Professional Documents
Culture Documents
Assets Maam Macon
Assets Maam Macon
Assets Maam Macon
2. When preparing a proof of cash, a credit memo from the previous month is
a) Extended to the book receipts column as an addition
b) Extended to the bank receipts column as an addition
c) Extended to the book receipts column as a deduction
d) Not extended in any of the book columns
3. Based on the new pronouncement of the Professional Regulatory Board of Accountancy, the new
name of the Financial Reporting Standards Council is
a. Accounting and Sustainability Standards Board
b. Financial and Sustainability Reporting Standard Council
c. Sustainability Reporting and Accounting Standards Council
d. Board of Financial and Sustainability Reporting Standards
4. ABRAHAM Company provided the following information with respect to its cash and cash
equivalents on December 31, 2023:
Checking account at Metrobank
account at BDO
Treasury bonds 1,000,000
Payroll account 500,000
Tax fund 400,000
Foreign bank account - restricted 2,000,000
Postage stamps 50,000
Employee’s postdated check 300,000
Traveller’s check 300,000
NSF check 150,000
IOU from president’s son 750,000
Credit memo from a vendor for a purchase return 80,000
Petty cash (P20,000 in currency and expense receipts for
P30,000)
A deposit of 190,000 placed in the bank’s night depository on Dec 29 does not appear on the
bank statement. Checks outstanding on Dec. 31 amount to 80,000, including 20,000 certified
check.
Included with the Dec 31 bank statement was an NSF check for 50,000 that the entity had
received from a customer on Dec 20. The bank statement showed a 3,000 service charge for
Dec.
The bank statement showed that on Dec 25 the bank collected a note for the entity and
credited the proceeds of 187,000 to the entity’s account which included 7,000 interest. The
entity discovered that a check written in December for 40,000 in payment of an account had
been recorded as 4,000.
7. A 240- day, 6% interest-bearing note was discounted at a bank at 8% after being held for 150 days.
The proceeds received from the bank upon discounting would be the
a) Maturity value less the discount at 6% for 90 days.
b) Maturity value less the discount at 8% for 90 days.
c) Maturity value less the discount at 8% for 150 days.
d) Face value less the discount at 6% for 90 days.
Bibo Company factored P2,500,000 of accounts receivable with a finance company. The factoring fee
was 5% of the accounts purchased. The finance company withheld 10% of the purchase price to
cover sales discounts, returns and allowances.
I. Trade receivables are classified as current assets only if they are collectible within one year from
the reporting date.
II. Generally, receivables are initially measured at fair value plus transaction costs.
a) I only
b) II only
c) Both I and II
d) Neither I nor II
On January 2, 2021, Goo Won Company sold equipment with a carrying amount of P530,000 in
exchange for P50,000 and a P900,000 non interest- bearing collectible in 3 equal installments every
end of the calendar year. There was no established exchange price for the equipment. The prevailing
rate of interest for a note at the time of sale was 10%.
12. How much should the company report as gain on sale of equipment in its 2021 profit or loss?
a) 420, 000
b) 214, 000
c) 195, 000
d) 264, 000
13. How much should the company report as interest income in its 2021 profit or loss?
a) 74 400
b) 90 400
c) 74 000
d) 90 000
14. What is the amortized cost of the note receivable of Dec 31, 2021?
a) 518 400
b) 514 400
c) 600 000
d) 443 800
16. On July 1, 2023, Sa- Rang Company recorded purchases of inventory of P3 000 000 and P2 000
000 under credit terms of 2/15, net 30. The payment due on the P3 000 000 purchase was remitted
on July 16. The payment due on P2 000 000 purchase was remitted on July 31.
Under the gross and net method, respectively, these purchases should be included at what amount of
determination of cost of goods available for sale?
17. S1: The “list” sales price less any trade discount is the invoice amount.
S2: The use of the direct write-off method is acceptable under gaap
a) True, false
b) False, true
c) False, false
d) True, true
18. The closing raw materials inventory of Japan Manufacturing Corp. amounted to P345 000 at Dec.
31, 2023. This total includes an item of raw material (material Zen) with a cost of P100 000 with an
estimated net realizable value of P80 000. Immediately after the balance sheet date, material Zen was
applied to production and the cost of the finished product where material Zen was applied revealed
that its net selling price exceeds the cost of producing the finished goods.
As of Dec. 31, 2023, what amount of raw materials inventory should Japan report?
a) 245 000
b) 265 000
c) 345 000
d) 325 000
a) FIFO perpetual
b) LIFO perpetual
c) Moving average
d) Weighted average
On November 15, 2023, Noh Sang-sik Company entered into a commitment to purchase 100 000
gallons of aviation fuel on Feb 1, 2024. The intention of Noh is to protect itself against the volatility of
its price in the market. Noh reveals the following details:
Contract price under the purchase commitment agreement P110 per gallons
Fair value of aviation fuel on Dec 31, 2023 P100 per gallons
Fair value of aviation fuel on Feb 1, 2024 P106 per gallons
22. What amount should be recognized as gain on purchase commitment for 2024?
a) 1 000 000
b) 600 000
c) 1 600 000
d) 0
23. Assume instead on the date of delivery on Feb 1, 2024, the price of fuel risen to P112 per gallons,
what amount should Noh report as gain for 2024?
a) 1 200 000
b) 1 000 000
c) 200 000
d) 0
24. Which of the following shall be taken to profit or loss for investments measured at fair value
through other comprehensive income?
a) Change in fair value during the reporting period
b) Gain or loss disposal of the securities
c) Dividends received declared from current year’s earnings of the investee
d) Impairment in the value of the securities
Yoon ah Corporation acquired 10 000 Lee Jun-ho Company shares on Feb 5, 2022 at P50 which
include P10 per share broker’s fees and commissions. A P50 000 cash dividends were received from
Lee Company on March 20, 2022. These dividends were declared on Jan 5 and date of record is Feb.
10. Lee shares were split 2 for 1 on November 1. The shares were selling at P32 per share on Dec.
31, 2022. The investments were designated at FVPL.
26. How much is initial carrying amount of investment on the date of acquisition?
a) 500 000 c) 400 000
b) 450 000 d) 350 000
27. How much should be recognized as dividend income?
a) 50 000
b) 100 000
c) 290 000
d) 0
28. What total amount of loss should be reported for the current year?
a) 130 000
b) 80 000
c) 30 000
d) 20 000
29. Which of the following is most likely an acceptable measurement of agricultural produce?
a) Initial – fv less cost to sell; Subsequent – cost
b) Initial – fv less cost to sell; Subsequent – lower of cost and NRV
c) Initial – FV; Subsequent – lower of cost and fv less cost to sell
d) Initial – FV less cost to sell; Subsequent – FV less cost to sell
30. Sudan Corp purchased cattle at an auction for P200 000 on July 1, 2023. Cost of transporting the
cattle back to the company’s farm was P2 000 and the company would have to incur cost similar
transportation cost if it was to sell the cattle in the auction, in addition an auctioneer’s fee of 2% of
sales price.
31. An impairment loss is the difference between the carrying amount of the debt investment and the
a) Expected cash flows
b) Contractual cash flows
c) Present value of the expected cash flows
d) Present value of the contractual cash flows
32. Piyaya Corporation buys a van with a list price of P3 000 000. The dealer grants a 15% reduction
in list price and an additional 2% cash discount on the net price if payment is made in 30 days.
Irrecoverable taxes amount to P40 000 and the entity paid an extra P30 000 to have a special horn
installed.
34. Kapeislayf Corporation expects the value of the won to increase in the next 30 days. Accordingly,
on December 15, 2023, Bb Company enters into a 30-day forward contract to buy 10 000 wons at the
forward rate of P1.24. On December 31, 2023, the forward rate was P1.27 and by January 15. 2024,
the spot rate moved to P1.30.
On January 1, 2021, Payaman Company purchased equipment with cost of P2 400 000 useful life of 8
years and no residual value. The entity used straight line depreciation. On December 31, 2022, the
entity determined that impairment indicators are present, but was subsequently recovered after two
years on December 31, 2024. There is no change in useful life or residual value. The company policy
is to account its equipment using cost model.
38. If the company policy is to account equipment using revaluation model, the revaluation surplus is:
a) 500 000
b) 100 000
c) 200 000
d) 0
39. When an entity successfully defended a patent from infringement by a competitor, the cost of
successful litigation should be charged to
a) Expense of the period
b) Legal fees and amortized over five years
c) Patent and amortized over the legal life of the patent
d) Patent and amortized over the remaining useful life of the patent
a) True, false
b) False, true
c) False, false
d) True, true