104 Overall Compilation

STOCKHOLDERS' EQUITY
SHAREHOLDERS' EQUITY PRACTICE QUIZ (74points)
Only a memorandum entry is made when

Feedback
The correct answer is: Entities issue rights to existing shareholders.
Question text
When shareholders may elect to receive cash in lieu of stock dividend, the amount
to be charged to retained earnings is equal to
Feedback
The correct answer is: Optional cash dividend
Question text
How would retained earnings be affected by the declaration of share dividend and
share split, respectively?
Feedback
The correct answer is: Decrease and No effect
Question text
The total cost of treasury stock should be reported as
Feedback
The correct answer is:
Deduction from stockholders’ equity
Question text
Nonstock dividends shall be recognized as liabilities on the
Feedback
The correct answer is: Date of declaration
Question text
If an entity wishes to "capitalize" retained earnings, it may issue
Feedback
The correct answer is: Share dividend
Question text
Which of the following statements is incorrect concerning the appropriations of
retained earnings?
Feedback
The correct answer is: Appropriations of retained earnings reflect funds set aside for
a designated purpose, such as plant expansion.
Question text
Paid in capital does not include
Feedback
The correct answer is: Capital accumulated by retention of earnings
Question text
Transaction costs that are directly attributable to the issuance of new shares should
be
Feedback
The correct answer is: Deducted from equity, net of any related income tax benefit
Question text
When shares with par value are sold, the proceeds shall be credited to the
Feedback
The correct answer is: Share capital account to the extent of the par value of the
shares issued with any excess being reflected in share premium
Question text
The cost of treasury shares acquired for noncash consideration is usually measured
by
Feedback
The correct answer is: Carrying amount of the noncash asset surrendered
Question text
The term residual owner means that shareholders
Feedback
The correct answer is: Bear the ultimate risks and receive the benefits of ownership.
Question text
Which of the following statements is incorrect concerning retained earnings?
Feedback
The correct answer is: A deficit in retained earnings shall be presented as an asset.
Question text
The proceeds from issuance of shares for a consideration other than cash should be
measured by the
Feedback
The correct answer is: Fair value of the consideration received
Question text
Unlike a share split, a stock dividend requires a formal journal entry in the
accounting records because
Feedback
The correct answer is: Stock dividends represent a transfer from retained earnings to
share capital.
Question text
An entity declared a dividend, a portion of which was liquidating. How would this
declaration affect contributed capital and retained earnings, respectively?
Feedback
The correct answer is: Decrease and Decrease
Question text
The premptive right of an ordinary shareholder is the right to
Feedback
The correct answer is: Share proportionately in any new issue of shares of the same
class.
Question text
Undistributed share dividends shall be reported as
Feedback
The correct answer is: An addition to share capital outstanding
Question text
What is the treatment of "joint costs" that relate to the concurrent listing and
issuance of new shares, and listing of old existing shares?
Feedback
The correct answer is: The joint costs should be allocated between the newly issued
and listed shares and the newly listed old existing shares prorata based on the
number of shares outstanding.
Question text
Which is true concerning share capital transactions?
Feedback
The correct answer is: All of these statements are true concerning share capital
transactions.
Question text
Loss on retirement of treasury shares shall be debited to
Feedback
The correct answer is: Share premium from original issuance, share premium from
treasury shares and then retained earnings.
Question text
Cash and property dividends should be recorded as liabilities on the
Feedback
Question text
A restriction of retained earnings is most likely to be required by
Feedback
The correct answer is: Purchase of treasury shares
Question text
Which is not an element of shareholders equity?
Feedback
The correct answer is: Investment in ordinary shares of another company
Question text
When shares without par value are sold the proceeds should be credited to the
applicable share capital account. Alternatively, the excess proceeds over stated
value, if any, of the no par shares may be credited to
Feedback
The correct answer is: Share premium
Question text
Costs of public offering of shares or costs that relate to "stock market listing of
shares" should be
Feedback
The correct answer is: Expensed immediately
Question text
Which of the following statements is incorrect concerning treasury shares?
Feedback
The correct answer is: Treasury shares may be recognized .as financial asset.
Question text
If the entity has only one class of share capital, a transfer from retained earnings to
share capital equal to the fair value of the shares issued is ordinarily a characteristic
of
Feedback
A share dividend but not a share split·
Question text
Which of the following statements is true concerning appropriations of retained
earnings?
Feedback
The correct answer is: All of these statements are true concerning appropriations of
retained earnings.
Question text
Treasury shares may be reissued as dividends, in which case what amount should
be charged to retained earnings?
Feedback
The correct answer is: Cost of the treasury shares
Question text
In accounting for shareholders' equity, the accountant is primarily concerned with
which of the following?
Feedback
The correct answer is: Recording the source of each of the various elements of
shareholders' equity
Question text
The issuer shall directly charge retained earnings for the fair value of the shares
issued in
Feedback
The correct answer is: Ten percent stock dividend
Question text
An entity shall measure a noncurrent asset classified as held for distribution to
owners at
Feedback
The correct answer is: Lower of carrying amount and fair value less cost to distribute
Question text
Liquidating dividends
Feedback
The correct answer is: Reduce amounts paid in by shareholders
Question text
An entity declared a cash dividend on a certain date payable on another date.
Retained earnings would
Feedback
The correct answer is: Not be affected on the date of payment
Question text
The issuance of preference shares
Feedback
The correct answer is: Increases preference shares outstanding
Question text
If shares are issued to extinguish a financial liability, what is the initial measurement
of the shares issued?
Feedback
The correct answer is: Fair value of liability extinguished
Question text
When an entity declared and paid a liquidating dividend, the distribution resulted in
a decrease in
Feedback
The correct answer is: Paid in capital and no effect on retained earnings
Question text
Retained earnings appropriated account is created for the purpose of
Feedback
The correct answer is: Protecting the working capital position
Question text
Which of the following would not affect retained earnings?
Feedback
The correct answer is: Share split
Question text
Subscriptions receivable and other receivables from sale of shares which are not
collectible currently shall be presented as
Feedback
Deduction from the related subscribed share capital in the shareholders’ equity
section
Question text
When the total shareholders’ equity is smaller than the amount of contributed
capital, this deficiency is called
Feedback
The correct answer is: A deficit
Question text
Treasury shares are
Feedback
The correct answer is: Issued but not outstanding shares.
Question text
Total shareholders' equity remains the same when there is
Feedback
The correct answer is: Declaration of a share dividend
Question text
When an entity calls in all of the preference shares for more than the original issue
price, the excess paid above the original issue price should be
Feedback
The correct answer is: Charged against retained earnings
Question text
Total shareholders' equity represents
Feedback
The correct answer is: A claim against a portion of the total assets of an entity.
Question text
Cash dividends are paid on the basis of the number of shares
Feedback
The correct answer is: Outstanding
Question text
When a share dividend is declared and issued
Feedback
The correct answer is: Total shareholders' equity does not change.
Question text
If the share dividend is less than 20%, what' amount of the retained earnings should
be capitalized?
Feedback
The correct answer is: Fair value of the shares on the date of declaration
Question text
An entry is not made on the
Feedback
The correct answer is: Date of record
Question text
Convertible preference shares
Feedback
The correct answer is: Include an option for the holder to convert preference shares
into a fixed number ordinary shares.
Question text
Contributed capital does not include
Feedback
Question text
A dividend which is a return to shareholders of a portion of their original investment
is
The correct answer is: Liquidating dividend

Question text
What amount should be assigned to shares issued for services received?
Feedback
The correct answer is: Fair value of such services
Question text
An entity shall measure a liability to distribute noncash asset as dividend to the
owners at
Feedback
The correct answer is: Fair value of the asset distributed
Question text
Which of the following is not a method that may be used to account for treasury
shares?
Feedback
The correct answer is: Retained earnings method
Question text
A share dividend
Feedback
leaves total shareholder’s equity unchanged
Question text
For which of the following purposes should an appropriation for possible loss
contingencies be established?
Feedback
The correct answer is: To inform shareholders that a portion of retained earnings
should be set aside from amounts available for dividends because of such
contingencies.F
Question text
An entity issued what is called a "20% share dividend". At what amount per share
should retained earnings be reduced for the transaction?
Feedback
The correct answer is: Par value
Question text
Appropriations of retained earnings should be reported as
Feedback
The correct answer is: Component of equity as part as total retained earnings
Question text
The actual total amount of a cash dividend to be paid is determined on the date of
Feedback
The correct answer is: Declaration
Question text
It refers to the issuance by an enterprise of its own ordinary shares to its ordinary
shareholders without consideration and under conditions indicating that such
action is prompted mainly by a desire to increase the number of shares
outstanding.
Feedback
Question text
When collectibility is reasonably assured, the excess of the subscription price over
the stated value of the no-par subscribed share capital shall 'be recorded as
Feedback
The correct answer is: Share premium when the subscription is recorded
Question text
The declaration and issuance of a 25% share dividend
Feedback
The correct answer is: Decreases retained earnings but does not change total
equity.
Question text
An appropriation of retained earnings for future plant expansion will result in
Feedback
The correct answer is: The disclosure that management, does not intend to
distribute in the form of dividends assets equal to the amount of the appropriation.
Question text
If treasury shares are reissued for noncash consideration, the proceeds shall be
measured by
Feedback
The correct answer is: Fair value of the noncash consideration '
Question text
An entity shall review and adjust the carrying amount of the dividend payable at
the end of each reporting period and at the date of settlement with any changes
in the carrying amount of the dividend payable recognized
Feedback
The correct answer is: In equity as adjustment to the amount of distribution
Question text
A retained earnings appropriation is used to
The correct answer is: Restrict earnings available for dividends
Question text
Transaction costs directly attributable to the issuance of new shares include all of
the following, except
The correct answer is: Road show presentation

Question text
The par value of an ordinary share represents
The correct answer is: The legal nominal value assigned to the share
Question text
Gain and loss on retirement of treasury shares shall not be included in profit or loss. If
the retirement results in a gain, such gain shall be credited to
Question text
Which statement best describes a possible result of treasury share transactions?
The correct answer is: May decrease but not increase retained earnings.
Question text
Loss from sale of treasury shares shall be charged to
The correct answer is: Share premium from treasury shares and then retained
earnings
Question text
When an entity issued rights to existing shareholders to purchase unissued ordinary
shares at more than par value, share premium would be recorded when the rights
The correct answer is: Are exercised

Question text
At the date of the financial statements, shares issued would exceed shares
outstanding as a result of

Question text
The issuer should charge retained earnings for the fair value of shares issued in a
Feedback
The correct answer is: 1 for 8 share dividend
Question text
When an entity settles the property dividend payable, it shall recognize the
difference between the carrying amount of the asset distributed and the carrying
amount of the dividend payable in
Feedback
The correct answer is: Profit or' loss
Question text
When preference shares are purchased and retired by the issuing entity for less than
original issue price, proper accounting for the retirement
Feedback
The correct answer is: Increases the contributed capital of the ordinary
shareholders
PQ1 SHAREHOLDERS' EQUITY Quiz

Feedback
Question text
Feedback
Question text
Feedback
Question text
If the entity has only one class of share capital, a transfer from retained earnings to
share capital equal to the fair value of the shares issued is ordinarily a characteristic
of
Feedback
Question text
Feedback
Question text
The proceeds from issuance of shares for a consideration other than cash should be
measured by the
Feedback
Question text
When shareholders may elect to receive cash in lieu of stock dividend, the amount
to be charged to retained earnings is equal to
Feedback
Question text
When an entity calls in all of the preference shares for more than the original issue
price, the excess paid above the original issue price should be
Feedback
Question text
Feedback
Question text
Feedback
Question text
earnings?
Feedback
The correct answer is: All of these statements are true concerning appropriations of
retained earnings.
Question text
Feedback
Question text
When an entity issued rights to existing shareholders to purchase unissued ordinary
Feedback
Question text
Feedback
Question text
owners at
Feedback
Question text
Feedback
The correct answer is: Include an option for the holder to convert preference shares
into a fixed number ordinary shares.
Question text
Feedback
Question text
Feedback
The correct answer is: Share premium from original issuance, share premium from
treasury shares and then retained earnings.
Question text
Feedback
Question text
Feedback
Question text
Feedback
Question text
It refers to the issuance by an enterprise of its own ordinary shares to its ordinary
shareholders without consideration and under conditions indicating that such
action is prompted mainly by a desire to increase the number of shares
outstanding.
Feedback
Question text
Feedback
Question text
Feedback
class.
Question text
Feedback
Question text
Feedback
equity.
Question text
Feedback
Question text
Feedback
Question text
shares?
Feedback
Question text
Feedback
Question text
Feedback
Question text
Treasury shares may be reissued as dividends, in which case what amount should
be charged to retained earnings?
Feedback
Question text
Feedback
Question text
Feedback
Question text
Feedback
Question text
Feedback
Question text
Feedback
transactions.
Question text
Feedback
Question text
Feedback
share capital.
Question text
Feedback
PQ2Quiz
Cassaionoi Co. issued 200,000 common shares in 2018 and issued another 100,000
common shares in 2019. The company also issued preferred shares convertible to
100,000 common shares. In 2020, the company reacquired 75,000 common shares
and held as treasury. How many common shares are outstanding on December 31,
2020?
Feedback
The correct answer is: 225,000
Question 2
Question text
Saionrano Co. reported the following at the start of the year. Share capital, P50 par
value, P3,000,000; Share premium, P600,000; Retained earnings, P4,200,000. During
the year, a 15% share dividend was declared and distributed when the share was
selling at P65. What amount should be reported as share capital outstanding at
year end?
Feedback
The correct answer is: 3,450,000
Question 3
Question text
On June 1, 2020, Massaion Co. was incorporated and was authorized to issue the
following: Common stocks 100 par value, 200,000 shares; Preferred stocks, 10%, P50
par value, 200,000 shares. During the year, the company issued 150,000 common
shares for P18,000,000 and 50,000 preferred shares at P60 per share. In addition, on
November 11, subscriptions for 20,000 preferred shares were taken at P100 per
share. 25% of the subscription were paid and the balance payable February of next
year. The income summary account has a credit balance of 5,000,000. What is the
amount of contributed capital on December 31, 2020?
Feedback
Question 4
Question text
On December 8, 2020 Cassaion Co. declared a 5% share dividend on 100,000
issued and outstanding shares of P20 par value, which had a fair value of P50 per
share at the date of declaration. The share dividend was distributed on February 28,
2021. What is the increase in current liabilities as a result of the share dividend
declaration?
Feedback
The correct answer is: 0
Question 5
Question text
Saionagud Co issued 1,000 shares with P5 par to Atty. Abogago as compensation
for 500 hours of legal services performed. Atty. Abogago rate is P320 per hour. On
the date of issuance, the share was quoted on a public exchange at P140. What
amount should share premium increase as a result of the transaction?
Feedback
Question 6
Question text
On May 1, 2020 Purosaion Corp. declared and issued a 15% share dividend. Prior to
this dividend, Purosaion had 100,000, P1 par value, ordinary shares issued and
outstanding. The fair value of Purosaion's ordinary share was P20 per share on May
1, 2016. As a result of this share dividend, Purosaion's retained earnings
Feedback
The correct answer is: Decreased by 300,000
Question 7
Question text
Saionaini Co. issued 60,000, P50 par value, ordinary shares and 20,000, P100 par
value, preference shares for a total consideration of P7,500,000. At this date, the
ordinary share was selling for P100 per share and the preference share was selling
for P150 per share. What amount of the proceeds should be allocated to the
preference shares?
Feedback
Question 8
Question text
Saionaoi Company was organized on January 1, 2018. On that date it issued
500,000, P10 par value, ordinary shares at P15 per share. During the period January
1, 2018 through December 31, 2020, Saionaoi reported profit of P3,000,000 and paid
cash dividends of P500,000. On January 5, 2020, Saionaoi purchased 50,000 ordinary
shares at P20 per share. On December 31, 2020, 45,000 treasury shares were sold at
P30 per share and retired the remaining treasury shares. What is the total
shareholders’ equity on December 31, 2020?
Feedback
Question 9
Question text
Saionsaion Co. had sufficient retained earnings in 2020 but temporarily short of
cash. The company adopts the calendar year. It declared dividend of P50,000 on
October 1, 2020 and issued a promissory note bearing a 10% interest with a maturity
date of September 30, 2021. How should the dividend and interest be accounted
for?
Feedback
The correct answer is: Debit retained earnings 50,000 on October 1, 2020 and Debit
interest expense 1,250 on December 31, 2020
Question 10
Question text
Waileesud Corp. received a donation of 2,000 shares of its P5 par value ordinary
shares from a shareholder. On that date, the share’s fair value was P35 per share.
The share was originally issued for P25 per share. By what amount would this
donation cause total shareholders’ equity to decrease?
Feedback
Question 11
Question text
Leesudni Company issued 200,000 shares of P100 par, 10% cumulative preference
shares for P25,000,000. One detachable warrant was attached to each preference
share issued. Each warrant gives the holder the right to purchase one ordinary
share, P50 par value, for P100. The market value of the warrant after the preference
shares were issued was P15. The proceeds to be allocated to the preference shares
is
Feedback
Question 12
Question text
Saionasad Co. issued 8,000 convertible preferred shares with P100 par value at
P105. One preferred share can be converted into three common shares with P25
par value at the option of the stockholder. Subsequently, all of the preferred shares
were converted into common shares. The fair value of the common shares on the
date of conversion was P30. What amount should be credited to share premium or
additional paid in capital as a result of the above transactions.
Feedback
Question 13
Question text
Saionrabai Co. had 80,000 ordinary shares outstanding at the start of the year. The
company distributed a 15% stock dividend in April and another 10% stock in July.
After acquiring 10,000 shares of treasury in October, the company split the share 4
for 1 in December. How many ordinary shares are outstanding at the end of the
year?
22,800
Feedback
Question 14
Question text
Saionra Co. provided the following accounts at year end: Issued share capital,
P3,000,000; Subscribed share capital, P1,000,000; Subscription receivable,
P600,000; Share premium, P400,00; Appropriated retained earnings, P400,000;
Unappropriated retained earnings, P200,000; Donated capital, P300,000. What
amount should be reported as total shareholders’ equity?
Feedback
Question 15
Question text
At the beginning of the current year, Saionra Co. declared a 1 for 5 reverse share
split, when the market value per share was P100. Prior to the split, the entity had
10,000 sahres of P10 par value issued and outstanding. What is the par value of the
share after the share split?
Feedback
INVESTMENT IN EQUITY SECURITIES

MTQ1_IESQuiz
Pretty Co. purchased 10,000 shares of Prettier Inc. on June 30, 2020. Pretty received
a share dividend of 2,000 shares on August 15, 2020 when the carrying amount per
share was P400 and the market value was P350. Par value per share was P100.
Prettier Inc. declared and paid cash dividend of P15 per share on September 15,
2020. What amount of dividend income will be reported in the income statement of
Pretty Co. for the year ended September 30, 2020?
Feedback
Question 2
Question text
Irresistible Co. purchased marketable equity securities to be held for trading for
P5,000,000 and paid transaction cost amounting toP200,000 on March 1, 2020. The
securities had a market value of P5,500,000 on December 31, 2020. What amount of
unrealized gain or loss on these securities should be reported in the income
statement?
Feedback
The correct answer is: 500,000 gain
Question 3
Question text
Investments in equity instruments are financial assets because they are.
Feedback
The correct answer is: Equity instruments of another entity.
Question 4
Question text
DfntlyLuvly Co. owned 30,000 shares of Alluring, Inc. at a cost of P2,000,000. On
October 31, the company received 30,000 stock rights from Alluring, entitling the
holder to acquire one share at P45. The market price of Alluring’s shares on this date
was P50 and each right was quoted at P10. DfntlyLuvly sold the rights on December
8 for P450,000 and the broker’s fee amounted to P10,000. What amount should be
reported as gain from the sale of rights?
Feedback
Question 5
Question text
On January 1, 2019, Smart Co. purchased 100,000 equity securities for trading for
P40 per share, excluding transaction cost which amounts to P1 per share. On
December 28, the company sold 80,000 shares for P50 a share. What amount
should be reported as gain on sale of trading securities?
Feedback
Question 6
Question text
When an equity security is appropriately carried and reported as FA@FVOCI, a gain
should be reported in the income statement:
Feedback
The correct answer is: Never.
Question 7
Question text
When a company has acquired a "passive interest" in another corporation, the
acquiring company should account for the investment
Feedback
The correct answer is: By using the fair value method.
Question 8
Question text
Handsome Co. purchased 10,000 shares of equity securities at P80 per share on April
1. On July 31, the company received 10,000 share warrants to purchase an
additional 10,000 shares at 90 per share. The shares and the share warrants were
quoted at P95 and P5, respectively on this date. The share warrants will expire on
December 31. What amount should be reported on July 31 for the investment in
stock rights?
Feedback
Question 9
Question text
Inspired Co. carries the following marketable equity securities classified as
FA@FVTOCI on its books at December 31, 2019 and 2020. All the securities were
purchased during 2019. Cost, P5,100,000; FV 12.31.19 P4,800,000; FV 12.31.20,
P5,000,000. The net amount to be recognized in 2020 comprehensive income is
Feedback
The correct answer is: P200,000 gain
Question 10
Question text
Dividends are recognized in profit or loss only when:
Feedback
The entity’s right to receive payment of the dividend is established.
Question 11
Question text
An investment in equity instrument may not be classified as a financial asset
subsequently measured at
Feedback
The correct answer is: Amortized cost
Question 12
Question text
During 2019, Confident Co. purchased trading securities at a cost of P4,2540,000. For
the year ended December 31, 2019, the company recognized an unrealized loss of
P230,000. There were no transactions in 2020. The securities were quoted at
P4,120,000 at year-end 2020. What amount of unrealized gain or loss should be
reported in the 2020 income statement?
Feedback
The correct answer is: Unrealized gain of P100,000
Question 13
Question text
On January 2, 2020, Happy Co. purchased 40,000 shares of Merry, Inc. stock at P100
per share. Brokerage fees amounted to P120,000. A P5 dividend per share of Merry,
Inc. shares had been declared on December 15, 2019, to be paid on March 31,
2020 to shareholders of record on January 31, 2020. The shares are designated as
FVTOCI. On December 31, 2020 the investment has a fair value of P4,200,000. How
much should be recognized in the 2020 other comprehensive income related to
these securities?
Feedback
The correct answer is: P280,000
Question 14
Question text
PFRS 9 permits an entity to make an irrevocable election to present in other
comprehensive income changes in the fair value of an investment in an equity
instrument. Amounts presented in other comprehensive income
.
Feedback
The correct answer is: Shall be subsequently transferred to retained earnings.
Question 15
Question text
Inlove Co. acquired for P4,000,000 equity instruments classified as FAFVTOCI.
Transaction cost incurred in the acquisition amounted to P700,000. On December
31, 2020, the fair value of the instrument was P5,500,000 and the estimated
transaction costs that would be incurred if the instruments were sold amounts to
P600,000. What amount of gain should be recognized in other comprehensive
income for the year ended December 31, 2020?
Feedback
Question 16
Question text
Glad Co. acquired an investment in equity instrument for P800,000 on 31 March
2020. The direct acquisition costs incurred were P140,000. On 31 December 2020 the
fair value of the instrument was P1,100,000 and the transaction costs that would be
incurred on sale were estimated at P120,000. If the investment were designated as
FA@FVTOCI, what gain would be recognized in the financial statements for the year
ended 31 December 2020?
Feedback
Question 17
Question text
Uplifted Co carries the following marketable equity securities on its books at
December 31, 2019 and 2020. All the securities were purchased during 2019.
FA@FVTOCI Cost, P5,100,000; FV 12.31.19 P4,800,000; FV 12.31.20, P5,000,000. The net
unrealized gain/loss at December 31, 2020 in accumulated other comprehensive
income in shareholders' equity is
Feedback
The correct answer is: P100,000 loss
Question 18
Question text
What is the principle for recognition of a financial asset in PFRS 9?
Feedback
The correct answer is: A financial asset is recognized when, and only when, the
entity becomes a party to the contractual provisions of the instrument.
Question 19
Question text
On January 2, 2020, Cheers Company purchased 40,000 shares of Jeers, Inc. stock
at P100 per share. Brokerage fees amounted to P120,000. The shares are designated
as FVTOCI. On December 31, 2020 the investment has a fair value of P4,200,000.
How much should be recognized in the 2020 other comprehensive income related
to these securities?
Feedback
The correct answer is: P 80,000
Question 20
Question text
When an investor classifies an investment in common stock as trading securities,
cash dividends are classified by the investor as:
Feedback
The correct answer is: Dividend income.
MTQ2_IESQuiz
Financial assets include
Feedback
The correct answer is: Deposit of cash
Question 2
Question text
A financial asset is any asset that is (choose the incorrect one)
Feedback
The correct answer is: A contractual right to exchange financial instruments with
another entity under conditions that are potentially unfavorable.
Question 3
Question text
What is the effect of stock dividend of the same class?
Feedback
The correct answer is: No effect on investment account but decrease in cost per
share.
Question 4
Question text
Which of the following statements is correct regarding unrealized gains or losses?
Feedback
The correct answer is: All statements are correct.
Question 5
Question text
iCare Co. acquired an equity investment for P1,500,000 and classified it as FVTOCI.
On December 31, 2018, the cumulative loss recognized in other comprehensive
income was P200,000 and the carrying amount of the investment was P1,300,000.
On December 31, 2019 the investee was in financial difficulty and the fair value of
the investment had fallen to P600,000. What cumulative amount of unrealized
should be reported as component of other comprehensive income in the
statement of changes in equity for the year ended December 31, 2019?
Feedback
Question 6
Question text
Stock rights as a form of a financial assets are measured initially at
Feedback
The correct answer is: Fair value
Question 7
Question text
per share to be held for trading. Brokerage fees amounted to P120,000. A P5
dividend per share of Merry, Inc. shares had been declared on December 15, 2019,
to be paid on March 31, 2020 to shareholders of record on January 31, 2020. What is
the initial measurement of the investment?
Feedback
The correct answer is: P3,800,000
Question 8
Question text
In 2017, Irresistible Co. purchased 10,000 equity securities at P45 per share
designated as a financial asset at fair value through profit or loss. It sold 2,000 shares
for P51 per share in 2018 and another 2,500 shares for P33 per share in 2019. The
shares were quoted per share at P47, P39, and P31 at December 31, 2017, 2018 and
2019, respectively. How much should be recognized in 2019 profit or loss as a result
of the fair value changes?
Feedback
Question 9
Question text
What is the effect of share split up?.
Feedback
The correct answer is: Increase in number of shares and decrease in cost per share.
Question 10
Question text
An equity instrument is any contract t evidencing a residual interest in the assets of
an entity after deducting all of its liabilities. It include all of the following, except
Feedback
The correct answer is: Preference shares capital with mandatory redemption date
or redeemable at the option of the holder.
Question 11
Question text
When stock dividends of different class are received, which is incorrect?
Feedback
The procedure is to allocate the cost of the original investment between the original
shares and the “different” stock dividends on the basis of fair value.
Question 12
Question text
On derecognition of nonmarketable equity securities, the difference between the
consideration received and the carrying amount of the investment.
Feedback
The correct answer is: Shall be recognized in profit or loss
Question 13
Question text
At which of the following dates has the shareholder theoretically realized income
from dividend?
Feedback
The correct answer is: The date the dividend is declared
Question 14
Question text
In 2018, Upbeat Co. purchased 20,000 shares of Downcast Co. for P100 per share on
May 15. An additional 30,000 shares were bought in July 19 for P120 each. Upbeat
received cash dividends at P10 per share on August 18 and a 20% stock dividend
on September 8. On December 11, Upbeat sold 30,000 shares of its investment at
P125 per share. What is the gain on the sale of the shares (use FIFO method)?
550,000
Feedback
Question 15
Question text
Property dividends
Feedback
The correct answer is: Dividend income at fair value of the property.
Question 16
Question text
Under the PFRS 9, which one is not a category of financial assets?
Feedback
The correct answer is: Financial assets held for sale.
Question 17
Question text
An entity shall derecognized a financial asset when either one of the following
conditions is met, except
Feedback
The correct answer is: The entity has retained substantially all risk and rewards.
Question 18
Question text
The following categories may be composed of both equity and debt securities,
except
Feedback
The correct answer is: Financial assets at amortized cost.
Question 19
Question text
An entity has preference shares which are redeemable on 12/31/23. Such
preference shares & its related preference dividend are presented in the 2020
financial statements as
Feedback
The correct answer is: Noncurrent liability and finance cost, respectively
Question 20
Question text
Smilelang Co. owns 20,000 shares of Frowning Co.’s 200,000 shares of P100 par, 6%
noncumulative, nonparticipating preference share capital and 10,000 ordinary
shares, representing 2% ownership of Frowning Co.. During 2019, Frowning declared
and paid preference dividends. No dividends had been declared or paid during
2018. In addition, Smilelang, received a 5% share dividend on ordinary shares from
Frowning when the quoted market price of Frowning’s ordinary share was P10. What
amount of dividend income should be reported in 2019?
Feedback
Question 21
Question text
Transactions costs incurred in connections with financial assets at fair value through
profit or loss are
Feedback
The correct answer is: Expensed outright
Question 22
Question text
P125 per share. What is the gain on the sale of the shares (use average method)?
Feedback
Question 23
Question text
It is any contract gives rise to both a financial asset of the one entity and a financial
liability or equity instrument of another entity.
Feedback
The correct answer is: Financial instrument
Question 24
Question text
Joyful Co. owns 50,000 shares of Gloom Co. at a cost of P5,000,000. Subsequently,
Joyful received stock share rights entitling it to purchase 12,500 shares at P100 per
share. The share is quoted right-on at P125. What is the cost of the new investment if
all of the stock rights are exercised (stock right accounted for separately)?
Feedback
Question 25
Question text
Smilelang Co. owns 20,000 shares of Frowning Co.’s, P100 par, 6% cumulative,
nonparticipating preference share capital and 10,000 ordinary shares. During 2019,
Frowning declared and paid preference dividends. No dividends had been
declared or paid during 2018. In addition, Smilelang, received a 5% share dividend
on ordinary shares from Frowning when the quoted market price of Frowning’s
ordinary share was P10. What amount of dividend income should be reported in
2019?
Feedback
Question 26
Question text
It is a transaction whereby the outstanding shares are called in and replaced by a
larger number, accompanied by a reduction in the par or stated value.
Feedback
The correct answer is: Share split up
Question 27
Question text
Liquidating dividends (choose the incorrect statement)
Feedback
The correct answer is: Are credited to income
Question 28
Question text
The IAS term for stock dividend is
Feedback
The correct answer is: Bonus issue
EMPLOYEE BENEFITS
FTQ1Quiz
An employer offered for a short period of time special termination benefits to some
employees. The employees accepted the offer which provided for immediate lump
sum payments and future payments at the end of the next two years. The amounts
can be reasonably estimated. The amount of expense recognized in the current
year should include
Feedback
The correct answer is: The lump sum payments and the present value of the future
payments
Question 2
Question text
A liability for compensated absences should
Feedback
The correct answer is: Be accrued during the period following vesting.
Question 3
Question text
An entity shall use the projected unit credit method to determine the present value
of its defined benefit obligations and the related current service cost and, where
applicable, past service cost. The projected unit credit method is also known as
Feedback
The correct answer is: The accrued benefit method pro-rated on service.
Question 4
Question text
Which of the following is a characteristic of a defined benefit plan?
Feedback
If actuarial or investment experience are worse than expected, the entity’s
obligation may be increased.
Question 5
Question text
Short- term employee benefits include all, except
Feedback
The correct answer is: Profit-sharing and bonuses payable in more than twelve
months after the end of the reporting period.
Question 6
Question text
Interest cost included in the net pension cost recognized by an employer
sponsoring a defined benefit plan represents the
Feedback
The correct answer is: Increase in the projected benefit obligation due to the
passage of time.
Question 7
Question text
The components of defined benefit cost include
Feedback
The correct answer is: All of these mentioned are components of defined benefit
cost.
Question 8
Question text
The vested benefits in a pension plan represent
Feedback
The correct answer is: Benefits that are not contingent on the employee's
continuing in the service of the employer.
Question 9
Question text
A multiemployer plan is defined as
Feedback
The correct answer is: A defined contribution plan or defined benefit plan that pools
the assets contributed by various entities that are not under common control and
uses those assets to provide benefits to employees of more than one entity.
Question 10
Question text
An-entity made a public announcement of a commitment to a voluntary
redundancy plan. The entity has an obligation to pay employees that choose
voluntary redundancy a lump sum equal to twice their gross annual salary. What is
the obligation to pay employees that choose voluntary redundancy?
Feedback
The correct answer is: A short-term employee benefit
Question 11
Question text
Under what condition is an employer required to accrue a liability for sick pay?
Feedback
The correct answer is: Sick pay benefits vest.
Question 12
Question text
Which statement is incorrect regarding short-term employee benefits?
render service that increases their entitlement to future paid absences.
Feedback
The correct answer is: PAS 19 requires disclosures about short-term employee
benefits for key management personnel.
Question 13
Question text
Which statement is incorrect regarding post-employment benefit plans?
None of the statements are incorrect.
Feedback
The correct answer is: None of the statements are incorrect.
Question 14
Question text
Employees are entitled to 10 days holiday leave per year. Unused holiday leave
may be carried forward until the employee leaves employment at which time the
entity will pay the employee for all unused holiday leave. What is the holiday leave?
'
Feedback
The correct answer is: Other long-term employee benefit
Question 15
Question text
What are compensated absences?
Feedback
The correct answer is: Paid time off
Question 16
Question text
Vested benefits
Feedback
The correct answer is: Are defined' by all of these statements.
Question 17
Question text
Which of the following criteria is not required for the recognition of a liability for
compensated absences?.
Feedback
The correct answer is: Payment of the obligation will require the use of current
assets.
Question 18
Question text
If the payment of employees' compensation for future absences is probable, the
amount can be reasonably estimated and the obligation relates to rights that
accumulate, the compensation should be
Feedback
The correct answer is: Accrued if attributable to employees' services already
rendered.
Question 19
Question text
These are employee benefits that are payable as a result of an entity's decision to
terminate an employee's employment before the normal retirement date, or an
employee's decision to accept an offer of benefits in exchange for termination of
employment.
Feedback
The correct answer is: Termination benefits
Question 20
Question text
Which measure requires the use of future salaries in the computation of benefit
obligation?
Feedback
The correct answer is: Projected benefit obligation
Question 21
Question text
An entity shall recognize a liability and expense for termination benefits
Feedback
The correct answer is: At the earlier of the two statements.
Question 22
Question text
In rare circumstances, when a retirement benefit plan has attributes of both defined
contribution and defined benefit plan, the plan is deemed
Feedback
The correct answer is: Defined benefit plan
Question 23
Question text
Feedback
The correct answer is: Pensions.
Question 24
Question text
Which of the following statements best describes "other long-term employee
benefits"?
Feedback
The correct answer is: Benefits that are not expected to be settled within twelve
Question 25
Question text
Which of the following statements is incorrect in relation to termination benefits?
retirement is a postemployment benefit rather than a termination benefit.
Feedback
The correct answer is: A benefit that is in any way dependent on providing service
in the future is a termination benefit.
Question 26
Question text
What is the discount rate for pension plans?
Feedback
The correct answer is: The market yield at the end of the reporting period for high-
quality corporate bonds
Question 27
Termination benefits are employee benefits provided in exchange for the
termination of an employee’s employment as a result of:
Feedback
The correct answer is: Either of the two statements
Question 28
Question text
Feedback
The correct answer is: The defined benefit obligation exceeds the fair value of plan
assets.
Question 29
Question text
When may an entity net assets and liabilities of several pension plans?
Feedback
The correct answer is: Assets and liabilities may be netted when there is a legally
enforceable right to use the assets of one and to settle the obligations of another
plan.
Question 30
Question text
Which of the following is not a characteristic of short-term employee benefits?
Feedback
The correct answer is: Short-term employee benefit obligations are measured on a
discounted basis.
PRELIM
A company declared a cash dividend on its ordinary share in December 2019
payable in January 2020. Retained earnings would
Feedback
Question 2
Question text
A company issued rights to its existing shareholders to acquire, at P15 per share,
5,000 unissued shares of ordinary share with a par value P10 per share. Ordinary
share will be credited at
Feedback
The correct answer is: P10 per share when the rights are exercised
Question 3
Question text
A company issued rights to its existing shareholders to purchase for par unissued
shares of ordinary share with a par value of P10 per share. When the market value
of the ordinary share was P12 per share, the rights were exercised. Ordinary share
should be credited at P10 per share and
Feedback
The correct answer is: Additional Paid-in capital credited at P2 per share
Question 4
Question text
A company issued rights to its existing shareholders to purchase, for P30 per share,
unissued shares of P15 par value ordinary share. When the rights lapse
Feedback
The correct answer is: No entry will be made
Question 5
Question text
Feedback
The correct answer is: Purchasing treasury share
Question 6
Question text
Aguanta Co. decided to split its P25 par value common stock for a 5-for-1 scheme.
Which of the following is true?
Feedback
The correct answer is: The new common stock will have a par value of P5 per share
after the split
Question 7
Question text
At the date of financial statements, ordinary share shares issued would exceed
ordinary share shares outstanding as a result of the
Feedback
The correct answer is: Purchase of treasury share
Question 8
Question text
At the start of current year, Saionra Co. was organized with authorized capital of
200,000 shares of P100 par value. On January 10, it issued 50,000 shares at P110 per
share. On March 25, 2,000 shares were issued when the shares were quoted at P120
a share in the stock market. The company acquired land having a fair value of
P1,300,000 in exchange for issuing 10,000 shares which was quoted in the stock
exchange at P110 per share. What amount should be reported as share capital?
Feedback
Question 9
Question text
exchange at P110 per share. What amount should be reported as share premium?
Feedback
Question 10
Question text
At the start of the current year, Saionaini Co. was authorized by the SEC to issue
800,000 shares. Immediately after, the company issued 600,000 shares. In the middle
of the year, the company reacquired but did not cancel 50,000 shares. Then a
month before the year ended the company declared a two for one stock split. At
the end of the year the company declared dividends. How many shares are
entitled to receive dividends at year end?
1,500,000
Feedback
Question 11
Question text
At the start of the year, Cassiaion Co. issued 500,000 shares of P1 par value for P10
per share. During the year, the company reacquired and retired 20,000 shares at
P15 per share. As a result of the retirement, what amount should be debited to
share premium?
Feedback
Question 12
Question text
retained earnings?
Feedback
Question 13
Question text
Cassaionoi Co. was incorporated October 2020 and issued 200,000 shares par value
of P10 at P15 per share. During the period October 2020 to December 31, 2021, the
company reported a profit of P750,000 and paid cash dividends of P380,000. In the
same period, the company also reacquired 12,000 shares at P12 per share and
subsequently reissued 8,000 shares for P8 per share and retired the remaining
treasury shares. What is the total shareholders’ equity on December 31, 2021?
Feedback
Question 14
Question text
During the year, Casaionbaani Co. issued P110 per share, 150,000 convertible
preference shares with P100 par value. One preference share may be converted
into three ordinary shares of P25 par value at the option of the preference
shareholder. At year-end, all the preference shares were converted into ordinary
shares. The market value of the ordinary share at the conversion date was P40.
What amount should be credited to ordinary share capital as a result of
conversion?
Feedback
Question 15
Question text
shares. The market value of the ordinary share at the conversion date was P40. By
what amount did share premium increase as a result of conversion?
Feedback
Question 16
Question text
Easybreezy Co. held 100,000 shares of P1 par value as treasury reacquired for
P120,000. At year-end, the entity reissued all 100,000 shares for P190,000. What is
credited for the excess of the reissue price over the cost of treasury shares?
Feedback
The correct answer is: Share premium P70,000
Question 17
Question text
Famous Company has not declared or paid dividends on its cumulative preference
share in the last three years. These dividends should be reported
Feedback
The correct answer is: In a note to the financial statements
Question 18
Question text
Five thousand (5,000) shares of ordinary share with a par value of P10 per share
were issued initially at P12 per share. Subsequently, one thousand (1,000) of these
shares were acquired as treasury share at P15 per share. Assuming that the cost
method of accounting for treasury share transactions is used, what is the effect of
the acquisition of the treasury share on the share premium and retained earnings,
respectively?
Feedback
The correct answer is: No effect, no effect
Question 19
Question text
Fully participating preference share means that:
Feedback
The correct answer is: The ordinary shareholders receive a dividend rate per share
equal to the preference and all excess dividends are share proportionately
between the two classes.
Question 20
Question text
Gains and losses on the purchase and resale of treasury shares may be reflected
only in
Feedback
The correct answer is: Paid in capital and retained earnings accounts
Question 21
Question text
How would a share split affect the company’s assets, total shareholders’ equity and
share premium, respectively?
Feedback
The correct answer is: No effect, no effect, no effect
Question 22
Question text
How would retained earnings be affected by the declaration stock dividend and
Feedback
The correct answer is: Decrease, no effect
Question 23
Question text
How would the declaration of a 20% stock dividend by a Corporation affect it’s
retained earnings and total shareholders’ equity respectively?
Feedback
Question 24
Question text
In accordance with PIC Q&A No. 2011-04, the following are generally treated as
deduction to equity, except
Feedback
The correct answer is: Stock exchange listing fees
Question 25
Question text
Leesudni Company issued 200,000 shares of P100 par, 10% cumulative preference
share issued. Each warrant gives the holder the right to purchase one ordinary
share, P50 par value, for P100. The market value of the warrant after the preference
shares were issued was P15. The proceeds to be allocated to the preference shares
is
Feedback
Question 26
Question text
Naglaum Co. declared and distributed 10% share dividend with fair value of
P1,500,000 and par value of P1,000,000, and 25% share dividend with fair value of
P4,000,000 and par value of P3,500,000. What aggregate amount should be
debited to retained earnings for the share dividends?
Feedback
Question 27
Question text
NoBae Co. provided the following information at year end: Preference share
capital, P100 stated value, P4,600,000; Share premium on preference share,
P1,610,000; Ordinary share capital, P10 par, P10,500,000; Share premium on ordinary
share P5,500,000; Subscribed ordinary share capital, P100,000; Subscription
receivable on ordinary shares, P75,000; Bonds payable, P5,000,000; Premium on
bonds payable, P1,000,000; Appropriated retained earnings, P2,000,000;
Unappropriated retained earnings, P1,800,000. What is the amount of legal capital?
Feedback
Question 28
Question text
On February 1, 2020, authorized ordinary share was sold on a subscription basis at a
price in excess of par value, and 20% of the subscription price was collected. On
May 1, 2020 the remaining 80% of the subscription price was collected. Share
premium would increase on February 1 or May 1, respectively?
Feedback
The correct answer is: YES, NO
Question 29
Question text
On February 28, 2020, Wailisod Co. declared a 10% share dividend. On this date, the
company’s 30,000 outstanding shares with par value of P20 was quoted in the stock
exchange at P90 per share. The share dividends were distributed on September 30
when the quote price went up to P100 per share. What amount should be credited
to share premium resulting from the share dividend?
Feedback
Question 30
Question text
On January 1, 2019, Confidentcaio Co. had 100,000 outstanding shares and 25,000
shares held in treasury. During the first quarter, the company distributed 13,000
treasury shares to its officers. It declared a 3 for 1 stock split which took effect on
October 31. In November 2, the company purchased 5,000 of its own shares to stop
a company takeover. How many shares were issued on December 31, 2019?
Feedback
Question 31
Question text
On January 1, 2019, Confidentcaio Co. had 100,000 outstanding shares and 25,000
shares held in treasury. During the first quarter, the company distributed 13,000
treasury shares to its officers. It declared a 3 for 1 stock split which took effect on
October 31. In November 2, the company purchased 5,000 of its own shares to stop
a company takeover. How many shares were outstanding on December 31, 2019?
Feedback
Question 32
Question text
On January 1, 2019, Confidentpa Co. had 20,000 treasury shares of P100 par value
that have been acquired at P120 per share. In December, the company reissued
15,000 of these treasury shares at P150 per share. What amount should be reported
as appropriated retained earnings for treasury share transactions?
Feedback
Question 33
Question text
On January 1, 2019, Massaion Co. reported P1,750,000 of appropriated retained
earnings for the construction of a new building which was completed in 2019 at a
total cost of P1,500,000. During the year the company appropriated P1,200,000 of
retained earnings for the construction of a new warehouse. Also, P2,000,000 of cash
was restricted to cover the partial retirement of bonds in 2020. What amount of
appropriated retained earnings should be reported on the December 31, 2019
financial statements?
Feedback
Question 34
Question text
On July 31, 2011, ACD Corporation purchased 500,000 shares of XYZ
Corporation. On December 31,2012 ACD distributed 250,000 shares of XYZ share as
a dividend to ACD’s shareholders. This is an example of a
Feedback
The correct answer is: Property dividend
Question 35
Question text
On June 30, 2020, Steelheart Mining, Inc. declared a cash dividend of P8,000,000 to
shareholders of July 15, 2020 and payable on September 1, 2020. As at June 30, the
company reported share capital of P100,000,000, share premium of P3,000,000 and
retained earnings of P6,000,000. It also reported an accumulated depletion of
P2,000,000. What amount should be recognized as liquidating dividend?
Feedback
Question 36
Question text
On October 31, 2019, Saionni? Co. declared a property dividend consisting of
inventories payable on March 31, 2020. The carrying amount of the inventories at
the date of declaration is P3,000,000 and the fair value is P2,500,000. However, the
fair value less cost to distribute the inventory is P2,200,000 on December 31, 2019
and P2,000,000 on March 31, 2020. What is the dividend payable on December 31,
2019?
Feedback
Question 37
Question text
and P2,000,000 on March 31, 2020. What amount of loss on distribution of dividend is
recognized on March 31, 2020?
Feedback
Question 38
Question text
Pinacasaionjud Co. provided the following data at year end: Authorized share
capital, P10,000,000; Issued share capital, P6,000,000; Subscribed share capital,
P2,000,000; Subscription receivable, collectible within one year, P800,000; Share
premium, P1,000,00; Appropriated retained earnings, P1,200,000; Unappropriated
retained earnings, P600,000; Revaluation surplus, P400,000; Treasury shares, at cost,
P200,000. What amount should be reported as total shareholders’ equity?
Feedback
Question 39
Question text
par value at the option of the stockholder. Subsequently, all of the preferred shares
were converted into common shares. The fair value of the common shares on the
date of conversion was P30. What amount should be credited to share premium or
Feedback
Question 40
Question text
Select the statements that is incorrect concerning the appropriations of retained
earnings:
Feedback
The correct answer is: Appropriations of retained earnings reflect funds set aside for
a designated purpose, such as plant expansion
Question 41
Question text
The directors of Nolovelife, Inc. have decided to issue a share dividend. The P50 par
value share is currently selling at P60. The selling price is not expected to be
affected by the share dividend. The company which has an authorized capital of
1,000,000 shares had issued 500,000 shares, of which 100,000 shares are in treasury.
In order to capitalized P2,400,000 of retained earnings, what percentage should be
declared as share dividends by the directors?
Feedback
The correct answer is: 10%
Question 42
Question text
The entry to record the issuance of ordinary share for fully paid share subscription is
Feedback
The correct answer is: Debit Ordinary Share Subscribed: Credit Ordinary Share
Question 43
Question text
The equity section of Loveless Co revealed the following information on December
31, 2019: Preference share capital, P100 par, P5,000,000; Share premium-preference
shares, P2,000,000; Ordinary share capital, P50, P3,200,000; Share premium-ordinary
shares, P500,000; Subscribed ordinary share capital, P800,000; Appropriated
retained earnings, P250,000; Unappropriated retained earnings, P3,500,000;
Subscription receivable ordinary shares, P400,000; OCI-Unrealized loss on IESFVOCI,
P600,000; Treasury shares ordinary, P1,000,000. How much is the contributed capital
of Loveless Co. as of December 31, 2019?
Feedback
Question 44
The par value of ordinary shares represents
Feedback
The correct answer is: The legal nominal value assigned to the shares
Question 45
Question text
The residual interest in a corporation belongs to the
Feedback
The correct answer is: Ordinary shareholders.
Question 46
Unlike a stock split, a share dividend requires a formal journal entry in the financial
Feedback
capital share
Question 47
Question text
When a portion of shareholders’ original investment is returned in the form of a
dividend, it is called a
Feedback
The correct answer is: liquidating dividend
Question 48
Question text
Which of the following actions or events does not result in an addition to retained
earnings?
Feedback
The correct answer is: Issuance of a 3-for-1 share split
Question 49
Question text
Which of the following is NOT considered a type of preference share?
Feedback
The correct answer is: Premium preference share
Question 50
Question text
Which of the following statements is correct?
Feedback
The correct answer is: A stock dividend (declared and issued) does not change the
total assets, total liabilities, or total stockholders equity of the issuing corporation.
Question 51
Question text
Which statement is incorrect regarding measurement of a liability to distribute non-
cash assets as dividend to the entity’s owners?
Feedback
The correct answer is: At the end of each reporting period and at the date of
settlement, the entity shall review and adjust the carrying amount of the dividend
payable, with any changes in the carrying amount of the dividend payable
recognized in profit or loss.
MIDTERM
Feedback
equity.
Question 2
Question text
2020. The direct acquisition costs incurred were P140,000. On 31 December 2020 the
fair value of the instrument was P1,100,000 and the transaction costs that would be
incurred on sale were estimated at P120,000. If the investment were designated as
FA@FVTOCI, what gain would be recognized in the financial statements for the year
ended 31 December 2020?
Feedback
Question 3
Question text
earnings for the construction of a new building which was completed in 2019 at a
total cost of P1,500,000. During the year the company appropriated P1,200,000 of
retained earnings for the construction of a new warehouse. Also, P2,000,000 of cash
was restricted to cover the partial retirement of bonds in 2020. What amount of
appropriated retained earnings should be reported on the December 31, 2019
financial statements?
Feedback
Question 4
Question text
It is a transaction whereby the outstanding shares are called in and replaced by a
larger number, accompanied by a reduction in the par or stated value.
Feedback
Question 5
Question text
.
Feedback
Question 6
Question text
The pre-emptive right of an ordinary shareholder is the right to
Feedback
class.
Question 7
Question text
designated as a financial asset at fair value through profit or loss. It sold 2,000 shares
for P51 per share in 2018 and another 2,500 shares for P33 per share in 2019. The
shares were quoted per share at P47, P39, and P31 at December 31, 2017, 2018 and
2019, respectively. How much should be recognized in 2019 profit or loss as a result
Feedback
Question 8
Question text
Smilelang Co. owns 20,000 shares of Frowning Co.’s 200,000 shares of P100 par, 6%
noncumulative, nonparticipating preference share capital and 10,000 ordinary
shares, representing 2% ownership of Frowning Co.. During 2019, Frowning declared
and paid preference dividends. No dividends had been declared or paid during
2018. In addition, Smilelang, received a 5% share dividend on ordinary shares from
Frowning when the quoted market price of Frowning’s ordinary share was P10. What
amount of dividend income should be reported in 2019?
Feedback
Question 9
Question text
Property dividends
Feedback
Question 10
Question text
Feedback
share capital.
Question 11
Question text
Feedback
Question 12
Question text
Feedback
Question 13
Question text
On January 2, 2020, Cheers Company purchased 40,000 shares of Jeers, Inc. stock
at P100 per share. Brokerage fees amounted to P120,000. The shares are designated
as FVTOCI. On December 31, 2020 the investment has a fair value of P4,200,000.
How much should be recognized in the 2020 other comprehensive income related
to these securities?
Feedback
Question 14
Question text
share premium?
Feedback
Question 15
Question text
On December 8, 2020 Cassaion Co. declared a 5% share dividend on 100,000
issued and outstanding shares of P20 par value, which had a fair value of P50 per
share at the date of declaration. The share dividend was distributed on February 28,
2021. What is the increase in current liabilities as a result of the share dividend
declaration?
Feedback
Question 16
Question text
Feedback
Question 17
Question text
Feedback
contingencies.
Question 18
Question text
When an investor classifies an investment in common stock as trading securities,
cash dividends are classified by the investor as:
Feedback
The correct answer is: Dividend income.
Question 19
Question text
from dividend?
Feedback
Question 20
Question text
Feedback
Question 21
Correct
Mark 1.00 out of 1.00
Flag question
Question text
Feedback
Question 22
Question text
Pretty Co. purchased 10,000 shares of Prettier Inc. on June 30, 2020. Pretty received
a share dividend of 2,000 shares on August 15, 2020 when the carrying amount per
share was P400 and the market value was P350. Par value per share was P100.
Prettier Inc. declared and paid cash dividend of P15 per share on September 15,
2020. What amount of dividend income will be reported in the income statement of
Pretty Co. for the year ended September 30, 2020?
Feedback
Question 23
Question text
Feedback
Question 24
Question text
Feedback
Question 25
Question text
and P2,000,000 on March 31, 2020. What is the dividend payable on December 31,
2019?
Feedback
Question 26
Question text
Feedback
The correct answer is: Shall be subsequently transferred to retained earnings.
Question 27
Question text
What is the effect of share split up?
Feedback
The correct answer is: Increase in number of shares and decrease in cost per share.
Question 28
Question text
Feedback
Question 29
Question text
Feedback
Question 30
Question text
Saionrabai Co. had 80,000 ordinary shares outstanding at the start of the year. The
company distributed a 15% stock dividend in April and another 10% stock in July.
After acquiring 10,000 shares of treasury in October, the company split the share 4
for 1 in December. How many ordinary shares are outstanding at the end of the
year?
Feedback
Question 31
Question text
P2,000,000; Subscription receivable, collectible within one year, P800,000; Share
premium, P1,000,00; Appropriated retained earnings, P1,200,000; Unappropriated
retained earnings, P600,000; Revaluation surplus, P400,000; Treasury shares, at cost,
P200,000. What amount should be reported as total shareholders’ equity?
Feedback
Question 32
Question text
Inc. shares had been declared on December 15, 2019, to be paid on March 31,
2020 to shareholders of record on January 31, 2020. The shares are designated as
much should be recognized in the 2020 other comprehensive income related to
these securities?
Feedback
Question 33
Question text
P1,500,000 and par value of P1,000,000, and 25% share dividend with fair value of
P4,000,000 and par value of P3,500,000. What aggregate amount should be
Feedback
Question 34
Question text
Feedback
Question 35
Question text
Joyful Co. owns 50,000 shares of Gloom Co. at a cost of P5,000,000. Subsequently,
Joyful received stock share rights entitling it to purchase 12,500 shares at P100 per
share. The share is quoted right-on at P125. What is the cost of the new investment if
all of the stock rights are exercised (stock right accounted for separately)?
Feedback
Question 36
Question text
On January 1, 2019, Confidentpa Co. had 20,000 treasury shares of P100 par value
that have been acquired at P120 per share. In December, the company reissued
15,000 of these treasury shares at P150 per share. What amount should be reported
as appropriated retained earnings for treasury share transactions?
Feedback
Question 37
Question text
Share premium on ordinary and preference shares
Feedback
Question 38
Question text
Investments in equity instruments are financial assets because they are
Feedback
The correct answer is: Equity instruments of another entity.
Question 39
Question text
exchange at P110 per share. What amount should be reported as share premium?
Feedback
Question 40
Question text
Transactions costs incurred in connections with financial assets at fair value through
profit or loss are
Feedback
Question 41
Question text
Feedback
The correct answer is: Amortized cost
Question 42
Question text
P125 per share. What is the gain on the sale of the shares (use average method)?
Feedback
Question 43
Saionaini Co. issued 60,000, P50 par value, ordinary shares and 20,000, P100 par
value, preference shares for a total consideration of P7,500,000. At this date, the
ordinary share was selling for P100 per share and the preference share was selling
for P150 per share. What amount of the proceeds should be allocated to the
preference shares?
Feedback
Question 44
Question text
Feedback
share.
Question 45
Question text
Feedback
Question 46
Question text
An equity instrument is any contract t evidencing a residual interest in the assets of
an entity after deducting all of its liabilities. It include all of the following, except
Feedback
The correct answer is: Preference shares capital with mandatory redemption date
or redeemable at the option of the holder.
Question 47
Question text
On January 1, 2019, Smart Co. purchased 100,000 equity securities for trading for
P40 per share, excluding transaction cost which amounts to P1 per share. On
Feedback
Question 48
Question text
An equity instrument of another entity.
Feedback
Question 49
Question text
Feedback
Question 50
per share to be held for trading. Brokerage fees amounted to P120,000. A P5
dividend per share of Merry, Inc. shares had been declared on December 15, 2019,
to be paid on March 31, 2020 to shareholders of record on January 31, 2020. What is
the initial measurement of the investment?
Feedback
SHAREHOLDERS’ EQUITY - PRELIM QUIZ 1
1. On December 8, 2020 Cassaion Co. declared a 5% share dividend on 100,000 issued and outstanding
shares of P20 par value, which had a fair value of P50 per share at the date of declaration. The share
dividend was distributed on February 28, 2021. What is the increase in current liabilities as a result of the
share dividend declaration?
Retained Earnings (5,000 x 50) 250,000
Share dividend payable (5,000 x 20) 100,000
Share premium 150,000
increase = 0
2. On June 1, 2020, Massaion Co. was incorporated and was authorized to issue the following: Common
stocks-100 par value, 200,000 shares; Preferred stocks, 10%, P50 par value, 200,000 shares. During the
year, the company issued 150,000 common shares for P18,000,000 and 50,000 preferred shares at P60
per share. In addition, on November 11, subscriptions for 20,000 preferred shares were taken at P100 per
share. 25% of the subscription were paid and the balance payable February of next year. The income
summary account has a credit balance of 5,000,000. What is the amount of contributed capital on
December 31, 2020?
Ordinary Share Capital 18,000,000
Preference Share Capital (50,000x60) 3,000,000
Subscribed Preference Share Capital (20,000x100) 2,000,000
Total contributed capital 23,000,000
3. Saionaoi Company was organized on January 1, 2018. On that date it issued 500,000, P10 par value,
ordinary shares at P15 per share. During the period January 1, 2018 through December 31, 2020,
Saionaoi reported profit of P3,000,000 and paid cash dividends of P500,000. On January 5, 2020,
Saionaoi purchased 50,000 ordinary shares at P20 per share. On December 31, 2020, 45,000 treasury
shares were sold at P30 per share and retired the remaining treasury shares. What is the total
shareholders' equity on December 31, 2020?
Issuance (500,000x15) 7,500,000
Net Income 3,000,000
Less: Cash Dividends 500,000
Treasury Shares (50,000x20) 1,000,000 -1,500,000
Reissue of Treasury Shares (45,000x30) 1,350,000
TOTAL SHE 10,350,000
4. Leesudni Company issued 200,000 shares of P100 par, 10% cumulative preference shares for
P25,000,000. One detachable warrant was attached to each preference share issued. Each warrant
gives the holder the right to purchase one ordinary share, P50 par value, for P100. The market value of
the warrant after the preference shares were issued was P15. The proceeds to be allocated to the
preference shares is
Cumulative Preference Share 25,000,000
Warrants (200,000x15) 3,000,000
Preference Share 22,000,000
5. Saionasad Co. issued 8,000 convertible preferred shares with P100 par value at P105. One preferred
share can be converted into three common shares with P25 par value at the option of the stockholder.
Subsequently, all of the preferred shares were converted into common shares. The fair value of the
common shares on the date of conversion was P30. What amount should be credited to share premium or
Issuance of preference (8,000x100) 800,000
Par Value - Common (8,000x3x25) 600,000
6. Saionaini Co. issued 60,000, P50 par value, ordinary shares and 20,000, P100 par value, preference
shares for a total consideration of P7,500,000. At this date, the ordinary share was selling for P100 per
share and the preference share was selling for P150 per share. What amount of the proceeds should be
allocated to the preference shares?
Market Value Fraction Allocated
Ordinary Shares (60,000x100) 6,000,000 6/9 5,000,000
Preference Shares (20,000x150) 3,000,000 3/9 2,500,000
9,000,000 7,500,000
7. When collectibility is reasonably assured, the excess of the subscription price over the stated value of
the no-par subscribed share capital shall 'be recorded as
-Share premium when the subscription is recorded
8. When the total shareholders' equity is smaller than the amount of contributed capital, this deficiency is
called
- A deficit
9. A company issued rights to its existing shareholders to acquire, at P15 per share, 5,000 unissued
shares of ordinary share with a par value P10 per share. Ordinary share will be credited at
-P10 per share when the rights are exercised
10. When a portion of shareholders' original investment is returned in the form of a dividend, it is called a
-liquidating dividend
11. When a portion of shareholders' original investment is returned in the form of a dividend, it is called a
-Restrict earnings available for dividends
12. The issuance of preference shares

-Increases preference shares outstanding
13. The issuer shall directly charge retained earnings for the fair value of the shares issued in
-Ten percent stock dividend
14. When an entity settles the property dividend payable, it shall recognize the difference between the
carrying amount of the asset distributed and the carrying amount of the dividend payable in
-Profit or' loss
15. An entity shall measure a liability to distribute noncash asset as dividend to the owners at
-Fair value of the asset distributed
16. Only a memorandum entry is made when

-Entities issue rights to existing shareholders.
17. The total cost of treasury stock should be reported as

-Deduction from stockholders' equity
18. Aguanta Co. decided to split its P25 par value common stock for a 5-for-1 scheme. Which of the
following is true?
-The new common stock will have a par value of P5 per share after the split
19. Transaction costs that are directly attributable to the issuance of new shares should be
-Deducted from equity, net of any related income tax benefit
20. Paid in capital does not include

-Capital accumulated by retention of earnings
21. Which of the following is NOT considered a type of preference share?
-Premium preference share
22. A company issued rights to its existing shareholders to purchase, for P30 per share, unissued shares
of P15 par value ordinary share. When the rights lapse
-No entry will be made
23. Fully participating preference share means that:

-The ordinary shareholders receive a dividend rate per share equal to the preference and all excess
dividends are share proportionately between the two classes.
24. Gains and losses on the purchase and resale of treasury shares may be reflected only in
-Paid in capital and retained earnings accounts
25. When a share dividend is declared and issued

-Total shareholders' equity does not change.
26. Which statement is incorrect regarding measurement of a liability to distribute non-cash assets as
dividend to the entity's owners?
-At the end of each reporting period and at the date of settlement, the entity shall review and adjust
the carrying amount of the dividend payable, with any changes in the carrying amount of the
dividend payable recognized in profit or loss.
27. Gain and loss on retirement of treasury shares shall not be included in profit or loss. If the retirement
results in a gain, such gain shall be credited to
-Share premium
28. In accordance with PIC Q&A No. 2011-04, the following are generally treated as deduction to equity,
except
-Recording the source of each of the various elements of shareholders' equity
29. In accounting for shareholders' equity, the accountant is primarily concerned with which of the
following?
-Recording the source of each of the various elements of shareholders' equity
30. Transaction costs directly attributable to the issuance of new shares include all of the following, except
-Road show presentation
31. Total shareholders' equity represents

-A claim against a portion of the total assets of an entity.
32. How would retained earnings be affected by the declaration of share dividend and share split,
respectively?
-Decrease and No effect
33. The entry to record the issuance of ordinary share for fully paid share subscription is
-Debit Ordinary Share Subscribed: Credit Ordinary Share
34. Unlike a stock split, a share dividend requires a formal journal entry in the financial accounting records
because
-Stock dividends represent a transfer from retained earnings to capital share
35. How would the declaration of a 20% stock dividend by a Corporation affect it's retained earnings and
total shareholders' equity respectively?
-Decrease, no effect
36. When an entity calls in all of the preference shares for more than the original issue price, the excess
paid above the original issue price should be
-Charged against retained earnings
37. The term residual owner means that shareholders

-Bear the ultimate risks and receive the benefits of ownership.
38. At the date of the financial statements, shares issued would exceed shares outstanding as a result of
-Purchase of treasury shares
39. An entity issued what is called a "20% share dividend". At what amount per share should retained
earnings be reduced for the transaction?
-Par value
40. When preference shares are purchased and retired by the issuing entity for less than original issue
price, proper accounting for the retirement
-Increases the contributed capital of the ordinary shareholders
41. An entry is not made on the

-Date of record
42. Cash and property dividends should be recorded as liabilities on the

-Date of declaration
43. Which is true concerning share capital transactions?

-All of these statements are true concerning share capital transactions.
44. Which of the following statements is incorrect concerning retained earnings?

-A deficit in retained earnings shall be presented as an asset.
45. The par value of an ordinary share represents

-The legal nominal value assigned to the share
46. The proceeds from issuance of shares for a consideration other than cash should be measured by the
-Fair value of the consideration received
47. Saionagud Co issued 1,000 shares with P5 par to Atty. Abogago as compensation for 500 hours of
legal services performed. Atty. Abogago rate is P320 per hour. On the date of issuance, the share was
quoted on a public exchange at P140. What amount should share premium increase as a result of the
transaction?
Legal Expense (1,000x140) 140,000
Share Capital (1,000x5) 5,000
Share Premium 135,000
Note: 135,000 answer sa Prac Acc and even sa mga yt tutorials pero ka Sir Amparado is 155,00 :)))
48. Saionra Co. provided the following accounts at year end: Issued share capital, P3,000,000;
Subscribed share capital, P1,000,000; Subscription receivable, P600,000; Share premium, P400,00;
Appropriated retained earnings, P400,000; Unappropriated retained earnings, P200,000; Donated capital,
P300,000. What amount should be reported as total shareholders' equity?
Share Capital 3,000,000
Subscribed Share Capital 1,000,000
Less: Subscription receivable -600,000
3,400,000
Appropriated Retained Earnings 400,000
Unapproriated Retained Earning 200,000
Donated Capital 300,000
TOTAL SHE 4,700,000
49. At the beginning of the current year, Saionra Co. declared a 1 for 5 reverse share split, when the
market value per share was P100. Prior to the split, the entity had 10,000 shares of P10 par value issued
and outstanding. What is the par value of the share after the share split?
Shares 10,000 /5 2,000 shares
Par Value 10 *5 50 par value
50. Saionrabai Co. had 80,000 ordinary shares outstanding at the start of the year. The company
distributed a 15% stock dividend in April and another 10% stock in July. After acquiring 10,000 shares of
treasury in October, the company split the share 4 for 1 in December. How many ordinary shares are
outstanding at the end of the year?
Original Shares 80,000
Share dividend - April (80,000x15%) 12,000
Total 92,000
Share dividend - July (92,000x10%) 9,200
Issues before split 101,200
Issues after split (101,200x4) 404,800
Treasury Shares after split (10,000x4) 40,000
Outstanding Shares 364,800
PRELIM EXAMINATON
1. On January 1, 2019, Confidentpa Co. had 20,000 treasury shares of P100 par value that have been
acquired at P120 per share. In December, the company reissued 15,000 of these treasury shares at P150
per share. What amount should be reported as appropriated retained earnings for treasury share
transactions?
-600,000
2. Unlike a stock split, a share dividend requires a formal journal entry in the financial accounting records
because
-Stock dividends represent a transfer from retained earnings to capital share
3. On June 30, 2020, Steelheart Mining, Inc. declared a cash dividend of P8,000,000 to shareholders of
July 15, 2020 and payable on September 1, 2020. As at June 30, the company reported share capital of
P100,000,000, share premium of P3,000,000 and retained earnings of P6,000,000. It also reported an
accumulated depletion of P2,000,000. What amount should be recognized as liquidating dividend?
-2,000,000
4. A company issued rights to its existing shareholders to purchase, for P30 per share, unissued shares of
P15 par value ordinary share. When the rights lapse
-No entry will be made
5. Gains and losses on the purchase and resale of treasury shares may be reflected only in
-Paid in capital and retained earnings accounts
6. On July 31, 2011, ACD Corporation purchased 500,000 shares of XYZ Corporation. On December
31,2012 ACD distributed 250,000 shares of XYZ share as a dividend to ACD’s shareholders. This is an
example of a
-Property dividend
7. In accordance with PIC Q&A No. 2011-04, the following are generally treated as deduction to equity,
except
-Stock exchange listing fees
8. On February 1, 2020, authorized ordinary share was sold on a subscription basis at a price in excess of
par value, and 20% of the subscription price was collected. On May 1, 2020 the remaining 80% of the
subscription price was collected. Share premium would increase on February 1 or May 1, respectively?
-YES, NO
9. Which of the following actions or events does not result in an addition to retained earnings?
-Issuance of a 3-for-1 share split
10. The par value of ordinary shares represents

-The legal nominal value assigned to the shares
11. At the start of the year, Cassiaion Co. issued 500,000 shares of P1 par value for P10 per share.
During the year, the company reacquired and retired 20,000 shares at P15 per share. As a result of the
retirement,
A. what amount should be debited to share premium? 180,000
B. what amount should be debited to retained earnings? 100,000
12. How would retained earnings be affected by the declaration of share dividend and share split,
respectively?
13. On October 31, 2019, Saionni? Co. declared a property dividend consisting of inventories payable on
March 31, 2020. The carrying amount of the inventories at the date of declaration is P3,000,000 and the
fair value is P2,500,000. However, the fair value less cost to distribute the inventory is P2,200,000 on
December 31, 2019 and P2,000,000 on March 31, 2020.
A. What is the dividend payable on December 31, 2019? 2,200,000
B. What amount of loss on distribution of dividend is recognized on March 31, 2020? 200,000
14. Leesudni Company issued 200,000 shares of P100 par, 10% cumulative preference shares for
P25,000,000. One detachable warrant was attached to each preference share issued. Each warrant gives
the holder the right to purchase one ordinary share, P50 par value, for P100. The market value of the
warrant after the preference shares were issued was P15. The proceeds to be allocated to the preference
shares is
-22,000,000
15. Aguanta Co. decided to split its P25 par value common stock for a 5-for-1 scheme. Which of the
following is true?
-The new common stock will have a par value of P5 per share after the split
16. The directors of Nolovelife, Inc. have decided to issue a share dividend. The P50 par value share is
currently selling at P60. The selling price is not expected to be affected by the share dividend. The
company which has an authorized capital of 1,000,000 shares had issued 500,000 shares, of which
100,000 shares are in treasury. In order to capitalized P2,400,000 of retained earnings, what percentage
should be declared as share dividends by the directors?
-10%
17. A company issued rights to its existing shareholders to acquire, at P15 per share, 5,000 unissued
-P10 per share when the rights are exercised
18. Select the statements that is incorrect concerning the appropriations of retained earnings:
-Appropriations of retained earnings reflect funds set aside for a designed purpose, such as plant
expansion.
19. When a portion of shareholders’ equity investment is returned in the form of a dividend, it is called a
-liquidating dividend
20. On January 1, 2019, Confidentcaio Co. had 100,000 outstanding shares and 25,000 shares held in
treasury. During the first quarter, the company distributed 13,000 treasury shares to its officers. It declared
a 3 for 1 stock split which took effect on October 31. In November 2, the company purchased 5,000 of its
own shares to stop a company takeover.
A. How many shares were issued on December 31, 2019? 375,000
B. How many shares were outstanding on December 31, 2019? 334,000
21. At the date of financial statements, ordinary share shares issued would exceed ordinary share shares
outstanding as a result of the
-Purchase of treasury share
22. The entry to record the issuance of ordinary share for fully paid share subscription is
-Debit Ordinary Share Subscribed: Credit Ordinary Share
23. On February 28, 2021, Wailisud Co. Declared a 10% share dividend. On this date, the company’s
30,000 outstanding shares with par value of P20 was quoted in the stock exchange at P90 per share. The
share dividends were distributed on September 30 when the quote price went up to P100 per share. What
amount should be credited to share premium resulting from the share dividend?
-210,000
24. At the start of the current year, Saionaini Co. was authorized by the SEC to issue 800,000 shares.
Immediately after, the company issued 600,000 shares. In the middle of the year, the company reacquired
but did not cancel 50,000 shares. Then a month before the year ended the company declared a two for
one stock split. At the end of the year the company declared dividends. How many shares are entitled to
receive dividends at year end?
-1,100,000
25. NoBae Co. provided the following information at year end: Preference share capital, P stated value,
P4,600,000; Share premium on preference share, P1,610,000; Ordinary share capital, P10 par,
P10,500,000; Share premium on ordinary share P5,500,000; Subscribed ordinary share capital, P100,000;
Subscription receivable on ordinary shares, P75,000; Bonds payable, P5,000,000; Premium on bonds
payable, P1,000,000; Appropriated retained earnings, P2,000,000; Unappropriated retained earnings,
P1,800,000. What is the amount of legal capital?
- 16,810,000
26. At the start of current year, Saionra Co. was organized with authorized capital of 200,000 shares of
P100 par value. On January 10, it issued 50,000 shares at P110 per share. On March 25, 2, shares were
issued when the shares were quoted at P120 a share in the stock market. The company acquired land
having a fair value of P1,300,000 in exchange for issuing 10,000 shares which was quoted in the stock
exchange at P110 per share.
A. What amount should be reported as share capital? 6,200,000
B. What amount should be reported as share premium? 840,000
27. Fully participating preference share means that:
-The ordinary shareholders receive a dividend rate per share equal to the preference and all excess
dividends are share proportionately between the two classes.
28. Pinacasaionjud Co. provided the following data at year end: Authorized share capital, P10,000,000;
Issued share capital, P6,000,000; Subscribed share capital, P2,000,000; Subscription receivable,
collectible within one year, P800,000; Share premium, P1,000,00; Appropriated retained earnings,
P1,200,000; Unappropriated retained earnings, P600,000; Revaluation surplus, P400,000; Treasury
shares, at cost, P200,000. What amount should be reported as total shareholders’ equity?
-11,000,000
29. Which of the following statement is correct?

-A stock dividend (declared and issued) does not change the total assets, total liabilities, or total
stockholders’ equity of the issuing corporation
30. On January 1, 2019, Massaion Co. reported P1,750,000 of appropriated retained earnings for the
construction of a new building which was completed in 2019 at a total cost of P1,500,000. During the year
the company appropriated P1,200,000 of retained earnings for the construction of a new warehouse. Also,
P2,000,000 of cash was restricted to cover the partial retirement of bonds in 2020. What amount of
appropriated retained earnings should be reported on the December 31, 2019 financial statements?
-1,200,000
31. The equity section of Loveless Co. revealed the following information on December 31, 2019:
Preference share capital, P100 par, P5,000,000; Share premium-preference shares, P2,000,000; Ordinary
share capital, P50,P3,200,000; Share premium-ordinary shares, P500,000; Subscribed ordinary share
capital, P800,000; Appropriated retained earnings, P250,000; Unappropriated retained earning,
P3,500,000; Subscription receivable ordinary shares, P400,000; OCI-Unrealized loss on IES FVOCI,
P600,000; Treasury shares ordinary, P1,000,000. How much is the contributed capital of Loveless Co. As
of December 31, 2019?
-11,500,000
32. Which statement is incorrect regarding measurement of a liability to distribute non-cash assets as
dividend to the entity’s owner?
-At the end of each reporting period and at the date of settlement, the entity shall review and adjust
the carrying amount of the dividend payable, with any changes in the carrying amount of the
dividend payable………….
33. A restriction of retained earnings is most likely to be required by

-Purchase of treasury share
34. Easybreezy Co. held 100,000 shares of P1 par value as treasury reacquired for P120,000. At year-
end, the entity reissued all 100,000 shares for P190,000. What is credited for the excess of the reissue
price over the cost of treasury shares?
-Share premium P70,000
35. A company declared a cash dividend on its ordinary share in December 2019 payable in January 2020.
-Not be affected on the date of payment
36. Cassaionoi Co. was incorporated October 2020 and issued 200,000 shares par value of P10 at P15
per share. During the period October 2020 to December 31, 2021, the company reported a profit of
P750,000 and paid cash dividends of P380,000. In the same period, the company also reacquired 12,000
shares at P12 per share and subsequently reissued 8,000 shares for P8 per share and retired the
remaining treasury shares. What is the total shareholders’ equity on December 31, 2021?
-3,290,000
37. A residual interest in a corporation belongs to the
-Ordinary shareholders
38. 21.Which of the following is NOT considered a type of preference share?

-Premium preference share
39. Naglaum Co. declared and distributed 10% share dividend with fair value of P1,500,000 and par value
of P1,000,000, and 25% share dividend with fair value of P4,000,000 and par value of P3,500,000. What
aggregate amount should be debited to retained earnings for the share dividends?
-5,000,000
40. During the year, Casaionbaani Co. issued P110 per share, 150,000 convertible preference shares with
P100 par value. One preference share may be converted into three ordinary shares of P par value at the
option of the preference shareholder. At year-end, all the preference shares were converted into ordinary
A. What amount should be credited to ordinary share capital as a result of conversion? 11,250,000
B. By what amount did share premium increase as a result of conversion? 3,750,000
41. How would the declaration of a 20% stock dividend by a Corporation affect it's retained earnings and
total shareholders' equity respectively?
42. Five thousand (5,000) shares of ordinary shares with a par value of P10 per share were issued initially
at P12 per share. Subsequently, one thousand (1,000) of these shares were acquired as treasury shares a
P15 per share. Assuming that the cost method of accounting for treasury share transaction is used, what
is the effect of the acquisition of the treasury share on the share premium and retained earnings,
respectively?
-No effect, no effect
43. Famous company has not declared or paid dividends on its cumulative preference share in the last
three years. These dividends should be reported
-In a note to the financial statements
44. A company issued rights to its existing shareholders to purchase for par unissued shares of ordinary
share with a par value of P10 per share. When the market value of the ordinary share was P12 per share,
the rights were exercised. Ordinary share should be credited at P10 per share and
-Additional Paid-in capital credited at P2 per share
45. How would a share split affect the company’s assets, total shareholders’ equity and share premium,
respectively?
-No effect, no effect, no effect
INVESTMENT IN EQUITY SECURITIES - MIDTERM QUIZ 1
1. An investment in equity instrument may not be classified as a financial asset subsequently measured at
-Amortized cost
2. During 2019, Confident Co. purchased trading securities at a cost of P4,254,000. For the year ended
December 31, 2019, the company recognized an unrealized loss of P230,000. There were no transactions
in 2020. The securities were quoted at P4,120,000 at year-end 2020. What amount of unrealized gain or
loss should be reported in the 2020 income statement? (Indicate whether gain or loss after the amount) i.e.
2,000 gain or 2,000 loss
TS - Cost 4,254,000 Market Value 4,120,000
Less: Unrealized Loss 230,000 Less: Carrying Amount 4,024,000
Carrying Amount 4,024,000 Unrealized Gain 96,000
3. A financial asset is any asset that is (choose the incorrect one)
-A contractual right to exchange financial instruments with another entity under conditions that are
potentially unfavorable.
4. Inlove Co. acquired for P4,000,000 equity instruments classified as FAFVTOCI. Transaction cost
incurred in the acquisition amounted to P700,000. On December 31, 2020, the fair value of the instrument
was P5,500,000 and the estimated transaction costs that would be if the instruments were sold amounts to
P600,000. What amount of gain should be recognized in other comprehensive income for the year ended
December 31, 2020?
Acquisition Price 4,000,000 Fair Value 5,500,000

Transaction Cost 700,000 Less: Acquisition Cost 4,700,000
Acquisition Cost 4,700,000 Unrealized Gain 800,000
5. An equity instrument is any contract evidencing a residual interest in the assets of an entity after
deducting all of its liabilities. It include all of the following, except
-Preference shares capital with mandatory redemption date or redeemable at the option of the
holder.
6. In 2017, Irresistible Co. purchased 10,000 equity securities at P45 per share designated as a financial
asset at fair value through profit or loss. It sold 2,000 shares for P51 per share in 2018 and another 2,500
shares for P33 per share in 2019. The shares were quoted per share at P47, P39, and P31 at December
31, 2017, 2018 and 2019, respectively. How much should be recognized in 2019 profit or loss as a result
Securities 10,000 Cost - 2018 (5,500x39) 214,500
Less: Sold (2,000+2,500) 4,500 Less: Cost - 2019 (5,500x31) 170,500
Available for sale 5,500 Unrealized Loss 44,000
7. Happy Co. acquired 40,000 shares of Merry, Inc. stock at P100 per share on January 12, 2020.
Brokerage fees amounted to P120,000. A P5 dividend per share of Merry, Inc. shares had been declared
on December 20, 2019, to be paid on March 1, 2020 to shareholders of record on January 31, 2020. The
shares are designated as FVTOCI. On December 31, 2020 the investment has a fair value of P4,200,000.
A. What is the initial measurement of the investment?
B. How much should be recognized in the 2020 other comprehensive income related to these securities?
Acquisition Cost (40,000 x 100) 4,000,000 Fair Value - 2020 4,200,000

Less: Purchase Dividend (40,000 x 5) 200,000 Initial Measurement 3,800,000
Inital Measurement of the Investment 3,800,000 Brokerage Fee 120,000 3,920,000
280,000
8. When a company has acquired a "passive interest" in another corporation, the acquiring company
should account for the investment
-By using the fair value method.
9. On January 1, 2019, Smart Co. purchased 100,000 equity securities for trading for P40 per share,
excluding transaction cost which amounts to P1 per share. On December 28, the company sold 80,000
shares for P50 a share. What amount should be reported as gain on sale of trading securities?
Trading Securities (100,000 x 40) 4,000,000
Cash 4,000,000
Cash (80,000 x 50) 4,000,000

IES - FVPL (80,000 x 40) 3,200,000
Gain on Sale of IES (4M - 3.3M) 800,000
10. Uplifted Co carries the following marketable equity securities on its books at December 31, 2019 and
2020. All the securities were purchased during 2019. FA@FVTOCI Cost, P5,100,000; FV 12.31.19
P4,800,000; FV 12.31.20, P5,000,000. The net unrealized gain/loss at December 31, 2020 in accumulated
other comprehensive income in shareholders' equity is (Indicate whether gain or loss after the amount, i.e.
2,000 gain or 2,000 loss)
Cost 5,100,000 Fair Value - 2020 5,000,000

Fair Value - 2019 4,800,000 Less: Cost 5,100,000
Fair Value - 2020 5,000,000 Unrealized Loss -100,000
11. Financial assets include

-Cash on hand
12. iCare Co. acquired an equity investment for P1,500,000 and classified it as FVTOCI. On December 31,
2018, the cumulative loss recognized in other comprehensive income was P200,000 and the carrying
amount of the investment was P1,300,000. On December 31, 2019 the investee was in financial difficulty
and the fair value of the investment had fallen to P600,000. What cumulative amount of unrealized should
be reported as component of other comprehensive income in the statement of changes in equity for the
year ended December 31, 2019?
Fair Value - 2019 600,000 Fair Value - 2019 600,000

Less: Carrying Amount 1,300,000 Less: Historical Cost 1,500,000
Unrealized Loss - 2019 -700,000 OR Cumulative Unrealized Loss -900,000
Unrealized Loss - 2018 200,000
Cumulative Unrealized Loss -900,000
13. The following categories may be composed of both equity and debt securities, except
-Financial assets at amortized cost.
14. PFRS 9 permits an entity to make an irrevocable election to present in other comprehensive income
changes in the fair value of an investment in an equity instrument. Amounts presented in other
comprehensive income
-Shall be subsequently transferred to retained earnings.
15. Glad Co. acquired an investment in equity instrument for P800,000 on 31 March 2020. The direct
acquisition costs incurred were P140,000. On 31 December 2020 the fair value of the instrument was
P1,100,000 and the transaction costs that would be incurred on sale were estimated at P120,000. If the
investment were designated as FA@FVTOCI, what gain would be recognized in the income statement for
the year ended 31 December 2020?
Gain = 0
16. On January 2, 2020, Cheers Company purchased 40,000 shares of Jeers, Inc. stock at P100 per share.
Brokerage fees amounted to P120,000. The shares are designated as FVTOCI. On December 31, 2020
the investment has a fair value of P4,200,000. How much should be recognized in the 2020 other
comprehensive income related to these securities?
Acquisition Cost 4,000,000 Fair Value - 2020 4,200,000

Brokerage Fee 120,000 Less: IES - FVOCI 4,120,000
IES - FVOCI 4,120,000 80,000
17. When an equity security is appropriately carried and reported as FA@FVOCI, a gain should be
reported in the income statement:
-Never
18. Inspired Co. carries the following marketable equity securities classified as FA@FVTOCI on its books
at December 31, 2019 and 2020. All the securities were purchased during 2019. Cost, P5,100,000; FV
12.31.19 P4,800,000; FV 12.31.20, P5,000,000. The amount to be reported in 2020 statement of
comprehensive income is (Indicate whether gain or loss after the amount) i.e. 2,000 gain or 2,000 loss
Cost 5,100,000 Fair Value - 2020 5,000,000

Fair Value - 2020 5,000,000 Less: Fair Value - 2019 4,800,000
Fair Value - 2019 4,800,000 Gain 200,000
19. It is any contract gives rise to both a financial asset of the one entity and a financial liability or equity
instrument of another entity.
-Financial instrument
20. Sophisticated Co. reported a P50,000 unrealized loss on June 30, 2020. There was no change during
the fiscal year 2021 in the composition of the portfolio of nontrading securities held at fair value through
other comprehensive income
FV at
Security Cost
6/30/21
SMC 600,000 650,000
BPI 450,000 250,000
ALI 800,000 750,000
1,850,000 1,650,000
A. What is the market value of the investment on June 30, 2020?
B. What amount of loss on these securities should be included in the statement of comprehensive income
for the year ended June 30, 2021 as component of other comprehensive income?
C. What cumulative amount of loss on these securities should be3 reported in the statement of changes in
equity for the year ended June 30, 2021 as a component of other comprehensive income?
Total Cost 1,850,000 Market Value - 2021 1,650,000
Less: Unrealized Loss 50,000 Less: Market Value - 2020 1,800,000
Market Value - 2020 1,800,000 Unrealized Loss - 2021 -150,000
Unrealized Loss - 2020 -50,000
Cumulative Unrealized Loss - 2021 -200,000
21. Investments in equity instruments are financial assets because they are
-Equity instruments of another entity.
22. What is the principle for recognition of a financial asset in PFRS 9?

-A financial asset is recognized when, and only when, the entity becomes a party to the contractual
provisions of the instrument.
23. Which of the following statements is correct regarding unrealized gains or losses?
-All statements are correct.
Unrealized gains or losses on trading securities are included in profit or loss of the current period.
Unrealized gains or losses on financial asset at amortized cost are not recognized.
Unrealized gains or losses on financial asset at fair value through other comprehensive income should be
classified as component of other comprehensive income.
24. An entity shall derecognized a financial asset when either one of the following conditions is met,
except
-The entity has retained substantially all risk and rewards.
25. Under the PFRS 9, which one is not a category of financial assets?
-Financial assets held for sale.
26. Transactions costs incurred in connections with financial assets at fair value through profit or loss are
-Expensed outright
27. Irresistible Co. purchased marketable equity securities to be held for trading for P5,000,000 and paid
transaction cost amounting to P200,000 on March 1, 2020. The securities had a market value of
P5,500,000 on December 31, 2020. What amount of unrealized gain or loss on these securities should be
reported in the income statement? (Indicate whether it is a gain or loss after the amount, i.e. 2,000 gain or
2,000 loss)
Market Value - 2020 5,500,000
Less: Cost 5,000,000
Unrealized Gain 500,000
INVESTMENT IN EQUITY SECURITIES - MIDTERM QUIZ 2
1. Joyful Co. (accounted for separately)

50,000/12,500 4
Theoritical value (125-100/4+1) 5
Initial Cost (50,000 x 5) 250,000
Cash paid for new shares (12,500 x 100) 1,250,000
Total cost of new investment 1,500,000
2. Handsome Co.
Initial Measurement at fair value (10,000 x 5) 50,000
3. Upbeat Co.
May 15 (20,000 shares at 100) 2,000,000
July 19 (30,000 shares at 120) 3,600,000
5,600,000
FIFO APPROACH May July
Original Shares 20,000 30,000
Stock dividends - 20% 4,000 6,000
Total Shares 24,000 36,000
Sale Price (30,000 x 125) 3,750,000

Less: Cost of Shares Sold
May 15 (24,000 shares) (24,000/24,000x2,000,000) 2,000,000
July 19 (6,000 shares) (6,000/36,000x3,600,000) 600,000 2,600,000
Gain on sale 1,150,000
AVERAGE APPROACH
Sale Price 3,750,000
Less: Cost of Shares Sold (30,000/60,000x5,600,000) 2,800,000
Gain on sale 950,000
4. Pretty Co.
Original Shares 10,000
Stock dividend 2,000
Total Shares 12,000
Dividend Income (12,000x15) 180,000
5. Smilelang Co.
Dividend income on preference share (cumulative)
(20,000/200,000=10%x2,400,000) 240,000
Dividend Income on preference share (noncumulative)

(20,000x100=2,000,000x6%) 120,000
6. Fighting Co.
Net sale Price 500,000
Less: cost of shares sold (2,000/22,000x3,300,000) 300,000
Gain on sale of investments 200,000
7. Joyful Co. (not accounted for separately)

Investment in Shares 5,000,000
Cash 5,000,000
MEMO ENTRY - received stock rights entitling to purchase
12,500
shares at 100 per sahre
Investment in Shares 1,250,000
Cash(12,500x100) 1,250,000
8. DfntlyLuvly Co.
Net Sale Price (450,000 - 10,000) 440,000
Less: Initial Cost of Rights Sold (30,000 x 10) 300,000
Gain on sale of rights 140,000
MIDTERM EXAMINATION
1. Saionra has the following transactions from its investments in equity securities in 2020
 Received P108,000 from its investment in BSA Co.. BSA was distributing liquidating dividends
 Received P900,000 dividends from BSMA Co.. Saionra holds 30% of the total equity of BSMA
 Received P24,000 dividends from its investment in preference shares of BSFM
 BSMA Co. declared dividends to its ordinary shareholders totaling P36,000,000 at year-end 2020,
which will be settled first quarter of the following year. Saionra holds 5% interest in BSMA ordinary
shares.
What amount should be reported as dividend income for 2020?
-1,824,000
2. The following information pertains to equity securities of Saionra Co. held as financial assets measured
at fair value through other comprehensive income. Saionra Co. adopts a fiscal year that ends on June 30.
Fair Value Fair Value
Security Cost 6/30/2020 6/30/2021
BSA 1,800,000 1,920,000 -
BSMA 2,400,000 2,100,000 2,220,000
BSFM 3,000,000 2,760,000 2,820,000
The security in BSA was disposed on September 30, 2020 at a price of P2,100,000.
A. What amount of gain or loss should be included in the statement of comprehensive income for the year
ended June 30, 2021? (After the amount, indicate if its a gain or loss)
B. What cumulative unrealized gain or loss on the remaining investments in equity securities should be
reported in the statement of changes in equity for fiscal year-end 2021? (After the amount, indicate if its a
gain or loss)
C. What amount should be recognized directly in retained earnings as a result of the sale of BSA equity
security?
A. 300,000 GAIN
B. 360,000 LOSS
C. 300,000
3. Financial assets include all of the following except

-Prepaid Expenses
4. On October 31, 2019, Saionni? Co. declared a property dividend consisting of inventories payable on
March 31, 2020. The carrying amount of the inventories at the date of declaration is P3,000,000 and the
fair value is P2,500,000. However, the fair value less cost to distribute the inventory is P2,200,000 on
December 31, 2019 and P2,000,000 on March 31, 2020.
A. What is the dividend payable on December 31, 2019?
B. What amount of loss on distribution of dividend is recognized on March 31, 2020?
A. 2,200,000
B. 200,000
5. On February 28, 2020, Wailisod Co. declared a 10% share dividend. On this date, the company's
30,000 outstanding shares with par value of P20 was quoted in the stock exchange at P90 per share. The
share dividends were distributed on September 30 when the quote price went up to P100 per share. What
amount should be credited to share premium resulting from the share dividend?
-210,000
6. At the start of the year, Cassiaion Co. issued 500,000 shares of P1 par value for P10 per share. During
the year, the company reacquired and retired 20,000 shares at P15 per share. As a result of the retirement,
A. What amount should be debited to share premium?
B. What amount should be debited to retained earnings?
A. 180,000
B. 100,000
7. Cassaionoi Co. was incorporated October 2020 and issued 200,000 shares par value of P10 at P15 per
share. During the period October 2020 to December 31, 2021, the company reported a profit of P750,000
and paid cash dividends of P380,000. In the same period, the company also reacquired 12,000 shares at
P12 per share and subsequently reissued 8,000 shares for P8 per share and retired the remaining
treasury shares. What is the total shareholders' equity on December 31, 2021?
-3,290,000
8. Naglaum Co. declared and distributed 10% share dividend with fair value of P1,500,000 and par value
of P1,000,000, and 25% share dividend with fair value of P4,000,000 and par value of P3,500,000. What
aggregate amount should be debited to retained earnings for the share dividends?
-5,000,000
9. During the year, Casaionbaani Co. issued P110 per share, 150,000 convertible preference shares with
P100 par value. One preference share may be converted into three ordinary shares of P25 par value at
the option of the preference shareholder. At year-end, all the preference shares were converted into
ordinary shares. The market value of the ordinary share at the conversion date was P40.
A. What amount should be credited to ordinary share capital as a result of conversion? 11,250,000
B. By what amount did share premium increase as a result of conversion? 3,750,000
10. A financial asset is any asset that is (choose incorrect answer)

-A contractual right to exchange financial instruments under conditions that are potentially
unfavorable
11. For the year ended December 31, 2020, Saionra Company reported retained earnings of P2,000,000
and cumulative unrealized gains recorded as reserves of P62,500. These gains are from an investment
with an original cost of P250,000 and a fair value of P312,000. The company policy is to value all
investments at fair value with unrealized gains and losses included in reserves. The company's accounting
policy is that when an investment is sold, the reserve amount is transferred to retained earnings. During
2021, one-half of the investment was sold. The remaining investment increased in value to P175,000. A
second investment was bought for P375,000 and its fair value had increased to P412,500 by the end of
2021. What is the reserve balance at December 31, 2021?
-87,500
12. The following information pertains to the equity securities of Saionra Co. as at end of the fisal year
June 30, 2021. The securities purchased were held as trading securities.
Security No. of Fair
shares Cost/share Value/share
@ 6.30.21
BSA 1,750 200 300
BSMA 17,500 170 160
BSFM 35,000 155 145
On August 18, 2021 17,500 BSFM shares were sold for 150 per share
A. What amount should be reported as gain or loss on sale of trading securities? (Indicate whether gain or
loss after the amount) 87,500 gain
B. What amount of unrealized gain or loss should be reported in the income statement for the year ended
June 30, 2021? (Indicate whether gain or loss after the amount) 350,000 loss
13. It is any contract that evidences residual interest in the assets of an entity after deducting all of its
liabilities
-equity instrument
14. An investment in equity instrument may not be classified as a financial asset subsequently measured
at
-amortized cost
15. The following categories may be composed of both equity and debt securities, except
-financial assets at amortized cost
16. Transactions costs incurred in connections with financial assets at fair value through profit or loss are
-expensed outright
17. Investments in equity instruments are financial assets because they are
-equity instruments of another entity
18. Saionra Company purchased 15% of Leesod Company's ordinary shares for P20,000,000 at June 1,
2020.
The following data concerning Leesod Company are available:
2020 2021
Net income P6,000,000 P7,000,000
Cash dividend paid None 15,000,000
In its income statement for the year ended December 31, 2021, how much should Saionra report as
income from this investment?
-2,250,000
19. When an entity issued rights to existing shareholders to purchase unissued ordinary shares at more
than par value, share premium would be recorded when the rights
-are exercised
20. An appropriation of retained earnings for future plant expansion will result in
-The disclosure that management, does not intend to distribute in the form of dividends assets
equal to the amount of the appropriation.
21. Which of the following statements is true concerning appropriations of retained earnings? ,
-When treasury shares are purchased, retained earnings must be appropriated equal to the cost of the
treasury shares.
Appropriations do not reduce total retained earnings.
The only proper way to eliminate an appropriation of retained earnings after it has served its purpose is to
revert to the unappropriated retained earnings.
All of these statements are true concerning appropriations of retained earnings.
22. If treasury shares are reissued for noncash consideration, the proceeds shall be measured by
-Fair value of the noncash consideration '
23. Saionra Co. has the following transactions during the year 2020
Feb 22 Purchased 112,000 shares of BSA Co. at P150 per share
Apr 15 Bought 168,000 shares of BSA Co. at P180 per share
Jun 30 Received 15% share dividend
Sep 30 Received cash dividend at P8 per share
Dec 12 Sold 160,000 shares at P200 per share
Dec 29 Received cash dividend at P10 per share
A. What is the gain on the sale of shares (use FIFO)
B. What is the gain on the sale of shares (use average)
C. What amount of dividend income should be reported for the year 2020?
A. 11,600,000
B. 9,600,000
C. 4,880,000
24. The following information pertains to the June 30, 2021 portfolio of equity securities of Saionra
Company, these securities were acquired on September 1, 2020:
Security
Trading Nontrading
Aggregate cost 3,200,000 4,800,000
Aggregate Fair Value 2,960,000 4,400,000
Aggregate Lower of Cost and Fair 2,800,000 4,240,000
Value applied to each security
The reduction in the fair value are deemed to be other than temporary. The nontrading securities are
designated at fair value through other comprehensive income
A. What amount should be reported as loss on these securities in the income statement for the fiscal year
end June 30, 2021?
B. What cumulative amount of loss on these securities should be reported in the statement of changes in
equity for the fiscal year ended June 30, 2021 as a component of other comprehensive income?
A. 240,000
B. 400,000
25. Saionra Co.'s board of directors declared a cash dividend on January 2, 2021 of P2,000,000. Selected
data from Saionra's December 31, 2020 statement of financial position are as follows: Accumulated
depletion P500,000 Share capital 2,500,000 Share premium 750,000 Retained earnings 1,500,000. The
cash dividend includes a liquidating dividend of
-500,000
26. Saionra Corp. reveal, in part, the following information in its current financial statements
Opening equity balances—share capital P300,000, retained earnings P220,000, asset revaluation surplus
P60,000
• Total comprehensive income—P130,000
• Other comprehensive income—P20,000
• Dividends paid—P35,000
• No more share capital was issued during the reporting period
What is the amount of the closing retained earnings?
-965,000
27. Saionra Inc. has the following investments in equity securities at December 31, 2020 and 2021.
All securities were purchased during 2020.
FA@FVTPL:
Cost FV 12/31/20 FV 12/31/21
BSA Co. P 500,000 P 260,000 P 400,000
BSMA Inc. 260,000 400,000 400,000
BSFM Co. 700,000 600,000 500,000
FA@FVTOCI:
Cost FV 12/31/20 FV 12/31/21
BSA Inc. P4,100,000 P3,600,000 P3,600,000
BSMA Co 1,000,000 1,200,000 1,400,000
A. The net amount to be recognized in 2021 statement of comprehensive income is (indicate whether gain
or loss after the amount)
B. The net unrealized gain/loss at December 31, 2021 in accumulated other comprehensive income in
shareholders' equity is (indicate whether gain or loss after the amount)
A. 240,000 gain
B. 100,000 loss
28. Specifically, these securities represent ownership shares such as common stock, preferred stock and
other capital stock
-Equity securities
29. Saionra Co. owns 375,000 shares of Leesud Co. at a cost of P38 per share. During the year Saionra
received stock rights entitling it to purchase 375,000 shares at P45 per share. The stocks were quoted at
P53 immediately before the rights were issued and P48 immediately after the rights were issued. During
the year all stock rights were exercised. A week before year-end Saionra sold 125,000 shares at P48 per
share. Saionra does not account for stock rights separately.
A. What amount of gain on sale of investments should be recognized during the year (use FIFO approach)
B. What amount of gain on sale of investments should be recognized during the year (use Average
approach)
A. 1,250,000
B. 812,500
EMPLOYEE BENEFITS - FINALS QUIZ 1
1. Interest cost included in the net pension cost recognized by an employer sponsoring a defined benefit
plan represents the
-Increase in the projected benefit obligation due to the passage of time.
2. A pension' asset is reported when

-Plans assets at fair value exceed the defined benefit obligation.
3. In the calculation of pension expense under a defined benefit plan, which component will not be
included?
-Excess of projected benefit obligation over the fair value of the plan assets
4. A pension liability is reported when

-The defined benefit obligation exceeds the fair value of plan assets.
5. What is the relationship between the amount funded and the amount reported for defined benefit
cost?
-Defined benefit cost may be more than, equal to, or less than the amount funded.
6. The present value of pension benefits accrued to date using assumptions as to future compensation
level is the
-projected benefit obligation
7.
Current Service Cost 2,537,500

Past Service Cost 525,000
Interest Expense (10%x 13,300,000) 1,330,000
Less: Interest Income (10%x11,725,000) 1,172,500
Employee Benefits Expense 3,220,000
Actual Return 875,000

Less: Interest Income (10%x11,725,000) 1,172,500
Remeasurement gain/loss on plan assets -297,500
FVPA - Jan 1 11,725,000 PBO - Jan 1 13,300,000
Contributions 2,625,000 Current Service Cost 2,537,500
Actual Return 875,000 Past Service Cost 525,000
Total 15,225,000 Interest Expense 1,330,000
Less: Benefits Paid 1,400,000 Less: Benefits Paid 1,400,000
FVPA - Dec 31 13,825,000 PBO -Dec 31 16,292,500
P/ABC (13,825,000 - 16,292,500) -2,467,500
8. The vested benefits in a pension plan represent

-Benefits that are not contingent on the employee's continuing in the service of the employer.
9. Which measure requires the use of future salaries in the computation of benefit obligation?
-projected benefit obligation
10. The interest on the projected benefit obligation

-Is the same as the actual return on plan assets.
11. Vested benefits

-Are defined' by all of these statements.
12. Which of the following is a characteristic of a defined benefit plan?

-If actuarial or investment experience are worse than expected, the entity's obligation may be
increased.
13. Which statement is incorrect regarding post-employment benefit plans?

-None of the statements are incorrect
14. A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for each
year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent (compound) each
year. The discount rate used is 10 per cent per year. The entity does not fund its obligation to pay lump-sum
benefits. The employee is expected to leave at the end of year 5. The increase in the present value of the
defined benefit obligation resulting from employee service in year 2 (current service cost) is
Date Benefit PV Factor Current Service Cost Interest PBO

2021 131 0.683 89 - 89
2022 131 0.751 98 9 196
2023 131 0.826 108 20 324
2024 131 0.909 119 33 476
2025 131 1.000 131 48 655
15. Post-employment benefits include

-pensions
16. A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for each
year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent (compound) each
year. The discount rate used is 10 per cent per year. The entity does not fund its obligation to pay lump-sum
benefits. The employee is expected to leave at the end of year 5.The defined benefit liability (deficit) at the
end of the second year is
Date Benefit PV Factor Current Service Cost Interest PBO

2021 131 0.683 89 - 89
2022 131 0.751 98 9 196
2023 131 0.826 108 20 324
2024 131 0.909 119 33 476
2025 131 1.000 131 48 655
17. The projected unit credit method

-Both the two statements are correct
18. In a defined benefit plan, a formula is used to

-Define the benefits that the employee will receive at the date of retirement.
19.
FVPA - Jan 1 7,875,000

Contributions 630,000
Less: Benefits Paid 562,500
FVPA - Dec 31 8,775,000
20. In accordance with the revised PAS 19, which of the following is reported in profit or loss?
-Interest on the effect of asset ceiling
21. The components of defined benefit cost include

-Interest (net) on the net defined benefit liability (asset) in profit or loss.
All of these mentioned are components of defined benefit cost.
Service cost in profit or loss.
Remeasurements of the net defined benefit liability (asset) in other comprehensive income.
22. Which of the following is a characteristic of defined contribution plans?

-The employer's obligation is satisfied by making the appropriate amount of periodic contribution.
23. Saionaini Company provided the following information to the pension plan for the current year: Projected
benefit obligation on January 1, P14,400,000; Service cost, P3,600,000; Pension benefits paid, P3,000,000;
Discount rate is 10%. If no change in actuarial estimate occurred in the current year, what is the projected
benefit obligation on December 31?
PBO - Jan 1 14,400,000
Current Service Cost 3,600,000
Interest Expense (10%x 14,400,000) 1,440,000
Less: Benefits Paid 3,000,000
PBO - Dec 31 16,440,000
24. Which of the following is a characteristic of a defined contribution plan?

-The entity's legal or constructive obligation is limited to the amount that it agrees to contribute to the fund.
Actuarial risk (that benefits will be less than expected) and investment risk (that assets invested will be
insufficient to meet expected benefits) fall, in substance, on the employee.
All of the statements characterizes a defined contribution plan
The amount of the post-employment benefits received by the employee is determined by the amount of
contributions paid by an entity to a post-employment benefit plan or to an insurance company, together with
investment returns arising from the contributions.
25. Waileesud Co. provided the following data: Fair value of plan asset at start of year, P4,375,000; Pension
benefits paid, P300,000; Contributions made to the fund, P350,000; Actual return on plan assets, P475,000.
What is the fair value of the plan asset on December 31?
FVPA - Jan 1 4,375,000
Contributions 350,000
Less: Benefits Paid 300,000
FVPA - Dec 31 4,900,000
26. Saionra Co. had a noncontributory defined benefit pension plan. The entity received the projected benefit
obligation report from the independent actuary at year-end. Pension benefits paid, P405,000; PBO on
December 31, P6,480,000; Interest expense, P360,000; Discount rate, 8%. What is the projected benefit
obligation on January 1?
PBO - Jan 1 (360,000/8%) 4,500,000
27. Employee benefits are

-All forms of consideration given by an entity in exchange for service rendered by employees or for
the termination of employment.
104 FINAL EXAM ANSWERS
a. Charged to retained earnings
b. Expensed immediately
c. Deducted from equity
d. Deducted from equity, net of any related income tax benefit
2. The present value of pension benefits accrued to date using assumptions as to future
compensation level is the
a. Past service cost
b. Accumulated benefit obligation
c. Accrued pension cost
d. Projected benefit obligation
3. In rare circumstances, when a retirement benefit plan has attributes of both defined
a. Both defined benefit and defined contribution plan
b. Defined contribution plan
c. Neither defined benefit nor defined contribution plan
d. Defined benefit plan
4. An employer offered for a short period of time special termination benefits to some
employees. The employees accepted the offer which provided for immediate lump sum
payments and future payments at the end of the next two years. The amounts can be
reasonably estimated. The amount of expense recognized in the current year should
include
a. The lump sum payments and the present value of the future payments
b. One third of the lump sum payments and one third of the present value of the future
payments
c. The lump sum payments and the total of the future payments
d. Only the lump sum payments
5. At the start of current year, Saionra Co. was organized with authorized capital of
share. On March 25, 2,000 shares were issued when the shares were quoted at P120 a
share in the stock market. The company acquired land having a fair value of
exchange at P110 per share. What amount should be reported as share capital?
a. 6,200,000
b. 5,000,000
c. 7,440,000
d. 7,640,000
6. Saionra Co. had a noncontributory defined benefit pension plan. The entity received the
projected benefit obligation report from the independent actuary at year-end. Pension
benefits paid, P405,000; PBO on December 31, P6,480,00; Interest expense, P360,00;
Discount rate, 8%. What is the current service cost for the year?
a. P1,620,000
b. P765,000
c. P2,025,000
d. P2,430,000
7. In 2018, Upbeat Co. purchased 20,000 shares of Downcast Co. for P100 per share on
received cash dividends at P10 per share on August 18 and a 20% stock dividend on
September 8. On December 11, Upbeat sold 30,000 shares of its investment at P125
per share. What is the gain on the sale of the shares (use FIFO method)?
a. 950,000
b. 150,000
c. 550,000
d. 1,150,000
8. A lump sum benefit is payable on termination of service and equal to 1 per cent of final
salary for each year of service. The salary in year 1 is P10,000 and is assumed to
increase at 7 per cent (compound) each year. The discount rate used is 10 per cent per
year. The entity does not fund its obligation to pay lump-sum benefits. The employee is
expected to leave at the end of year 5. The amount to be recognized as expense in the
second year is
a. P 98
b. P196
c. P131
d. P107
9. An investment in equity instrument may not be classified as a financial asset

a. Fair value through profit or loss

b. Answer not given
c. Fair value through other comprehensive income
d. Amortized cost
10. Which of the following statements is incorrect concerning the appropriations of retained
earnings?
a. Appropriations of retained earnings can be made as a result of contractual requirements.
b. Appropriations of retained earnings do not change the total amount of shareholders' equity.
c. Appropriations of retained earnings reflect funds set aside for a designated purpose,
such as plant expansion.
d. Appropriations of retained earnings can be made at the discretion of the board of directors.
11. An entity shall use the projected unit credit method to determine the present value of its
defined benefit obligations and the related current service cost and, where applicable,
past service cost. The projected unit credit method is also known as
a. Neither of the two statements are correct.
b. The accrued benefit method pro-rated on service.
c. Both statements are correct.
d. The benefit/years of service method
12. On January 1, 2019, Smart Co. purchased 100,000 equity securities for trading for P40
per share, excluding transaction cost which amounts to P1 per share. On December 28,
the company sold 80,000 shares for P50 a share. What amount should be reported as
gain on sale of trading securities?
a. 800,000
b. 400,000
c. 900,000
d. 200,000
13. Interest cost included in the net pension cost recognized by an employer sponsoring a
defined benefit plan represents the
a. Increase in the fair value of plan assets due to the passage of time.
b. Shortage between the expected and actual returns, on plan assets.
c. Change in the nature of benefits.
d. Increase in the projected benefit obligation due to the passage of time.
14. These are employee benefits that are payable as a result of an entity's decision to
employment.
a. Postemployment employee benefits
b. Termination benefits
c. Short-term employee benefits
d. Other long-term employee benefits
15. On January 2, 2020, Cheers Company purchased 40,000 shares of Jeers, Inc. stock at
P100 per share. Brokerage fees amounted to P120,000. The shares are designated as
much should be recognized in the 2020 other comprehensive income related to these
securities?
a. P400,000
b. P280,000
c. P80,000
d. P200,000
16. Inspired Co. carries the following marketable equity securities classified as
a. P200,000 gain
b. P240,000 gain
c. P260,000 loss
d. P60,000 loss
17. Which of the following is not a characteristic of short-term employee benefits?
a. There is no possibility of any actuarial gain or loss.
b. No actuarial assumptions are required to measure the benefit obligation.
c. Short-term employee benefits by definition are payable no later than twelve months after
year-end.
d. Short-term employee benefit obligations are measured on a discounted basis.
18. Which statement is incorrect regarding post-employment benefit plans?
a. Post-employment benefit plans are arrangements whereby an entity provides post-

employment benefits.
b. None of the statements are incorrect.

c. An entity applies PAS 19 to all post-employment benefit plans whether or not they involve the
establishment of a separate entity to receive contributions and to pay benefits.
d. Post-employment benefit plans are classified as either defined contribution plans or defined
benefit plans, depending on the economic substance of the plan as derived from its principal
terms and conditions.
19. What is the effect of share split up?
a. Decrease in number of shares and increase in cost per share.
b. Decrease in number of share and decrease in cost per share.
c. Increase in number of shares and increase in cost per share.
d. Increase in number of shares a
expected to leave at the end of year 5. The increase in the present value of the defined
benefit obligation resulting from employee service in year 2 (current service cost) is
a. P89
b. P98
c. P131
d. P196
21. Saionaini Company provided the following information to the pension plan for the
current year: Projected benefit obligation on January 1, P14,400,000; Service cost,
P3,600,000; Pension benefits paid, P3,000,000; Discount rate is 10%. If no change in
actuarial estimate occurred in the current year, what is the projected benefit obligation
on December 31?
a. 16,440,000
b. 15,840,000
c. 15,000,000
d. 12,840,000
22. On May 1, 2020 Purosaion Corp. declared and issued a 15% share dividend. Prior to
this dividend, Purosaion had 100,000, P1 par value, ordinary shares issued and
outstanding. The fair value of Purosaion's ordinary share was P20 per share on May 1,
2016. As a result of this share dividend, Purosaion's retained earnings
a. Decreased by 15,000
b. Increased by 300,000
c. Decreased by 300,000
d. Did not change
23. What is the effect of stock dividend of the same class?
a. No effect on investment account but increase in cost per share.
b. No effect on investment account but decrease in cost per share.
c. Decrease in investment account and decrease in cost per share.
d. Increase in investment account and increase in cost per share.
24. On January 2, 2020, Happy Co. purchased 40,000 shares of Merry, Inc. stock at P100
Inc. shares had been declared on December 15, 2019, to be paid on March 31, 2020 to
shareholders of record on January 31, 2020. The shares are designated as FVTOCI.
On December 31, 2020 the investment has a fair value of P4,200,000. How much
should be recognized in the 2020 other comprehensive income related to these
securities?
a. P400,000
b. P200,000
c. P280,000
d. P80,000
25. A pension liability is reported when
a. The pension expense for the period is greater than the funding amount for the same period.
b. The accumulated benefit obligation is less than the fair value of plan assets.
c. Cumulative other comprehensive income exceeds the fair value of plan assets.
d. The defined benefit obligation exceeds the fair value of plan assets
26. An entity contributes to an industrial pension plan that provides a pension arrangement
for the employees. A large number of other employers also contribute to the pension
plan and the entity makes contributions in respect of each employee. These
contributions are kept separate from corporate assets and are used together with any
investment income to purchase annuities for retired employees. The only obligation of
the entity is to pay the annual contributions. This pension scheme is a
a. Multiemployer plan and a defined contribution scheme.
b. Defined benefit plan only.
c. Defined contribution plan only.
d. Multiemployer plan and a defined benefit scheme.

27. Employee benefits are
a. Benefits that are payable after the completion of employment.
b. Benefits that are expected to be settled wholly before twelve months after the end of the
annual reporting period in which the employees render the related service.
c. All forms of consideration given by an entity in exchange for service rendered by

employees or for the termination of employment.
d. Benefits other than short-term employee benefits, post-employment benefits and termination
benefits.
28. Leesudni Company issued 200,000 shares of P100 par, 10% cumulative preference
share issued. Each warrant gives the holder the right to purchase one ordinary share,
P50 par value, for P100. The market value of the warrant after the preference shares
were issued was P15. The proceeds to be allocated to the preference shares is
a. 25,000,000
b. 21,000,000
c. 20,000,000
d. 22,000,000
29. Financial assets include
a. Deposit of cash
b. Gold bullion deposited in bank
c. Property, plant and equipment
d. Prepaid rent
30. Under the PFRS 9, which one is not a category of financial assets?
a. Financial assets at amortized cost.
b. Financial assets at fair value through other comprehensive income.
c. Financial assets at fair value through profit or loss.
d. Financial assets held for sale.
31. Which of the following statements is incorrect in relation to termination benefits?
a. A benefit resulting from termination of employment at the request of an employee without an

entity offer is not a termination benefit.
b. A benefit that is in any way dependent on providing service in the future is a

termination benefit.
c. A benefit resulting from mandatory retirement is a postemployment benefit rather than a
d. The event that gives rise to an obligation for termination benefit is the termination of
employment.
32. Saionrabai Co. had 80,000 ordinary shares outstanding at the start of the year. The
company distributed a 15% stock dividend in April and another 10% stock in July. After
acquiring 10,000 shares of treasury in October, the company split the share 4 for 1 in
December. How many ordinary shares are outstanding at the end of the year?
a. 364,800
b. 22,800
c. 25,300
d. 360,000
expected to leave at the end of year 5. The defined benefit liability (deficit) at the end of
the second year is
a. P262
b. P196
c. P187
d. P275
34. A financial asset is any asset that is (choose the incorrect one)
a. A contractual right to receive cash or another financial asset of another entity.
b. An equity instrument of another entity.
c. A contractual right to exchange financial instruments with another entity under conditions that
are potentially unfavorable.
d. Cash
35. If the share dividend is less than 20%, what' amount of the retained earnings should be
capitalized?
a. Fair value of the shares on the date of record
b. Fair value of the shares on the date of issuance
c. Par value of the shares
d. Fair value of the shares on the date of declaration

36. Stock rights as a form of a financial assets are measured initially at
a. Fair value
b. Cost
c. Fair value less cost to sell
d. Amortized cost
37. Termination benefits are employee benefits provided in exchange for the termination of
an employee’s employment as a result of:
a. An employee’s decision to accept an offer of benefits in exchange for the termination of

employment.
b. Neither of the two statements
c. Either of the two statements
d. An entity’s decision to terminate an employee’s employment before the normal retirement

date.
6 38. When shareholders may elect to receive cash in lieu of stock dividend, the amount to
be charged to retained earnings is equal to
a. Book value of the shares
b. Optional cash dividend
c. Fair value of the shares
d. Par value of the shares
39. When an entity issued rights to existing shareholders to purchase unissued ordinary
a. Lapsed
b. Are exercised
c. Are issued
d. Become exercisable
8
40. Under what condition is an employer required to accrue a liability for sick pay?
a. Sick pay benefits can be reasonably estimated.
b. Sick pay benefits equal 100% of the pay.
c. Sick pay benefits accumulate.

d. Sick pay benefits vest.
41. Which of the following is a characteristic of a defined benefit plan?
a. The entity’s legal or constructive obligation is limited to the amount that it agrees to contribute
to the fund.
b. If actuarial or investment experience are worse than expected, the entity’s obligation
may be increased.
c. The amount of the post-employment benefits received by the employee is determined by the
amount of contributions paid by an entity to a post-employment benefit plan or to an insurance
company, together with investment returns arising from the contributions.
d. Actuarial risk (that benefits will be less than expected) and investment risk (that assets
invested will be insufficient to meet expected benefits) fall, in substance, on the employee.
42. At the start of the current year, Saionaini Co. was authorized by the SEC to issue
800,000 shares. Immediately after, the company issued 600,000 shares. In the middle
of the year, the company reacquired but did not cancel 50,000 shares. Then a month
before the year ended the company declared a two for one stock split. At the end of the
year the company declared dividends. How many shares are entitled to receive
dividends at year end?
a. 1,500,000
b. 1,100,000
c. 1,150,000
d. 1,200,000
expected to leave at the end of year 5. The change in year 2 in the net defined benefit
liability that arises from the passage of time (interest cost) is
a. P131
b. Nil
c. P 98
d. P9
44. Saionrajud Co. determined that it has an obligation relating to employees’ rights to
receive compensation for future absences attributed to employees’ services already
rendered. The obligation relates to rights that vest, and payment of the compensation is
probable. The obligations at year-end are reasonably estimated as follows: Vacation
pay, P550,000; Sick pay, P450,000. At year-end, what amount should be reported as
liability for compensated absences?
a. 550,000
b. 450,000
c. 0
d. 1,000,000
45. At year-end, Massaion Co. provided the following information: Fair Value of Plan
Assets, P10,350,000; Projected benefit obligation, P17,100,000; Accumulated benefit
obligation, P12,900,000. What is the accrued liability at year-end?
a. 2,550,000
b. 6,750,000
c. 17,100,000
d. 4,200,000
46. Waileesud Co. provided the following data: Fair value of plan asset at start of year,
P4,375,000; Pension benefits paid, P300,000; Contributions made to the fund,
P350,000; Actual return on plan assets, P475,000. What is the fair value of the plan
asset on December 31?
a. 4,425,000
b. 3,625,000
c. 4,100,000
d. 4,900,000
47. When an equity security is appropriately carried and reported as FA@FVOCI, a gain
should be reported in the income statement:
a. Never.
b. When the fair value of the security increases.
c. Only when the security is sold.
d. When the present value of the security increases.
48. Treasury shares are
a. Issued but not outstanding shares.
b. Shares held as an investment by the corporation.
c. Issued and outstanding shares.
d. Shares held as an investment by the treasurer.
49. It is any contract gives rise to both a financial asset of the one entity and a financial
liability or equity instrument of another entity.
a. Debt instrument
b. Equity instrument
c. Investment
d. Financial instrument
50. An-entity made a public announcement of a commitment to a voluntary redundancy

plan. The entity has an obligation to pay employees that choose voluntary redundancy
a lump sum equal to twice their gross annual salary. What is the obligation to pay
employees that choose voluntary redundancy?
a. A termination benefit
b. A short-term employee benefit
c. A postemployment benefit
d. Other long-term employee benefit
51. Employees are entitled to 10 days holiday leave per year. Unused holiday leave may be
carried forward until the employee leaves employment at which time the entity will pay
the employee for all unused holiday leave. What is the holiday leave? '
a. Other long-term employee benefit
b. A termination benefit
c. A postemployment benefit
d. A short-term employee benefit
52. Which statement is incorrect regarding short-term employee benefits?
a. These benefits include non-monetary benefits for current employees if expected to be settled
wholly before twelve months after the end of the annual reporting period in which the employees
render the related services.
b. Short-term employee benefits in the form of accumulating paid absences are recognized
when the employees render service that increases their entitlement to future paid absences.
c. An entity shall measure the expected cost of accumulating paid absences as the additional
amount that the entity expects to pay as a result of the unused entitlement that has accumulated
at the end of the reporting period.
d. PAS 19 requires disclosures about short-term employee benefits for key management
personnel.
projected benefit obligation report from the independent actuary at year-end. Pension
benefits paid, P405,000; PBO on December 31, P6,480,00; Interest expense, P360,00;
Discount rate, 8%. What is the projected benefit obligation on January 1?
a. P4,500,000
b. P6,480,000
c. P5,961,600
d. P5,062,500
54. The deficit or surplus is:
a. Assets held by a long-term employee benefit fund and qualifying insurance policies.
b. The total of the two statements.
c. The present value, without deducting any plan assets, of expected future payments required
to settle the obligation resulting from employee service in the current and prior periods.
d. The difference between the two statements.
55. When a company has acquired a "passive interest" in another corporation, the acquiring
company should account for the investment
a. By consolidation.
b. By using the fair value method.
c. By using the equity method.
d. By using the effective interest method.
56. In accounting for shareholders' equity, the accountant is primarily concerned with which
of the following?
a. Determining the total amount of shareholders' equity
b. Distinguishing between realized and unrealized revenue
c. Making sure that the directors do not declare dividends in excess of retained earnings
d. Recording the source of each of the various elements of shareholders' equity
57. When a portion of shareholders’ original investment is returned in the form of a

a. liquidating dividend
b. compensating dividend
c. equity dividend
d. Property dividend
58. A multiemployer plan is defined as
a. A defined benefit plan that provides benefits to employees of more than one entity.
b. A defined contribution plan or defined benefit plan that pools the assets contributed by
various entities that are not under common control and uses those assets to provide
benefits to employees of more than one entity.
c. A defined contribution plan or a defined benefit
d. A defined contribution plan that pools the asset contributed by various entities.
59. Which of the following would not affect retained earnings?
a. Share split
b. Conversion of preference shares into ordinary shares
c. Share dividend
d. Reissue of treasury shares

Question 1
Incorrect
Flag question
Question text
The projected unit credit method
a.
Measures each unit of benefit entitlement separately to build up the final
obligation.
b.
Both the two statements are correct.
c.
Sees each period of service as giving rise to an additional unit of benefit
entitlement.
d.
Neither of the two statements are correct.
Feedback
The correct answer is: Both the two statements are correct.
Question 2
Incorrect
Flag question
Question text
In rare circumstances, when a retirement benefit plan has attributes of both defined
a.
Neither defined benefit nor defined contribution plan
b.
Both defined benefit and defined contribution plan
c.
Defined benefit plan
d.
Defined contribution plan
Feedback
The correct answer is: Defined benefit plan
Question 3
Correct
Flag question
Question text
Vested benefits
a.
Are those that the employee is entitled to receive even if fired.
b.
Are defined' by all of these statements.
c.
Are not contingent upon additional service under the plan.
d.
Usually require a certain minimum number of years of service.
Feedback
The correct answer is: Are defined' by all of these statements.
Question 4
Correct
Flag question
Question text
Termination benefits are employee benefits provided in exchange for the
termination of an employee’s employment as a result of:
a.
Either of the two statements
b.
Neither of the two statements
c.
An entity’s decision to terminate an employee’s employment before the normal
retirement date.
d.
An employee’s decision to accept an offer of benefits in exchange for the
termination of employment.
Feedback
Question 5
Incorrect
Flag question
Question text
a.
Be accrued during the period following vesting.
b.
Be accrued during the period when earned.
c.
Be accrued during the period when the compensated time is expected to be used
by employees.
d.
Not be accrued unless a written contractual obligation exists.
Feedback
Question 6
Incorrect
Flag question
Question text
a.
Post-employment benefit plans are arrangements whereby an entity provides post-
employment benefits.
b.
An entity applies PAS 19 to all post-employment benefit plans whether or not they
involve the establishment of a separate entity to receive contributions and to pay
benefits.
c.
d.
Post-employment benefit plans are classified as either defined contribution plans or
defined benefit plans, depending on the economic substance of the plan as
derived from its principal terms and conditions.
Feedback
Question 7
Incorrect
Flag question
Question text
The deficit or surplus is:
a.
The total of the two statements.
b.
Assets held by a long-term employee benefit fund and qualifying insurance policies.
c.
The present value, without deducting any plan assets, of expected future payments
required to settle the obligation resulting from employee service in the current and
prior periods.
d.
The difference between the two statements.
Feedback
The correct answer is: The difference between the two statements.
Question 8
Correct
Flag question
Question text
These are employee benefits that are payable as a result of an entity's decision to
employment.
a.
Termination benefits
b.
Postemployment employee benefits
c.
Short-term employee benefits
d.
Other long-term employee benefits
Feedback
The correct answer is: Termination benefits
Question 9
Correct
Flag question
Question text
a.
Payroll deductions
b.
Unpaid time off
c.
Paid time off
d.
A form of healthcare
Feedback
The correct answer is: Paid time off
Question 10
Correct
Flag question
Question text
Which of the following is not a characteristic of short-term employee benefits?
a.
No actuarial assumptions are required to measure the benefit obligation.
b.
There is no possibility of any actuarial gain or loss.
c.
Short-term employee benefit obligations are measured on a discounted basis.
d.
Short-term employee benefits by definition are payable no later than twelve months
after year-end.
Feedback
The correct answer is: Short-term employee benefit obligations are measured on a
discounted basis.
Question 11
Incorrect
Flag question
Question text
The present value of pension benefits accrued to date using assumptions as to
future compensation level is the
a.
Projected benefit obligation
b.
Accumulated benefit obligation
c.
Accrued pension cost
d.
Past service cost
Feedback
Question 12
Correct
Flag question
Question text
Which of the following statements best describes "other long-term employee
benefits"?
a.
Benefits which are payable after completion of employment.
b.
Benefits that are expected to be settled within twelve months after the end of the
reporting period.
c.
Benefits that are not expected to be settled within twelve months after the end of
the reporting period.
d.
Benefits payable as a result of an entity's decision to terminate an employee's
employment before the normal retirement date.
Feedback
The correct answer is: Benefits that are not expected to be settled within twelve
Question 13
Correct
Flag question
Question text
A pension liability is reported when
a.
The defined benefit obligation exceeds the fair value of plan assets.
b.
Cumulative other comprehensive income exceeds the fair value of plan assets.
c.
The accumulated benefit obligation is less than the fair value of plan assets.
d.
The pension expense for the period is greater than the funding amount for the same
period.
Feedback
The correct answer is: The defined benefit obligation exceeds the fair value of plan
assets.
Question 14
Correct
Flag question
Question text
Employees are each entitled to 20 days of paid holiday leave per year. Unused
holiday leave cannot be carried forward and does not vest. What is the holiday
leave?
a.
A termination benefit
b.
Other long-term employee benefit
c.
A short-term employee benefit
d.
A postemployment benefit
Feedback
Question 15
Correct
Flag question
Question text
These are compensated or paid absences that are carried forward and can be
used in future periods and the employees are entitled to a cash payment for
unused entitlement on leaving the entity.
a.
Accumulating and nonvesting
b.
Nonaccumulating and nonvesting
c.
Accumulating and vesting
d.
Nonaccumulating and vesting
Feedback
The correct answer is: Accumulating and vesting
Question 16
Correct
Flag question
Question text
a.
A defined benefit plan that provides benefits to employees of more than one entity.
b.
A defined contribution plan or a defined benefit
c.
A defined contribution plan or defined benefit plan that pools the assets
contributed by various entities that are not under common control and uses those
assets to provide benefits to employees of more than one entity.
d.
A defined contribution plan that pools the asset contributed by various entities.
Feedback
The correct answer is: A defined contribution plan or defined benefit plan that pools
the assets contributed by various entities that are not under common control and
uses those assets to provide benefits to employees of more than one entity.
Question 17
Correct
Flag question
Question text
The vested benefits in a pension plan represent
a.
Benefits that are not contingent on the employee's continuing in the service of the
employer.
b.
Benefits accumulated in the hands trustee.
c.
Benefits to be paid to the retired employee.
d.
Benefits to be paid to, the retired employee in the current year.
Feedback
The correct answer is: Benefits that are not contingent on the employee's
continuing in the service of the employer.
Question 18
Correct
Flag question
Question text
a.
Interest (net) on the net defined benefit liability (asset) in profit or loss.
b.
Remeasurements of the net defined benefit liability (asset) in other comprehensive
income.
c.
d.
Feedback
The correct answer is: All of these mentioned are components of defined benefit
cost.
Question 19
Correct
Flag question
Question text
a.
A benefit resulting from termination of employment at the request of an employee
without an entity offer is not a termination benefit.
b.
The event that gives rise to an obligation for termination benefit is the termination of
employment.
c.
A benefit that is in any way dependent on providing service in the future is a
d.
A benefit resulting from mandatory retirement is a postemployment benefit rather
than a termination benefit.
Feedback
The correct answer is: A benefit that is in any way dependent on providing service
in the future is a termination benefit.
Question 20
Incorrect
Flag question
Question text
A pension' asset is reported when
a.
The accumulated benefit obligation exceeds the fair value of plan assets but a past
service cost exists.
b.
Plan assets at fair value exceed the accumulated benefit obligation.
c.
Plans assets at fair value exceed the defined benefit obligation.
d.
The accumulated benefit obligation exceeds the fair value of plan assets.
Feedback
The correct answer is: Plans assets at fair value exceed the defined benefit
obligation.
Question 21
Incorrect
Flag question
Question text
Which statement is incorrect regarding short-term employee benefits?
a.
Short-term employee benefits in the form of accumulating paid absences are
recognized when the employees render service that increases their entitlement to
future paid absences.
b.
An entity shall measure the expected cost of accumulating paid absences as the
additional amount that the entity expects to pay as a result of the unused
entitlement that has accumulated at the end of the reporting period.
c.
These benefits include non-monetary benefits for current employees if expected to
be settled wholly before twelve months after the end of the annual reporting period
in which the employees render the related services.
d.
PAS 19 requires disclosures about short-term employee benefits for key
management personnel.
Feedback
The correct answer is: PAS 19 requires disclosures about short-term employee
benefits for key management personnel.
Question 22
Incorrect
Flag question
Question text
a.
When the entity recognizes costs for a restructuring that involves the payment of
termination benefits.
b.
At the later of the two statements.
c.
At the earlier of the two statements.
d.
When the entity can no longer withdraw the offer of those benefits.
Feedback
Question 23
Correct
Flag question
Question text
The interest on the projected benefit obligation
a.
Reflects the 'incremental borrowing rate of the employer.
b.
Is the same as the actual return on plan assets.
c.
Reflects the rate at which retirement benefits could be effectively settled.
d.
May be stated implicitly or explicitly.
Feedback
The correct answer is: Reflects the rate at which retirement benefits could be
effectively settled.
Question 24
Correct
Flag question
Question text
In determining whether to accrue employees' compensation for future absences,
one of the conditions that must be met is that the employer has an obligation to
make payment even if an employee terminates. This is an example of what?
a.
Accumulated right
b.
Contingent right
c.
Vested right
d.
Estimate right
Feedback
The correct answer is: Vested right
Question 25
Correct
Flag question
Question text
Which of the following criteria is not required for the recognition of a liability for
compensated absences?
a.
The amount of the obligation must be estimable.
b.
Payment of the obligation will require the use of current assets.
c.
Payment of the obligation must be probable.
d.
The compensation either vests with the employee or can be carried forward to
subsequent years.
Feedback
The correct answer is: Payment of the obligation will require the use of current
assets.
Question 26
Correct
Flag question
Question text
What is the relationship between the amount funded and the amount reported for
defined benefit cost?
a.
Defined benefit cost must equal the amount funded.
b.
Defined benefit cost is less than the amount funded.
c.
Defined benefit cost may be more than, equal to, or less than the amount funded.
d.
Defined benefit cost is more than the amount funded.
Feedback
The correct answer is: Defined benefit cost may be more than, equal to, or less than
the amount funded.
Question 27
Incorrect
Flag question
Question text
An-entity made a public announcement of a commitment to a voluntary
redundancy plan. The entity has an obligation to pay employees that choose
voluntary redundancy a lump sum equal to twice their gross annual salary. What is
the obligation to pay employees that choose voluntary redundancy?
a.
b.
c.
d.
Feedback
Question 28
Correct
Flag question
Question text
If the payment of employees' compensation for future absences is probable, the
amount can be reasonably estimated and the obligation relates to rights that
accumulate, the compensation should be
a.
Accrued if attributable to employees' services whether already rendered or not.
b.
Recognized when paid.
c.
Accrued if attributable to employees' services already rendered.
d.
Accrued if attributable to employees' services not yet rendered.
Feedback
The correct answer is: Accrued if attributable to employees' services already
rendered.
Question 29
Correct
Flag question
Question text
A profit-sharing plan requires an entity to pay a specified proportion of the
cumulative profit for a five-year period to employees who serve throughout the five-
year period. What is the profit-sharing plan? ,
a.
b.
c.
A short-term' employee benefit
d.
Feedback
Question 30
Correct
Flag question
Question text
a.
Assets and liabilities may be netted when there is a legally enforceable right to use
the assets of one and to settle the obligations of another plan.
b.
When the estimated cash inflows and outflows are similar in pattern.
c.
When the assets and liabilities are both financial.
d.
Assets and liabilities are always netted.
Feedback
The correct answer is: Assets and liabilities may be netted when there is a legally
enforceable right to use the assets of one and to settle the obligations of another
plan.
lOMoARcPSD|7731915
All-about-shareholders
accounting (University of San Jose-Recoletos)
StuDocu is not sponsored or endorsed by any college or university

Downloaded by Charys Golloso (charysdelats22@gmail.com)
lOMoARcPSD|7731915
A company declared a cash dividend on its ordinary share in December 2019 payable in
January 2020. Retained earnings would
a.
Decrease on the date of payment
b.
Not be affected on the date of payment
c.
Increase on the date of declaration
d.
Not be affected on the date of declaration
Feedback
Question 2
Correct
Flag question
Question text
A company issued rights to its existing shareholders to acquire, at P15 per share, 5,000 unissued
a.
P15 per share when the rights are issued
b.
c.
P10 per share when the rights are exercised
d.
Feedback
Question 3
Incorrect
Flag question
Question text
A company issued rights to its existing shareholders to purchase for par unissued shares of
ordinary share with a par value of P10 per share. When the market value of the ordinary share

lOMoARcPSD|7731915
was P12 per share, the rights were exercised. Ordinary share should be credited at P10 per share
and
a.
No credit made to Additional Paid-In Capital or Retained Earnings
b.
Additional Paid-in capital credited at P2 per share
c.
Paid-in Capital from share rights credited at P2 per share
d.
Retained earnings credited at P2 per share
Feedback
Question 4
Correct
Flag question
Question text
A company issued rights to its existing shareholders to purchase, for P30 per share, unissued
shares of P15 par value ordinary share. When the rights lapse
a.
Additional paid-in-capital will be debited
b.
Additional paid-in-capital will be credited
c.
Share rights outstanding will be debited
d.
No entry will be made
Feedback
Question 5
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915
Purchasing treasury share

b.
Reissuing treasury share
c.
Incurring a net loss in the prior year
d.
Incurring a net loss in the current year
Feedback
Question 6
Correct
Flag question
Question text
Aguanta Co. decided to split its P25 par value common stock for a 5-for-1 scheme. Which of the
following is true?
a.
The firm’s stockholders’ equity will increase because the firm has more shares of stock
outstanding
b.
The firm’s paid-in capital will increase because the firm has more shares of stock outstanding
c.
A shareholder that held two shares before the split will have fifty share after the split
d.
The new common stock will have a par value of P5 per share after the split
Feedback
The correct answer is: The new common stock will have a par value of P5 per share after the split
Question 7
Correct
Flag question
Question text
At the date of financial statements, ordinary share shares issued would exceed ordinary share
shares outstanding as a result of the
a.
Declaration of a share dividend

lOMoARcPSD|7731915
b.
Payment in full of subscribed share
c.
Purchase of treasury share
d.
Declaration of a share split
Feedback
Question 8
Incorrect
Flag question
Question text
At the start of current year, Saionra Co. was organized with authorized capital of 200,000 shares
of P100 par value. On January 10, it issued 50,000 shares at P110 per share. On March 25, 2,000
shares were issued when the shares were quoted at P120 a share in the stock market. The
company acquired land having a fair value of P1,300,000 in exchange for issuing 10,000 shares
which was quoted in the stock exchange at P110 per share. What amount should be reported as
share capital?
a.
7,440,000
b.
5,000,000
c.
6,200,000
d.
7,640,000
Feedback
Question 9
Correct
Flag question
Question text
At the start of current year, Saionra Co. was organized with authorized capital of 200,000 shares

lOMoARcPSD|7731915
share premium?
a.
500,000
b.
800,000
c.
540,000
d.
840,000
Feedback
Question 10
Correct
Flag question
Question text
At the start of the current year, Saionaini Co. was authorized by the SEC to issue 800,000 shares.
Immediately after, the company issued 600,000 shares. In the middle of the year, the company
reacquired but did not cancel 50,000 shares. Then a month before the year ended the company
declared a two for one stock split. At the end of the year the company declared dividends. How
many shares are entitled to receive dividends at year end?
a.
1,150,000
b.
1,100,000
c.
1,200,000
d.
1,500,000
Feedback
Question 11
Correct
Flag question
Question text

lOMoARcPSD|7731915
At the start of the year, Cassiaion Co. issued 500,000 shares of P1 par value for P10 per share.
During the year, the company reacquired and retired 20,000 shares at P15 per share. As a result
of the retirement, what amount should be debited to share premium?
a.
180,000
b.
280,000
c.
20,000
d.
100,000
Feedback
Question 12
Correct
Flag question
Question text
At the start of the year, Cassiaion Co. issued 500,000 shares of P1 par value for P10 per share.
During the year, the company reacquired and retired 20,000 shares at P15 per share. As a result
of the retirement, what amount should be debited to retained earnings?
a.
100,000
b.
280,000
c.
20,000
d.
180,000
Feedback
Question 13
Correct
Flag question
Question text

lOMoARcPSD|7731915
Cassaionoi Co. was incorporated October 2020 and issued 200,000 shares par value of P10 at
P15 per share. During the period October 2020 to December 31, 2021, the company reported a
profit of P750,000 and paid cash dividends of P380,000. In the same period, the company also
reacquired 12,000 shares at P12 per share and subsequently reissued 8,000 shares for P8 per
share and retired the remaining treasury shares. What is the total shareholders’ equity on
December 31, 2021?
a.
3,370,000
b.
3,338,000
c.
3,290,000
d.
3,306,000
Feedback
Question 14
Incorrect
Flag question
Question text
During the year, Casaionbaani Co. issued P110 per share, 150,000 convertible preference shares
with P100 par value. One preference share may be converted into three ordinary shares of P25
par value at the option of the preference shareholder. At year-end, all the preference shares
were converted into ordinary shares. The market value of the ordinary share at the conversion
date was P40. What amount should be credited to ordinary share capital as a result of
conversion?
a.
15,000,000
b.
11,250,000
c.
16,500,000
d.
18,000,000
Feedback
Question 15
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
During the year, Casaionbaani Co. issued P110 per share, 150,000 convertible preference shares
with P100 par value. One preference share may be converted into three ordinary shares of P25
par value at the option of the preference shareholder. At year-end, all the preference shares
were converted into ordinary shares. The market value of the ordinary share at the conversion
date was P40. By what amount did share premium increase as a result of conversion?
a.
3,750,000
b.
1,500,000
c.
0
d.
5,250,000
Feedback
Question 16
Correct
Flag question
Question text
Easybreezy Co. held 100,000 shares of P1 par value as treasury reacquired for P120,000. At year-
end, the entity reissued all 100,000 shares for P190,000. What is credited for the excess of the
reissue price over the cost of treasury shares?
a.
Share capital P100,000
b.
Share premium P70,000
c.
Gain on sale of investment P70,000
d.
Retained earnings P70,000
Feedback
Question 17
Correct

lOMoARcPSD|7731915
Flag question
Question text
Famous Company has not declared or paid dividends on its cumulative preference share in the
last three years. These dividends should be reported
a.
As a current liability
b.
As a reduction in shareholders’ equity
c.
As a noncurrent liability
d.
In a note to the financial statements
Feedback
Question 18
Correct
Flag question
Question text
Five thousand (5,000) shares of ordinary share with a par value of P10 per share were issued
initially at P12 per share. Subsequently, one thousand (1,000) of these shares were acquired as
treasury share at P15 per share. Assuming that the cost method of accounting for treasury share
transactions is used, what is the effect of the acquisition of the treasury share on the share
premium and retained earnings, respectively?
a.
Increase, decrease
b.
No effect, no effect
c.
Decrease, increase
d.
Decrease, decrease
Feedback
Question 19
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
a.
The ordinary shareholders receive a dividend rate per share equal to the preference and all
excess dividends are share proportionately between the two classes.
b.
excess dividends go to the preference.
c.
The preference shareholders receive their full dividend and any excess dividends on the ordinary
shareholders.
d.
excess dividends are given to the ordinary shareholders
Feedback
The correct answer is: The ordinary shareholders receive a dividend rate per share equal to the
preference and all excess dividends are share proportionately between the two classes.
Question 20
Correct
Flag question
Question text
Gains and losses on the purchase and resale of treasury shares may be reflected only in
a.
Paid in capital accounts
b.
Paid in capital and retained earnings accounts
c.
Income, paid-in capital, and retained earnings accounts
d.
Income and paid-in capital accounts
Feedback
Question 21
Correct

lOMoARcPSD|7731915
Flag question
Question text
How would a share split affect the company’s assets, total shareholders’ equity and share
premium, respectively?
a.
No effect, no effect, increase
b.
Increase, increase, no effect
c.
Decrease, decrease, decrease
d.
No effect, no effect, no effect
Feedback
Question 22
Correct
Flag question
Question text
How would retained earnings be affected by the declaration stock dividend and share split,
respectively?
a.
Decrease, no effect
b.
No effect, decrease
c.
Decrease, decrease
d.
Feedback
Question 23
Correct

lOMoARcPSD|7731915
Flag question
Question text
How would the declaration of a 20% stock dividend by a Corporation affect it’s retained
earnings and total shareholders’ equity respectively?
a.
b.
Decrease, no effect
c.
No effect, decrease
d.
Decrease, decrease
Feedback
Question 24
Correct
Flag question
Question text
In accordance with PIC Q&A No. 2011-04, the following are generally treated as deduction to
equity, except
a.
Underwriting fees
b.
Stock exchange listing fees
c.
SEC registration fees for new shares
d.
Newspaper publication fees
Feedback
Question 25
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
Leesudni Company issued 200,000 shares of P100 par, 10% cumulative preference shares for
P25,000,000. One detachable warrant was attached to each preference share issued. Each
warrant gives the holder the right to purchase one ordinary share, P50 par value, for P100. The
market value of the warrant after the preference shares were issued was P15. The proceeds to
be allocated to the preference shares is
a.
22,000,000
b.
21,000,000
c.
20,000,000
d.
25,000,000
Feedback
Question 26
Incorrect
Flag question
Question text
Naglaum Co. declared and distributed 10% share dividend with fair value of P1,500,000 and par
value of P1,000,000, and 25% share dividend with fair value of P4,000,000 and par value of
P3,500,000. What aggregate amount should be debited to retained earnings for the share
dividends?
a.
5,500,000
b.
3,500,000
c.
5,000,000
d.
4,500,000
Feedback
Question 27

lOMoARcPSD|7731915
Incorrect
Flag question
Question text
NoBae Co. provided the following information at year end: Preference share capital, P100
stated value, P4,600,000; Share premium on preference share, P1,610,000; Ordinary share capital,
P10 par, P10,500,000; Share premium on ordinary share P5,500,000; Subscribed ordinary share
capital, P100,000; Subscription receivable on ordinary shares, P75,000; Bonds payable,
P5,000,000; Premium on bonds payable, P1,000,000; Appropriated retained earnings, P2,000,000;
Unappropriated retained earnings, P1,800,000. What is the amount of legal capital?
a.
15,200,000
b.
22,235,000
c.
22,310,000
d.
16,810,000
Feedback
Question 28
Correct
Flag question
Question text
On February 1, 2020, authorized ordinary share was sold on a subscription basis at a price in
excess of par value, and 20% of the subscription price was collected. On May 1, 2020 the
remaining 80% of the subscription price was collected. Share premium would increase on
February 1 or May 1, respectively?
a.
NO, NO
b.
YES, NO
c.
NO, YES
d.
YES, YES
Feedback

lOMoARcPSD|7731915
Question 29
Incorrect
Flag question
Question text
On February 28, 2020, Wailisod Co. declared a 10% share dividend. On this date, the company’s
30,000 outstanding shares with par value of P20 was quoted in the stock exchange at P90 per
share. The share dividends were distributed on September 30 when the quote price went up to
P100 per share. What amount should be credited to share premium resulting from the share
dividend?
a.
240,000
b.
270,000
c.
210,000
d.
300,000
Feedback
Question 30
Incorrect
Flag question
Question text
On January 1, 2019, Confidentcaio Co. had 100,000 outstanding shares and 25,000 shares held in
treasury. During the first quarter, the company distributed 13,000 treasury shares to its officers. It
declared a 3 for 1 stock split which took effect on October 31. In November 2, the company
purchased 5,000 of its own shares to stop a company takeover. How many shares were issued on
December 31, 2019?
a.
375,000
b.
125,000
c.
300,000

lOMoARcPSD|7731915
d.
450,000
Feedback
Question 31
Correct
Flag question
Question text
On January 1, 2019, Confidentcaio Co. had 100,000 outstanding shares and 25,000 shares held in
treasury. During the first quarter, the company distributed 13,000 treasury shares to its officers. It
declared a 3 for 1 stock split which took effect on October 31. In November 2, the company
purchased 5,000 of its own shares to stop a company takeover. How many shares were
outstanding on December 31, 2019?
a.
300,000
b.
324,000
c.
334,000
d.
285,000
Feedback
Question 32
Correct
Flag question
Question text
On January 1, 2019, Confidentpa Co. had 20,000 treasury shares of P100 par value that have
been acquired at P120 per share. In December, the company reissued 15,000 of these treasury
shares at P150 per share. What amount should be reported as appropriated retained earnings
for treasury share transactions?
a.
2,400,000
b.
500,000

lOMoARcPSD|7731915
c.
1,800,000
d.
600,000
Feedback
Question 33
Incorrect
Flag question
Question text
On January 1, 2019, Massaion Co. reported P1,750,000 of appropriated retained earnings for the
construction of a new building which was completed in 2019 at a total cost of P1,500,000. During
the year the company appropriated P1,200,000 of retained earnings for the construction of a
new warehouse. Also, P2,000,000 of cash was restricted to cover the partial retirement of bonds
in 2020. What amount of appropriated retained earnings should be reported on the December
31, 2019 financial statements?
a.
1,450,000
b.
3,200,000
c.
2,950,000
d.
1,200,000
Feedback
Question 34
Incorrect
Flag question
Question text
On July 31, 2011, ACD Corporation purchased 500,000 shares of XYZ Corporation. On December
31,2012 ACD distributed 250,000 shares of XYZ share as a dividend to ACD’s shareholders. This is
an example of a
a.
Property dividend

lOMoARcPSD|7731915
b.
Investment dividend
c.
Liquidating dividend
d.
Stock dividend
Feedback
Question 35
Correct
Flag question
Question text
On June 30, 2020, Steelheart Mining, Inc. declared a cash dividend of P8,000,000 to shareholders
of July 15, 2020 and payable on September 1, 2020. As at June 30, the company reported share
capital of P100,000,000, share premium of P3,000,000 and retained earnings of P6,000,000. It also
reported an accumulated depletion of P2,000,000. What amount should be recognized as
liquidating dividend?
a.
8,000,000
b.
6,000,000
c.
2,000,000
d.
3,000,000
Feedback
Question 36
Correct
Flag question
Question text
On October 31, 2019, Saionni? Co. declared a property dividend consisting of inventories
payable on March 31, 2020. The carrying amount of the inventories at the date of declaration is
P3,000,000 and the fair value is P2,500,000. However, the fair value less cost to distribute the
inventory is P2,200,000 on December 31, 2019 and P2,000,000 on March 31, 2020. What is the
dividend payable on December 31, 2019?

lOMoARcPSD|7731915
a.
3,000,000
b.
2,500,000
c.
2,200,000
d.
0
Feedback
Question 37
Correct
Flag question
Question text
On October 31, 2019, Saionni? Co. declared a property dividend consisting of inventories
payable on March 31, 2020. The carrying amount of the inventories at the date of declaration is
P3,000,000 and the fair value is P2,500,000. However, the fair value less cost to distribute the
inventory is P2,200,000 on December 31, 2019 and P2,000,000 on March 31, 2020. What amount
of loss on distribution of dividend is recognized on March 31, 2020?
a.
500,000
b.
200,000
c.
300,000
d.
0
Feedback
Question 38
Incorrect
Flag question
Question text
Pinacasaionjud Co. provided the following data at year end: Authorized share capital,
P10,000,000; Issued share capital, P6,000,000; Subscribed share capital, P2,000,000; Subscription
receivable, collectible within one year, P800,000; Share premium, P1,000,00; Appropriated

lOMoARcPSD|7731915
retained earnings, P1,200,000; Unappropriated retained earnings, P600,000; Revaluation surplus,

P400,000; Treasury shares, at cost, P200,000. What amount should be reported as total
shareholders’ equity?
a.
9,000,000
b.
10,200,000
c.
9,800,000
d.
11,000,000
Feedback
Question 39
Incorrect
Flag question
Question text
Saionasad Co. issued 8,000 convertible preferred shares with P100 par value at P105. One
preferred share can be converted into three common shares with P25 par value at the option of
the stockholder. Subsequently, all of the preferred shares were converted into common shares.
The fair value of the common shares on the date of conversion was P30. What amount should be
credited to share premium or additional paid in capital as a result of the above transactions.
a.
240,000
b.
120,000
c.
80,000
d.
200,000
Feedback
Question 40
Correct
Flag question

lOMoARcPSD|7731915
Question text
Select the statements that is incorrect concerning the appropriations of retained earnings:
a.
Appropriations of retained earnings can be made as a result of contractual requirements
b.
Appropriations of retained earnings reflect funds set aside for a designated purpose, such as
plant expansion
c.
Appropriations of retained earnings can be made at the discretion of the board of directors
d.
Appropriations of retained earnings do not change the total amount of shareholders’ equity
Feedback
The correct answer is: Appropriations of retained earnings reflect funds set aside for a designated
purpose, such as plant expansion
Question 41
Incorrect
Flag question
Question text
The directors of Nolovelife, Inc. have decided to issue a share dividend. The P50 par value share
is currently selling at P60. The selling price is not expected to be affected by the share dividend.
The company which has an authorized capital of 1,000,000 shares had issued 500,000 shares, of
which 100,000 shares are in treasury. In order to capitalized P2,400,000 of retained earnings, what
percentage should be declared as share dividends by the directors?
a.
8%
b.
10%
c.
6%
d.
4%
Feedback
Question 42
Correct
Flag question

lOMoARcPSD|7731915
Question text
a.
Debit Ordinary Share Subscribed: Credit Ordinary Share
b.
Debit Ordinary Share Subscribed: Credit Subscription Receivable
c.
A memorandum entry
d.
Debit Ordinary Share Subscribed: Credit Ordinary Share and Additional Paid-in Capital
Feedback
Question 43
Incorrect
Flag question
Question text
The equity section of Loveless Co revealed the following information on December 31, 2019:
Preference share capital, P100 par, P5,000,000; Share premium-preference shares, P2,000,000;
Ordinary share capital, P50, P3,200,000; Share premium-ordinary shares, P500,000; Subscribed
ordinary share capital, P800,000; Appropriated retained earnings, P250,000; Unappropriated
retained earnings, P3,500,000; Subscription receivable ordinary shares, P400,000; OCI-Unrealized
loss on IESFVOCI, P600,000; Treasury shares ordinary, P1,000,000. How much is the contributed
capital of Loveless Co. as of December 31, 2019?
a.
11,500,000
b.
10,500,000
c.
11,100,000
d.
10,100,000
Feedback
Question 44
Correct
Flag question

lOMoARcPSD|7731915
Question text
a.
The liquidation value of the shares
b.
The book value of the shares
c.
The amount received by the corporation when the share was originally issued.
d.
The legal nominal value assigned to the shares
Feedback
Question 45
Correct
Flag question
Question text
a.
Preference shareholders.
b.
Creditors.
c.
Ordinary shareholders.
d.
Management.
Feedback
Question 46
Correct
Flag question
Question text
Unlike a stock split, a share dividend requires a formal journal entry in the financial accounting
records because
a.

lOMoARcPSD|7731915
Stock dividends are payable on the date they are declared

b.
Stock dividends represent a transfer from retained earnings to capital share
c.
Stock dividends increase the relative book value of an individual’s share holdings
d.
Stock dividends increase the shareholders’ equity in the issuing firm
Feedback
The correct answer is: Stock dividends represent a transfer from retained earnings to capital
share
Question 47
Correct
Flag question
Question text
When a portion of shareholders’ original investment is returned in the form of a dividend, it is
called a
a.
liquidating dividend
b.
Property dividend
c.
equity dividend
d.
compensating dividend
Feedback
Question 48
Correct
Flag question
Question text
Which of the following actions or events does not result in an addition to retained earnings?
a.
Issuance of a 3-for-1 share split
b.

lOMoARcPSD|7731915
A quasi reorganization
c.
Correction of an error in which ending inventory was understated in a previous year
d.
Earnings of net income for the period
Feedback
Question 49
Correct
Flag question
Question text
a.
Cumulative preference share
b.
Premium preference share
c.
Redeemable preference share
d.
Participating preference share
Feedback
Question 50
Incorrect
Flag question
Question text
a.
When a corporation declares a small stock dividend, it should capitalize the par value of the
shares.
b.
A large stock split should be accounted for by capitalizing the current market value of the stock.
c.
A stock dividend and a stock split are identical in all respects for the corporation issuing the
dividend or splitting the stock.

lOMoARcPSD|7731915
d.
A stock dividend (declared and issued) does not change the total assets, total liabilities, or total
stockholders equity of the issuing corporation.
Feedback
The correct answer is: A stock dividend (declared and issued) does not change the total assets,
total liabilities, or total stockholders equity of the issuing corporation.
Question 51
Incorrect
Flag question
Question text
Which statement is incorrect regarding measurement of a liability to distribute non-cash assets as
dividend to the entity’s owners?
a.
At the end of each reporting period and at the date of settlement, the entity shall review and
adjust the carrying amount of the dividend payable, with any changes in the carrying amount of
the dividend payable recognized in profit or loss.
b.
An entity shall measure a liability to distribute non-cash assets as a dividend to its owners at the
fair value of the assets to be distributed.
c.
None of the above.
d.
If an entity gives its owners a choice of receiving either a non-cash asset or a cash alternative,
the entity shall estimate the dividend payable by considering both the fair value of each
alternative and the associated probability of owners selecting each alternative.
Feedback
The correct answer is: At the end of each reporting period and at the date of settlement, the
entity shall review and adjust the carrying amount of the dividend payable, with any changes in
the carrying amount of the dividend payable recognized in profit or loss.
At the date of the financial statements, shares issued would exceed shares outstanding as a
result of
a.
Purchase of treasury shares
b.
c.
Declaration of share split

lOMoARcPSD|7731915
d.
Payment in full of subscribed shares
Feedback
Question 2
Correct
Flag question
Question text
a.
Decreases retained earnings but does not change total equity.
b.
May increase or decrease share premium but does not change total equity.
c.
Increases ordinary shares outstanding and total equity.
d.
Increases retained earnings and total equity.
Feedback
The correct answer is: Decreases retained earnings but does not change total equity.
Question 3
Correct
Flag question
Question text
If treasury shares are reissued for noncash consideration, the proceeds shall be measured by
a.
Fair value of the treasury shares

lOMoARcPSD|7731915
b.
Cost of the treasury shares
c.
Carrying amount of the noncash consideration
d.
Fair value of the noncash consideration '
Feedback
Question 4
Incorrect
Flag question
Question text
The issuer shall directly charge retained earnings for the fair value of the shares issued in
a.
Two for one share split
b.
Ten percent stock dividend
c.
Share appreciation right
d.
Share options
Feedback
Question 5
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
Have the rights to specific assets of the entity.
b.
Can negotiate individual contracts in behalf of the entity.
c.
Are entitled to a dividend every year in which the entity earns an income.
d.
Bear the ultimate risks and receive the benefits of ownership.
Feedback
Question 6
Correct
Flag question
Question text
When shareholders may elect to receive cash in lieu of stock dividend, the amount to be
charged to retained earnings is equal to
a.
Fair value of the shares
b.
Optional cash dividend
c.
Par value of the shares
d.

lOMoARcPSD|7731915
Book value of the shares
Feedback
Question 7
Correct
Flag question
Question text
a.
Share premium
b.
Retained earnings '
c.
Share capital account
d.
Share capital account to the extent of the par value of the shares issued with any excess being
reflected in share premium
Feedback
The correct answer is: Share capital account to the extent of the par value of the shares issued
with any excess being reflected in share premium
Question 8
Incorrect
Flag question
Question text
a.
Record

lOMoARcPSD|7731915
b.
Declaration
c.
Payment
d.
Declaration or date of record, whichever is earlier
Feedback
Question 9
Correct
Flag question
Question text
a.
Appropriated retained earnings shall be clearly distinguished from unappropriated retained

earnings.
b.
When the deficit exceeds the total of the other capital account balances, the excess is a capital
deficiency.
c.
A deficit in retained earnings shall be presented as an asset.
d.
A deficit is a debit balance in retained earnings.
Feedback
Question 10
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
All of the choices are correct
b.
Require a credit to share capital
c.
Reduce amounts paid in by shareholders
d.
Are prohibited under IFRS
Feedback
Question 11
Correct
Flag question
Question text
a.
Funding of past service cost
b.
Payment of last maturing series of a serial bond issue
c.
Purchase of property, plant' and equipment
d.

lOMoARcPSD|7731915
Feedback
Question 12
Incorrect
Flag question
Question text
A share dividend
a.
answer not given
b.
c.
decreases assets
d.
decreases shareholder’s equity
Feedback

Question 13
Correct
Flag question
Question text
a.
Absorb a fire loss when an entity is self-insured
b.

lOMoARcPSD|7731915
Restrict earnings available for dividends
c.
Smooth periodic income
d.
Provide for a contingent loss that is probable and measurable
Feedback
Question 14
Correct
Flag question
Question text
How would retained earnings be affected by the declaration of share dividend and share split,
respectively?
a.
No effect and No effect
b.
Decrease and No effect
c.
No effect and Decrease
d.
Decrease and Decrease
Feedback
Question 15
Correct
Flag question

lOMoARcPSD|7731915
Question text
In accounting for shareholders' equity, the accountant is primarily concerned with which of the
following?
a.
Making sure that the directors do not declare dividends in excess of retained earnings
b.
Distinguishing between realized and unrealized revenue
c.
Determining the total amount of shareholders' equity
d.
Recording the source of each of the various elements of shareholders' equity
Feedback
The correct answer is: Recording the source of each of the various elements of shareholders'
equity
Question 16
Correct
Flag question
Question text
Treasury shares are
a.
Issued but not outstanding shares.
b.
Shares held as an investment by the corporation.
c.
Issued and outstanding shares.
d.
Shares held as an investment by the treasurer.
Feedback

lOMoARcPSD|7731915
Question 17
Correct
Flag question
Question text
a.
Increases preference shares authorized
b.
Increases preference shares outstanding
c.
Has no effect on preference shares outstanding
d.
Decreases preference shares authorized
Feedback
Question 18
Correct
Flag question
Question text
Treasury shares may be reissued as dividends, in which case what amount should be charged to
retained earnings?
a.
b.
Par value of the treasury shares
c.

lOMoARcPSD|7731915
Fair value of the treasury shares on the date of declaration .
d.
Fair value of the treasury shares on the date of issuance
Feedback
Question 19
Correct
Flag question
Question text
An entity issued what is called a "20% share dividend". At what amount per share should retained
a.
Par value
b.
Fair value at the declaration
c.
Fair value at the date of issuance
d.
Zero
Feedback
Question 20
Incorrect
Flag question
Question text

lOMoARcPSD|7731915
a.
Revaluation surplus
b.
Treasury shares
c.
Investment in ordinary shares of another company
d.
Retained earnings
Feedback
Question 21
Correct
Flag question
Question text
a.
Share split
b.
Reissue of treasury shares
c.
Share dividend
d.
Conversion of preference shares into ordinary shares
Feedback
Question 22
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
An entity shall review and adjust the carrying amount of the dividend payable at the end of
each reporting period and at the date of settlement with any changes in the carrying amount of
the dividend payable recognized
a.
As adjustment of share premium
b.
In equity as adjustment to the amount of distribution
c.
As component of other comprehensive income
d.
In profit or loss
Feedback
Question 23
Correct
Flag question
Question text
Which of the following is not a method that may be used to account for treasury shares?
a.
Constructive retirement method
b.
Cost method
c.
Par value method .

lOMoARcPSD|7731915
d.
Retained earnings method
Feedback
Question 24
Correct
Flag question
Question text
What is the treatment of "joint costs" that relate to the concurrent listing and issuance of new
shares, and listing of old existing shares?
a.
The joint costs should be deducted from equity, net of tax benefit.
b.
The joint costs should be expensed immediately.
c.
The joint costs should be deducted from equity, plus tax benefit.
d.
The joint costs should be allocated between the newly issued and listed shares and the newly
listed old existing shares prorata based on the number of shares outstanding.
Feedback
The correct answer is: The joint costs should be allocated between the newly issued and listed
shares and the newly listed old existing shares prorata based on the number of shares
outstanding.
Question 25
Incorrect
Flag question
Question text

lOMoARcPSD|7731915
a.
All of the choices are correct.
b.
Entities grant share warrants to executives and employees as a form of compensation.
c.
Entities include share warrants to make a security more attractive.
d.
Entities issue rights to existing shareholders.
Feedback
Question 26
Incorrect
Flag question
Question text
The proceeds from issuance of shares for a consideration other than cash should be measured
by the
a.
Fair value of the consideration received
b.
Par value of the shares issued
c.
Fair value of the shares issued
d.
Book value of the consideration received
Feedback
Question 27
Correct

lOMoARcPSD|7731915
Flag question
Question text
When collectibility is reasonably assured, the excess of the subscription price over the stated
value of the no-par subscribed share capital shall 'be recorded as
a.
No par share capital
b.
Share premium when the subscription is collected
c.
Share premium when the subscription is recorded
d.
Share premium when the share capital is issued.
Feedback
Question 28
Correct
Flag question
Question text
a.
Discount on share capital should be shown as deduction from total Shareholders' equity.
b.
All of these statements are true concerning share capital transactions.
c.
Subscriptions receivable from sale of share capital not currently collectible should be reflected
as deduction from the related subscribed share capital.

lOMoARcPSD|7731915
d.
Deposits on subscription to a proposed increase in share capital should be reported as part of
shareholders' equity.
Feedback
The correct answer is: All of these statements are true concerning share capital transactions.
Question 29
Correct
Flag question
Question text
a.
Fair value of such services
b.
Book value of the shares issued
c.
d.
Feedback
Question 30
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915
Outstanding less the number of treasury shares
b.
Outstanding
c.
Issued
d.
Authorized
Feedback
Question 31
Correct
Flag question
Question text
Subscriptions receivable and other receivables from sale of shares which are not collectible
currently shall be presented as
a.
Deduction from the related subscribed share capital in the shareholders’ equity section
b.
Long-term investment
c.
Other asset
d.
Current asset
Feedback
Deduction from the related subscribed share capital in the shareholders’ equity section
Question 32
Correct

lOMoARcPSD|7731915
Flag question
Question text
A dividend which is a return to shareholders of a portion of their original investment is
a.
Liability dividend
b.
Participating dividend
c.
d.
Patronage dividend
Feedback
Question 33
Incorrect
Flag question
Question text
a.
Capital resulting from re-issuance of treasury shares at a price above its acquisition price
b.
Capital accumulated by retention of earnings
c.
Preference shares
d.
Premium on common and preference shares

lOMoARcPSD|7731915
Feedback
Question 34
Correct
Flag question
Question text
If the share dividend is less than 20%, what' amount of the retained earnings should be
capitalized?
a.
Fair value of the shares on the date of declaration
b.
c.
Fair value of the shares on the date of issuance
d.
Fair value of the shares on the date of record
Feedback
Question 35
Correct
Flag question
Question text
When an entity declared and paid a liquidating dividend, the distribution resulted in a decrease
in
a.
Paid in capital and no effect on retained earnings

lOMoARcPSD|7731915
b.
Retained earnings and no effect on paid in capital
c.
Neither paid in capital nor retained earnings
d.
Both paid in capital and retained earnings
Feedback
Question 36
Correct
Flag question
Question text
a.
Date of declaration
b.
Date of record
c.
An entry is made on all of these dates
d.
Date of payment
Feedback
Question 37
Correct

lOMoARcPSD|7731915
Flag question
Question text
An entity shall measure a noncurrent asset classified as held for distribution to owners at
a.
Carrying amount
b.
Fair value less cost to distribute
c.
Lower of carrying amount and fair value less cost to distribute
d.
Fair value
Feedback
The correct answer is: Lower of carrying amount and fair value less cost to distribute
Question 38
Correct
Flag question
Question text
a.
Date of declaration
b.
Date of issuing check
c.
Date of record
d.
Date of payment

lOMoARcPSD|7731915
Feedback
Question 39
Correct
Flag question
Question text
Transaction costs that are directly attributable to the issuance of new shares should be
a.
Charged to retained earnings
b.
Expensed immediately
c.
Deducted from equity
d.
Deducted from equity, net of any related income tax benefit
Feedback
Question 40
Correct
Flag question
Question text
When preference shares are purchased and retired by the issuing entity for less than original issue
price, proper accounting for the retirement
a.
Increases reported income for the period
b.

lOMoARcPSD|7731915
Increases the treasury shares
c.
Increases the amount of dividends available to ordinary , shareholders
d.
Increases the contributed capital of the ordinary shareholders
Feedback
The correct answer is: Increases the contributed capital of the ordinary shareholders
Question 41
Correct
Flag question
Question text
a.
Deduction from Additional paid in capital
b.

c.
Deduction from retained earnings
d.
Noncurrent assets
Feedback

Question 42
Correct
Flag question

lOMoARcPSD|7731915
Question text
a.
A claim against specific assets contributed by the owners.
b.
The maximum amount that can be borrowed by the entity.
c.
A claim against a portion of the total assets of an entity.
d.
Only the amount of retained earnings.
Feedback
Question 43
Correct
Flag question
Question text
An entity shall measure a liability to distribute noncash asset as dividend to the owners at
a.
Carrying amount of the asset distributed
b.
Either the carrying amount or fair value of the asset
c.
Neither the carrying amount nor fair value
d.
Fair value of the asset distributed
Feedback
Question 44
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
a.
Total shareholders' equity decreases.
b.
Total shareholders' equity does not change.
c.
The current ratio increases.
d.
The amount of working capital decreases.
Feedback
Question 45
Correct
Flag question
Question text
When the total shareholders’ equity is smaller than the amount of contributed capital, this
deficiency is called
a.
A liability
b.
Net loss
c.
A dividend

lOMoARcPSD|7731915
d.
A deficit
Feedback
Question 46
Correct
Flag question
Question text
An entity declared a dividend, a portion of which was liquidating. How would this declaration
affect contributed capital and retained earnings, respectively?
a.
b.
c.
d.
Feedback
Question 47
Correct
Flag question
Question text
Costs of public offering of shares or costs that relate to "stock market listing of shares" should be
a.

lOMoARcPSD|7731915
Considered as component of other comprehensive income .
b.
c.
d.
Feedback
Question 48
Correct
Flag question
Question text
a.
Share premium from treasury shares and then retained earnings
b.
Share premium from original issuance, share premium from treasury shares and then retained
earnings
c.
Retained earnings and then share premium from treasury shares
d.
Loss on sale of treasury shares to be reported as other expense
Feedback
The correct answer is: Share premium from treasury shares and then retained earnings
Question 49
Correct

lOMoARcPSD|7731915
Flag question
Question text
For which of the following purposes should an appropriation for possible loss contingencies be
established?
a.
To match applicable costs with current revenue.
b.
To charge operations in periods of rising prices for the losses which may otherwise be absorbed in
periods of falling prices.
c.
To reduce fluctuations in net income in order to lend stability of the entity.
d.
To inform shareholders that a portion of retained earnings should be set aside from amounts
available for dividends because of such contingencies.
Feedback
The correct answer is: To inform shareholders that a portion of retained earnings should be set
aside from amounts available for dividends because of such contingencies.
Question 50
Correct
Flag question
Question text
When an entity settles the property dividend payable, it shall recognize the difference between
the carrying amount of the asset distributed and the carrying amount of the dividend payable in
a.
Retained earnings
b.
Profit or' loss

lOMoARcPSD|7731915
c.
Other comprehensive income
d.
Equity
Feedback
Question 51
Correct
Flag question
Question text
a.
Date of payment
b.
Date of declaration
c.
Date of record
d.
Feedback
Question 52
Correct
Flag question
Question text
The cost of treasury shares acquired for noncash consideration is usually measured by

lOMoARcPSD|7731915
a.
Fair value of the noncash consideration ~
b.
Carrying amount of the noncash asset surrendered
c.
Book-value of the shares
d.
Feedback
Question 53
Correct
Flag question
Question text
Which of the following statements is true concerning appropriations of retained earnings?
a.
When treasury shares are purchased, retained earnings must be appropriated equal to the cost
of the treasury shares.
b.
c.
d.
The only proper way to eliminate an appropriation of retained earnings after it has served its
purpose is to revert to the unappropriated retained earnings.
Feedback
The correct answer is: All of these statements are true concerning appropriations of retained
earnings.
Question 54
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
Share proportionately in any new issue of shares of the same class.
b.
Exclude preference shareholders from voting rights.
c.
Share proportionately in corporate assets upon liquidation.
d.
Receive cash dividends before distribution to preference shareholders.
Feedback
The correct answer is: Share proportionately in any new issue of shares of the same class.
Question 55
Correct
Flag question
Question text
a.
Component of total Iiabilities as noncurrent liability
b.
Component of equity as part of share premium
c.
Component of equity as part as total retained earnings
d.

lOMoARcPSD|7731915
Component of total liabilities as current liability
Feedback
Question 56
Correct
Flag question
Question text
Gain and loss on retirement of treasury shares shall not be included in profit or loss. If the
retirement results in a gain, such gain shall be credited to
a.
Share premium
b.
Retained earnings
c.
Share capital
d.
Income
Feedback
Question 57
Correct
Flag question
Question text
When an entity issued rights to existing shareholders to purchase unissued ordinary shares at
more than par value, share premium would be recorded when the rights
a.
Are issued

lOMoARcPSD|7731915
b.
Lapsed
c.
Are exercised
d.
Become exercisable
Feedback
Question 58
Correct
Flag question
Question text
Transaction costs directly attributable to the issuance of new shares include all of the following,
except
a.
SEC registration fee for new shares
b.
Underwriting fee
c.
Road show presentation
d.
Documentary stamp tax
Feedback
Question 59
Correct

lOMoARcPSD|7731915
Flag question
Question text
Unlike a share split, a stock dividend requires a formal journal entry in the accounting records
because
a.
Stock dividends are payable on the date declared.
b.
Stock dividends increase the shareholders' equity in the issuing entity.
c.
Stock dividends represent a transfer from retained earnings to share capital.
d.
Stock dividends increase the relative book value of an individual's share holdings.
Feedback
The correct answer is: Stock dividends represent a transfer from retained earnings to share
capital.
Question 60
Correct
Flag question
Question text
a.
A reduction in total shareholders' equity
b.
An addition to share capital outstanding
c.
A note to financial statements

lOMoARcPSD|7731915
d.
A current liability
Feedback
Question 61
Correct
Flag question
Question text
a.
May increase net income if the cost method is used.
b.
May increase but not decrease retained earnings.
c.
May decrease but not increase retained earnings.
d.
May decrease but increase net income.
Feedback
Question 62
Correct
Flag question
Question text
a.
Gain or loss on sale of treasury shares shall not be included in profit or loss.

lOMoARcPSD|7731915
b.
Treasury shares may be recognized .as financial asset.
c.
The total cost of treasury shares shall be deducted from shareholders' equity.
d.
Treasury shares shall be recorded at cost irrespective of whether acquired below or above par
value.
Feedback
Question 63
Correct
Flag question
Question text
a.
b.
Declaration of a cash dividend
c.
Issuance of preference shares in exchange for convertible debentures
d.
Issuance of nonconvertible bonds with share warrants
Feedback
Question 64
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
Property dividend
b.
Cash dividend
c.
d.
Share dividend
Feedback
Question 65
Correct
Flag question
Question text
The issuer should charge retained earnings for the fair value of shares issued in a
a.
2 for 1 share split
b.
4 for 1 share split
c.
1 for 5 share dividend
d.

lOMoARcPSD|7731915
Feedback
Question 66
Correct
Flag question
Question text
a.
Share premium from original issuance, share premium from treasury shares and then retained
earnings.
b.
c.
Retained earnings
d.
Share premium from treasury shares, share premium from original issuance and then retained
earnings
Feedback
The correct answer is: Share premium from original issuance, share premium from treasury shares
and then retained earnings.
Question 67
Correct
Flag question
Question text
a.
Preventing losses from contingencies

lOMoARcPSD|7731915
b.
Protecting the working capital position
c.
Insuring the payment of dividends
d.
Earmarking cash to be used for particular purposes
Feedback
Question 68
Correct
Flag question
Question text
a.
Use the "with and without" method to measure the compound instrument.
b.
Are compound financial instrument.
c.
Include an option for the holder to convert preference shares into a fixed number ordinary
shares.
d.
Feedback
The correct answer is: Include an option for the holder to convert preference shares into a fixed
number ordinary shares.
Question 69
Correct

lOMoARcPSD|7731915
Flag question
Question text
It refers to the issuance by an enterprise of its own ordinary shares to its ordinary shareholders
without consideration and under conditions indicating that such action is prompted mainly by a
desire to increase the number of shares outstanding.
a.
Share split
b.
Reverse share split
c.
Recapitalization
d.
Share dividend
Feedback
Question 70
Correct
Flag question
Question text
a.
The liquidation value of the share
b.
The book value of the share
c.
The legal nominal value assigned to the share

lOMoARcPSD|7731915
d.
The amount received by the entity when the share was originally issued
Feedback
Question 71
Correct
Flag question
Question text
When shares without par value are sold the proceeds should be credited to the applicable share
capital account. Alternatively, the excess proceeds over stated value, if any, of the no par
shares may be credited to
a.
Retained earnings
b.
Income
c.
Ordinary shares
d.
Share premium
Feedback
Question 72
Correct
Flag question
Question text
If the entity has only one class of share capital, a transfer from retained earnings to share capital
equal to the fair value of the shares issued is ordinarily a characteristic of

lOMoARcPSD|7731915
a.
Either a share dividend or a share split
b.

c.
A share split but not a share dividend
d.
Neither a share dividend nor a share split
Feedback

Question 73
Correct
Flag question
Question text
Which of the following statements is incorrect concerning the appropriations of retained
earnings?
a.
Appropriations of retained earnings can be made as a result of contractual requirements.
b.
Appropriations of retained earnings can be made at the discretion of the board of directors.
c.
Appropriations of retained earnings do not change the total amount of shareholders' equity.
d.
Appropriations of retained earnings reflect funds set aside for a designated purpose, such as
plant expansion.
Feedback
The correct answer is: Appropriations of retained earnings reflect funds set aside for a designated
purpose, such as plant expansion.

lOMoARcPSD|7731915
Question 74
Correct
Flag question
Question text
a.
A decrease in cash with an equal increase in. the investment in fund.
b.
The establishment of a fund to help finance future plant expansion.
c.
The setting aside of cash to be used for future plant expansion.
d.
The disclosure that management, does not intend to distribute in the form of dividends assets
equal to the amount of the appropriation.
Feedback
The correct answer is: The disclosure that management, does not intend to distribute in the form
of dividends assets equal to the amount of the appropriation.
Question 75
Correct
Flag question
Question text
An entity declared a cash dividend on a certain date payable on another date. Retained
earnings would
a.
b.

lOMoARcPSD|7731915
c.
d.
Feedback
Question 76
Incorrect
Flag question
Question text
If shares are issued to extinguish a financial liability, what is the initial measurement of the shares
issued?
a.
b.
c.
d.
Fair value of liability extinguished
Feedback
Question 77
Correct
Flag question

lOMoARcPSD|7731915
Question text
When an entity calls in all of the preference shares for more than the original issue price, the
excess paid above the original issue price should be
a.
Charged against retained earnings
b.
Accounted for as loss on exchange
c.
Charged against share premium of ordinary shares
d.
Charged to discount on preference shares
Feedback
Question 78
Correct
Flag question
Question text
a.
b.
Preference share capital
c.
Capital resulting from reissuance of treasury shares at a price above acquisition price
d.
Feedback

lOMoARcPSD|7731915
When an entity calls in all of the preference shares for more than the original issue price, the
excess paid above the original issue price should be
a.
b.
c.
d.
Feedback
Question 2
Correct
Flag question
Question text
a.
b.
c.
Entities grant share warrants to executives and employees as a form of compensation.
d.
Feedback
Question 3
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
A dividend which is a return to shareholders of a portion of their original investment is
a.
Patronage dividend
b.
c.
d.
Liability dividend
Feedback
Question 4
Correct
Flag question
Question text
If the share dividend is less than 20%, what' amount of the retained earnings should be
capitalized?
a.
b.
c.

lOMoARcPSD|7731915
d.
Feedback
Question 5
Correct
Flag question
Question text
a.
b.
Capital resulting from re-issuance of treasury shares at a price above its acquisition price
c.
d.
Preference shares
Feedback
Question 6
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915
b.
c.
d.
Feedback
Question 7
Correct
Flag question
Question text
a.
b.
Include an option for the holder to convert preference shares into a fixed number ordinary
shares.
c.
d.
Feedback
The correct answer is: Include an option for the holder to convert preference shares into a fixed
Question 8
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
b.
Share premium
c.
Retained earnings '
d.
Share capital account to the extent of the par value of the shares issued with any excess being
reflected in share premium
Feedback
The correct answer is: Share capital account to the extent of the par value of the shares issued
with any excess being reflected in share premium
Question 9
Correct
Flag question
Question text
It refers to the issuance by an enterprise of its own ordinary shares to its ordinary shareholders
without consideration and under conditions indicating that such action is prompted mainly by a
desire to increase the number of shares outstanding.
a.
Recapitalization
b.
Reverse share split
c.

lOMoARcPSD|7731915
Share split
d.
Share dividend
Feedback
Question 10
Correct
Flag question
Question text
a.
b.
c.
d.
Feedback
Question 11
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915
Date of record
b.
Date of declaration
c.
d.
Date of payment
Feedback
Question 12
Correct
Flag question
Question text
If the entity has only one class of share capital, a transfer from retained earnings to share capital
equal to the fair value of the shares issued is ordinarily a characteristic of
a.

b.
c.
d.
Feedback
Question 13
Correct

lOMoARcPSD|7731915
Flag question
Question text
When an entity settles the property dividend payable, it shall recognize the difference between
the carrying amount of the asset distributed and the carrying amount of the dividend payable in
a.
Equity
b.
Profit or' loss
c.
d.
Retained earnings
Feedback
Question 14
Correct
Flag question
Question text
Costs of public offering of shares or costs that relate to "stock market listing of shares" should be
a.
b.
c.
d.

lOMoARcPSD|7731915
Feedback
Question 15
Correct
Flag question
Question text
Transaction costs that are directly attributable to the issuance of new shares should be
a.
b.
c.
d.
Feedback
Question 16
Correct
Flag question
Question text
Which of the following statements is true concerning appropriations of retained earnings?
a.
b.

lOMoARcPSD|7731915
c.
The only proper way to eliminate an appropriation of retained earnings after it has served its
purpose is to revert to the unappropriated retained earnings.
d.
When treasury shares are purchased, retained earnings must be appropriated equal to the cost
of the treasury shares.
Feedback
The correct answer is: All of these statements are true concerning appropriations of retained
earnings.
Question 17
Correct
Flag question
Question text
When shares without par value are sold the proceeds should be credited to the applicable share
capital account. Alternatively, the excess proceeds over stated value, if any, of the no par
shares may be credited to
a.
Share premium
b.
Ordinary shares
c.
Retained earnings
d.
Income
Feedback
Question 18
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
Declaration
b.
c.
Record
d.
Payment
Feedback
Question 19
Correct
Flag question
Question text
Which of the following is not a method that may be used to account for treasury shares?
a.
Cost method
b.
c.
d.
Par value method .

lOMoARcPSD|7731915
Feedback
Question 20
Correct
Flag question
Question text
In accounting for shareholders' equity, the accountant is primarily concerned with which of the
following?
a.
Recording the source of each of the various elements of shareholders' equity
b.
c.
Making sure that the directors do not declare dividends in excess of retained earnings
d.
Feedback
The correct answer is: Recording the source of each of the various elements of shareholders'
equity
Question 21
Correct
Flag question
Question text
a.
Date of record

lOMoARcPSD|7731915
b.
c.
Date of declaration
d.
Date of payment
Feedback
Question 22
Correct
Flag question
Question text
a.
b.
Date of payment
c.
Date of record
d.
Date of declaration
Feedback
Question 23
Correct

lOMoARcPSD|7731915
Flag question
Question text
The cost of treasury shares acquired for noncash consideration is usually measured by
a.
b.
c.
d.
Feedback
Question 24
Correct
Flag question
Question text
When collectibility is reasonably assured, the excess of the subscription price over the stated
value of the no-par subscribed share capital shall 'be recorded as
a.
b.
c.
d.

lOMoARcPSD|7731915
Feedback
Question 25
Correct
Flag question
Question text
Transaction costs directly attributable to the issuance of new shares include all of the following,
except
a.
b.
c.
Underwriting fee
d.
Feedback
Question 26
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915
b.
c.
d.
Feedback
Question 27
Correct
Flag question
Question text
An entity declared a cash dividend on a certain date payable on another date. Retained
earnings would
a.
b.
c.
d.
Feedback
Question 28
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
b.
c.
d.
Feedback
Question 29
Correct
Flag question
Question text
If treasury shares are reissued for noncash consideration, the proceeds shall be measured by
a.
b.
c.
d.

lOMoARcPSD|7731915
Feedback
Question 30
Correct
Flag question
Question text
a.
b.
When the deficit exceeds the total of the other capital account balances, the excess is a capital
deficiency.
c.
d.
Appropriated retained earnings shall be clearly distinguished from unappropriated retained

earnings.
Feedback
Question 31
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915
b.
c.
d.
Feedback
Question 32
Correct
Flag question
Question text
Treasury shares may be reissued as dividends, in which case what amount should be charged to
retained earnings?
a.
b.
c.
d.
Feedback
Question 33
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
b.
c.
d.
Feedback
Question 34
Correct
Flag question
Question text
a.
b.
c.
d.

lOMoARcPSD|7731915
Feedback
The correct answer is: Share proportionately in any new issue of shares of the same class.
Question 35
Correct
Flag question
Question text
When an entity declared and paid a liquidating dividend, the distribution resulted in a decrease
in
a.
b.
c.
d.
Feedback
Question 36
Correct
Flag question
Question text
a.
Cash dividend
b.

lOMoARcPSD|7731915
c.
Property dividend
d.
Share dividend
Feedback
Question 37
Correct
Flag question
Question text
An entity issued what is called a "20% share dividend". At what amount per share should retained
a.
Zero
b.
c.
d.
Par value
Feedback
Question 38
Correct
Flag question

lOMoARcPSD|7731915
Question text
a.
b.
c.
d.
Treasury shares shall be recorded at cost irrespective of whether acquired below or above par
value.
Feedback
Question 39
Correct
Flag question
Question text
a.
b.
c.
d.
Feedback
The correct answer is: Decreases retained earnings but does not change total equity.
Question 40

lOMoARcPSD|7731915
Correct
Flag question
Question text
a.
b.
c.
d.
Feedback
Saionaini Co. issued 60,000, P50 par value, ordinary shares and 20,000, P100 par value,
preference shares for a total consideration of P7,500,000. At this date, the ordinary share was
selling for P100 per share and the preference share was selling for P150 per share. What amount
of the proceeds should be allocated to the preference shares?
a.
2,000,000
b.
2,500,000
c.
3,000,000
d.
1,875,000
Feedback
Question 2

lOMoARcPSD|7731915
Correct
Flag question
Question text
Leesudni Company issued 200,000 shares of P100 par, 10% cumulative preference shares for
P25,000,000. One detachable warrant was attached to each preference share issued. Each
warrant gives the holder the right to purchase one ordinary share, P50 par value, for P100. The
market value of the warrant after the preference shares were issued was P15. The proceeds to
be allocated to the preference shares is
a.
22,000,000
b.
21,000,000
c.
20,000,000
d.
25,000,000
Feedback
Question 3
Correct
Flag question
Question text
Saionra Co. provided the following accounts at year end: Issued share capital, P3,000,000;
Subscribed share capital, P1,000,000; Subscription receivable, P600,000; Share premium,
P400,00; Appropriated retained earnings, P400,000; Unappropriated retained earnings, P200,000;
Donated capital, P300,000. What amount should be reported as total shareholders’ equity?
a.
4,400,000

lOMoARcPSD|7731915
b.
5,900,000
c.
5,300,000
d.
4,700,000
Feedback
Question 4
Correct
Flag question
Question text
Saionaoi Company was organized on January 1, 2018. On that date it issued 500,000, P10 par
value, ordinary shares at P15 per share. During the period January 1, 2018 through December 31,
2020, Saionaoi reported profit of P3,000,000 and paid cash dividends of P500,000. On January 5,
2020, Saionaoi purchased 50,000 ordinary shares at P20 per share. On December 31, 2020, 45,000
treasury shares were sold at P30 per share and retired the remaining treasury shares. What is the
total shareholders’ equity on December 31, 2020?
a.
10,850,000
b.
10,500,000
c.
10,250,000
d.
10,350,000
Feedback
Question 5
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
Saionagud Co issued 1,000 shares with P5 par to Atty. Abogago as compensation for 500 hours
of legal services performed. Atty. Abogago rate is P320 per hour. On the date of issuance, the
share was quoted on a public exchange at P140. What amount should share premium increase
as a result of the transaction?
a.
155,000
b.
135,000
c.
140,000
d.
160,000
Feedback
Question 6
Correct
Flag question
Question text
Saionsaion Co. had sufficient retained earnings in 2020 but temporarily short of cash. The
company adopts the calendar year. It declared dividend of P50,000 on October 1, 2020 and
issued a promissory note bearing a 10% interest with a maturity date of September 30, 2021. How
should the dividend and interest be accounted for?
a.
Debit retained earnings 55,000 on October 1, 2020
b.
Debit retained earnings 55,000 on September 30, 2021

lOMoARcPSD|7731915
c.
Debit retained earnings 50,000 on October 1, 2020 and Debit interest expense 1,250 on
December 31, 2020
d.
Debit retained earnings 50,000 on October 1, 2020 and Debit interest expense 5,000 on
September 30, 2021
Feedback
The correct answer is: Debit retained earnings 50,000 on October 1, 2020 and Debit interest
expense 1,250 on December 31, 2020
Question 7
Incorrect
Flag question
Question text
Saionasad Co. issued 8,000 convertible preferred shares with P100 par value at P105. One
preferred share can be converted into three common shares with P25 par value at the option of
the stockholder. Subsequently, all of the preferred shares were converted into common shares.
The fair value of the common shares on the date of conversion was P30. What amount should be
credited to share premium or additional paid in capital as a result of the above transactions.
a.
240,000
b.
80,000
c.
200,000
d.
120,000
Feedback
Question 8
Correct

lOMoARcPSD|7731915
Flag question
Question text
Cassaionoi Co. issued 200,000 common shares in 2018 and issued another 100,000 common
shares in 2019. The company also issued preferred shares convertible to 100,000 common shares.
In 2020, the company reacquired 75,000 common shares and held as treasury. How many
common shares are outstanding on December 31, 2020?
a.
400,000
b.
325,000
c.
225,000
d.
300,000
Feedback
Question 9
Incorrect
Flag question
Question text
On May 1, 2020 Purosaion Corp. declared and issued a 15% share dividend. Prior to this dividend,
Purosaion had 100,000, P1 par value, ordinary shares issued and outstanding. The fair value of
Purosaion's ordinary share was P20 per share on May 1, 2016. As a result of this share dividend,
Purosaion's retained earnings
a.
Decreased by 300,000
b.
Increased by 300,000

lOMoARcPSD|7731915
c.
Decreased by 15,000
d.
Did not change
Feedback
The correct answer is: Decreased by 300,000
Question 10
Correct
Flag question
Question text
On June 1, 2020, Massaion Co. was incorporated and was authorized to issue the following:
Common stocks 100 par value, 200,000 shares; Preferred stocks, 10%, P50 par value, 200,000
shares. During the year, the company issued 150,000 common shares for P18,000,000 and 50,000
preferred shares at P60 per share. In addition, on November 11, subscriptions for 20,000 preferred
shares were taken at P100 per share. 25% of the subscription were paid and the balance
payable February of next year. The income summary account has a credit balance of 5,000,000.
What is the amount of contributed capital on December 31, 2020?
a.
26,000,000
b.
23,000,000
c.
21,000,000
d.
28,000,000
Feedback
Question 11
Correct

lOMoARcPSD|7731915
Flag question
Question text
Saionrabai Co. had 80,000 ordinary shares outstanding at the start of the year. The company
distributed a 15% stock dividend in April and another 10% stock in July. After acquiring 10,000
shares of treasury in October, the company split the share 4 for 1 in December. How many
ordinary shares are outstanding at the end of the year?
a.
364,800
b.
25,300
c.
360,000
d.
22,800
Feedback
Question 12
Correct
Flag question
Question text
On December 8, 2020 Cassaion Co. declared a 5% share dividend on 100,000 issued and
outstanding shares of P20 par value, which had a fair value of P50 per share at the date of
declaration. The share dividend was distributed on February 28, 2021. What is the increase in
current liabilities as a result of the share dividend declaration?
a.
b.
100,000

lOMoARcPSD|7731915
c.
250,000
d.
150,000
Feedback
Question 13
Correct
Flag question
Question text
Waileesud Corp. received a donation of 2,000 shares of its P5 par value ordinary shares from a
shareholder. On that date, the share’s fair value was P35 per share. The share was originally
issued for P25 per share. By what amount would this donation cause total shareholders’ equity to
decrease?
a.
70,000
b.
20,000
c.
0
d.
50,000
Feedback
Question 14
Correct
Flag question

lOMoARcPSD|7731915
Question text
Saionrano Co. reported the following at the start of the year. Share capital, P50 par value,
P3,000,000; Share premium, P600,000; Retained earnings, P4,200,000. During the year, a 15% share
dividend was declared and distributed when the share was selling at P65. What amount should
be reported as share capital outstanding at year end?
a.
3,450,000
b.
3,585.000
c.
3,615,000
d.
4,185,000
Feedback
Question 15
Correct
Flag question
Question text
At the beginning of the current year, Saionra Co. declared a 1 for 5 reverse share split, when the
market value per share was P100. Prior to the split, the entity had 10,000 sahres of P10 par value
issued and outstanding. What is the par value of the share after the share split?
a.
20
b.
c.
10
d.
50

lOMoARcPSD|7731915
Feedback

lOMoARcPSD|7731915
Midterm investment securities
accounting (University of San Jose-Recoletos)

lOMoARcPSD|7731915
Question 1
Correct
Flag question
Question text
a.
Retained earnings
b.
Share premium from treasury shares, share premium from original issuance and
then retained earnings
c.
Share premium from original issuance, share premium from treasury
shares and then retained earnings.
d.
Feedback
The correct answer is: Share premium from original issuance, share premium
from treasury shares and then retained earnings.
Question 2
Incorrect
Flag question
Question text
The actual total amount of a cash dividend to be paid is determined on the date
of
a.
Payment
b.
Record
c.

lOMoARcPSD|7731915
d.
Declaration
Feedback
Question 3
Correct
Flag question
Question text
a.
As component of other comprehensive income
b.
In equity as adjustment to the amount of distribution
c.
As adjustment of share premium
d.
In profit or loss
Feedback
Question 4
Correct
Flag question
Question text
outstanding as a result of
a.
Declaration of share split

lOMoARcPSD|7731915
b.
Payment in full of subscribed shares
c.
d.
Feedback
Question 5
Correct
Flag question
Question text
a.
Outstanding
b.
Issued
c.
Outstanding less the number of treasury shares
d.
Authorized
Feedback
Question 6
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915

b.
c.
d.
Feedback
Question 7
Correct
Flag question
Question text
A dividend which is a return to shareholders of a portion of their original
investment is
a.
Patronage dividend
b.
c.
d.
Liability dividend
Feedback
Question 8
Correct
Flag question
Question text

lOMoARcPSD|7731915
a.
The disclosure that management, does not intend to distribute in the
form of dividends assets equal to the amount of the appropriation.
b.
A decrease in cash with an equal increase in. the investment in fund.
c.
The setting aside of cash to be used for future plant expansion.
d.
The establishment of a fund to help finance future plant expansion.
Feedback
The correct answer is: The disclosure that management, does not intend to
distribute in the form of dividends assets equal to the amount of the
appropriation.
Question 9
Correct
Flag question
Question text
Which of the following statements is incorrect concerning the appropriations of
retained earnings?
a.
Appropriations of retained earnings can be made at the discretion of the board
of directors.
b.
Appropriations of retained earnings can be made as a result of contractual
requirements.
c.
Appropriations of retained earnings reflect funds set aside for a
designated purpose, such as plant expansion.
d.
Appropriations of retained earnings do not change the total amount of
shareholders' equity.
Feedback
The correct answer is: Appropriations of retained earnings reflect funds set aside
for a designated purpose, such as plant expansion.
Question 10

lOMoARcPSD|7731915
Correct
Flag question
Question text
a.
Purchase of property, plant' and equipment
b.
Funding of past service cost
c.
d.
Payment of last maturing series of a serial bond issue
Feedback
Question 11
Correct
Flag question
Question text
When preference shares are purchased and retired by the issuing entity for less
than original issue price, proper accounting for the retirement
a.
Increases reported income for the period
b.
Increases the contributed capital of the ordinary shareholders
c.
Increases the amount of dividends available to ordinary , shareholders
d.
Increases the treasury shares
Feedback

lOMoARcPSD|7731915
The correct answer is: Increases the contributed capital of the ordinary
shareholders
Question 12
Correct
Flag question
Question text
Treasury shares are
a.
Issued but not outstanding shares.
b.
Shares held as an investment by the corporation.
c.
Shares held as an investment by the treasurer.
d.
Issued and outstanding shares.
Feedback
Question 13
Correct
Flag question
Question text
An entity shall measure a noncurrent asset classified as held for distribution to
owners at
a.
Lower of carrying amount and fair value less cost to distribute
b.
Fair value less cost to distribute
c.
Carrying amount

lOMoARcPSD|7731915
d.
Fair value
Feedback
The correct answer is: Lower of carrying amount and fair value less cost to
distribute
Question 14
Correct
Flag question
Question text
If treasury shares are reissued for noncash consideration, the proceeds shall be
measured by
a.
b.
c.
d.
Feedback
Question 15
Correct
Flag question
Question text
a.
b.

lOMoARcPSD|7731915

c.
d.
Feedback
Question 16
Correct
Flag question
Question text
a.
b.
Appropriated retained earnings shall be clearly distinguished from
unappropriated retained earnings.
c.
d.
When the deficit exceeds the total of the other capital account balances, the
excess is a capital deficiency.
Feedback
The correct answer is: A deficit in retained earnings shall be presented as an
asset.
Question 17
Correct
Flag question
Question text

lOMoARcPSD|7731915
a.
b.
c.
d.
Feedback
The correct answer is: Share proportionately in any new issue of shares of the
same class.
Question 18
Correct
Flag question
Question text
a.
b.
c.
d.
Feedback
Question 19
Correct
Flag question

lOMoARcPSD|7731915
Question text
a.
Fair value of such services
b.
c.
d.
Feedback
Question 20
Correct
Flag question
Question text
A share dividend
a.
decreases assets
b.
answer not given
c.
decreases shareholder’s equity
d.
Feedback
Question 21
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
b.
Date of record
c.
Date of payment
d.
Date of declaration
Feedback
Question 22
Correct
Flag question
Question text
a.
b.
c.
d.
Feedback
The correct answer is: Bear the ultimate risks and receive the benefits of
ownership.

lOMoARcPSD|7731915
Question 23
Correct
Flag question
Question text
An entity declared a dividend, a portion of which was liquidating. How would this
declaration affect contributed capital and retained earnings, respectively?
a.
b.
c.
d.
Feedback
Question 24
Correct
Flag question
Question text
a.
To inform shareholders that a portion of retained earnings should be
set aside from amounts available for dividends because of such
contingencies.
b.
To charge operations in periods of rising prices for the losses which may
otherwise be absorbed in periods of falling prices.
c.

lOMoARcPSD|7731915
To match applicable costs with current revenue.

d.
To reduce fluctuations in net income in order to lend stability of the entity.
Feedback
contingencies.
Question 25
Correct
Flag question
Question text
a.
All of these statements are true concerning share capital transactions.
b.
Subscriptions receivable from sale of share capital not currently collectible
should be reflected as deduction from the related subscribed share capital.
c.
Deposits on subscription to a proposed increase in share capital should be
reported as part of shareholders' equity.
d.
Discount on share capital should be shown as deduction from total Shareholders'
equity.
Feedback
transactions.
Question 26
Correct
Flag question
Question text

lOMoARcPSD|7731915
a.
Stock dividends are payable on the date declared.
b.
Stock dividends represent a transfer from retained earnings to share
capital.
c.
Stock dividends increase the relative book value of an individual's share
holdings.
d.
Stock dividends increase the shareholders' equity in the issuing entity.
Feedback
The correct answer is: Stock dividends represent a transfer from retained
earnings to share capital.
Question 27
Correct
Flag question
Question text
An entity issued what is called a "20% share dividend". At what amount per
share should retained earnings be reduced for the transaction?
a.
Par value
b.
c.
d.
Zero
Feedback
Question 28
Correct

lOMoARcPSD|7731915
Flag question
Question text
earnings?
a.
When treasury shares are purchased, retained earnings must be appropriated
equal to the cost of the treasury shares.
b.
All of these statements are true concerning appropriations of retained
earnings.
c.
d.
The only proper way to eliminate an appropriation of retained earnings after it
has served its purpose is to revert to the unappropriated retained earnings.
Feedback
The correct answer is: All of these statements are true concerning
appropriations of retained earnings.
Question 29
Correct
Flag question
Question text
If the entity has only one class of share capital, a transfer from retained earnings
to share capital equal to the fair value of the shares issued is ordinarily a
characteristic of
a.
b.
c.

lOMoARcPSD|7731915
d.
Feedback
Question 30
Correct
Flag question
Question text
If the share dividend is less than 20%, what' amount of the retained earnings
should be capitalized?
a.
b.
c.
d.
Feedback
Question 31
Correct
Flag question
Question text
a.
Date of payment
b.

lOMoARcPSD|7731915
Date of declaration
c.
d.
Date of record
Feedback
Question 32
Correct
Flag question
Question text
What is the treatment of "joint costs" that relate to the concurrent listing and
issuance of new shares, and listing of old existing shares?
a.
The joint costs should be allocated between the newly issued and listed
shares and the newly listed old existing shares prorata based on the
number of shares outstanding.
b.
The joint costs should be expensed immediately.
c.
The joint costs should be deducted from equity, plus tax benefit.
d.
The joint costs should be deducted from equity, net of tax benefit.
Feedback
The correct answer is: The joint costs should be allocated between the newly
issued and listed shares and the newly listed old existing shares prorata based
on the number of shares outstanding.
Question 33
Correct
Flag question

lOMoARcPSD|7731915
Question text
When the total shareholders’ equity is smaller than the amount of contributed
capital, this deficiency is called
a.
A dividend
b.
A deficit
c.
Net loss
d.
A liability
Feedback
Question 34
Correct
Flag question
Question text
When an entity issued rights to existing shareholders to purchase unissued
ordinary shares at more than par value, share premium would be recorded when
the rights
a.
Are exercised
b.
Become exercisable
c.
Lapsed
d.
Are issued
Feedback
Question 35
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
Investment in ordinary shares of another company
b.
Retained earnings
c.
Revaluation surplus
d.
Treasury shares
Feedback
Question 36
Correct
Flag question
Question text
shares?
a.
b.
Par value method .
c.
Cost method
d.
Feedback

lOMoARcPSD|7731915
Question 37
Correct
Flag question
Question text
a.
Insuring the payment of dividends
b.
Preventing losses from contingencies
c.
Protecting the working capital position
d.
Earmarking cash to be used for particular purposes
Feedback
Question 38
Correct
Flag question
Question text
a.
b.
c.
d.
Feedback

lOMoARcPSD|7731915
Question 39
Correct
Flag question
Question text
In accounting for shareholders' equity, the accountant is primarily concerned
with which of the following?
a.
Making sure that the directors do not declare dividends in excess of retained
earnings
b.
c.
d.
Recording the source of each of the various elements of shareholders'
equity
Feedback
Question 40
Correct
Flag question
Question text
a.
b.
Retained earnings and then share premium from treasury shares
c.

lOMoARcPSD|7731915
Share premium from original issuance, share premium from treasury shares and
then retained earnings
d.
Loss on sale of treasury shares to be reported as other expense
Feedback
The correct answer is: Share premium from treasury shares and then retained
earnings
Question 41
Correct
Flag question
Question text
Transaction costs directly attributable to the issuance of new shares include all
of the following, except
a.
Underwriting fee
b.
c.
d.
Feedback
Question 42
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915
b.
c.
d.
Feedback
equity.
Question 43
Correct
Flag question
Question text
a.
b.
c.
d.
Feedback
Question 44
Correct
Flag question
Question text

lOMoARcPSD|7731915
a.
Has no effect on preference shares outstanding
b.
Decreases preference shares authorized
c.
Increases preference shares authorized
d.
Increases preference shares outstanding
Feedback
Question 45
Correct
Flag question
Question text
a.
b.
Retained earnings '
c.
Share capital account to the extent of the par value of the shares
issued with any excess being reflected in share premium
d.
Share premium
Feedback
The correct answer is: Share capital account to the extent of the par value of the
shares issued with any excess being reflected in share premium
Question 46
Correct
Flag question

lOMoARcPSD|7731915
Question text
a.
b.
c.
d.
Entities grant share warrants to executives and employees as a form of
compensation.
Feedback
Question 47
Correct
Flag question
Question text
When an entity declared and paid a liquidating dividend, the distribution
resulted in a decrease in
a.
b.
c.
d.
Feedback
Question 48
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
All of the choices are correct
b.
Reduce amounts paid in by shareholders
c.
Require a credit to share capital
d.
Are prohibited under IFRS
Feedback
Question 49
Correct
Flag question
Question text
a.
b.
Issuance of preference shares in exchange for convertible debentures
c.
Declaration of a cash dividend
d.
Issuance of nonconvertible bonds with share warrants
Feedback
Question 50

lOMoARcPSD|7731915
Correct
Flag question
Question text
The cost of treasury shares acquired for noncash consideration is usually
measured by
a.
b.
c.
d.
Feedback
Question 51
Correct
Flag question
Question text
The issuer should charge retained earnings for the fair value of shares issued in
a
a.
b.
2 for 1 share split
c.
d.
4 for 1 share split

lOMoARcPSD|7731915
Feedback
Question 52
Correct
Flag question
Question text
Transaction costs that are directly attributable to the issuance of new shares
should be
a.
b.
c.
d.
Feedback
The correct answer is: Deducted from equity, net of any related income tax
benefit
Question 53
Correct
Flag question
Question text
owners at
a.
Either the carrying amount or fair value of the asset
b.
Fair value of the asset distributed

lOMoARcPSD|7731915
c.
Carrying amount of the asset distributed
d.
Neither the carrying amount nor fair value
Feedback
Question 54
Correct
Flag question
Question text
When collectibility is reasonably assured, the excess of the subscription price
over the stated value of the no-par subscribed share capital shall 'be recorded
as
a.
b.
c.
d.
Feedback
Question 55
Correct
Flag question
Question text
a.

lOMoARcPSD|7731915
Date of declaration
b.
c.
Date of payment
d.
Date of record
Feedback
Question 56
Correct
Flag question
Question text
Costs of public offering of shares or costs that relate to "stock market listing of
shares" should be
a.
b.
c.
d.
Feedback
Question 57
Correct
Flag question
Question text

lOMoARcPSD|7731915

a.
b.
c.
d.
Feedback
Question 58
Correct
Flag question
Question text
When shareholders may elect to receive cash in lieu of stock dividend, the
amount to be charged to retained earnings is equal to
a.
Fair value of the shares
b.
Book value of the shares
c.
d.
Optional cash dividend
Feedback
Question 59
Correct

lOMoARcPSD|7731915
Flag question
Question text
Gain and loss on retirement of treasury shares shall not be included in profit or
loss. If the retirement results in a gain, such gain shall be credited to
a.
Share capital
b.
Retained earnings
c.
Share premium
d.
Income
Feedback
Question 60
Correct
Flag question
Question text
Treasury shares may be reissued as dividends, in which case what amount
should be charged to retained earnings?
a.
b.
c.
d.
Feedback

lOMoARcPSD|7731915
Question 61
Correct
Flag question
Question text
a.
b.
c.
d.
Feedback
Question 62
Correct
Flag question
Question text
The proceeds from issuance of shares for a consideration other than cash should
be measured by the
a.
Book value of the consideration received
b.
c.
Fair value of the consideration received
d.

lOMoARcPSD|7731915
Feedback
Question 63
Correct
Flag question
Question text
Subscriptions receivable and other receivables from sale of shares which are not
collectible currently shall be presented as
a.
Long-term investment
b.
section
c.
Other asset
d.
Current asset
Feedback
section
Question 64
Correct
Flag question
Question text
a.
A current liability
b.
A reduction in total shareholders' equity

lOMoARcPSD|7731915
c.
An addition to share capital outstanding
d.
A note to financial statements
Feedback
Question 65
Correct
Flag question
Question text
a.
b.
c.
d.
Include an option for the holder to convert preference shares into a fixed
Feedback
The correct answer is: Include an option for the holder to convert preference
shares into a fixed number ordinary shares.
Question 66
Correct
Flag question
Question text
How would retained earnings be affected by the declaration of share dividend
and share split, respectively?

lOMoARcPSD|7731915
a.
b.
c.
d.
Feedback
Question 67
Incorrect
Flag question
Question text
It refers to the issuance by an enterprise of its own ordinary shares to its
ordinary shareholders without consideration and under conditions indicating that
such action is prompted mainly by a desire to increase the number of shares
outstanding.
a.
Share split
b.
Share dividend
c.
Reverse share split
d.
Recapitalization
Feedback
Question 68
Correct

lOMoARcPSD|7731915
Flag question
Question text
a.
Capital resulting from reissuance of treasury shares at a price above acquisition
price
b.
c.
d.
Preference share capital
Feedback
Question 69
Correct
Flag question
Question text
a.
Share dividend
b.
Conversion of preference shares into ordinary shares
c.
Share split
d.
Reissue of treasury shares
Feedback

lOMoARcPSD|7731915
Question 70
Correct
Flag question
Question text
a.
Ordinary shares
b.
Retained earnings
c.
Income
d.
Share premium
Feedback
Question 71
Correct
Flag question
Question text
When an entity calls in all of the preference shares for more than the original
issue price, the excess paid above the original issue price should be
a.
b.
c.
d.

lOMoARcPSD|7731915

Feedback
Question 72
Correct
Flag question
Question text
a.
b.
c.
d.
Treasury shares shall be recorded at cost irrespective of whether acquired below
or above par value.
Feedback
Question 73
Correct
Flag question
Question text
a.
b.
Share dividend
c.

lOMoARcPSD|7731915
Cash dividend
d.
Property dividend
Feedback
Question 74
Correct
Flag question
Question text
When an entity settles the property dividend payable, it shall recognize the
difference between the carrying amount of the asset distributed and the
carrying amount of the dividend payable in
a.
Retained earnings
b.
Profit or' loss
c.
d.
Equity
Feedback
Question 75
Correct
Flag question
Question text
a.
Deduction from retained earnings

lOMoARcPSD|7731915
b.
c.
Noncurrent assets
d.
Deduction from Additional paid in capital
Feedback
Question 76
Incorrect
Flag question
Question text
If shares are issued to extinguish a financial liability, what is the initial
measurement of the shares issued?
a.
b.
c.
Fair value of liability extinguished
d.
Feedback
Question 77
Incorrect
Flag question
Question text

lOMoARcPSD|7731915
The issuer shall directly charge retained earnings for the fair value of the shares
issued in
a.
Two for one share split
b.
Share options
c.
Ten percent stock dividend
d.
Share appreciation right
Feedback
Question 78
Correct
Flag question
Question text
a.
b.
Preference shares
c.
d.
Capital resulting from re-issuance of treasury shares at a price above its
acquisition price
Feedback
When a company has acquired a "passive interest" in another corporation, the

acquiring company should account for the investment

lOMoARcPSD|7731915
a.
By using the equity method.
b.
By using the effective interest method.
c.
By using the fair value method.
d.
By consolidation.
Clear my choice
Question 2
Not yet answered
Marked out of 1.00
Flag question
Question text
Irresistible Co. purchased marketable equity securities to be held for trading for
P5,000,000 and paid transaction cost amounting toP200,000 on March 1, 2020.
The securities had a market value of P5,500,000 on December 31, 2020. What
amount of unrealized gain or loss on these securities should be reported in the
income statement?
a.
500,000 gain
b.
300,000 gain
c.
400,000 gain
d.
500,000 loss
Clear my choice
Question 3
Not yet answered
Marked out of 1.00

lOMoARcPSD|7731915
Flag question
Question text
Pretty Co. purchased 10,000 shares of Prettier Inc. on June 30, 2020. Pretty
received a share dividend of 2,000 shares on August 15, 2020 when the carrying
amount per share was P400 and the market value was P350. Par value per share
was P100. Prettier Inc. declared and paid cash dividend of P15 per share on
September 15, 2020. What amount of dividend income will be reported in the
income statement of Pretty Co. for the year ended September 30, 2020?
Cash Dividends= (12000 shares * P15)
= P180,000
a.
980,000
b.
880,000
c.
150,000
d.
180,000
Clear my choice
Question 4
Not yet answered
Marked out of 1.00
Flag question
Question text
DfntlyLuvly Co. owned 30,000 shares of Alluring, Inc. at a cost of P2,000,000. On
October 31, the company received 30,000 stock rights from Alluring, entitling
the holder to acquire one share at P45. The market price of Alluring’s shares on
this date was P50 and each right was quoted at P10. DfntlyLuvly sold the rights
on December 8 for P450,000 and the broker’s fee amounted to P10,000. What
amount should be reported as gain from the sale of rights? Initial cost of share
rights= 300k net sales price= 440000
a.

lOMoARcPSD|7731915
240,000
b.
150,000
c.
250,000
d.
140,000
Clear my choice
Question 5
Not yet answered
Marked out of 1.00
Flag question
Question text
When an investor classifies an investment in common stock as trading
securities, cash dividends are classified by the investor as:
a.
A loss.
b.
A deduction from the investment account.
c.
A return of capital.
d.
Dividend income.
Clear my choice
Question 6
Not yet answered
Marked out of 1.00
Flag question
Question text
2020. The direct acquisition costs incurred were P140,000. On 31 December

lOMoARcPSD|7731915
2020 the fair value of the instrument was P1,100,000 and the transaction costs
that would be incurred on sale were estimated at P120,000. If the investment
were designated as FA@FVTOCI, what gain would be recognized in the financial
statements for the year ended 31 December 2020?
P 1,100,000- (P800,000+140,000)= P160K
a.
P0
b.
P160,000
c.
P420,000
d.
P40,000
Clear my choice
Question 7
Not yet answered
Marked out of 1.00
Flag question
Question text
Uplifted Co carries the following marketable equity securities on its books at
December 31, 2019 and 2020. All the securities were purchased during 2019.
FA@FVTOCI Cost, P5,100,000; FV 12.31.19 P4,800,000; FV 12.31.20,
P5,000,000. The net unrealized gain/loss at December 31, 2020 in accumulated
other comprehensive income in shareholders' equity is
(P4,800,000-P5,100,000)+(P5,000,000-P4,800,000)= (P100,000)
a.
P40,000 gain
b.
P100,000 loss
c.
P260,000 loss
d.
P200,000 gain
Clear my choice

lOMoARcPSD|7731915
Question 8
Not yet answered
Marked out of 1.00
Flag question
Question text
On January 2, 2020, Cheers Company purchased 40,000 shares of Jeers, Inc.
stock at P100 per share. Brokerage fees amounted to P120,000. The shares are
designated as FVTOCI. On December 31, 2020 the investment has a fair value of
P4,200,000. How much should be recognized in the 2020 other comprehensive
income related to these securities?
P4,200,000-(40,000 shares * 100+P120000)= P80,000 gain
a.
P 80,000
b.
P400,000
c.
P200,000
d.
P280,000
Clear my choice
Question 9
Not yet answered
Marked out of 1.00
Flag question
Question text
Inspired Co. carries the following marketable equity securities classified as
P5,0000,000-P4,800,000= P200,000 gain
a.
P200,000 gain

lOMoARcPSD|7731915
b.
P240,000 gain
c.
P260,000 loss
d.
P60,000 loss
Clear my choice
Question 10
Not yet answered
Marked out of 1.00
Flag question
Question text
On January 1, 2019, Smart Co. purchased 100,000 equity securities for trading
for P40 per share, excluding transaction cost which amounts to P1 per share. On
Cost= 100000 Shares * P40= P4 million
Sale= 80000/100000 Shares * P4 million
= P 3,200,000
Cost-Sale= 800000 gain
a.
800,000
b.
900,000
c.
200,000
d.
400,000
Clear my choice
Question 11
Not yet answered
Marked out of 1.00

lOMoARcPSD|7731915
Flag question
Question text
Investments in equity instruments are financial assets because they are
a.
Contractual rights to exchange financial assets or financial liabilities with
another entity under conditions that are potentially favorable to the entity.
b.
Equity instruments of another entity.
c.
Cash equivalents.
d.
Contractual rights to receive cash or another financial asset from another entity.
Clear my choice
Question 12
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
Amortized cost
b.
Answer not given
c.
Fair value through profit or loss
d.
Fair value through other comprehensive income
Clear my choice
Question 13

lOMoARcPSD|7731915
Not yet answered

Marked out of 1.00
Flag question
Question text
a.
Shall be subsequently transferred to retained earnings.
b.
May be subsequently transferred to profit or loss.
c.
Neither to profit or loss or retained earnings
d.
Either to profit or loss or retained earnings
Clear my choice
Question 14
Not yet answered
Marked out of 1.00
Flag question
Question text
During 2019, Confident Co. purchased trading securities at a cost of P4,250,000.
For the year ended December 31, 2019, the company recognized an unrealized
loss of P230,000. There were no transactions in 2020. The securities were
quoted at P4,120,000 at year-end 2020. What amount of unrealized gain or loss
should be reported in the 2020 income statement?
Workback:
12/31/19= P4.25 Million - P230000 Loss
=P4.02Million
Unrealized gain= P4.12 Million-P 4.02Million
= 100,000

lOMoARcPSD|7731915
a.
Unrealized loss of P130,000
b.
Unrealized gain of P130,000
c.
Unrealized loss of P100,000
d.
Unrealized gain of P100,000
Clear my choice
Question 15
Not yet answered
Marked out of 1.00
Flag question
Question text
Inlove Co. acquired for P4,000,000 equity instruments classified as FAFVTOCI.
Transaction cost incurred in the acquisition amounted to P700,000. On
December 31, 2020, the fair value of the instrument was P5,500,000 and the
estimated transaction costs that would be incurred if the instruments were sold
amounts to P600,000. What amount of gain should be recognized in other
comprehensive income for the year ended December 31, 2020?
P5.5 Million - (P4 million + P700,000)
= P800000 gain
a.
0
b.
800,000
c.
900,000
d.
200,000
Clear my choice
Question 16
Not yet answered
Marked out of 1.00

lOMoARcPSD|7731915
Flag question
Question text
Dividends are recognized in profit or loss only when:
a.
The investor's name appears on the date of record
b.
Answer not given.
c.
It is received
d.
The entity’s right to receive payment of the dividend is established.
Clear my choice
Question 17
Not yet answered
Marked out of 1.00
Flag question
Question text
What is the principle for recognition of a financial asset in PFRS 9?
a.
A financial asset is recognized when, and only when, the entity obtains control of
the instrument and has the ability to dispose of the financial asset independent
of the actions of others.
b.
A financial asset is recognized when, and only when, the entity
becomes a party to the contractual provisions of the instrument.
c.
A financial asset is recognized when, and only when, the entity obtains the risks
and rewards of ownership of the financial asset and has the ability to dispose of
the financial asset.
d.

lOMoARcPSD|7731915
A financial asset is recognized when, and only when, it is probable that future
economic benefits will flow to the entity and the cost or value of the instrument
can be measured reliably.
Clear my choice
Question 18
Not yet answered
Marked out of 1.00
Flag question
Question text
On January 2, 2020, Happy Co. purchased 40,000 shares of Merry, Inc. stock at
P100 per share. Brokerage fees amounted to P120,000. A P5 dividend per share
of Merry, Inc. shares had been declared on December 15, 2019, to be paid on
March 31, 2020 to shareholders of record on January 31, 2020. The shares are
designated as FVTOCI. On December 31, 2020 the investment has a fair value of
P4,200,000. How much should be recognized in the 2020 other comprehensive
income related to these securities?
P4.2 Million - (P4 million + P120,000)
=80,000
a.
P280,000
b.
P200,000
c.
P400,000
d.
P 80,000
Clear my choice
Question 19
Not yet answered
Marked out of 1.00
Flag question
Question text

lOMoARcPSD|7731915
When an equity security is appropriately carried and reported as FA@FVOCI, a

gain should be reported in the income statement:
a.
Only when the security is sold.
b.
When the fair value of the security increases.
c.
When the present value of the security increases.
d.
Never.
Clear my choice
Question 20
Not yet answered
Marked out of 1.00
Flag question
Question text
Handsome Co. purchased 10,000 shares of equity securities at P80 per share on
April 1. On July 31, the company received 10,000 share warrants to purchase an
additional 10,000 shares at 90 per share. The shares and the share warrants
were quoted at P95 and P5, respectively on this date. The share warrants will
expire on December 31. What amount should be reported on July 31 for the
investment in stock rights?
10000 share warrants * P5= 50k
a.
100,000
b.
50,000
c.
150,000
d.
60,000
Unrealized holding gains or losses which are recognized in income are from debt
securities classified as
A. held-to-maturity.

lOMoARcPSD|7731915
B. available-for-sale.
C. trading.
D. none of these answers are correct.
C. trading
Debt securities that are accounted for at amortized cost, not fair value, are
A. never-sell debt securities.

B. held-to-maturity debt securities.
C. trading debt securities.
D. available-for-sale debt securities.
B. held-to-maturity debt securities
Debt securities acquired by a corporation which are accounted for by recognizing

unrealized holding gains or losses that are included as other comprehensive income
and as a separate component of stockholders' equity are
A. trading debt securities.

B. available-for-sale debt securities.
C. never-sell debt securities.
D. held-to-maturity debt securities.
B. available-for-sale debt securities
Equity securities acquired by a corporation which are accounted for by recognizing

unrealized holding gains or losses are
A. securities where a company has holdings of more than 20%.

B. securities where a company has holdings of between 20% and 50%.
C. securities where a company has holdings of less than 20%.
D. securities where a company has holdings of more than 50%.
C. securities where a company has holdings of less than 20%
A requirement for a security to be classified as held-to-maturity is
A. all of these are required.

B. the security must be a debt security.
C. positive intent.
D. ability to hold the security to maturity.
A. all of these are required
Which of the following is not correct in regard to trading securities?

lOMoARcPSD|7731915
A. They are held with the intention of selling them in a short period of time.
B. Unrealized holding gains and losses are reported as part of net income.
C. Any discount or premium is amortized.
D. All of these choices are correct.
D. All of these choices are correct
Investments in debt securities are generally recorded at
A. cost including brokerage and other fees.

B. cost including accrued interest.
C. maturity value with a separate discount or premium account.
D. maturity value.
A. cost including brokerage and other fees
GAAP specifies that, regarding the amortization of a premium or discount on a debt

security, the
A. straight-line method of allocation must be used.
B. effective-interest method of allocation should be used but other methods can

be applied if there is no material difference in the results obtained.
C. par value method must be used and therefore no allocation is necessary.
D. effective-interest method of allocation must be used.
B. effective-interest method of allocation should be used but other methods can be

applied if there is no material difference in the results obtained.
When a company has acquired a "passive interest" in another corporation, the acquiring
company should account for the investment
A. by using the equity method.

B. by using the fair value method.
C. by consolidation.
D by using the effective interest method.
B. by using the fair value method
An investor has a long-term investment in stocks. Regular cash dividends received by

the investor are recorded as
Fair Value;Equity

lOMoARcPSD|7731915
A. A reduction of the investment; A reduction of the investment

B. Income; A reduction of the investment
C. A reduction of the investment; Income
D. Income; Income
B. Income; A reduction of the investment
When a company holds between 20% and 50% of the outstanding stock of an investee,
which of the following statements applies?
A. The investor should always use the equity method to account for its investment.
B. The investor should use the equity method to account for its investment
unless circumstances indicate that it is unable to exercise "significant influence"
over the investee.
C. The investor must use the fair value method unless it can clearly demonstrate the
ability to exercise "significant influence" over the investee.
D. The investor should always use the fair value method to account for its investment.
B. The investor should use the equity method to account for its investment unless
circumstances indicate that it is unable to exercise "significant influence" over the
investee.
The fair value option allows a company to
A. report most financial instruments at fair value at any point of time.

B. record income when the fair value of its bonds increases.
C. value its own liabilities at fair value.
D. all of these choices are true of the fair value option.
A. report most financial instruments at fair value at any point of time
Transfers between categories
A. are accounted for at fair value for all transfers.
B. are considered unrealized and unrecognized if transferred out of held-to-maturity into

trading.
C. will always result in an impact on net income.
D. result in companies omitting recognition of fair value in the year of the transfer.
A. are accounted for at fair value for all transfer

lOMoARcPSD|7731915
Richman Company purchased $1,200,000 of 8%, 5-year bonds from Carlin, Inc. on
January 1, 2018, with interest payable on July 1 and January 1. The bonds sold for
$1,249,896 at an effective interest rate of 7%. Using the effective interest method,
Richman Company decreased the Available-for-Sale Debt Securities account for the
Carlin, Inc. bonds on July 1, 2018 and December 31, 2018 by the amortized premiums
of $4,248 and $4,392, respectively.
At December 31, 2018, the fair value of the Carlin, Inc. bonds was $1,272,000. What
should Richman Company report as other comprehensive income and as a separate
component of stockholders' equity?
A. $8,640
B. $22,104
C. $30,744
D. $0
C. $30,744
Instrument Corporation has the following investment which was held throughout 2018-
2019:
Fair Value
Equity investment
$900,000 - Cost
$1,200,000 - 12/31/18
$1,140,000 - 12/31/19
What amount of gain or loss would Instrument Corporation report in its income
statement for the year ended December 31, 2019 related to its investment?
A. $240,000 gain.
B. $60,000 gain.
C. $300,000 gain.
D. $60,000 loss.
D. $60,000 loss
At December 31, 2018, Atlanta Company has an equity portfolio valued at $160,000. Its
cost was $132,000. If the Securities Fair Value Adjustment has a debit balance of
$8,000, which of the following journal entries is required at December 31, 2018?
A. Fair Value Adjustment 28,000

Unrealized Holding Gain or Loss-Equity 28,000

lOMoARcPSD|7731915
B. Unrealized Holding Gain or Loss-Equity 20,000

Fair Value Adjustment 20,000
C. Fair Value Adjustment 20,000

D. Unrealized Holding Gain or Loss-Equity 28,000

Fair Value Adjustment 28,000
C. Fair Value Adjustment 20,000

On its December 31, 2017, balance sheet, Trump Company reported its investment in
equity securities, which had cost $600,000, at fair value of $560,000. At December 31,
2018, the fair value of the securities was $585,000. What should Trump report on its
2018 income statement as a result of the increase in fair value of the investments in
2018?
A. $0.
B. Realized gain of $25,000.
C. Unrealized gain of $25,000.
D. Unrealized loss of $15,000.
C. Unrealized gain on $25,000
On January 2, 2018 Pod Company purchased 25% of the outstanding common stock of
Jobs, Inc. and subsequently used the equity method to account for the investment.
During 2018 Jobs, Inc. reported net income of $1,260,000 and distributed dividends of
$540,000. The ending balance in the Investment in Pod Company account at December
31, 2018 was $960,000 after applying the equity method during 2018. What was the
purchase price Pod Company paid for its investment in Jobs, Inc?
A. $1,410,000
B. $1,140,000
C. $510,000
D. $780,000
D. $780,000
Ziegler Corporation purchased 25,000 shares of common stock of the Sherman

Corporation for $40 per share on January 2, 2017. Sherman Corporation had 100,000
shares of common stock outstanding during 2018, paid cash dividends of $150,000
during 2018, and reported net income of $500,000 for 2018. Ziegler Corporation should
report revenue from investment for 2018 in the amount of

lOMoARcPSD|7731915
A. $137,500.
B. $37,500.
C. $125,000.
D. $87,500.
Which of the following statements is correct regarding unrealized gains or

losses?
a.
Unrealized gains or losses on financial asset at amortized cost are not
recognized.
b.
All statements are correct.
c.
Unrealized gains or losses on financial asset at fair value through other
comprehensive income should be classified as component of other
comprehensive income.
d.
Unrealized gains or losses on trading securities are included in profit or loss of
the current period.
Clear my choice
Question 2
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
Shall not be recognized
b.
Shall be recognized in profit or loss
c.
Shall be recognized in equity
d.
Shall be included in retained earnings

lOMoARcPSD|7731915
Clear my choice
Question 3
Not yet answered
Marked out of 1.00
Flag question
Question text
designated as a financial asset at fair value through profit or loss. It sold 2,000
shares for P51 per share in 2018 and another 2,500 shares for P33 per share in
2019. The shares were quoted per share at P47, P39, and P31 at December 31,
2017, 2018 and 2019, respectively. How much should be recognized in 2019
profit or loss as a result of the fair value changes?
Cost of 10000 shares= P450k
Selling Prices :
(2018) P 102K ; 90K cost
(2019) P82500; 112500 cost
Quoted Prices :
2017 = P47
2018= P39
2019= P31
a.
77,000
b.
44,000
c.
11,000
d.
0
Clear my choice
Question 4
Not yet answered
Marked out of 1.00

lOMoARcPSD|7731915
Flag question
Question text
a.
Are not income
b.
Are credited to income
c.
Are credited to investment account
d.
Represent return of invested capital
Clear my choice
Question 5
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
Fair value less cost to sell
b.
Cost
c.
Fair value
d.
Amortized cost
Clear my choice
Question 6
Not yet answered
Marked out of 1.00

lOMoARcPSD|7731915
Flag question
Question text
P100 per share to be held for trading. Brokerage fees amounted to P120,000. A
P5 dividend per share of Merry, Inc. shares had been declared on December 15,
2019, to be paid on March 31, 2020 to shareholders of record on January 31,
2020. What is the initial measurement of the investment?
40000 shares * P100= 4 Million
4 Million-(P5*40000 shares)= P3800000
a.
P3,920,000
b.
P3,800,000
c.
P4,000,000
d.
P4,150,000
Clear my choice
Question 7
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
Decrease in number of share and decrease in cost per share.
b.
Increase in number of shares and increase in cost per share.
c.
Increase in number of shares and decrease in cost per share.

lOMoARcPSD|7731915
d.
Decrease in number of shares and increase in cost per share.
Clear my choice
Question 8
Not yet answered
Marked out of 1.00
Flag question
Question text
Joyful Co. owns 50,000 shares of Gloom Co. at a cost of P5,000,000.
Subsequently, Joyful received stock share rights entitling it to purchase 12,500
shares at P100 per share. The share is quoted right-on at P125. What is the cost
of the new investment if all of the stock rights are exercised (stock right
accounted for separately)?
a.
1,250,000
b.
1,500,000
c.
1,562,500
d.
1,450,000
Clear my choice
Question 9
Not yet answered
Marked out of 1.00
Flag question
Question text
An equity instrument is any contract t evidencing a residual interest in the
assets of an entity after deducting all of its liabilities. It include all of the
following, except
a.

lOMoARcPSD|7731915
Ordinary share capital

b.
Warrants that allow the holder to subscribe for or purchase a fixed amount of
ordinary shares of the issuing entity in exchange for a fixed amount of cash.
c.
Preference shares capital with mandatory redemption date or
redeemable at the option of the holder.
d.
Options that allow the holder to subscribe for or purchase a fixed amount of
ordinary shares of the issuing entity in exchange for a fixed amount cash.
Clear my choice
Question 10
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
A contractual right to receive cash or another financial asset of another entity.
b.
c.
A contractual right to exchange financial instruments with another
entity under conditions that are potentially unfavorable.
d.
Cash
Clear my choice
Question 11
Not yet answered
Marked out of 1.00
Flag question

lOMoARcPSD|7731915
Question text
a.
Prepaid rent
b.
Property, plant and equipment
c.
Gold bullion deposited in bank
d.
Deposit of cash
Clear my choice
Question 12
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
Noncurrent liability and finance cost, respectively
b.
Equity and finance cost, respectively
c.
Noncurrent liability and deduction from retained earnings, respectively
d.
Equity and deduction from retained earnings, respectively
Clear my choice
Question 13
Not yet answered
Marked out of 1.00

lOMoARcPSD|7731915
Flag question
Question text
a.
Financial assets at fair value through profit or loss.
b.
Financial assets at fair value through other comprehensive income.
c.
Financial assets at amortized cost.
d.
Financial assets held for sale.
Clear my choice
Question 14
Not yet answered
Marked out of 1.00
Flag question
Question text
except
a.
Answer not given.
b.
c.
d.
Clear my choice
Question 15
Not yet answered

lOMoARcPSD|7731915
Marked out of 1.00
Flag question
Question text
It is any contract gives rise to both a financial asset of the one entity and a
financial liability or equity instrument of another entity.
a.
Investment
b.
Financial instrument
c.
Equity instrument
d.
Debt instrument
Clear my choice
Question 16
Not yet answered
Marked out of 1.00
Flag question
Question text
Smilelang Co. owns 20,000 shares of Frowning Co.’s 200,000 shares of P100 par,
6% noncumulative, nonparticipating preference share capital and 10,000
ordinary shares, representing 2% ownership of Frowning Co.. During 2019,
declared or paid during 2018. In addition, Smilelang, received a 5% share
dividend on ordinary shares from Frowning when the quoted market price of
Frowning’s ordinary share was P10. What amount of dividend income should be
reported in 2019?
a.
245,000
b.
240,000
c.

lOMoARcPSD|7731915
125,000
d.
120,000
Clear my choice
Question 17
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
Ordinary share
b.
Stock bonus
c.
Bonus issue
d.
Preference share
Clear my choice
Question 18
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
No effect on investment account but decrease in cost per share.
b.
No effect on investment account but increase in cost per share.
c.

lOMoARcPSD|7731915
Decrease in investment account and decrease in cost per share.

d.
Increase in investment account and increase in cost per share.
Clear my choice
Question 19
Not yet answered
Marked out of 1.00
Flag question
Question text
iCare Co. acquired an equity investment for P1,500,000 and classified it as
FVTOCI. On December 31, 2018, the cumulative loss recognized in other
comprehensive income was P200,000 and the carrying amount of the
investment was P1,300,000. On December 31, 2019 the investee was in
financial difficulty and the fair value of the investment had fallen to P600,000.
What cumulative amount of unrealized should be reported as component of
other comprehensive income in the statement of changes in equity for the year
ended December 31, 2019?
1.5 Million - 200k loss= 1.3 million
1.3 million - 600k= 700k
a.
900,000
b.
0
c.
500,000
d.
700,000
Clear my choice
Question 20
Not yet answered
Marked out of 1.00
Flag question

lOMoARcPSD|7731915
Question text
a.
The entity has lost control over the asset when the other party or transferee has
the practical ability to sell asset in its entirety to a third party without attaching
any restrictions to the transfer.
b.
The contractual rights to the cash flows of the financial asset have expired.
c.
The entity as transferred substantially all risk and rewards.
d.
The entity has retained substantially all risk and rewards.
Clear my choice
Question 21
Not yet answered
Marked out of 1.00
Flag question
Question text
It is a transaction whereby the outstanding shares are called in and replaced by
a larger number, accompanied by a reduction in the par or stated value.
a.
Bonus issue
b.
Share split
c.
Share split up
d.
Share split down
Clear my choice
Question 22
Not yet answered
Marked out of 1.00

lOMoARcPSD|7731915
Flag question
Question text
In 2018, Upbeat Co. purchased 20,000 shares of Downcast Co. for P100 per
share on May 15. An additional 30,000 shares were bought in July 19 for P120
each. Upbeat received cash dividends at P10 per share on August 18 and a 20%
stock dividend on September 8. On December 11, Upbeat sold 30,000 shares of
its investment at P125 per share. What is the gain on the sale of the shares (use
average method)?
Cost of all shares=5.6 Million
total number of shares before share dividend= 50k
20% share dividend= 10k
allocated share dividend of 10k shares=
sold 30000 shares @ 125= 3.75 Million
averaging= 30k/60k*5.6 Million= 2.8 Million cost of sold shares
Gain= 3.75 Million-2.8 Million shares= 950k
a.
1,150,000
b.
550,000
c.
950,000
d.
150,000
Clear my choice
Question 23
Not yet answered
Marked out of 1.00
Flag question
Question text

lOMoARcPSD|7731915
from dividend?
a.
The date of record
b.
The date the dividend is declared
c.
The date the dividend check is mailed by the corporation.
d.
The date the dividend check is received by the stockholder.
Clear my choice
Question 24
Not yet answered
Marked out of 1.00
Flag question
Question text
Property dividends
a.
Memorandum only.
b.
Dividend income at cost of the property.
c.
Return of investment and therefore credited to investment account.
d.
Dividend income at fair value of the property.
Clear my choice
Question 25
Not yet answered
Marked out of 1.00
Flag question

lOMoARcPSD|7731915
Question text
FIFO method)?
Original shares= 20000 and 30000
20% share dividend= 20% * 50000= 10k
PRORATE 10K SHARES= 10K/50K*20000; 10K/50K* 30K
SALE Price-Cost of shares sold= 3.75 million- 2.6 Million
Gain on sale= 1.15 Million
a.
1,150,000
b.
550,000
c.
950,000
d.
150,000
Clear my choice
Question 26
Not yet answered
Marked out of 1.00
Flag question
Question text
Transactions costs incurred in connections with financial assets at fair value
through profit or loss are
a.
Debited to retained earnings.
b.
Capitalized as part of the cost if financial asset.
c.
Expensed outright

lOMoARcPSD|7731915
d.
Not recognized.
Clear my choice
Question 27
Not yet answered
Marked out of 1.00
Flag question
Question text
a.
A new investment account is debited and the original investment account is
credited.
b.
The procedure is to allocate the cost of the original investment between the
original shares and the “different” stock dividends on the basis of fair value.
c.
It decreases the total cost of the original investment.
d.
Cash is debited and dividend income is credited
Clear my choice
Question 28
Not yet answered
Marked out of 1.00
Flag question
Question text
nonparticipating preference share capital and 10,000 ordinary shares. During
2019, Frowning declared and paid preference dividends. No dividends had been
reported in 2019?

lOMoARcPSD|7731915
a.
240,000
b.
245,000
c.
120,000
d.
125,000
Clear my choice
Question 1
Correct
Flag question
Question text
A company declared a cash dividend on its ordinary share in December 2019
payable in January 2020. Retained earnings would
a.
b.
c.
d.
Feedback

lOMoARcPSD|7731915
Question 2
Correct
Flag question
Question text
A company issued rights to its existing shareholders to acquire, at P15 per
share, 5,000 unissued shares of ordinary share with a par value P10 per share.
Ordinary share will be credited at
a.
b.
c.
d.
Feedback
Question 3
Correct
Flag question
Question text
A company issued rights to its existing shareholders to purchase for par
unissued shares of ordinary share with a par value of P10 per share. When the

lOMoARcPSD|7731915
market value of the ordinary share was P12 per share, the rights were exercised.
Ordinary share should be credited at P10 per share and
a.
No credit made to Additional Paid-In Capital or Retained Earnings
b.
Retained earnings credited at P2 per share
c.
Paid-in Capital from share rights credited at P2 per share
d.
Additional Paid-in capital credited at P2 per share
Feedback
Question 4
Correct
Flag question
Question text
A company issued rights to its existing shareholders to purchase, for P30 per
share, unissued shares of P15 par value ordinary share. When the rights lapse
a.
Additional paid-in-capital will be credited
b.
Additional paid-in-capital will be debited
c.
No entry will be made
d.

lOMoARcPSD|7731915
Share rights outstanding will be debited

Feedback
Question 5
Correct
Flag question
Question text
a.
Incurring a net loss in the current year
b.
Purchasing treasury share
c.
Reissuing treasury share
d.
Incurring a net loss in the prior year
Feedback
Question 6
Correct
Flag question
Question text

lOMoARcPSD|7731915
Aguanta Co. decided to split its P25 par value common stock for a 5-for-1
scheme. Which of the following is true?
a.
The new common stock will have a par value of P5 per share after the split
b.
A shareholder that held two shares before the split will have fifty share after the
split
c.
The firm’s stockholders’ equity will increase because the firm has more shares of
stock outstanding
d.
The firm’s paid-in capital will increase because the firm has more shares of stock
outstanding
Feedback
The correct answer is: The new common stock will have a par value of P5 per
share after the split
Question 7
Correct
Flag question
Question text
At the date of financial statements, ordinary share shares issued would exceed
ordinary share shares outstanding as a result of the
a.
Payment in full of subscribed share
b.
Purchase of treasury share
c.

lOMoARcPSD|7731915
d.
Declaration of a share split
Feedback
Question 8
Correct
Flag question
Question text
200,000 shares of P100 par value. On January 10, it issued 50,000 shares at
P110 per share. On March 25, 2,000 shares were issued when the shares were
quoted at P120 a share in the stock market. The company acquired land having
a fair value of P1,300,000 in exchange for issuing 10,000 shares which was
quoted in the stock exchange at P110 per share. What amount should be
reported as share capital?
P5 Million+ P200k+ P 1 million= 6.2 million
a.
7,440,000
b.
7,640,000
c.
6,200,000
d.
5,000,000
Feedback

lOMoARcPSD|7731915
Question 9
Correct
Flag question
Question text
200,000 shares of P100 par value. On January 10, it issued 50,000 shares at
P110 per share. On March 25, 2,000 shares were issued when the shares were
quoted at P120 a share in the stock market. The company acquired land having
a fair value of P1,300,000 in exchange for issuing 10,000 shares which was
quoted in the stock exchange at P110 per share. What amount should be
reported as share premium?
500k+ 40000+ 300k= 840k
a.
840,000
b.
540,000
c.
500,000
d.
800,000
Feedback
Question 10
Correct

lOMoARcPSD|7731915
Flag question
Question text
At the start of the current year, Saionaini Co. was authorized by the SEC to issue
800,000 shares. Immediately after, the company issued 600,000 shares. In the
middle of the year, the company reacquired but did not cancel 50,000 shares.
Then a month before the year ended the company declared a two for one stock
split. At the end of the year the company declared dividends. How many shares
are entitled to receive dividends at year end?
(600000-50k Treasury shares)* 2= P1,100,000
a.
1,200,000
b.
1,150,000
c.
1,500,000
d.
1,100,000
Feedback
Question 11
Correct
Flag question
Question text
At the start of the year, Cassiaion Co. issued 500,000 shares of P1 par value for
P10 per share. During the year, the company reacquired and retired 20,000

lOMoARcPSD|7731915
shares at P15 per share. As a result of the retirement, what amount should be
debited to share premium? 200000/500000*4.5M
a.
180,000
b.
100,000
c.
20,000
d.
280,000
Feedback
Question 12
Correct
Flag question
Question text
At the start of the year, Cassiaion Co. issued 500,000 shares of P1 par value for
P10 per share. During the year, the company reacquired and retired 20,000
shares at P15 per share. As a result of the retirement, what amount should be
debited to retained earnings? Share premium (dr) 180k, Share capital (dr
20k) and retained earnings (dr) 100k
a.
20,000
b.
280,000
c.

lOMoARcPSD|7731915
180,000
d.
100,000
Feedback
Question 13
Correct
Flag question
Question text
Cassaionoi Co. was incorporated October 2020 and issued 200,000 shares par
value of P10 at P15 per share. During the period October 2020 to December 31,
2021, the company reported a profit of P750,000 and paid cash dividends of
P380,000. In the same period, the company also reacquired 12,000 shares at
P12 per share and subsequently reissued 8,000 shares for P8 per share and
retired the remaining treasury shares. What is the total shareholders’ equity on
December 31, 2021?
(380k)+3m+750k-144k+64k=3.29m
a.
3,290,000
b.
3,306,000
c.
3,338,000
d.
3,370,000
Feedback
Question 14

lOMoARcPSD|7731915
Correct
Flag question
Question text
What amount should be credited to ordinary share capital as a result of
conversion?
(150 k shares * 3)* 25= 11.25 million
a.
18,000,000
b.
15,000,000
c.
11,250,000
d.
16,500,000
Feedback
Question 15
Incorrect
Flag question

lOMoARcPSD|7731915
Question text
By what amount did share premium increase as a result of conversion?
Preference share capital (dr) 15 million
Share Premium P/S (dr) 1.5 million
Ordinary Share Capital (cr) 11.25 million
Share Premium O/S (cr) 5.25million
5.25 million Share Premium (cr)- 1.5 million Share Premium (dr)= 3.75 million
a.
5,250,000
b.
1,500,000
c.
3,750,000
d.
0
Feedback
Question 16
Correct
Flag question
Question text
Easybreezy Co. held 100,000 shares of P1 par value as treasury reacquired for
P120,000. At year-end, the entity reissued all 100,000 shares for P190,000.

lOMoARcPSD|7731915
What is credited for the excess of the reissue price over the cost of treasury
shares?
a.
Gain on sale of investment P70,000
b.
Retained earnings P70,000
c.
Share premium P70,000
d.
Share capital P100,000
Feedback
Question 17
Correct
Flag question
Question text
Famous Company has not declared or paid dividends on its cumulative
preference share in the last three years. These dividends should be reported
a.
In a note to the financial statements
b.
As a current liability
c.
As a reduction in shareholders’ equity
d.

lOMoARcPSD|7731915
As a noncurrent liability
Feedback
Question 18
Correct
Flag question
Question text
Five thousand (5,000) shares of ordinary share with a par value of P10 per share
were issued initially at P12 per share. Subsequently, one thousand (1,000) of
these shares were acquired as treasury share at P15 per share. Assuming that
the cost method of accounting for treasury share transactions is used, what is
the effect of the acquisition of the treasury share on the share premium and
retained earnings, respectively?
a.
Decrease, increase
b.
Increase, decrease
c.
Decrease, decrease
d.
Feedback
Question 19
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
a.
The preference shareholders receive their full dividend and any excess dividends
on the ordinary shareholders.
b.
The ordinary shareholders receive a dividend rate per share equal to the
preference and all excess dividends are share proportionately between the two
classes.
c.
preference and all excess dividends go to the preference.
d.
preference and all excess dividends are given to the ordinary shareholders
Feedback
The correct answer is: The ordinary shareholders receive a dividend rate per
share equal to the preference and all excess dividends are share proportionately
between the two classes.
Question 20
Correct
Flag question
Question text
Gains and losses on the purchase and resale of treasury shares may be reflected
only in

lOMoARcPSD|7731915
a.
Paid in capital and retained earnings accounts
b.
Income, paid-in capital, and retained earnings accounts
c.
Income and paid-in capital accounts
d.
Paid in capital accounts
Feedback
Question 21
Correct
Flag question
Question text
How would a share split affect the company’s assets, total shareholders’ equity
and share premium, respectively?
a.
Decrease, decrease, decrease
b.
Increase, increase, no effect
c.
No effect, no effect, no effect
d.
No effect, no effect, increase

lOMoARcPSD|7731915
Feedback
Question 22
Correct
Flag question
Question text
How would retained earnings be affected by the declaration stock dividend and
a.
b.
No effect, decrease
c.
Decrease, no effect
d.
Decrease, decrease
Feedback
Question 23
Correct
Flag question
Question text
How would the declaration of a 20% stock dividend by a Corporation affect it’s
retained earnings and total shareholders’ equity respectively?

lOMoARcPSD|7731915
a.
Decrease, decrease
b.
Decrease, no effect
c.
d.
No effect, decrease
Feedback
Question 24
Correct
Flag question
Question text
In accordance with PIC Q&A No. 2011-04, the following are generally treated as
deduction to equity, except
a.
Stock exchange listing fees
b.
Newspaper publication fees
c.
SEC registration fees for new shares
d.
Underwriting fees

lOMoARcPSD|7731915
Feedback
Question 25
Correct
Flag question
Question text
Leesudni Company issued 200,000 shares of P100 par, 10% cumulative
preference shares for P25,000,000. One detachable warrant was attached to
each preference share issued. Each warrant gives the holder the right to
purchase one ordinary share, P50 par value, for P100. The market value of the
warrant after the preference shares were issued was P15. The proceeds to be
allocated to the preference shares is
25k - Cost of share warrants
25k-(200k shares * 15)
=22k allocated for P/S
a.
25,000,000
b.
21,000,000
c.
20,000,000
d.
22,000,000
Feedback
Question 26
Correct

lOMoARcPSD|7731915
Flag question
Question text
P1,500,000 and par value of P1,000,000, and 25% share dividend with fair value
of P4,000,000 and par value of P3,500,000. What aggregate amount should be
=1.5 million + 3.5 million= 5 million
a.
5,500,000
b.
4,500,000
c.
3,500,000
d.
5,000,000
Feedback
Question 27
Incorrect
Flag question
Question text
NoBae Co. provided the following information at year end: Preference share
capital, P100 stated value, P4,600,000; Share premium on preference share,
P1,610,000; Ordinary share capital, P10 par, P10,500,000; Share premium on
ordinary share P5,500,000; Subscribed ordinary share capital, P100,000;

lOMoARcPSD|7731915
Subscription receivable on ordinary shares, P75,000; Bonds payable,

P5,000,000; Premium on bonds payable, P1,000,000; Appropriated retained
earnings, P2,000,000; Unappropriated retained earnings, P1,800,000. What is
the amount of legal capital?
a.
22,235,000
b.
16,810,000
c.
15,200,000
d.
22,310,000
Feedback
Question 28
Incorrect
Flag question
Question text
On February 1, 2020, authorized ordinary share was sold on a subscription basis
at a price in excess of par value, and 20% of the subscription price was
collected. On May 1, 2020 the remaining 80% of the subscription price was
collected. Share premium would increase on February 1 or May 1, respectively?
a.
YES, NO
b.
YES, YES

lOMoARcPSD|7731915
c.
NO, NO
d.
NO, YES
Feedback
Question 29
Incorrect
Flag question
Question text
On February 28, 2020, Wailisod Co. declared a 10% share dividend. On this date,
the company’s 30,000 outstanding shares with par value of P20 was quoted in
the stock exchange at P90 per share. The share dividends were distributed on
September 30 when the quote price went up to P100 per share. What amount
should be credited to share premium resulting from the share dividend?
a.
300,000
b.
210,000
c.
270,000
d.
240,000
Feedback
Question 30
Correct

lOMoARcPSD|7731915
Flag question
Question text
On January 1, 2019, Confidentcaio Co. had 100,000 outstanding shares and
25,000 shares held in treasury. During the first quarter, the company distributed
13,000 treasury shares to its officers. It declared a 3 for 1 stock split which took
effect on October 31. In November 2, the company purchased 5,000 of its own
shares to stop a company takeover. How many shares were issued on December
31, 2019?
a.
300,000
b.
375,000
c.
450,000
d.
125,000
Feedback
Question 31
Correct
Flag question
Question text
On January 1, 2019, Confidentcaio Co. had 100,000 outstanding shares and
25,000 shares held in treasury. During the first quarter, the company distributed

lOMoARcPSD|7731915
13,000 treasury shares to its officers. It declared a 3 for 1 stock split which took
effect on October 31. In November 2, the company purchased 5,000 of its own
shares to stop a company takeover. How many shares were outstanding on
December 31, 2019?
a.
334,000
b.
324,000
c.
285,000
d.
300,000
Feedback
Question 32
Correct
Flag question
Question text
On January 1, 2019, Confidentpa Co. had 20,000 treasury shares of P100 par
value that have been acquired at P120 per share. In December, the company
reissued 15,000 of these treasury shares at P150 per share. What amount
should be reported as appropriated retained earnings for treasury share
transactions?
Cost of t/s= 2.4m less Cost of sale 20k/15k*2.4m= 600k
a.
500,000
b.

lOMoARcPSD|7731915
2,400,000
c.
600,000
d.
1,800,000
Feedback
Question 33
Correct
Flag question
Question text
earnings for the construction of a new building which was completed in 2019 at
a total cost of P1,500,000. During the year the company appropriated
P1,200,000 of retained earnings for the construction of a new warehouse. Also,
P2,000,000 of cash was restricted to cover the partial retirement of bonds in
2020. What amount of appropriated retained earnings should be reported on the
December 31, 2019 financial statements?
a.
1,200,000
b.
1,450,000
c.
2,950,000
d.
3,200,000
Feedback

lOMoARcPSD|7731915
Question 34
Correct
Flag question
Question text
On July 31, 2011, ACD Corporation purchased 500,000 shares of XYZ
Corporation. On December 31,2012 ACD distributed 250,000 shares of XYZ
share as a dividend to ACD’s shareholders. This is an example of a
a.
Property dividend
b.
Investment dividend
c.
Stock dividend
d.
Feedback
Question 35
Correct
Flag question
Question text
On June 30, 2020, Steelheart Mining, Inc. declared a cash dividend of
P8,000,000 to shareholders of July 15, 2020 and payable on September 1, 2020.

lOMoARcPSD|7731915
As at June 30, the company reported share capital of P100,000,000, share

premium of P3,000,000 and retained earnings of P6,000,000. It also reported an
accumulated depletion of P2,000,000. What amount should be recognized as
liquidating dividend?
a.
6,000,000
b.
3,000,000
c.
2,000,000
d.
8,000,000
Feedback
Question 36
Correct
Flag question
Question text
inventories payable on March 31, 2020. The carrying amount of the inventories
at the date of declaration is P3,000,000 and the fair value is P2,500,000.
However, the fair value less cost to distribute the inventory is P2,200,000 on
December 31, 2019 and P2,000,000 on March 31, 2020. What is the dividend
payable on December 31, 2019?
a.
2,200,000
b.

lOMoARcPSD|7731915
2,500,000
c.
0
d.
3,000,000
Feedback
Question 37
Correct
Flag question
Question text
inventories payable on March 31, 2020. The carrying amount of the inventories
at the date of declaration is P3,000,000 and the fair value is P2,500,000.
However, the fair value less cost to distribute the inventory is P2,200,000 on
December 31, 2019 and P2,000,000 on March 31, 2020. What amount of loss on
distribution of dividend is recognized on March 31, 2020?
Dividend payable 3/31/2020= 2m less carrying amount 12/31/2019= 2.2 m
a.
500,000
b.
200,000
c.
300,000
d.
0

lOMoARcPSD|7731915
Feedback
Question 38
Incorrect
Flag question
Question text
P2,000,000; Subscription receivable, collectible within one year, P800,000;
Share premium, P1,000,00; Appropriated retained earnings, P1,200,000;
Unappropriated retained earnings, P600,000; Revaluation surplus, P400,000;
Treasury shares, at cost, P200,000. What amount should be reported as total
shareholders’ equity?
Subscription receivable is not added because it is collectible within one year
a.
9,000,000
b.
11,000,000
c.
10,200,000
d.
9,800,000
Feedback
Question 39
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
par value at the option of the stockholder. Subsequently, all of the preferred
shares were converted into common shares. The fair value of the common
shares on the date of conversion was P30. What amount should be credited to
share premium or additional paid in capital as a result of the above transactions.
a.
80,000
b.
200,000
c.
120,000
d.
240,000
Feedback
Question 40
Correct
Flag question
Question text
Select the statements that is incorrect concerning the appropriations of retained
earnings:
a.

lOMoARcPSD|7731915
Appropriations of retained earnings do not change the total amount of

shareholders’ equity
b.
Appropriations of retained earnings can be made as a result of contractual
requirements
c.
Appropriations of retained earnings reflect funds set aside for a designated
purpose, such as plant expansion
d.
Appropriations of retained earnings can be made at the discretion of the board
of directors
Feedback
The correct answer is: Appropriations of retained earnings reflect funds set aside
for a designated purpose, such as plant expansion
Question 41
Correct
Flag question
Question text
The directors of Nolovelife, Inc. have decided to issue a share dividend. The P50
par value share is currently selling at P60. The selling price is not expected to be
affected by the share dividend. The company which has an authorized capital of
1,000,000 shares had issued 500,000 shares, of which 100,000 shares are in
treasury. In order to capitalized P2,400,000 of retained earnings, what
percentage should be declared as share dividends by the directors?
a.
8%
b.
6%

lOMoARcPSD|7731915
c.
4%
d.
10%
Feedback
Question 42
Correct
Flag question
Question text
The entry to record the issuance of ordinary share for fully paid share
subscription is
a.
Debit Ordinary Share Subscribed: Credit Ordinary Share and Additional Paid-in
Capital
b.
Debit Ordinary Share Subscribed: Credit Ordinary Share
c.
Debit Ordinary Share Subscribed: Credit Subscription Receivable
d.
A memorandum entry
Feedback
Question 43
Incorrect

lOMoARcPSD|7731915
Flag question
Question text
The equity section of Loveless Co revealed the following information on
December 31, 2019: Preference share capital, P100 par, P5,000,000; Share
premium-preference shares, P2,000,000; Ordinary share capital, P50,
P3,200,000; Share premium-ordinary shares, P500,000; Subscribed ordinary
share capital, P800,000; Appropriated retained earnings, P250,000;
Unappropriated retained earnings, P3,500,000; Subscription receivable ordinary
shares, P400,000; OCI-Unrealized loss on IESFVOCI, P600,000; Treasury shares
ordinary, P1,000,000. How much is the contributed capital of Loveless Co. as of
December 31, 2019?
a.
11,500,000
b.
11,100,000
c.
10,100,000
d.
10,500,000
Feedback
Question 44
Correct
Flag question
Question text

lOMoARcPSD|7731915
a.
The liquidation value of the shares
b.
The amount received by the corporation when the share was originally issued.
c.
The legal nominal value assigned to the shares
d.
The book value of the shares
Feedback
Question 45
Correct
Flag question
Question text
a.
Creditors.
b.
Management.
c.
Preference shareholders.
d.
Ordinary shareholders.
Feedback

lOMoARcPSD|7731915
Question 46
Correct
Flag question
Question text
Unlike a stock split, a share dividend requires a formal journal entry in the
financial accounting records because
a.
Stock dividends increase the shareholders’ equity in the issuing firm
b.
Stock dividends represent a transfer from retained earnings to capital share
c.
Stock dividends increase the relative book value of an individual’s share
holdings
d.
Stock dividends are payable on the date they are declared
Feedback
The correct answer is: Stock dividends represent a transfer from retained
earnings to capital share
Question 47
Correct
Flag question
Question text

lOMoARcPSD|7731915
When a portion of shareholders’ original investment is returned in the form of a

a.
Property dividend
b.
liquidating dividend
c.
equity dividend
d.
compensating dividend
Feedback
Question 48
Correct
Flag question
Question text
Which of the following actions or events does not result in an addition to
retained earnings?
a.
A quasi reorganization
b.
Correction of an error in which ending inventory was understated in a previous
year
c.
Earnings of net income for the period

lOMoARcPSD|7731915
d.
Issuance of a 3-for-1 share split
Feedback
Question 49
Correct
Flag question
Question text
a.
Premium preference share
b.
Redeemable preference share
c.
Cumulative preference share
d.
Participating preference share
Feedback
Question 50
Correct
Flag question

lOMoARcPSD|7731915
Question text
a.
A stock dividend (declared and issued) does not change the total assets, total
liabilities, or total stockholders equity of the issuing corporation.
b.
A large stock split should be accounted for by capitalizing the current market
value of the stock.
c.
A stock dividend and a stock split are identical in all respects for the corporation
issuing the dividend or splitting the stock.
d.
When a corporation declares a small stock dividend, it should capitalize the par
value of the shares.
Feedback
The correct answer is: A stock dividend (declared and issued) does not change
the total assets, total liabilities, or total stockholders equity of the issuing
corporation.
Question 51
Incorrect
Flag question
Question text
Which statement is incorrect regarding measurement of a liability to distribute
non-cash assets as dividend to the entity’s owners?
a.
None of the above.
b.

lOMoARcPSD|7731915
An entity shall measure a liability to distribute non-cash assets as a dividend to

its owners at the fair value of the assets to be distributed.
c.
At the end of each reporting period and at the date of settlement, the entity
shall review and adjust the carrying amount of the dividend payable, with any
changes in the carrying amount of the dividend payable recognized in profit or
loss.
d.
If an entity gives its owners a choice of receiving either a non-cash asset or a
cash alternative, the entity shall estimate the dividend payable by considering
both the fair value of each alternative and the associated probability of owners
selecting each alternative.
Feedback
The correct answer is: At the end of each reporting period and at the date of
settlement, the entity shall review and adjust the carrying amount of the
dividend payable, with any changes in the carrying amount of the dividend
payable recognized in profit or loss.
Question 1
Incorrect
Not flaggedFlag question
Question text
a.
A new investment account is debited and the original investment account is
credited.
b.
It decreases the total cost of the original investment.

lOMoARcPSD|7731915
c.
Cash is debited and dividend income is credited
d.
Feedback
Question 2
Incorrect
Question text
a.
Noncurrent liability and deduction from retained earnings, respectively
b.
Noncurrent liability and finance cost, respectively
c.
Equity and deduction from retained earnings, respectively

lOMoARcPSD|7731915
d.
Equity and finance cost, respectively
Feedback
The correct answer is: Noncurrent liability and finance cost, respectively
Question 3
Correct
Question text
designated as a financial asset at fair value through profit or loss. It sold 2,000
shares for P51 per share in 2018 and another 2,500 shares for P33 per share in
2019. The shares were quoted per share at P47, P39, and P31 at December 31,
2017, 2018 and 2019, respectively. How much should be recognized in 2019
profit or loss as a result of the fair value changes?
a.
44,000
b.
77,000
c.
0
d.
11,000
Feedback
Question 4
Correct

lOMoARcPSD|7731915

Question text
Transactions costs incurred in connections with financial assets at fair value
through profit or loss are
a.
Debited to retained earnings.
b.
Expensed outright
c.
Capitalized as part of the cost if financial asset.
d.
Not recognized.
Feedback
Question 5
Correct
Question text
Property dividends
a.
Memorandum only.

lOMoARcPSD|7731915
b.
Return of investment and therefore credited to investment account.
c.
Dividend income at cost of the property.
d.
Dividend income at fair value of the property.
Feedback
Question 6
Correct
Question text
It is any contract gives rise to both a financial asset of the one entity and a
financial liability or equity instrument of another entity.
a.
Debt instrument
b.
Investment
c.
Financial instrument
d.
Equity instrument

lOMoARcPSD|7731915
Feedback
The correct answer is: Financial instrument
Question 7
Correct
Question text
a.
Are not income
b.
Represent return of invested capital
c.
Are credited to income
d.
Are credited to investment account
Feedback
Question 8
Correct
Question text
It is a transaction whereby the outstanding shares are called in and replaced by
a larger number, accompanied by a reduction in the par or stated value.

lOMoARcPSD|7731915
a.
Bonus issue
b.
Share split down
c.
Share split up
d.
Share split
Feedback
Question 9
Correct
Question text
Which of the following statements is correct regarding unrealized gains or
losses?
a.
Unrealized gains or losses on trading securities are included in profit or loss of
the current period.
b.
All statements are correct.

lOMoARcPSD|7731915
c.
Unrealized gains or losses on financial asset at fair value through other
comprehensive income should be classified as component of other
comprehensive income.
d.
Unrealized gains or losses on financial asset at amortized cost are not
recognized.
Feedback
The correct answer is: All statements are correct.
Question 10
Correct
Question text
a.
Cost
b.
Fair value
c.
Amortized cost
d.
Fair value less cost to sell
Feedback

lOMoARcPSD|7731915
Question 11
Correct
Question text
a.
Increase in investment account and increase in cost per share.
b.
No effect on investment account but increase in cost per share.
c.
No effect on investment account but decrease in cost per share.
d.
Decrease in investment account and decrease in cost per share.
Feedback
share.
Question 12
Correct
Question text
nonparticipating preference share capital and 10,000 ordinary shares. During
2019, Frowning declared and paid preference dividends. No dividends had been

lOMoARcPSD|7731915
reported in 2019?
a.
240,000
b.
120,000
c.
245,000
d.
125,000
Feedback
Question 13
Correct
Question text
a.
Increase in number of shares and increase in cost per share.

lOMoARcPSD|7731915
b.
Decrease in number of share and decrease in cost per share.
c.
Increase in number of shares and decrease in cost per share.
d.
Decrease in number of shares and increase in cost per share.
Feedback
The correct answer is: Increase in number of shares and decrease in cost per
share.
Question 14
Correct
Question text
Joyful Co. owns 50,000 shares of Gloom Co. at a cost of P5,000,000.
Subsequently, Joyful received stock share rights entitling it to purchase 12,500
shares at P100 per share. The share is quoted right-on at P125. What is the cost
of the new investment if all of the stock rights are exercised (stock right
accounted for separately)?
a.
1,250,000
b.
1,562,500
c.
1,500,000

lOMoARcPSD|7731915
d.
1,450,000
Feedback
Question 15
Incorrect
Question text
a.
Shall be included in retained earnings
b.
Shall not be recognized
c.
Shall be recognized in profit or loss
d.
Shall be recognized in equity
Feedback
The correct answer is: Shall be recognized in profit or loss
Question 16
Correct

lOMoARcPSD|7731915
Question text
from dividend?
a.
The date the dividend is declared
b.
The date the dividend check is received by the stockholder.
c.
The date of record
d.
The date the dividend check is mailed by the corporation.
Feedback
Question 17
Correct
Question text
a.
Deposit of cash
b.
Prepaid rent

lOMoARcPSD|7731915
c.
Property, plant and equipment
d.
Gold bullion deposited in bank
Feedback
The correct answer is: Deposit of cash
Question 18
Correct
Question text
An equity instrument is any contract t evidencing a residual interest in the
assets of an entity after deducting all of its liabilities. It include all of the
following, except
a.
Warrants that allow the holder to subscribe for or purchase a fixed amount of
ordinary shares of the issuing entity in exchange for a fixed amount of cash.
b.
Options that allow the holder to subscribe for or purchase a fixed amount of
ordinary shares of the issuing entity in exchange for a fixed amount cash.
c.
Preference shares capital with mandatory redemption date or redeemable at the
option of the holder.
d.
Ordinary share capital

lOMoARcPSD|7731915
Feedback
The correct answer is: Preference shares capital with mandatory redemption
date or redeemable at the option of the holder.
Question 19
Correct
Question text
iCare Co. acquired an equity investment for P1,500,000 and classified it as
FVTOCI. On December 31, 2018, the cumulative loss recognized in other
comprehensive income was P200,000 and the carrying amount of the
investment was P1,300,000. On December 31, 2019 the investee was in
financial difficulty and the fair value of the investment had fallen to P600,000.
What cumulative amount of unrealized should be reported as component of
other comprehensive income in the statement of changes in equity for the year
ended December 31, 2019?
a.
500,000
b.
700,000
c.
0
d.
900,000
Feedback
Question 20
Correct

lOMoARcPSD|7731915

Question text
FIFO method)?
a.
550,000
b.
950,000
c.
150,000
d.
1,150,000
Feedback
Question 21
Correct
Question text

lOMoARcPSD|7731915
average method)?
a.
550,000
b.
950,000
c.
1,150,000
d.
150,000
Feedback
Question 22
Correct
Question text
P100 per share to be held for trading. Brokerage fees amounted to P120,000. A
P5 dividend per share of Merry, Inc. shares had been declared on December 15,
2019, to be paid on March 31, 2020 to shareholders of record on January 31,
2020. What is the initial measurement of the investment?
a.
P3,920,000
b.

lOMoARcPSD|7731915
P4,000,000
c.
P4,150,000
d.
P3,800,000
Feedback
Question 23
Correct
Question text
a.
The entity has retained substantially all risk and rewards.
b.
The entity as transferred substantially all risk and rewards.
c.
The contractual rights to the cash flows of the financial asset have expired.
d.
The entity has lost control over the asset when the other party or transferee has
the practical ability to sell asset in its entirety to a third party without attaching
any restrictions to the transfer.

lOMoARcPSD|7731915
Feedback
Question 24
Correct
Question text
a.
Cash
b.
c.
A contractual right to exchange financial instruments with another entity under
conditions that are potentially unfavorable.
d.
A contractual right to receive cash or another financial asset of another entity.
Feedback
Question 25
Correct
Question text

lOMoARcPSD|7731915
a.
b.
c.
d.
Financial assets held for sale.
Feedback
The correct answer is: Financial assets held for sale.
Question 26
Incorrect
Question text
Smilelang Co. owns 20,000 shares of Frowning Co.’s 200,000 shares of P100 par,
6% noncumulative, nonparticipating preference share capital and 10,000
ordinary shares, representing 2% ownership of Frowning Co.. During 2019,
reported in 2019?
a.

lOMoARcPSD|7731915
120,000
b.
125,000
c.
245,000
d.
240,000
Feedback
Question 27
Correct
Question text
except
a.
Answer not given.
b.
c.

lOMoARcPSD|7731915
d.
Feedback
The correct answer is: Financial assets at amortized cost.
Question 28
Correct
Question text
a.
Bonus issue
b.
Preference share
c.
Ordinary share
d.
Stock bonus
Feedback
The correct answer is: Bonus issue
Question 1
Correct

lOMoARcPSD|7731915
Question text
A pension liability is reported when
a.
The pension expense for the period is greater than the funding amount for the same period.
b.
The defined benefit obligation exceeds the fair value of plan assets.
c.
The accumulated benefit obligation is less than the fair value of plan assets.
d.
Cumulative other comprehensive income exceeds the fair value of plan assets.
Feedback
The correct answer is: The defined benefit obligation exceeds the fair value of plan assets.
Question 2
Correct
Question text
These are compensated or paid absences that are carried forward and can be used in future periods and
the employees are entitled to a cash payment for unused entitlement on leaving the entity.
a.
Nonaccumulating and nonvesting
b.
Nonaccumulating and vesting
c.
Accumulating and vesting
d.
Accumulating and nonvesting

lOMoARcPSD|7731915
Feedback
The correct answer is: Accumulating and vesting
Question 3
Incorrect
Question text
An-entity made a public announcement of a commitment to a voluntary redundancy plan. The entity has
an obligation to pay employees that choose voluntary redundancy a lump sum equal to twice their gross
annual salary. What is the obligation to pay employees that choose voluntary redundancy?
a.
b.
c.
d.
Feedback
Question 4
Incorrect
Question text
An entity shall use the projected unit credit method to determine the present value of its defined benefit
obligations and the related current service cost and, where applicable, past service cost. The projected
unit credit method is also known as
a.
The benefit/years of service method.

lOMoARcPSD|7731915
b.
The accrued benefit method pro-rated on service.
c.
d.
Both statements are correct.
Feedback
The correct answer is: The accrued benefit method pro-rated on service.
Question 5
Correct
Question text
Employee benefits are
a.
Benefits other than short-term employee benefits, post-employment benefits and termination benefits.
b.
Benefits that are payable after the completion of employment.
c.
Benefits that are expected to be settled wholly before twelve months after the end of the annual
reporting period in which the employees render the related service.
d.
All forms of consideration given by an entity in exchange for service rendered by employees or for the
termination of employment.
Feedback
The correct answer is: All forms of consideration given by an entity in exchange for service rendered by
employees or for the termination of employment.
Question 6
Correct

lOMoARcPSD|7731915
Question text
In the calculation of pension expense under a defined benefit plan, which component will not be
included?
a.
Interest cost on the projected benefit obligation
b.
Actuarial present value of benefits attributed by the pension benefit formula to employee service during
current period
c.
Gain or loss on plan settlement
d.
Excess of projected benefit obligation over the fair value of the plan assets
Feedback
The correct answer is: Excess of projected benefit obligation over the fair value of the plan assets
Question 7
Correct
Question text
a.
Post-employment benefit plans are arrangements whereby an entity provides post-employment

benefits.
b.
Post-employment benefit plans are classified as either defined contribution plans or defined benefit
plans, depending on the economic substance of the plan as derived from its principal terms and
conditions.
c.

lOMoARcPSD|7731915
d.
An entity applies PAS 19 to all post-employment benefit plans whether or not they involve the
establishment of a separate entity to receive contributions and to pay benefits.
Feedback
Question 8
Correct
Question text
a.
Payroll deductions
b.
Unpaid time of
c.
Paid time of
d.
A form of healthcare
Feedback
The correct answer is: Paid time of
Question 9
Correct
Question text
Which of the following statements best describes "other long-term employee benefits"?
a.
Benefits that are expected to be settled within twelve months after the end of the reporting period.

lOMoARcPSD|7731915
b.
Benefits which are payable after completion of employment.
c.
Benefits payable as a result of an entity's decision to terminate an employee's employment before the
normal retirement date.
d.
Benefits that are not expected to be settled within twelve months after the end of the reporting period.
Feedback
The correct answer is: Benefits that are not expected to be settled within twelve months after the end of
the reporting period.
Question 10
Correct
Question text
An entity contributes to an industrial pension plan that provides a pension arrangement for the
employees. A large number of other employers also contribute to the pension plan and the entity makes
contributions in respect of each employee. These contributions are kept separate from corporate assets
and are used together with any investment income to purchase annuities for retired employees. The only
obligation of the entity is to pay the annual contributions. This pension scheme is a
a.
Multiemployer plan and a defined contribution scheme.
b.
Multiemployer plan and a defined benefit scheme.
c.
Defined contribution plan only.
d.
Defined benefit plan only.
Feedback
The correct answer is: Multiemployer plan and a defined contribution scheme.
Question 11

lOMoARcPSD|7731915
Correct
Question text
Termination benefits are employee benefits provided in exchange for the termination of an employee’s
employment as a result of:
a.
Neither of the two statements
b.
An employee’s decision to accept an ofer of benefits in exchange for the termination of employment.
c.
Either of the two statements
d.
An entity’s decision to terminate an employee’s employment before the normal retirement date.
Feedback
Question 12
Correct
Question text
The interest on the projected benefit obligation
a.
May be stated implicitly or explicitly.
b.
Reflects the rate at which retirement benefits could be efectively settled.
c.
Is the same as the actual return on plan assets.

lOMoARcPSD|7731915
d.
Reflects the 'incremental borrowing rate of the employer.
Feedback
The correct answer is: Reflects the rate at which retirement benefits could be efectively settled.
Question 13
Correct
Question text
The projected unit credit method
a.
b.
Both the two statements are correct.
c.
Sees each period of service as giving rise to an additional unit of benefit entitlement.
d.
Measures each unit of benefit entitlement separately to build up the final obligation.
Feedback
The correct answer is: Both the two statements are correct.
Question 14
Correct
Question text

lOMoARcPSD|7731915
A pension' asset is reported when
a.
The accumulated benefit obligation exceeds the fair value of plan assets.
b.
The accumulated benefit obligation exceeds the fair value of plan assets but a past service cost exists.
c.
Plans assets at fair value exceed the defined benefit obligation.
d.
Plan assets at fair value exceed the accumulated benefit obligation.
Feedback
The correct answer is: Plans assets at fair value exceed the defined benefit obligation.
Question 15
Correct
Question text
a.
When the entity can no longer withdraw the ofer of those benefits.
b.
At the later of the two statements.
c.

lOMoARcPSD|7731915
When the entity recognizes costs for a restructuring that involves the payment of termination benefits.
d.
At the earlier of the two statements.
Feedback
Question 16
Correct
Question text
If the payment of employees' compensation for future absences is probable, the amount can be
reasonably estimated and the obligation relates to rights that accumulate, the compensation should be
a.
Recognized when paid.
b.
Accrued if attributable to employees' services not yet rendered.
c.
Accrued if attributable to employees' services whether already rendered or not.
d.
Accrued if attributable to employees' services already rendered.
Feedback
The correct answer is: Accrued if attributable to employees' services already rendered.
Question 17
Correct

lOMoARcPSD|7731915
Question text
The deficit or surplus is:
a.
Assets held by a long-term employee benefit fund and qualifying insurance policies.
b.
The diference between the two statements.
c.
The present value, without deducting any plan assets, of expected future payments required to settle
the obligation resulting from employee service in the current and prior periods.
d.
The total of the two statements.
Feedback
The correct answer is: The diference between the two statements.
Question 18
Correct
Question text
Under what condition is an employer required to accrue a liability for sick pay?
a.
Sick pay benefits vest.

lOMoARcPSD|7731915
b.
Sick pay benefits accumulate.
c.
Sick pay benefits equal 100% of the pay.
d.
Sick pay benefits can be reasonably estimated.
Feedback
The correct answer is: Sick pay benefits vest.
Question 19
Correct
Question text
Which measure requires the use of future salaries in the computation of benefit obligation?
a.
Current benefit obligation
b.
Accumulated benefit obligation
c.
Projected benefit obligation
d.
Vested benefit obligation
Feedback

lOMoARcPSD|7731915
Question 20
Correct
Question text
Employees are each entitled to 20 days of paid holiday leave per year. Unused holiday leave cannot be
carried forward and does not vest. What is the holiday leave?
a.
b.
c.
d.
Feedback
Question 21
Correct
Question text
Which of the following is a characteristic of a defined benefit plan?

lOMoARcPSD|7731915
a.
The amount of the post-employment benefits received by the employee is determined by the amount of
contributions paid by an entity to a post-employment benefit plan or to an insurance company, together
with investment returns arising from the contributions.
b.
Actuarial risk (that benefits will be less than expected) and investment risk (that assets invested will be
insufficient to meet expected benefits) fall, in substance, on the employee.
c.
The entity’s legal or constructive obligation is limited to the amount that it agrees to contribute to the
fund.
d.
If actuarial or investment experience are worse than expected, the entity’s obligation may be increased.
Feedback
If actuarial or investment experience are worse than expected, the entity’s obligation may be increased.
Question 22
Correct
Question text
An employer ofered for a short period of time special termination benefits to some employees. The
employees accepted the ofer which provided for immediate lump sum payments and future payments
at the end of the next two years. The amounts can be reasonably estimated. The amount of expense
recognized in the current year should include

lOMoARcPSD|7731915
a.
The lump sum payments and the present value of the future payments
b.
One third of the lump sum payments and one third of the present value of the future payments
c.
The lump sum payments and the total of the future payments
d.
Only the lump sum payments
Feedback
The correct answer is: The lump sum payments and the present value of the future payments
Question 23
Correct
Question text
a.
b.
c.
Remeasurements of the net defined benefit liability (asset) in other comprehensive income.

lOMoARcPSD|7731915
d.
Interest (net) on the net defined benefit liability (asset) in profit or loss.
Feedback
The correct answer is: All of these mentioned are components of defined benefit cost.
Question 24
Correct
Question text
What is the discount rate for pension plans?
a.
The rate of return on plan assets
b.
The weighted average interest rate
c.
The bank prime interest rate
d.
The market yield at the end of the reporting period for high-quality corporate bonds
Feedback
The correct answer is: The market yield at the end of the reporting period for high-quality corporate
bonds
Question 25
Correct

lOMoARcPSD|7731915
Question text
Which of the following criteria is not required for the recognition of a liability for compensated
absences?
a.
The amount of the obligation must be estimable.
b.
Payment of the obligation must be probable.
c.
Payment of the obligation will require the use of current assets.
d.
The compensation either vests with the employee or can be carried forward to subsequent years.
Feedback
The correct answer is: Payment of the obligation will require the use of current assets.
Question 26
Correct
Question text
A profit-sharing plan requires an entity to pay a specified proportion of the cumulative profit for a five-
year period to employees who serve throughout the five-year period. What is the profit-sharing plan? ,
a.
b.

lOMoARcPSD|7731915
c.
A short-term' employee benefit
d.
Feedback
Question 27
Correct
Question text
a.
Assets and liabilities are always netted.
b.
When the assets and liabilities are both financial.
c.
When the estimated cash inflows and outflows are similar in pattern.
d.
Assets and liabilities may be netted when there is a legally enforceable right to use the assets of one and
to settle the obligations of another plan.
Feedback

lOMoARcPSD|7731915
The correct answer is: Assets and liabilities may be netted when there is a legally enforceable right to use
the assets of one and to settle the obligations of another plan.
Question 28
Incorrect
Question text
a.
Be accrued during the period following vesting.
b.
Be accrued during the period when earned.
c.
Be accrued during the period when the compensated time is expected to be used by employees.
d.
Not be accrued unless a written contractual obligation exists.
Feedback
Question 29
Correct
Question text

lOMoARcPSD|7731915
a.
A defined benefit plan that provides benefits to employees of more than one entity.
b.
A defined contribution plan or a defined benefit
c.
A defined contribution plan that pools the asset contributed by various entities.
d.
A defined contribution plan or defined benefit plan that pools the assets contributed by various entities
that are not under common control and uses those assets to provide benefits to employees of more than
one entity.
Feedback
The correct answer is: A defined contribution plan or defined benefit plan that pools the assets
contributed by various entities that are not under common control and uses those assets to provide
benefits to employees of more than one entity.
Question 30
Correct
Question text
a.
A benefit resulting from mandatory retirement is a postemployment benefit rather than a termination
benefit.
b.
The event that gives rise to an obligation for termination benefit is the termination of employment.

lOMoARcPSD|7731915
c.
A benefit resulting from termination of employment at the request of an employee without an entity
ofer is not a termination benefit.
d.
A benefit that is in any way dependent on providing service in the future is a termination benefit.
Feedback
The correct answer is: A benefit that is in any way dependent on providing service in the future is a

lOMoARcPSD|7731915
Accounting- 104 questions and answers
Bachelors of Science Major in Accountancy (University of San Jose-Recoletos)

lOMoARcPSD|7731915
104 FINAL EXAM ANSWERS
a. Charged to retained earnings
b. Expensed immediately
c. Deducted from equity
d. Deducted from equity, net of any related income tax benefit
2. The present value of pension benefits accrued to date using assumptions as to future
compensation level is the
a. Past service cost
b. Accumulated benefit obligation
c. Accrued pension cost
d. Projected benefit obligation
3. In rare circumstances, when a retirement benefit plan has attributes of both defined contribution
and defined benefit plan, the plan is deemed
a. Both defined benefit and defined contribution plan
b. Defined contribution plan
c. Neither defined benefit nor defined contribution plan
d. Defined benefit plan
4. An employer offered for a short period of time special termination benefits to some employees.
The employees accepted the offer which provided for immediate lump sum payments and future
payments at the end of the next two years. The amounts can be reasonably estimated. The
amount of expense recognized in the current year should include
a. The lump sum payments and the present value of the future payments
b. One third of the lump sum payments and one third of the present value of the future payments
c. The lump sum payments and the total of the future payments
d. Only the lump sum payments
5. At the start of current year, Saionra Co. was organized with authorized capital of 200,000 shares
share capital?

lOMoARcPSD|7731915
a. 6,200,000
b. 5,000,000
c. 7,440,000
d. 7,640,000
projected benefit obligation report from the independent actuary at year-end. Pension benefits
paid, P405,000; PBO on December 31, P6,480,00; Interest expense, P360,00; Discount rate, 8%.
What is the current service cost for the year?
a. P1,620,000
b. P765,000
c. P2,025,000
d. P2,430,000
7. In 2018, Upbeat Co. purchased 20,000 shares of Downcast Co. for P100 per share on May 15. An
additional 30,000 shares were bought in July 19 for P120 each. Upbeat received cash dividends
at P10 per share on August 18 and a 20% stock dividend on September 8. On December 11,
Upbeat sold 30,000 shares of its investment at P125 per share. What is the gain on the sale of
the shares (use FIFO method)?
a. 950,000
b. 150,000
c. 550,000
d. 1,150,000
8. A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary
for each year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent
(compound) each year. The discount rate used is 10 per cent per year. The entity does not fund
its obligation to pay lump-sum benefits. The employee is expected to leave at the end of year 5.
The amount to be recognized as expense in the second year is
a. P 98
b. P196
c. P131
d. P107
9. An investment in equity instrument may not be classified as a financial asset subsequently

measured at
a. Fair value through profit or loss

lOMoARcPSD|7731915
b. Answer not given
c. Fair value through other comprehensive income
d. Amortized cost
10. Which of the following statements is incorrect concerning the appropriations of retained
earnings?
a. Appropriations of retained earnings can be made as a result of contractual requirements.
b. Appropriations of retained earnings do not change the total amount of shareholders' equity.
c. Appropriations of retained earnings reflect funds set aside for a designated purpose, such as plant
expansion.
d. Appropriations of retained earnings can be made at the discretion of the board of directors.
11. An entity shall use the projected unit credit method to determine the present value of its defined
benefit obligations and the related current service cost and, where applicable, past service cost.
The projected unit credit method is also known as
a. Neither of the two statements are correct.
b. The accrued benefit method pro-rated on service.
c. Both statements are correct.
d. The benefit/years of service method
12. On January 1, 2019, Smart Co. purchased 100,000 equity securities for trading for P40 per share,
excluding transaction cost which amounts to P1 per share. On December 28, the company sold
80,000 shares for P50 a share. What amount should be reported as gain on sale of trading
securities?
a. 800,000
b. 400,000
c. 900,000
d. 200,000
13. Interest cost included in the net pension cost recognized by an employer sponsoring a defined
benefit plan represents the
a. Increase in the fair value of plan assets due to the passage of time.
b. Shortage between the expected and actual returns, on plan assets.
c. Change in the nature of benefits.
d. Increase in the projected benefit obligation due to the passage of time.

lOMoARcPSD|7731915
14. These are employee benefits that are payable as a result of an entity's decision to terminate an
employee's employment before the normal retirement date, or an employee's decision to accept
an offer of benefits in exchange for termination of employment.
a. Postemployment employee benefits
b. Termination benefits
c. Short-term employee benefits
d. Other long-term employee benefits
15. On January 2, 2020, Cheers Company purchased 40,000 shares of Jeers, Inc. stock at P100 per
share. Brokerage fees amounted to P120,000. The shares are designated as FVTOCI. On
December 31, 2020 the investment has a fair value of P4,200,000. How much should be
recognized in the 2020 other comprehensive income related to these securities?
a. P400,000
b. P280,000
c. P80,000
d. P200,000

104 Overall Compilation

Uploaded by

Copyright:

Available Formats

You might also like

104 Overall Compilation

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

104 Overall Compilation

Uploaded by

Copyright:

Available Formats

STOCKHOLDERS' EQUITY

SHAREHOLDERS' EQUITY PRACTICE QUIZ (74points)

Only a memorandum entry is made when

The correct answer is: Liquidating dividend

The correct answer is: Road show presentation

The correct answer is: Share premium

The correct answer is: Are exercised

The correct answer is: Purchase of treasury shares

PQ1 SHAREHOLDERS' EQUITY Quiz

Appropriations of retained earnings should be reported as

INVESTMENT IN EQUITY SECURITIES

12. The issuance of preference shares

16. Only a memorandum entry is made when

17. The total cost of treasury stock should be reported as

20. Paid in capital does not include

23. Fully participating preference share means that:

25. When a share dividend is declared and issued

31. Total shareholders' equity represents

37. The term residual owner means that shareholders

41. An entry is not made on the

42. Cash and property dividends should be recorded as liabilities on the

43. Which is true concerning share capital transactions?

44. Which of the following statements is incorrect concerning retained earnings?

45. The par value of an ordinary share represents

10. The par value of ordinary shares represents

29. Which of the following statement is correct?

33. A restriction of retained earnings is most likely to be required by

38. 21.Which of the following is NOT considered a type of preference share?

INVESTMENT IN EQUITY SECURITIES - MIDTERM QUIZ 1

Acquisition Price 4,000,000 Fair Value 5,500,000

Acquisition Cost (40,000 x 100) 4,000,000 Fair Value - 2020 4,200,000

Cash (80,000 x 50) 4,000,000

Cost 5,100,000 Fair Value - 2020 5,000,000

11. Financial assets include

Fair Value - 2019 600,000 Fair Value - 2019 600,000

Acquisition Cost 4,000,000 Fair Value - 2020 4,200,000

Cost 5,100,000 Fair Value - 2020 5,000,000

22. What is the principle for recognition of a financial asset in PFRS 9?

INVESTMENT IN EQUITY SECURITIES - MIDTERM QUIZ 2

1. Joyful Co. (accounted for separately)

Sale Price (30,000 x 125) 3,750,000

Dividend Income (12,000x15) 180,000

Dividend Income on preference share (noncumulative)

7. Joyful Co. (not accounted for separately)

3. Financial assets include all of the following except

10. A financial asset is any asset that is (choose incorrect answer)

2. A pension' asset is reported when

4. A pension liability is reported when

Current Service Cost 2,537,500

Actual Return 875,000

P/ABC (13,825,000 - 16,292,500) -2,467,500

8. The vested benefits in a pension plan represent

10. The interest on the projected benefit obligation

11. Vested benefits

12. Which of the following is a characteristic of a defined benefit plan?

13. Which statement is incorrect regarding post-employment benefit plans?

Date Benefit PV Factor Current Service Cost Interest PBO