANCIAL MARKETS
Others Types
- Broker Market 1. Treasury Bills
- Dealer Market 2. Certificate of Deposit
3. Commercial Paper
4. Repurchase Agreement

Risks FINANCIAL INTERMEDIARIES

1. Adverse Selection - before 1. information about borrowers
2. Moral Hazard - after 2. capacity to monitor borrower
Theories
FINMAR | CHAPTER 5: CREDIT RISKS FINMAR | CHAPTER 5: CREDIT RISKS
Identify the risks described in each statement. S1: Credit risk is one type of business risk
1st: Arise on the inability to make payment that the borrower was not able to repay
consistently. Most of the business was able to its obligation.
raise financing on their demands, however
their cash flows projected were not that S2: Legal risk is dependent on the
guaranteed. covenants set and agreed in between the
lenders and the borrowers
2nd: Identified by ensuring the business to a) Statement 1 and 2 are true
be capable of meeting all its currently b) Statement 1 and 2 are false
maturing obligation. c) Only statement 1 is true
b) Default; Liquidity d) Only statement 2 is true
FINANCIAL MARKETS
Others Types
3. Commercial Paper

Risks FINANCIAL INTERMEDIARIES Risks

1. Adverse Selection - before 1. information about borrowers 1. Default risk
2. Moral Hazard - after 2. capacity to monitor borrower 2. Liquidity risk
3. Credit risk
4. Legal risk
Theories
FINMAR | CHAPTER 5: CREDIT RISKS FINMAR | CHAPTER 5: CREDIT RISKS
Identify the risks described in each statement. S1: Credit risk is one type of business risk
1st: Arise on the inability to make payment that the borrower was not able to repay
consistently. Most of the business was able to its obligation.
raise financing on their demands, however
their cash flows projected were not that S2: Legal risk is dependent on the
guaranteed. inconsistent cash flows covenants set and agreed in between the
lenders and the borrowers
2nd: Identified by ensuring the business to a) Statement 1 and 2 are true
be capable of meeting all its currently b) Statement 1 and 2 are false
maturing obligation. CA < CL c) Only statement 1 is true
b) Default; Liquidity d) Only statement 2 is true
FINANCIAL MARKETS
Others Types
3. Commercial Paper

Risks FINANCIAL INTERMEDIARIES Risks

1. Adverse Selection - before 1. information about borrowers 1. Default risk
2. Moral Hazard - after 2. capacity to monitor borrower 2. Liquidity risk
3. Credit risk
4. Legal risk
Theories
FINMAR | CHAPTER 6: DEBT SECURITIES/BONDS
40% got it correct.
QUESTION 10
Face Value Selling price
Par bond 1,000 1,000
A bond with a face value of $1,000
Discount bond 1,000 900
that sells for less than $1,000 in the
Premium bond 1,000 1,100
market is called a:
a) Par bond.
b) Discount bond. 1. Non Interest bearing bond (Zero Coupon bond)
c) Premium bond. 2. Interest bearing bond
d) Zero coupon bond.
Theories
FINMAR | CHAPTER 6: DEBT SECURITIES/BONDS
6% got it correct.
QUESTION 8
Which of the following statements always describe 1. Current Yield/Yield-to-Maturity

the relationship between current yield and yield to = Effective/Market interest rate
maturity?
a) The current yield is higher. 2. Coupon rate
b) The two yields are the same. = Nominal interest rate
c) The yield to maturity reflects the total return; the
current yield only the cash return.
d) The yield to maturity should be used in comparing
bonds which are to be held to maturity; the current
yield for comparing bonds which are to be sold
before maturity.
Theories
FINMAR | CHAPTER 5/6
34% got it correct.
QUESTION 7
If investors are uncertain that they will be able to sell Bond A Bond B
a corporate bond quickly, the investors will demand a

Maturity: 5 years 5 years
higher yield in the form of a____________.
Nominal int. % 10% 10%
a) inflation premium
publicly non-publicly
b) liquidity risk premium traded traded
c) interest rate risk premium (liquid) (illiquid)
d) default risk premium

Theories
FINMAR | CHAPTER 5/6
34% got it correct.
QUESTION 7
If investors are uncertain that they will be able to sell Bond A Bond B
a corporate bond quickly, the investors will demand a

Maturity: 5 years 5 years
higher yield in the form of a____________.
Nominal int. % 10% 10% + 2% = 12%
a) inflation premium
publicly non-publicly
b) liquidity risk premium traded traded
c) interest rate risk premium (liquid) (illiquid)
d) default risk premium

Theories
STRATCOST | CHAPTER 4: CVP ANALYSIS
31% got it correct.
QUESTION 12
sold 5,000 u
Cost volume profit analysis is a key factor in many
Sales (10/unit) P50,000
decisions, including choice of product lines, pricing of VC (5/unit) (25,000)
products, marketing strategy, and use of productive CM (5/unit) 25,000
FC (25,000)
facility. A calculation used in a CVP analysis is the
OI -
breakeven point. Once the breakeven point has been breakeven
reached, operating income will increase by the
a) sales price per unit for each additional unit sold
b) gross margin per unit for each additional unit sold
c) variable costs per unit for each additional unit sold
d) contribution margin per unit for each additional unit
sold
Theories
STRATCOST | CHAPTER 4: CVP ANALYSIS
31% got it correct.
QUESTION 12
+ 1,000 units sold
sold 5,000 u sold 6,000 u
Cost volume profit analysis is a key factor in many
Sales (10/unit) P50,000 P60,000
decisions, including choice of product lines, pricing of VC (5/unit) (25,000) (30,000)
products, marketing strategy, and use of productive CM (5/unit) 25,000 30,000
FC (25,000) (25,000)
facility. A calculation used in a CVP analysis is the
OI - P5,000
breakeven point. Once the breakeven point has been breakeven
reached, operating income will increase by the
a) sales price per unit for each additional unit sold
b) gross margin per unit for each additional unit sold
c) variable costs per unit for each additional unit sold
d) contribution margin per unit for each additional unit
sold
Theories
STRATCOST | CHAPTER 5: ACTIVITY-BASED COSTING
20% got it correct.
QUESTION 13
If activity-based costing is implemented in an organization without any other changes being

effected, total overhead costs will
a) be reduced because of the elimination of non-value-added activities.
b) be reduced because organizational costs will not be assigned to products or services.
c) be increased because of the need for additional people to gather information on cost
drivers and cost pools.
d) remain constant and simply be spread over products differently
Theories
STRATCOST | CHAPTER 3: PRODUCT COSTING
40% got it correct.
QUESTION 14 Absorption Costing Variable Costing

Product cost Product cost
The principal difference between variable costing 1. Direct Materials 1. Direct Materials
and absorption costing centers on: 2. Direct Labor 2. Direct Labor
a) whether fixed manufacturing costs should be 3. Variable FOH 3. Variable FOH
included as product costs. 4. Fixed FOH
b) whether variable manufacturing costs should be
included as product costs. Period cost
c) whether fixed manufacturing costs and fixed 1. Fixed FOH
selling and administrative costs should be included
as product costs.
d) none of these.
Theories
STRATCOST | CHAPTER 2: COST, CONCEPT, CLASSIFICATION, AND BEHAVIOR
46% got it correct.
QUESTION 16
Weakness of the high-low method include

all of the following except:
a) Only two observations are used to
develop the cost function
b) The high and low activity levels may not
be representative
c) The method does not detect if the cost
behavior is nonlinear
d) The mathematical calculations are
relatively complex
Theories
STRATCOST | CHAPTER 6: STANDARD COSTING FOR COST CONTROL STRATCOST | CHAPTER 2: COST, CONCEPT, CLASSIFICATION, AND BEHAVIO
If a predetermined overhead rate is not Within the relevant range, the difference
employed and the volume of production is
between variable costs and fixed costs is
increased over the level planned, the cost
a) Variable cost per unit fluctuates and fixed
per unit would be expected to
a) Decrease for fixed cost and remain cost per unit remains constant
unchanged for variable costs b) Variable cost per unit is constant and
b) Remain unchanged for fixed costs and fixed cost per unit fluctuates
increase for variable costs c) Both total variable cost and total fixed
c) Decrease for fixed costs and increase cost are constant
for variable costs
d) Both total variable cost and total fixed
d) Increase for fixed costs and increase
cost fluctuate
for variable costs
Theories ABC Manufacturing Company
Income Statement (Absorption Costing)
For the year ended December 31, 2021
23% got it correct. Sales Pxx

Less: Cost of Goods Sold xx
Gross profit Pxx
QUESTION 19 Less: Selling & Administrative costs
Variable Pxx
Fixed xx xx
Which of the following is true about Net Income Pxx
absorption costing? CHAPTER 6: STANDARD COSTING FOR COST CONTROL | STRATCOST
a) No fixed factory overhead is charged to 51% got it correct.
QUESTION 20
production
b) It is also known as direct costing
Which of the following should be least
c) The term used to designate the considered when deciding whether to
difference between sales and cost of investigate a variance?
goods sold is the “manufacturing margin” a) Whether the variance is favorable or
d) Over-applied factory overhead is unfavorable
reflected in the income statement as a b) Significance of the variance
c) Cost on investigating the variance
reduction in cost of goods sold
d) Trend of the variances over time
Theories Types of Financial Decisions
1. Investment decision
FINMAN| CHAPTER 1: INTRODUCTION TO FINANCIAL MANAGEMENT relates to the selection of assets, on which a
40% got it correct.
firm will invest funds.
2. Financing decision
QUESTION 21 related to the financing mix or capital
structure or leverage
The choice to issue shares of stocks or 3. Dividend decision
long-term bonds and issuance of relates to dividend policy
commercial fall under:
49% got it correct.
a) investment decision QUESTION 22
b) financing decision
c) dividend decision Which of the following is a principle of
d) none of the above basic financial management?
a) Efficient capital markets
b) Risk/Return tradeoff
c) Incremental cash flow counts
d) All of the above
Theories
FINMAN| CHAPTER 2: FINANCIAL STATEMENT ANALYSIS
37% got it correct.
QUESTION 23
The ratio that measures a firm’s ability to

generate earnings is
a) sales to working capital. The operating asset turnover ratio is an
b) days’ sales in receivables. efficiency ratio that identifies the revenue
c) operating asset turnover. generation capabilities of a company's
d) times interest earned. operating assets.
Theories
17% got it correct.
QUESTION 24
Other factors remaining constant, what is

the effect on increase in the average
payment period?
a) Increase in average collection period
b) No effect in cash conversion cycle The Operating Cycle is calculated by getting
c) Decrease in the operating cycle the sum of the inventory period and accounts
d) No effect in the operating cycle receivable period.
Theories
FINMAN| CHAPTER 7: FINANCIAL PLANNING FINMAN| CHAPTER 6: SHORT-TERM FINANCING MANAGEMENT
All of the following are considered The following technique/s to reduce the
appropriate goals for measuring a division need for precautionary cash balance is/are:
manager’s efficiency for a budgeting I. Less accurate cash budgeting
period, except: II. Have ready lines of credit
a) Earnings per share projections III. Invest idle cash in highly liquid long-
b) A targeted share of the market term investments
c) Budgeted operating income a) I only
d) A reduction in the organizational b) II only
structure (fewer employees doing a given c) II and III
amount of work) d) All of the above
Theories
46% got it correct.
QUESTION 27
Example:
A high receivable turnover ratio indicates:
a) A lot of customers are not paying Net Credit Sales: 234,500
receivables Accounts receivable, beginning: 32,000
b) A large portion is on company’s credit Accounts receivable, ending: 29,000
sales
c) Customers make quick payments AR Turnover= 234, 500
AR Turnover=
d) There is increase in sales AR Turnover= (32,000 + 29,000)/2
AR Turnover= 7.69 times

Theories
46% got it correct.
QUESTION 27
Example:
A high receivable turnover ratio indicates: A lot of customers are not paying receivables
sales
AR Turnover=

Theories
46% got it correct.
QUESTION 27
Example:
A high receivable turnover ratio indicates: Customers make quick payments
sales
AR Turnover=

Theories
FINMAN| CHAPTER 2: FINANCIAL STATEMENT ANALYSIS FINMAN| CHAPTER 2: FINANCIAL STATEMENT ANALYSIS
Which of the following statements is true? Capital turnover shows:

a) Ratios are most useful in identifying a) the amount of income generated by each
relationships. dollar of capital investment.
b) A common measure of liquidity is return b) the number of sales dollars generated by
on equity. each dollar of capital investment.
c) A company that is leveraged is one that c) the amount of contribution margin
contains equity financing. generated by each dollar of capital
d) None of the above investment.
d) the amount of capital investment
generated by each sales dollar.
Theories Advantages of Adequate Working Capital
1. Solvency of the business
FINMAN| CHAPTER 3: WORKING CAPITAL AND FINANCIAL MANAGEMENT
2. Goodwill
46% got it correct.
3. Easy Loans
4. Cash Discounts
QUESTION 30 5. Regular supply or materials
6. Regular Payment of Salaries, Wages and Other
Which of the following is an advantage of Day-to-day Commitments
adequate working capital? 7. Ability to face crisis
a) Goodwill 8. Quick and Regular Return on Investments
9. Exploitation of Favourable Market Conditions
b) Irregular supply of materials
10. High morale
c) Low morale
d) None of the above
Adequate working capital enables a business concern to make prompt
payments and hence helps in creating and maintaining goodwill.
Problems
FINMAR| CHAPTER 4: MONEY MARKET & RELATED FINANCIAL INSTRUMENTS
43% got it correct.
QUESTION 31
Bv - Bp 360
Annualized Discount Rate = x
Bv D
What is the Annualized Discount Rate of a
1,300 - 975 360
P1,300 Treasury bill with a 91-day tenor Annualized Discount Rate = x
1,300 91
that can be purchased at P975?
325 360
Annualized Discount Rate = x
1,300 91
a) 1.32%
b) 1.34%
Annualized Discount Rate = 0.98 or 98.90%
c) 0.98%
d) 1.02%
Bv = Face value or Market value
Bp = Purchase price
D = Tenor or Period in Days
Problems
29% got it correct.
QUESTION 32
Bv - Bp 365
Annualized Investment Rate = x
Bp D
What is the Annualized Investment Rate of
1,300 - 975 365
a P1,300 Treasury bill with a 91- day tenor Annualized Investment Rate = x
975 91
that can be purchased at P975?
325 365
Annualized Investment Rate = x
975 91
a) 1.32%
b) 1.34%
Annualized Investment Rate = 1.34 or 133.70%
c) 0.98%
d) 1.02%
Bv = Face value or Market value
Bp = Purchase price
D = Tenor or Period in Days
Problems
20% got it correct.
i = (R + D )
f m
QUESTION 33 R = ( R - Inflation) R = ( R + Inflation)

fr f f fr
R = 10% - 5% R = 6% + 7%
Leonora Corp would like to borrow funds fr f
R = 5% R = 13%
from Francisco Financing. The risk free rate fr f
is 10% and the current inflation rate is 5%. In
i = 13% + 5%
the following year, the inflation is expected
i = 18%
to grow to 7%. Francisco Financing still
finds that the 6% margin remains to be
relevant. How much is the interest rate that i = interest
Rf = risk free rate where (Real risk free rate = Rf - inflation)
Francisco Financing should impose to
Dm = Debt margin or debt spread or the risk premium
Leonora Corp.?
Answer: 18%
Problems Dividend per share
Rate of return
P 40
25%
Price per preference share P 160
17% got it correct.

14% got it correct.
QUESTION 35
QUESTION 34
Assuming that Investor XXX is also

Investor XXX wants to buy 2,000 preference shares,
looking at the preference shares of an
P300 par value from a Japanese Company. According to
American Company that has a par value
his sources, the preference shares come with a constant
of P200 with 30% dividend rate. What is
dividend of P40 per share Investor XXX intends to hold
the value of each preference share of the
the preference shares long-term and has no plans on
American Company?
selling this in the near future. Investor XXX requires a
25% return on all his investment. What is the value of
Answer: P240
each preference share?
Par Value P 200
Answer: P160 Dividend rate 30%
Dividend per share 60
Rate of return 25%
Price per preference share P 240
Problems
VALUATION CONCEPTS AND METHODS
31% got it correct.
QUESTION 36
Total Assets P 10,000,000

At the end of 2021, the balance sheet of
Total liabilities 6,500,000
Royalty Company showed total assets of
Preference Shares 500,000
P10 million pesos, total liabilities of P6.5 Book Value 3,000,000
million pesos, preference shares of P500 Divide by:
thousand pesos and P150 thousand Total no. of outstanding shares 150,000
outstanding shares. What is the book Book value per share P 20
value per share of Royalty Company?
Answer: P20
Problems
VALUATION CONCEPTS AND METHODS
40% got it correct.
QUESTION 37
Total realized assets P 9,700,000

Using the same given in #36, upon further
Total liabilities 6,500,000
evaluation, Royalty Company found out
Preference Shares 500,000
that the assets can only be realized for Book Value 2,700,000
P9.7 million pesos, lower than its book Divide by:
value of P10 million. What is the liquidation Total no. of outstanding shares 150,000
value of Royalty Company? Book value per share P 18
Answer: P18
Problems

14% got it correct.
Jolly Company’s preferred stock is selling for Barbie’s stock is currently selling for P60.00.
P30 per share. If the required return is 8%, The expected dividend one year from now is
what will the dividend be two years from P3 and the required return is 18%. What is the
now? firm’s dividend growth rate assuming the
constant dividend growth model is
Answer: P2.40 appropriate?
Answer: 13%
Required return 18%
Selling price per share P 30
Less:
Rate of return 8%
Expected dividend one year from now P 3
Dividend P 2.40
Divide by: Selling price 60
Multiply by: 100 0.05 ( 5%)
Dividend growth rate 13%
Problems
49% got it correct.
QUESTION 41
Interest rate
In Golden Mining Corporation, the value of 10%
debentures is P75,000,000. Assume the tax rate to
Kd = Interest x (1 – tax rate)
be 50%. Compute the cost of debt.
Kd = 10% x (1 – 0.50)
Kd = 5%
Answer: 5%
Problems
49% got it correct.
QUESTION 42
A bond with a par value of P2,000 has an annual Par value of bond 2,000
Coupon rate 8%
coupon rate of 8% and currently sells for P1,750.
Annual coupon payment 160
What is the bond’s current yield?
Divide by: Bond's current price 1,750
Bond’s current yield 9.14%
Answer: 9.14%
Problems
STRATCOST | CHAPTER 6: STANDARD COSTING
57% got it correct.
QUESTION 44
Information on Stranger Things Company’s direct Standard labor cost (14,400 x P15) P 216,000
labor cost is as follows: Add: Adverse usage variance 17,400

Actual time at standard rate 233,400
Standard direct labor rate 15 Divide by: Standard labor rate 15
Actual direct labor rate 13.5 Actual hours worked P 15,560
Standard direct labor hours 14,400
Direct labor adverse usage variance 17,400
What were the actual hours worked?

Answer: P15,560
Problems Product/ Inventoriable/ Manufacturing Cost

Direct materials P 15,000
Direct labor (75 x P12) 900
31% got it correct.
Manufacturing overhead (75 X P60) 1,200
Total cost of Job no. E11 P 17,100
QUESTION 45
Brenner Products started and finished job no. E11 during

February. The job required P15,000 of direct material and 75
hours of direct labor at P12 per hour. The predetermined
overhead rate is P16 per direct labor hour.
During February, direct materials requisitions for all jobs totaled

P149,000; the total direct labor hours and cost were 6,200
hours at P12 per hour; and the total cost of jobs completed was
P337,500. All of these figures include data that pertain to job
no. E11. What is the total cost of job no. E11?
Answer: P17,100
Problems CMR: [78,750 / (975,000 - 750,000)] 35%
Fixed costs after the increase
STRATCOST | CHAPTER 4: COST-PROFIT-VOLUME ANALYSIS (975,000 x 0.35) 341,250
49% got it correct.
Target Peso Sales:
(341,250 + 70,000 / 0.35) 1,175,000
QUESTION 46
The Melvald's Company is expecting an increase in fixed costs

by P78,750 upon moving their place of business to the business
downtown area. Likewise it is anticipating that the selling price
per unit and the variable expenses will not change. At present,
the sales volume necessary to breakeven is P750,000 but the
expected increase in fixed costs, the sales volume necessary to
breakeven will go up to P975,000. Based on these projections,
what would be the required peso sales to earn P70,000 in the
coming year?
Answer: P1,175,000
Problems
STRATCOST | CHAPTER 4: COST-PROFIT-VOLUME ANALYSIS
49% got it correct.

Sales P 500,000
Variable cost (300,000)
QUESTION 47 Contribution margin 200,000
Profit (150,000)
Starcourt’s Company has revenues of P500,000, Fixed cost 50,000
Reduction of % of Fixed costs 80%
variable costs of P300,000, and pre-tax profit of
New Fixed cost P 40,000
P150,000. If the company increases the sales price
per unit by 10%, reduces fixed costs by 20%, and Sales (500,000 x 1.10) P 550,000
leaves variable cost per unit unchanged, what would Variable cost (300,000)
be the new breakeven point in pesos? Contribution margin 250,000
Divide by: Sales 550,000
CMR 45.45%
Answer: P88,000
Fixed cost P 40,000
Divide by: CMR 45.45%
Breakeven Sales P 88,000
Problems
40% got it correct.
QUESTION 48
Max’s Company manufactures office furniture. During the most productive

month of the year, 3,500 desks were manufactured at a total cost P 84,400.
In its slowest month, the company made 1,100 desks at a cost of P46,000.
Using the high-low method of cost estimation, total fixed costs in August is:
Answer: P28,400 Variable rate = (change in activity host) / (change in activity level)
= (P84,000 - P46,000) / (3,500 - 1,100)
= P16
Fixed cost: a = y - bx
a = P46,000 - (1,100 x P16)
a = P28,400
Problems
40% got it correct.
QUESTION 49
Given the cost formula Y = P17,500 + P4X, at what Y = P17,500 + P4X

level of activity will total cost be P42,500? 42,500 = P17,500 + P4X
42,500 – 17,500 = 4X
25,000 = 4X
Answer: P6,250 units 4 4
6,250 = X
Problems
51% got it correct.
QUESTION 50
Data to be used in applying the high-low method Change in cost (69,000 – 52,000) P 17,000
shows the highest cost of P69,000 and the lowest Divide by: Change in sales
cost of P52,000. The data show P148,000 as the (148,000-97,000) 51,000
highest level of sales and P97,000 as the lowest Variable cost per peso sales P 0.33
level. What is the variable cost per peso sales?
Answer: P0.33
Problems
26% got it correct.
QUESTION 52 Standard Price P xxx

Standard Quantity
Billy Company uses a standard costing system in xxx
connection with the manufacture of a line of t-shirts. Standard Cost P xxx
Each unit of finished product contains 2.25 yards of
direct material. However, a 25% direct material
spoilage calculated on input quantities occur during
the manufacturing process. The cost of direct
materials is P150 per yard. The standard direct
material cost per unit of finished product is
Answer: P450
Problems
26% got it correct.
QUESTION 52 Standard Price P xxx P 150/yd

Standard Quantity
Billy Company uses a standard costing system in (2.25/0.75) xxx x 3 yd
connection with the manufacture of a line of t-shirts. Standard Cost P xxx P 450
Each unit of finished product contains 2.25 yards of
direct material. However, a 25% direct material
spoilage calculated on input quantities occur during
the manufacturing process. The cost of direct Required input quantity 3.00 (squeezed)
materials is P150 per yard. The standard direct Spoilage 25% _______
material cost per unit of finished product is Output quantity 75% 2.25
Answer: P450
Problems
14% got it correct.
@4,500 units
QUESTION 53 IDL, Actual P 10,100

IDL, Flexible budget
Robin’s Corporation’s master budget calls for the (4,500 units x 2.40 per unit) (10,800)
production of 5,000 units of product monthly. The Variance (700) F
annual master budget includes indirect labor of
P144,000 annually. Robin considers indirect labor to
Annual variable IDL cost P 144,000
be a variable cost. During the month of April, 4,500
units of product were produced, and indirect labor Annual units produced
costs of P10,100 were incurred. A performance (5,000 x 12 mos) /60,000

report utilizing flexible budgeting would report a Std. VC per unit P 2.40
budget variance for indirect labor of:
Answer: P700 favorable
Problems
31% got it correct.
QUESTION 54
Sinclair, Inc. manufactures widgets. Management has Standard cost per unit P 3.50 / unit
determined that each widget has a standard materials cost of Total units produced x 4,300 units
P3.50 when 2.5 ounces of raw material at a cost of P1.40 per
Standard DM cost P 15,050
ounce are used. The static budget for the month of December
showed an estimated production of 4,000 widgets in
December. During December, 4,300 widgets were actually
produced. The actual cost for each widget wash P3.60 when
2.25 ounces of raw material at a cost of P1.60 per ounce were
purchased and used. What should be the total direct materials
cost according to Sinclair’s flexible budget for December?
Answer: P15,050
Problems
40% got it correct.
QUESTION 55
The Byers Corporation makes a variety of leather goods. It uses standards costs
and flexible budget to aid planning and control. Budgeted variable overhead at a
45,000 direct-labor hour level is P27,000.
Materials purchases were P241,900 during April. Actual direct-labor costs P 140,700
incurred were P140,700. The direct-labor usage variance was P5,100 unfavorable. 5,100 UF
The actual average wage rate was P0.20 lower than the average standard wage
rate. The company uses a variable overhead rate of 20% of standard direct labor
cost for flexible budgeting purposes. Actual variable overhead for the month was
P30,750. What were the standard hours allowed during the month of April?
Answer: P48,550
Problems
Standard Costing for Direct Labor
Actual AR x AH =
Flexible bdgt. SR x AH =
Usage Variance (Labor efficiency)

Std. SR x SH =
Problems
40% got it correct.
QUESTION 55
Answer: P48,550
Problems
Actual AR x AH = P 140,700
Usage Variance (Labor efficiency)

Std. SR x SH = 5,100 UF
Problems
40% got it correct.
QUESTION 55
P 27,000
45,000 DLH
Answer: P48,550
Problems
P 3.0
P 3.0 Usage Variance (Labor efficiency)

Std. VOH rate = 20% of std. DL rate

(P27,000 / 45,000) = 20% of std. DL rate
0.60 = 20% of Std. DL rate
Std. DL rate = 0.60/0.20
= 3.0
Problems
40% got it correct.
QUESTION 55
P 27,000
45,000 DLH
Answer: P48,550
Problems
P 2.8 50,250
P 3.0

VOH rate = 20% of std. DL rate

(P27,000 / 45,000) = 20% of std. DL rate
Std. DL rate = 0.60/0.20
= 3.0
Problems
P 2.8 50,250
P 3.0 50,250
Flexible bdgt. SR x AH = P 150,750


(P27,000 / 45,000) = 20% of std. DL rate
Std. DL rate = 0.60/0.20
= 3.0
Problems
P 2.8 50,250
P 3.0 50,250

Std. SR x SH = P 145,650 5,100 UF

(P27,000 / 45,000) = 20% of std. DL rate
Std. DL rate = 0.60/0.20
= 3.0
Problems
P 2.8 50,250
P 3.0 50,250
P 3.0 48,550 Usage Variance (Labor efficiency)

Std. SR x SH = P 145,650 5,100 UF

(P27,000 / 45,000) = 20% of std. DL rate
Std. DL rate = 0.60/0.20
= 3.0
Problems
37% got it correct.
QUESTION 56
P 27,000
45,000 DLH
0.60 VOH rate
Materials purchases were P241,900 during April. Actual direct-labor costs

incurred were P140,700. The direct-labor usage variance was P5,100 unfavorable.
P30,750. What was the variable overhead spending variance?
Answer: P600 UF
Problems
Standard Costing for Overhead
Variable Fixed Variable Fixed
VOH Spending
Actual ( AR x AH ) ( AR x AH ) variance
P ______
BAAH ( SR x AH ) ( SR x BH )
BASH ( SR x SH ) ( SR x BH )
Std. ( SR x SH ) ( SR x SH )
Problems
37% got it correct.
QUESTION 56
P 27,000
45,000 DLH
0.60 VOH rate
50,250 AH
Materials purchases were P241,900 during April. Actual direct-labor costs
incurred were P140,700. The direct-labor usage variance was P5,100 unfavorable.
cost for flexible budgeting purposes. Actual variable overhead for the month was P30,750
P30,750. What was the variable overhead spending variance?
Answer: P600 UF
Problems
Standard Costing for Overhead
Variable Fixed Variable Fixed
VOH Spending
Actual ( AR x AH ) ( AR x AH ) P 30,750 variance
P 600 UF
P 0.60 50,250
BAAH ( SR x AH ) ( SR x BH ) P 30,150
BASH ( SR x SH ) ( SR x BH )
Std. ( SR x SH ) ( SR x SH )
Actual VOH P 30,750

BAAH
(0.60 x 50,250) 30,150
VOH Spending var. 600 UF
Problems
29% got it correct.
BH XP Total
QUESTION 57 Direct Cost
(50 units x P250) 12,500
Dustin Company produces products BH (150 units x P350) 52,500 65,000
and XP. The direct cost of BH is P250 OH
per unit and XP is P350 per unit. 50 130,000 x 12,500 25,000
units of BH and 150 units of XP were 65,000
130,000 x 52,500 105,000 130,000
produced. Overhead amounting to
65,000 ________ _________
P130,000 is allocated to products using Total Cost 157,500
direct costs as the relevant cost driver. Total Units / 150
The cost of XP per unit amounts to: Cost per unit of XP 1,050
Answer: P1,050
Problems Net Cash Outflows at Year 0
Payback Period = Net Investment Cost

FINMAN | CHAPTER 9: CAPITAL BUDGETING
Annual Cash Flows After, Tax
53% got it correct.
Statement of Cash Flows (INDIRECT METHOD)
QUESTION 58
Operating Income/EBIT xxx
Add back: Depr exp and Amort exp xxx
A company is considering purchasing factory Add/Less: (Increase) Decrease in WC (xxx)/xxx
equipment that costs $1,250,500 and is estimated Less: Tax payments (xxx)
Less: Interest payments (xxx)
to have no salvage value at the end of its 5-year Cash flow from operating act., after tax xxx
useful life. If the equipment is purchased, annual
revenues are expected to be $450,000. The
straight-line method of depreciation would be
used. The income tax rate is 30%. The cash
payback period on the equipment is
Answer: 3.21 years
Problems Net Cash Outflows at Year 0

Annual Cash Flows After, Tax
53% got it correct.
QUESTION 58 450,000 - [1,250,500/5 years]

Operating Income/EBIT xxx 199,900
Add back: Depr exp and Amort exp xxx 250,100
A company is considering purchasing factory Add/Less: (Increase) Decrease in WC (xxx)/xxx
Less: Tax payments 199,900 x 30% (xxx) (59,970)
equipment that costs $1,250,500 and is estimated
Less: Interest payments (xxx)
to have no salvage value at the end of its 5-year Cash flow from operating act., after tax xxx 390,030
useful life. If the equipment is purchased, annual
revenues are expected to be $450,000. The
straight-line method of depreciation would be 1,250,500
used. The income tax rate is 30%. The cash Annual Cash Flows After, Tax
payback period on the equipment is 390,030
Answer: 3.21 years

= 3.21 years
37% got it correct.
QUESTION 59

The following information is available for Sun&Moon Enterprises
for 2022:
Pre tax operating profit xxx
Pre-tax operating profit 25,000,000 Add back: Depr exp and Amort exp xxx
Operating expenses including depreciation Add/Less: (Increase) Decrease in WC (xxx)/xxx
expenses of 1,500,000 10,000,000 Less: Tax payments (xxx)
Increase in Net Working Capital 5,600,000 Cash flow from operating act. xxx
Capital Expenditures 8,000,000 CAPEX (xxx)
Free Cash Flows xxx
Current Liabilities 6,500,000
Long-term debt- at par 8% 50,000,000
Debt ratio 2:1
Rate of return 12%
Income tax rate 25%
From the information above, what is the free cash flow for 2022?
Answer: P6,650,000
37% got it correct.
QUESTION 59

The following information is available for Sun&Moon Enterprises
for 2022:
Pre tax operating profit xxx
25,000,000
Pre-tax operating profit 25,000,000 Add back: Depr exp and Amort exp xxx
1,500,000
Operating expenses including depreciation Add/Less: (Increase) Decrease in WC (5,600,000
(xxx)/xxx
expenses of 1,500,000 10,000,000 Less: Tax payments 25,000,000 x 25% (6,250,000)
(xxx)
Increase in Net Working Capital 5,600,000 Cash flow from operating act. 14,650,000
xxx
CAPEX (8,000,000)
(xxx)
Capital Expenditures 8,000,000
Free Cash Flows 6,650,000
xxx
Current Liabilities 6,500,000
Long-term debt- at par 8% 50,000,000
Debt ratio 2:1
Rate of return 12%
Income tax rate 25%
From the information above, what is the free cash flow for 2022?
Answer: P6,650,000
Problems
40% got it correct.
QUESTION 60
15% 240,000
Aces Company reported a return on ROI = Net Income after tax
investment of 15%, a total Invested Capital
1,600,000
shareholder’s equity of 500,000, total
sales of 2,000,000 and income of
P240,000. Based on the given data, Net Income, aft tax P240,000
the company's invested capital was: ROI / 15%
Answer: P1,600,000 Invested Capital 1,600,000
Problems
FINMAN | CHAPTER 3: WORKING CAPITAL MANAGEMENT CCC = ACP + ASP - APP
34% got it correct.
ACP (365 days / Inv. TO)

QUESTION 62
Inv TO = COGS
Ave. Inv.
Using the following information and a 365-day
year, what is the firm’s present cash conversion ASP (365 days / AR TO)
cycle?
AR TO = Sales
Ave. AR
Average inventory P 55,000
Annual sales 575,000 APP (365 days / AP TO)
Annual cost of goods sold 480,000
AP TO = Purchases
Average accounts receivable 145,000
Ave. AP
Average accounts payable 30,000
CCC
Answer: 111 days

Problems
34% got it correct.
ACP (365 days / Inv. TO) 41.8

QUESTION 62
Inv TO = COGS 480,000
8.73 Ave. Inv. 55,000
year, what is the firm’s present cash conversion ASP (365 days / AR TO)
cycle?
AR TO = Sales
Ave. AR
AP TO = Purchases
Ave. AP
CCC
Answer: 111 days

Problems
34% got it correct.

QUESTION 62
8.73 Ave. Inv. 55,000
year, what is the firm’s present cash conversion ASP (365 days / AR TO) 91.9
cycle?
AR TO = Sales 575,000
3.97 Ave. AR 145,000
AP TO = Purchases
Ave. AP
CCC
Answer: 111 days

Problems
34% got it correct.

QUESTION 62
8.73 Ave. Inv. 55,000
cycle?
3.97 Ave. AR 145,000
Annual sales 575,000 APP (365 days / AP TO) (22.8)
AP TO = Purchases 480,000
Average accounts receivable 145,000 16.00 Ave. AP 30,000
CCC
Answer: 111 days

Problems
34% got it correct.

QUESTION 62
8.73 Ave. Inv. 55,000
cycle?
3.97 Ave. AR 145,000
Annual sales 575,000 APP (365 days / AP TO) (22.8)
AP TO = Purchases 480,000
Average accounts receivable 145,000 16.00 Ave. AP 30,000
CCC 111 days
Answer: 111 days

Problems
6% got it correct.
QUESTION 63
FIN Corporation is negotiating with a bank for a Gross Loan 100%

P500,000 one-year loan. The loan is discounted Less: Discount (12%)
Less Compensating bal. (15%) ___________
with a 12% percent interest rate and a 15%
Net Proceeds 73% P 500,000
compensating balance. Suppose that FIN
Corporation requires the entire amount of
P500,000 as net proceeds, how much is the
Loan’s required compensating balance?
Answer: 102,740
Problems
% got it correct.
QUESTION 63
FIN Corporation is negotiating with a bank for a Gross Loan 100% 684,931.50
P500,000 one-year loan. The loan is discounted Less: Discount (12%)
Less Compensating bal. (15%) 102,740
___________
with a 12% percent interest rate and a 15%
Net Proceeds 73% P 500,000
compensating balance. Suppose that FIN
Corporation requires the entire amount of
P500,000 as net proceeds, how much is the
Loan’s required compensating balance?
Answer: 102,740
Problems
Net Income, aft. tax attributable to OS
ROE = x 100
Average Ordinary/Common SHE
FINMAN | CHAPTER 2: FINANCIAL STATEMENT ANALYSIS
29% got it correct.
QUESTION 65
The stockholder’s equity section had the following balances

both beginning and ending:
Common Stock, 25 par P 100,000
Preferred Stock, P150 par 8% 300,000
Additional Paid in Capital, common 180,000
Retained Earnings 75,000
During the year, Yumi reported interest expense of P7,500,
earned net income of 78,500 after taxes at the rate of 25% and
had an average total assets of 750,000. The return on common
stockholder’s equity is:
Answer: 15.4%
Problems
ROE = x 100
Average Ordinary/Common SHE
29% got it correct.
QUESTION 65
ROE = 78,500 - 24,000

(100,000 + 180,000 + 75,000)
Common Stock, 25 par P 100,000 54,500 x 100
=
Preferred Stock, P150 par 8% 300,000 355,000
= 15.4%
had an average total assets of 750,000. The return on common
stockholder’s equity is:
Answer: 15.4%
Problems
EPS =
Weighted Ave. OS outstanding
40% got it correct.
QUESTION 66

Common Stock, 25 par P 100,000
Preferred Stock, P150 par 8% 300,000
had an average total assets of 750,000. The earnings per share
is:
Answer: 13.63 per share

Problems
EPS =
Weighted Ave. OS outstanding
40% got it correct.
QUESTION 66
EPS = 78,500 - 24,000

4,000
Common Stock, 25 par P 100,000 54,500
=
Preferred Stock, P150 par 8% 300,000 355,000
= 13.63
had an average total assets of 750,000. The earnings per share
is:
Answer: 13.63 per share

Problems
FINMAN | CHAPTER 3: CASH MANAGEMENT
26% got it correct.
QUESTION 67
Cash receipts per day
(P35,000 x 35 checks) P 1,225,000
What is the expected annual savings from a No. of days freed x 5 days
lock-box system that collects 35 checks Total cash to be freed 6,125,000
per day averaging P35,000 each and Rate of return x 8%
Expected benefit P 490,000
reduces mailing and processing time by 2.5
and 2.5 days, respectively, if the annual
interest rate is 8%?
Answer: P490,000
Problems
STRATCOST | CHAPTER 7: SHORT-TERM BUDGETARY SYSTEMS
51% got it correct.

August
July purch (120,000)
80%
QUESTION 68
20% --------------------- 24,000
Aug purch
Vitto Shop is preparing its cash budget for the 80% ---------------------
month of June. Vitto pays 80% of purchases in the 20% ___________
Total
month of purchase and the remainder the next
month. Operational information follows:
Beginning inventory, August 1 24,000
Estimated August cost of goods sold 150,000
Estimated August ending inventory 40,000
July purchases 120,000
What are Vitto’s estimated cash payments for shoes
in August?
Answer: P156,800
Problems
51% got it correct.

August
80%
QUESTION 68
20% --------------------- 24,000
Aug purch (166,000)
Vitto Shop is preparing its cash budget for the 80% ---------------------
Total
Beginning inventory, August 1 24,000 Inv, beg 24,000
Estimated August cost of goods sold 150,000 Purchases 166,000 (squeezed)
Estimated August ending inventory 40,000 Inv, end (40,000)
COGS 150,000
in August?
Answer: P156,800
Problems
51% got it correct.

August
80%
QUESTION 68
20% --------------------- 24,000
Aug purch (166,000)
Vitto Shop is preparing its cash budget for the 80% --------------------- 132,800
Total 156,800
Beginning inventory, August 1 24,000 Inv, beg 24,000
Estimated August cost of goods sold 150,000 Purchases 166,000 (squeezed)
Estimated August ending inventory 40,000 Inv, end (40,000)
COGS 150,000
in August?
Answer: P156,800
Problems
FINMAN | CHAPTER 3: WORKING CAPITAL MANAGEMENT
20% got it correct.

COGS
Inv TO =
Average Inv. Inv., beg + Inv, end
QUESTION 69 2
During 2021, Hiroshi Company’s

purchases are worth P1,500,000 of
inventory and the cost of goods sold
was P1,620,000. The ending inventory
in 2020 was P240,000. Given the
data, what was the inventory turnover
for 2021?
Answer: 9.0 times

Problems
20% got it correct.

COGS
Inv TO =
QUESTION 69 2
1,620,000
During 2021, Hiroshi Company’s =
(240,000 + 120,000)
purchases are worth P1,500,000 of 2
inventory and the cost of goods sold
was P1,620,000. The ending inventory
for 2021? Inv., beg P 240,000
Purchases 1,500,000
Inv, end (120,000) squeezed
Answer: 9.0 times
COGS P 1,620,000
Problems
20% got it correct.

COGS
Inv TO =
QUESTION 69 2
1,620,000
(240,000 + 120,000)
inventory and the cost of goods sold =
1,620,000
was P1,620,000. The ending inventory 180,000

for 2021? Inv., beg P 240,000
Purchases 1,500,000
Answer: 9.0 times
COGS P 1,620,000
Problems
20% got it correct.

COGS
Inv TO =
QUESTION 69 2
1,620,000
(240,000 + 120,000)
inventory and the cost of goods sold =
1,620,000
was P1,620,000. The ending inventory 180,000
= 9.0 times
for 2021? Inv., beg P 240,000
Purchases 1,500,000
Answer: 9.0 times
COGS P 1,620,000
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
Junior Philippine Institute of Accountants Manila
E500, 5/F Main Bldg., A. Mabini Campus, Anonas St., Sta. Mesa, Manila
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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Junior Philippine Institute of Accountants Manila

77% got it correct. 31% got it correct.

Investor Financial Instrument Business

Money Market Capital Market

Investor Financial Instrument Business

77% got it correct. 31% got it correct.

Money Market Capital Market

Investor Financial Instrument Business

Investor 2 Investor Financial Instrument Business

Secondary Market Primary Market

Investor 2 Investor Financial Instrument Business

Secondary Market Primary Market

77% got it correct. 31% got it correct.

Investor 2 Investor Financial Instrument Business

Secondary Market Primary Market

Risks FINANCIAL INTERMEDIARIES

40% got it correct.

Which of the following are essentially

Investor 2 Investor Financial Instrument Business

Secondary Market Primary Market

Risks FINANCIAL INTERMEDIARIES

37% got it correct. 49% got it correct.

Investor 2 Investor Financial Instrument Business

Secondary Market Primary Market

Risks FINANCIAL INTERMEDIARIES Risks

37% got it correct. 49% got it correct.

Investor 2 Investor Financial Instrument Business

Secondary Market Primary Market

Risks FINANCIAL INTERMEDIARIES Risks

40% got it correct.

Which of the following statements always describe 1. Current Yield/Yield-to-Maturity

34% got it correct.

a corporate bond quickly, the investors will demand a

d) default risk premium

34% got it correct.

a corporate bond quickly, the investors will demand a

d) default risk premium

31% got it correct.

31% got it correct.

20% got it correct.

If activity-based costing is implemented in an organization without any other changes being

40% got it correct.

QUESTION 14 Absorption Costing Variable Costing

46% got it correct.

Weakness of the high-low method include

54% got it correct. 37% got it correct.

23% got it correct. Sales Pxx

a) No fixed factory overhead is charged to 51% got it correct.

37% got it correct.

The ratio that measures a firm’s ability to

17% got it correct.

Other factors remaining constant, what is

51% got it correct. 17% got it correct.

46% got it correct.

AR Turnover= 7.69 times

46% got it correct.