Easy

E1. When specific customer’s account is written off by a company using the allowance method,
the effect on net income and net accounts receivable are, respectively

a. no effect, decrease
b. no effect, no effect
c. decrease, decrease
d. decrease, no effect

E2. You are given the following information related to Reyes Tacandong and Co.

Gross profit rate based on cost 25%

Accounts receivable December 31, 2012 120,000
Collections on accounts receivable in 2013 645,000
Cost of goods available for sale in 2013 690,000
Merchandise inventory, December 31, 2013 150,000

Assuming all sales were on account, what was the company’s Accounts Receivable balance at
December 31, 2013.

a. 105,000
b. 150,000
c. 159,000
d. 195,000

E3. Reyes Tacandong and Co. uses accrual basis of accounting. Reyes Tacandong and Co.’s
wages expense account had P2, 550,000 balance at the end of the year. The wages payable had
115,000balance at the beginning of the year and a 225,000 balance at the end of the year.

How much cash was paid for the wages during the year?
a. 2,660,000
b. 2,550,000
c. 2,440,000
d. 2,330,000
E4 When using a perpetual inventory system,

a. Purchases account is used

b. A cost of goods sold account is not used
c. Two journal entries are required to record sale
d. A physical count of goods is necessary at the end of the period

E5 Reyes Tacandong and Co. prepared an aging of its accounts receivable a t December 31,
2013 and determined that the net realizable value of the receivables was 750,000. Additional
information follows:

Allowance for Bad Debts, 84,000

December 31, 2012
Accounts written off as 69,000
uncollectible during 2013
Accounts Receivable, December 810,000
31, 2013
Uncollectible Accounts Recovery 15,000

What is Reyes Tacandong and Company’s bad debt expense for year ended December 31,
2013?

a. 69,000
b. 60,000
c. 45,000
d. 30,000

E6. Charging the acquisition of an inexpensive trash bin to an expense account is an example of
the application of:

a. Consistency principle
b. Cost principle
c. Matching principle
d. Materiality principle
E7 Chas Company’s insurance expense account had a 300,000 balance at the end of the year.
The prepaid insurance account had a 90,000 balance at the beginning of the year and 90,000
balance at the end of the year.
How much cash was paid for the insurance during the year?
a. 630,000
b. 420,000
c. 360,000
d. 240,000

M1.The following information was taken from Reyes Tacandong and Company’s accounting
records for the current year:

Increase in goods in process inventory 500,000

Increase in raw materials inventory 150,000
Decrease in finished goods inventory 350,000
Raw materials purchased 4,300,000
Direct Labor payroll 2,000,000
Factory overhead 3,000,000
Freight out 450,000

What was the cost of goods sold in the current year?

a. 9,300,000
b. 9,150,000
c. 8,650,000
d. 9,000,000

M2 When an account previously written off is subsequently recovered and collected, the
transaction would
a. Increase in net income under the direct write off method
b. Increase in net income under allowance method
c. Decrease in net income under the direct method
d. Increase in accounts receivable under the allowance method
M3 It is the process of determining the monetary amounts at which the elements of the
financial statements are recognized and carried in the financial statement.

a. Recognition
b. Measurement
c. Realization
d. Reporting

M4 On July 1, 2013, Crafters, Inc. has 200,000 ordinary shares outstanding with par value of P10
per share and market value of P12 per share. On the same date, Crafters declared a 1 for 2
reverse share split. The par value of the share was increased from P10 to P20 and one new P20
par value share was issued for every two P10 par outstanding. Immediately before the 1 for 2
reverse share split, Crafters’ share premium account balance was P450,000.

What should be the balance in Crafter’s share premium account immediately after the reverse
share split is effected?

a. 0
b. 450,000
c. 650,000
d. 850,000

M5 ReyesTacandong and Company provided the following information regarding the purchase
of the machinery:

Salvage Value ?
Depreciation for this machinery in 2013 90,000
Purchase Price 750,000
Date of Purchase April 1, 2013
Estimated useful life 5 years

The company uses straight line of depreciation. How much is the salvage value of the
machinery of the company?

a. 150,000
b. 166,667
c. 180,000
d. 200,000
M6 Dividends in arrears are reported in the statement of financial position as

a. Current liabilities
b. Contra- equity accounts
c. Contra-asset accounts
d. Note disclosure

M7. The shareholder’s equity of Reyes Tacandong and Company consists of the following
accounts:

Preference Share Capital, 10% cumulative, 5,000,000

P100 par (50,000 shares)
Ordinary Share Capital P100 par (200,000 20,000,000
shares)
Subscribed Ordinary Shares, net of 6,000,000
Subscription receivable of P4,000,000
(100,000 shares)
Treasury Ordinary Shares at cost (50,000 4,000,000
shares)
Share Premium 10,000,000
Retained Earnings 8,000,000

Preference dividends have not been paid for three years and have a liquidation value of P110.
The book value per ordinary share is:
a. 210
b. 168
c. 166
d. 152
H1 Reyes Tacandong and Company provided the following information regarding its equipment:

Salvage Value 50,000

Accumulated Depreciation as of December 31, 450,000
2013
Purchase Price ?
Date of Purchase April 1, 2010
Estimated useful life 5 years

The company uses straight line of depreciation. How much is the purchase price of the
equipment of the company?

a.600,000
b. 650,000
c. 700,000
d. 642,367

H2 Which of the following is not typically a characteristic of preference share?

a. Preference as to dividends
b. Preference over ordinary shares during liquidation
c. Preference as to voting rights
d. Cumulative and callable terms
H3 The petty cash fund of Reyes Tacandong and Co. at the end of the fiscal year ended June 30,
2013 is composed of the following:

Currencies 3,800
Coins 1,200
Paid vouchers for
Office Supplies 1,750
Postage Stamps 2,000
Loans to employees 6,000
Customer’s check marked NSF 2,750
Check drawn by the company payable to the 12,500
custodian, representing her salary
Check payable to an employee dated July 16, 4,000
2013

The correct amount of petty cash fund at June 30, 2013 is

a. 5,000
b. 17,500
c. 21,500
d. 30,000

H4.Ethan Company made 5,000,000 in payments to the suppliers during the year. Ethan
Company’s beginning inventory was 200,000 and the ending inventory was 350,000. In
addition, Ethan had a beginning Accounts Payable of 700,000.

How much is the cost of good sold of the company?

a. 5,850,000
b. 4,510,000
c. 4,150,000
d. 1,450,000
H5 Seldom does the balance of the cash in bank account in the depositor’s books agree with the
balance appearing in the bank statement at a particular date because of

a. A tax avoidance
b. Bank secrecy requirements
c. Negligence by the bookkeeper
d. Time-lapse difference

H6 At December 31, 2013 and 2012, Eagle had outstanding 4,000 shares at 100 par value, 12%
cumulative fully participating preference shares and 20,000 10 par value ordinary shares. At
December 31, 2012, dividends in arrears on preference shares were 24,000. Cash dividends
declared in 2013 totaled 108,000.

What is the total amount of dividends payable to preference shareholders?

a. 80,000
b. 72,000
c. 56,000
d. 24,000

H7 The following were taken from Reyes Tacandong and Company’s unadjusted trial balance as
of December 31, 2013

Debit Credit
Accounts Receivable 1,000,000
Allowance for Uncollectible 8,000
Accounts
Net Credit Sales 3,000,000

Reyes Tacandong and Company estimates that 3% of the gross accounts receivable will become
uncollectible. What is the bad debt expense at December 31, 2013?
a. 90,000
b. 38,000
c. 20,000
d. 22,000

1. What is the surname of the person considered as the first ever Filipino CPA? It is also the
name of a hospital near Central Market in Manila that is known for many child birth
deliveries everyday.
2. The main function of the FRSC is

a. to establish and improve accounting standards in the Philippines

b. to establish but not to improve accounting standards in the Philippines
c. to improve but not to establish accounting standards in the Philippines
d. none of these

3. Under this concept, capital is regarded as the net assets or equity of the enterprise

a. financial concept c. physical concept

b. all-financial resources
concept
d. all-inclusive concept

4. What is the law that governs the accountancy profession in the Philippines? This law
aims for the standardization and regulation of accounting education and supervision of the
practice of accountancy in the Philippines.

5. A laptop was purchased by CAT Company on April 1, 2010 for P92,000. It will be
depreciated using the straight line method. After 5 years of expected usage, it could be sold
for P12,000 in nearby repair shops in Greenhills. On June 20, 2012, it was sold to an
employee for P20,000 only. What is the gain or loss on the sale of the equipment?

6. A machine which was purchased for P424,000 and has a residual value of 24,000 was
sold for P150,000 on October 30, 2014. There was a loss on sale of P36,500. The machine
was purchased on the first day of the month, and it is expected to last for 8 years. Given
these information, what is the exact month and year of the date of purchase of this
machine?

7. (IGNORE VAT) On January 5, 2010, CAT Co. purchased inventory on account. The
merchandise has an invoice price of P100,000, with terms of 3/10, 2/15, n/30. On January
8, 1/5 of this amount was returned to the supplier because it was defective. What is the
amount of cash that should be paid by CAT to the supplier on January 15, 2010?

8. (IGNORE VAT) On January 21, 2010, CAT Co. purchased inventory on account. The
merchandise has an invoice price of P300,000, with terms of 3/10 EOM, n/90. Freight cost
amounted to P2,500, with terms FOB Destination , Freight Collect. On February 7, 1/3 of
this amount was returned to the supplier because it was defective. What is the amount of
cash that should be paid by CAT to the supplier on February 8, 2010?
9. During the year, CAT Co. has Sales of P1,200,000 and Operating Expenses amounted to
P30,000. If they have a policy of having a gross profit of 25% based on cost, what is the
amount of net income for the year?

10. During the year, CAT Co. has Cost of Goods Sold amounting to P300,000. Net Income
during the year amounted to P50,000 only. What is the amount of their operating expenses
if they have a policy of setting gross profit at 20% of sales?

11. The Financial Statements of Penshoppe Co. includes the following items:

Marketing Costs P320,000

Direct Labor Cost 490,000
Administrative Cost 290,000
Direct Materials used 370,000
Fixed Factory Overhead Costs 310,000
Variable Factory Overhead Costs 250,000
Q: What is the total Period Cost?

12. Particles Co. produces T-shirts for men. The following cost information is available for
the month ending December 31, 2008:
Materials put into production P300,000, of which P180,000 is direct materials.
Factory Labor Costs: P240,000, of which P50,000 was for indirect labor
Other Factory Overhead Costs incurred, P120,000
Advertising Expense P20,000
Q: What is the total Product Costs?
A: P660,000
13. Boston Co. presented the following data for June 2008
Direct Labor Cost P160,000
Purchases 200,000
Factory Overhead – applied at 150% of direct labor costs
Inventories June 1 June 30
Finished Goods 90,000 48,000
Work in Progress 51,600 36,000
Raw Materials 44,000 50,000
Q: How much is the Cost of Goods Manufactured?
A: P609,600
14. The cash account shows a balance of 42,000 before reconciliation. The bank
statement does not include a deposit of 2,300 made on the last day of the month.
The bank statement shows a collection by the bank of 940 and a customer's
check for 220 was returned because it was NSF. A customer's check for 450
was recorded on the books as 540, and a check written for 79 was recorded as
Q: What is the correct balance in the cash account?
A: P42,648
15. Alliance Co. balance sheet shows the following items:
Checking account in Onion Bank ,per books:
Outstanding checks as of year end totaled P15,200
Savings account at Bangko Ilocano 30,800
Petty Cash Fund (incl. expense receipts for P250) 1,500
Cash on Hand from undeposited sales receipts 4,200
Sinking Fund Cash 35,000
Q: What is the correct total of Cash to be presented in the Balance Sheet?
A: P141,450