MONDAY

1. Stiggins Corporation had the following account balances for 2002:

31-Dec 1-Jan
Accounts Payable 67,200 58,200
Prepaid Rent Expense 24,600 37,200
Accounts Receivable (net) 84,000 66,600

Stiggins' 2002 profit is ₱450,000. What amount should Stiggins include as net cash provided by operating activities
in its 2002 statement of cash flows?
a. 436,200 b. 445,200 c. 453,600 d. 454,200

2. Chow Company's 2002 income statement reported cost of goods sold as ₱135,000. Additional information is as
follows:
31-Dec-02 31-Dec-01
Inventory 30,000 22,500
Accounts Payable 13,000 19,500

If Chow uses the direct method, what amount should Chow report as cash paid to suppliers in its 2002 statement of
cash flows?
a. 121,000 b. 134,000 c. 136,000 d. 149,000

Use the following for the next three questions:

Frye Company uses the direct method to prepare its statement of cash flows. The company had the following cash
flows during 2002:
Cash receipts from the issuance of ordinary shares 400,000
Cash receipts from customers 200,000
Cash receipts from dividends on long-term investments 30,000
Cash receipts from repayment of loan made to
220,000
another entity
Cash payments for wages and other operating expenses 120,000
Cash payments for insurance 10,000
Cash payments for dividends 20,000
Cash payments for taxes 40,000
Cash payment to purchase land 80,000

3. The net cash provided by (used in) operating activities is

a. 60,000 b. 40,000 c. 30,000 d. (20,000)

4. The net cash provided by (used in) investing activities is

a. 220,000 b. 140,000 c. 60,000 d. (80,000)

5. The net cash provided by (used in) all activities is

a. 580,000 b. 410,000 c. 380,000 d. (60,000)
Tuesday
1. Conn Co. reported a retained earnings balance of ₱400,000
at December 31, 20X8. In August 20X9, Conn determined a. ₱0. c. ₱1,000 understated.
that insurance premiums of ₱60,000 for the three-year b. ₱1,000 overstated. d. ₱1,700 understated.
period beginning January 1, 20X8, had been paid and fully 7. Bren Co.'s beginning inventory at January 1, 20x3, was
expensed in 20X8. Conn has a 30% income tax rate. What understated by ₱26,000, and its ending inventory was
amount should Conn report as adjusted beginning overstated by ₱52,000. As a result, Bren's cost of goods
retained earnings in its 20X9 statement of retained sold for 20x3 was
earnings? a. Understated by ₱26,000. c. Understated by ₱78,000.
a. 420,000 b. 428,000 c. 440,000 d. 442,000 b. Overstated by ₱26,000. d. Overstated by ₱78,000.
2. Foy Corp. failed to accrue warranty costs of ₱50,000 in its
December 31, 20X4, financial statements. In addition, a The next three items are based on the following:
change from straight-line to accelerated depreciation made The bookkeeper of Latsch Company, which has an accounting
at the beginning of 20X5 resulted in a cumulative effect of year ending December 31, made the following errors:
₱30,000 on Foy's retained earnings. Both the ₱50,000 and  A ₱1,000 collection from a customer was received on
the ₱30,000 are net of related income taxes. What amount December 29, 20x0, but not recorded until the date of its
should Foy report as prior period adjustment in 20X5? deposit in the bank, January 4, 20x1.
a. 0 b. 30,000 c. 50,000 d. 80,000  A supplier's ₱1,600 invoice for inventory items received in
3. Loeb Corp. frequently borrows from the bank in order to December 20x0 was not recorded until January 20x1.
maintain sufficient operating cash. The following loans (Inventories at December 31, 20x0 and 20x1, were stated
were at a 12% interest rate, with interest payable at correctly, based on physical count.)
maturity. Loeb repaid each loan on its scheduled maturity  Depreciation for 20x0 was understated by ₱900. In
date. September 20x0, a ₱200 invoice for office supplies was
Date of loan Amount Maturity date Term of loan charged to the Utilities Expense account. Office supplies
11/1/x1 ₱ 5,000 10/31/x2 1 Year are expensed as purchased.
2/1/x2 15,000 7/31/x2 6 Months  December 31, 20x0, sales on account of ₱3,000 were
5/1/x2 8,000 1/31/x3 9 Months recorded in January 20x1.

Loeb records interest expense when the loans are repaid. As a Assume that no other errors have occurred and that no
result, interest expense of ₱1,500 was recorded in 20x2. If no correcting entries have been made. Ignore income taxes.
correction is made, by what amount would 20x2 interest
expense be understated?
8. Profit for 20x0 was
a. Understated by ₱500. c. Overstated by ₱2,500.
a. 540 b. 620 c. 640 d. 720
b. Understated by ₱2,100. d. Neither understated nor
The next three items are based on the following: overstated.
Declaration, Inc., is a calendar year corporation. Its financial
statements for the years 20x2 and 20x1 contained errors as 9. Assume the same facts as above. Working capital at
follows: December 31, 20x0, was
20x2 20x1 a. Understated by ₱3,000. c. Understated by ₱1,400.
Ending inventory ₱1,000 understated ₱3,000 overstated b. Understated by ₱500. d. Neither understated or
Depreciation expense ₱800 understated ₱2,500 overstated overstated.
4. Assume that the proper correcting entries were made at
December 31, 20x1. By how much will 20x2 income before 10. Assume the same facts as above. Total assets at December
income taxes be overstated or understated? 31, 20x0, were
a. ₱200 understated. c. ₱2,700 understated. a. Overstated by ₱2,500. c. Understated by ₱2,500.
b. ₱500 overstated. d. ₱3,200 understated. b. Overstated by ₱2,100. d. None of the above.
5. Assume that no correcting entries were made at December
31, 20x1. Ignoring income taxes, by how much will
retained earnings at December 31, 20x2, be overstated or
understated?
a. ₱200 understated. c. ₱2,700 understated.
b. ₱500 overstated. d. ₱3,200 understated.

6. Assume that no correcting entries were made at December

31, 20x1, or December 31, 20x2, and that no additional
errors occurred in 20x3. Ignoring income taxes, by how
much will working capital at December 31, 20x3, be
overstated or understated?
 Wednesday
1. Which of the following statements is incorrect?
a. Related party transactions and outstanding balances with other entities in a group are disclosed in an entity’s
financial statements.
b. Intragroup related party transactions and outstanding balances are not eliminated in the preparation of
consolidated financial statements of the group.
c. Related party relationships are a normal feature of commerce and business.
d. A related party relationship could have an effect on the profit or loss and financial position of an entity.
e. Knowledge of related party transactions, outstanding balances and relationships may affect assessments of
an entity’s operations by users of financial statements, including assessments of the risks and opportunities
facing the entity.

2. An entity’s ability to affect the financial and operating policies of an investee is through the presence of
I. Control
II. Joint control
III. Significant influence
a. I only b. I or III c. Any of I, II, or III d. I, II and III

3. Which of the following statements is correct?

I. The profit or loss and financial position of an entity may be affected by a related party relationship even if
related party transactions do not occur.
II. The mere existence of the relationship may be sufficient to affect the transactions of the entity with other
parties.
a. True, true b. True, false c. False, false d. False, true

4. All of the parties enumerated are related to an entity , except

a. the entity is a subsidiary, an associate, or a venture in a joint venture.
b. the party is a member of the key management personnel of the entity or its parent.
c. the party is a close member of the family of an individual having control, significant influence, or joint
control over the entity or a member of the key management personnel of the entity or its parent.
d. the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is
a related party of the entity.
e. two entities simply because they have a director or other member of key management personnel in common

5. The following relates to the transactions of MISCELLANY MIXTURE Company during 20x1:
Directors' and officers' remuneration 4,000,000
Post-employment benefits of officers 400,000
Fringe benefits in the form of housing assistance to directors
and officers 10,000,000
Share options granted to officers 600,000
Officers' expenses on travels, representation and
entertainment subject to liquidation and reimbursement 200,000
Loans to directors and officers 6,000,000
Sales to related entities 20,000,000

Requirements: Determine the amount of related party disclosures on MISCELLANY’s (a) separate financial
statements and (b) the group’s consolidated financial statements.
 Thursday

1. QUIRK ACCIDENT Co. reports profit before tax of ₱200,000 in its 2nd quarter interim financial statements before
consideration for the following:
a. Inventory with a carrying amount ₱10,000 has a net realizable value of ₱12,000. It is expected that the change in
value will reverse in the 3rd quarter. There have been no write-downs of inventory recognized in previous
periods.
b. An investment property measured under the cost model has a carrying amount of ₱150,000 but its recoverable
amount is ₱140,000.
c. An investment in FVPL measured at acquisition cost of ₱20,000 has a fair value of ₱38,000 as at the end of 2nd the
quarter. However, the increase in fair value is expected to be only temporary.
d. No depreciation is recognized during the 2 nd quarter. The annual straight-line depreciation of items of PPE is
₱60,000.
e. ABC Co. has a policy of providing 12 days paid vacation leaves for its employees. The vacation leaves are
vesting and accumulating. Total paid vacation leaves eligibility of employees for the full year is ₱140,000.
However, only ₱20,000 worth of paid vacation leaves have been availed of during the quarter.
f. It was discovered that depreciation in the previous year was overstated by ₱7,000.

Requirement: Compute for the adjusted profit before tax.

2. FATUOUS SILLY Co. is preparing its interim financial statements for the period ended March 31, 20x1. The
following relate to the transactions during the first quarter:
a. Total sales for the interim period was ₱2,000,000.
b. Cost of sales was ₱900,000.
c. FATUOUS is liable for 5% commission on its sales to its sales representatives and agents. No commission has
yet been paid as of March 31, 20x1.
d. The allowance for doubtful accounts has a balance of ₱10,000 as of January 1, 20x1. The required balance as of
March 31, 20x1 is ₱30,000. There were no write-offs or recoveries during the period.
e. A building with historical cost of ₱2,400,000 is being depreciated over 5 years using straight line method.
f. FATUOUS prepaid a one-year insurance on its assets for ₱80,000 on January 1, 20x1,.
g. Property taxes for 20x1 amounting to ₱52,000 was paid in January.
h. Advertising costs of ₱100,000 were incurred in February on promotional activities held on Valentine’s Day.
i. Year-end staff bonuses are expected to be around ₱184,000. Employees become entitled to the bonuses as they
provide services to FATUOUS during the year.
j. FATUOUS’s president is entitled to a 10% bonus on profit before bonus and taxes.
k. Loss on sale of a used equipment on March 2, 20x1 was ₱60,000.
l. FATUOUS incurred ₱24,000 on unanticipated repairs on its factory equipment on March 16, 20x1.
m. Due to the unexpected breakdown of the factory equipment on March 16, 20x1, FATUOUS has planned a
major periodic overhaul of its other equipment to be held annually starting on December 31, 20x1. The cost of
the major planned periodic overhaul is estimated at ₱96,000.
n. FATUOUS leases one of its retail stores. Monthly rentals are ₱10,000, however, the lease contracts provide for
a contingent rent equal to 2% of the excess of sales over ₱1,800,000.
o. FATUOUS’s budget for 20x1 included charitable contributions of ₱58,000 and employee training costs of
₱26,000. None of those costs were incurred as of March 31, 20x1.
p. p Other operating expenses incurred during the first quarter totaled ₱240,000.

Requirement: Compute for the profit or loss for the first quarter ended March 31, 20x1.
 Friday

1. An analysis of Thrift Corp.’s unadjusted prepaid expense account at December 31, 20x3, revealed the following:
 An opening balance of ₱1,500 for Thrift’s comprehensive insurance policy. Thrift had paid an annual premium of
₱3,000 on July 1, 20x2.
 A ₱3,200 annual insurance premium payment made July 1, 20x3.
 A ₱2,000 advance rental payment for a warehouse

Thrift leased for one year beginning January 1, 2004. In its December 31, 20x3 balance sheet, what amount should Thrift
report as prepaid expenses?
a. 5,200 b. 3,600 c. 2,000 d. 1,600

2. The balance in retained earnings at December 31, 2003 was ₱810,000 and at December 31, 2004 was ₱654,000. Net
income for 2004 was ₱563,000. A stock dividend was declared and distributed which increased common stock
₱225,000 and paid-in capital ₱125,000. A cash dividend was declared and paid. The amount of the cash dividend was
a. ₱279,000. c. ₱494,000.
b. ₱369,000. d. ₱719,000.

3. On April 1, 2008, Ivy began operating a service proprietorship with an initial cash investment of ₱1,000. The
proprietorship provided ₱3,200 of services in April and received full payment in May. The proprietorship incurred
expenses of ₱1,500 in April which were paid in June. During May, Ivy drew ₱500 against her capital account.

What was the proprietorship's income for the two months ended May 31, 2008, under the following methods of
accounting?
Cash basis Accrual basis
a. 1,200 1,200
b. 1,700 1,700
c. 2,700 1,200
d. 3,200 1,700

4. Entity Co. uses the cash basis of accounting and reported income of ₱87,000 in 20x1. The following items were
considered in the computation of the cash basis net income.

Inventory, beginning 12,000

Inventory, ending 18,000
Receivables, beginning 40,000
Receivables, ending 38,000
Payables, beginning 19,000
Payables, ending 25,000

The accrual basis income is

a. 97,000 b. 73,000 c. 89,000 d. 85,000

5. Information on an entity’s accounts is shown below:

Current tax payable, beg. 150,000
Current tax payable, end. 400,000
Increase in deferred tax liability 60,000
Increase in deferred tax asset 20,000
Income tax paid 280,000

How much is the income tax expense for the period?

a. 530,000 b. 540,000 c. 570,000 d. 610,000