RFJPIA-R12

2
ND
Annual Regional Convention
Mock CPA Board Exaination!
"#E$R% $F ACC$&N"'
1. Which of the following statements is (are) true, for purposes of fnancial reporting in the
Philippines?
I. Philippine practice is to present in the balance sheet current assets before non-current
assets, current liabilities before non-current liabilities; an e!uit" accounts before
liabilities
II. #otes are normall" presente in the following orer$ %ignifcant accounting policies;
statement of compliance of P&'%s; supporting information on items presente on the face
of the fnancial statements; an lastl", other isclosures
III. (he I)% term *&eser+es* in present Philippine practice, ma" refer to re+aluation
increment, translation a,ustments recogni-e in e!uit"; unreali-e gains an losses from
a+ailable for sale securities recogni-e in e!uit".
a. I an II onl" b. I an III onl" c. II an III onl" . I, II an III
.. )n entit" purchases a builing an the seller accepts pa"ment partl" in e!uit" shares an
partl" in ebentures of the entit". (his transaction shoul be treate in the cash /ow
statement as follows$
a. (he purchase of the builing shoul be in+esting cash out/ow an the issuance of shares
an the ebentures fnancing cash out/ows.
b. (he purchase of the builing shoul be in+esting cash out/ow an the issuance of
ebentures fnancing cash out/ows while the issuance of shares in+esting cash out/ow.
c. (his oes not belong in a cash /ow statement an shoul be isclose onl" in the notes to
the fnancial statements.
. Ignore the transaction totall" since it is a non-cash transaction. #o mention is re!uire in
either the cash /ow statement or an"where else in the fnancial statements
0. (he scope of P)% 01 inclues all of the following except
a. 'inancial instruments that meet the efnition of a fnancial asset
b. 'inancial instrument that meet the efnition of a fnancial liabilit"
c. 'inancial instruments issue b" the entit" that meet the efnition of an e!uit"
instrument
. 2ontracts to bu" or sell non-fnancial items that can be settle net.
3. 4eposits in foreign countries which are sub,ect to a foreign e5change restrictions shoul be
a. 6alue at current e5change rates an shown as current assets
b. 6alue at historical e5change rates an presente as noncurrent assets
c. 6alue at current e5change rates an presente as noncurrent assets 7
. 6alue at historical e5change rates an presente as current assets
8. What is the proper accounting for creit car sales if the creit car compan" is
A(liated )it* a +ank Not a(liated )it* a +ank
a. %ale on account 2ash sales
b. %ale on account %ale on account
c. 2ash sale 2ash sale
. 2ash sale %ale on account
9. :osses which are e5pecte to arise from frm an non-cancellable commitments for the future
purchase of in+entor" items, if material shoul be
a. &ecogni-e in the accounts b" ebiting loss on purchase commitments an
creiting estimate liabilit" for loss on purchase commitments
b. 4isclose in the notes
c. Ignore
. 2harge to retaine earnings
;. 4elta 2orp. purchase ;,3<< shares of =aien 2ompan">s common stoc? an classife it as
a+ailable-for-sale. (he purchase price was P09.,<<<, which is e!ual to 8<@ of =aien
2ompan">s retaine earnings balance. =aien 2ompan">s 39,<<< shares of common stoc?
are acti+el" trae. 4elta shoul account for this using the
a. 2ost metho

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b. A!uit" metho
c. 2ost metho sub,ect to fair +alue +aluation in the balance sheet
. =ar?et +alue metho sub,ect to fair +alue +aluation in the balance sheet
B. Which of the following statements regaring In+estment Propert" is (are) true
I. )n in+estment propert" shall be measure initiall" at its cost
II. (ransaction cost shall be inclue in the initial measurement of in+estment propert"
III. With certain e5ceptions, an entit" shall choose as its accounting polic" either the
fair +alue moel or the cost moel an shall appl" such polic" to all its in+estment
propert"
a. I an II onl" b. I an III onl" c. II an III onl" . I, II an III
1. In etermining the fair +alue of a biological asset for balance sheet purposes, which of the
following shoul be consiere?
a. Price change
b. Ph"sical change
c. Coth price change an ph"sical change
. #either price change nor ph"sical change
1<. ) compan" ac!uire some of its own common shares at a price greater than both their par
+alue an original issue price but less than their boo? +alue. (he compan" uses the cost
metho of accounting for treasur" stoc?. What is the impact of this ac!uisition on total
stoc?holers> e!uit" ((%A), an the net boo? +alue (#C6) per common share?
a. %A D ecrease ; #C6 D increase c. %A D ecrease; #C6 D ecrease
b. %A D increase ; #C6 D ecrease . %A D increase; #C6 - increase
11. What is the measurement basis of an asset that is ac!uire in non-monetar" e5change
-it* coercial !u+!tance -it* no coercial !u+!tance
a. 'air +alue of asset gi+en up 2arr"ing amount of asset gi+en up
b. 2arr"ing amount of asset gi+en up 2arr"ing amount of asset recei+e
c. 2arr"ing amount of asset recei+e 'air +alue of asset recei+e
. 'air +alue of asset gi+en up 'air +alue of asset gi+en up
1.. Which of the following statements concerning borrowing costs is false?
a. Corrowing costs generall" inclue interest costs, ban? o+errafts, amorti-ation of
iscounts or premiums relate to borrowings, fnance charges with respect to
fnance leases.
b. Corrowing costs are interest an other costs incurre b" an enterprise in relation to
borrowe funs.
c. Per P)% .0, the benchmar? treatment for borrowing costs is to capitali-e it as part
of the cost of the asset to which it relates.
. Corrowing costs inclue amorti-ation of ancillar" costs incurre in connection with the
arrangement of borrowings, as well as e5change iEerences arising from foreign currenc"
borrowings to the e5tent that the" are regare as an a,ustment to interest cost.
10. Aas" Cuilers Inc. is in the mile of a two-"ear construction contract when it recei+es a
letter from the customer e5tening the contract b" a "ear an re!uiring the construction
compan" to increase its output in proportion of the number of "ears of the new contract to
the pre+ious contract perio.
(his is allowe in recogni-ing aitional re+enue accoring to P)% 11 if
a. #egotiations ha+e reache an a+ance stage an it is probable that the customer will
accept the claim
b. (he contract is suFcientl" a+ance an it is probable that the specife performance
stanars will be e5ceee or met.
c. It is probable that the customer will appro+e the +ariation an the amount of re+enue
arising
from the +ariation, an the amount of re+enue can be reliabl" measure.
. It is probable that the customer will appro+e the +ariation an the amount of re+enue
arising
from the +ariation, whether the amount of re+enue can be reliabl" measure or not.
13. Gner I)% .<, which of the following is permitte in recogni-ing an intangible asset
ac!uire
free of charge, or for nominal consieration, b" wa" of a go+ernment grant?
I. &ecogni-e both the intangible asset an the grant initiall" at fair +alue.

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II. &ecogni-e the asset initiall" at a nominal amount plus an" e5peniture that is
irectl"
attributable to preparing the asset for its intene use
a. I onl"
b. Aither I or II, at the option of the ac!uiring enterprise
c. II onl"
. #either I nor II
18. P)% .<, Ho+ernment Hrants pro+ie two approaches to accounting for go+ernment grants $
(1) capitali-ation approach an (.) income approach. )rguments in support of the income
approach inclue the following except:
a. Ho+ernment grants are consiere earne through compliance with the conition an
meeting en+isage obligations
b. Ho+ernment grants are receipts from a source other than shareholers or capital
pro+iers
c. Ho+ernment grants represent an incenti+e pro+ie b" the go+ernment without relate
costs.
. Ho+ernment grants are consiere as e5tension of fscal policies similar to income an
other ta5es
B&'INE'' .A- : "A;A"I$N
19. Ioler I altere the amount of a negotiable note from P1<,<<< to P1<<,<<< then negotiate
the note to I. )s a result$
a. If I is a holer in ue course, he can re!uire the ma?er to pa" P1<<,<<<
b. If I is not a holer in ue course, he can re!uire the ma?er to pa" the sum of P1<<,<<<
c. I cannot re!uire the ma?er to pa" because of the forger" whether or not he is a holer in
ue course
. I is entitle to P1<,<<< if he is a holer in ue course
1;. (o call a meeting for the purpose of remo+ing a irector of a corporation the re!uire +otes of
the stoc?holers is$
a. ma,orit" of the stoc?holers present
b. J of the outstaning capital stoc?
c. .70 of the outstaning capital stoc?
. ma,orit" of the outstaning capital stoc?
1B. Which of the following instruments is negotiable?
a. KPa" to Cearer 2 P1<,<<<.<<*
b. KPa" to 2 P1<,<<<.<< or his orer out of the rental of m" house in =anila*.
c. KPa" to 2 P1<,<<<.<< an reimburse "ourself out of the rental of m" house in =anila*.
. KPa" to the orer of 2 P1<,<<<.<<*.
11. Paolo contribute P8<,<<<; &onal contribute P;8,<<<; an Paul contribute P.8,<<<. La" is
the inustrial partner. (here is no stipulation regaring profts an losses. (he partnership
suEere a P0<<,<<< loss. (he loss shall be share b" the partners as follows$
a. P1<<,<<<; P1<<,<<<; P1<<,<<<; an P<
b. P;8,<<<; P;8,<<<; P;8,<<<; an P;8,<<<
c. P1<<,<<<; P18<,<<<; P8<,<<<; an P<
. P1<<,<<<; P1<<,<<<; P1<<,<<<; an P1<<,<<<
.<. 2ase #o. 1 D Pero, the manager of MNO 2orporation, was promise of an increase in salar". (o
facilitate the pa"ment of the promise increase, he prepare a boar resolution an ha it
signe ini+iuall" b" a ma,orit" of the members of the Coar of 4irectors. (he treasurer of
the corporation refuse to pa" the increase in salar" stating that the resolution is not +ali. Is
the contention of the treasurer correct?
2ase #o. . D Lose agree to sell for a 1<@ commission the lan of =aria worth P8<<,<<<.
)ccoringl", Lose loo?e for a bu"er an foun Pero whom he introuce to =aria. =aria
howe+er tol Lose an Pero that she is no longer selling her lan. %ubse!uentl", =aria sol
the lan to Pero for P8<<,<<<, without the ?nowlege of Lose. Lose upon learning of the sale,
as?e =aria for his commission. Is Lose entitle to the commission?
a. NA%; NA%
b. NA%; #P
c. #P; #P
. #P; NA%

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.1. 1
st
%tatement D =elo" boun herself to pa" :ucas her inebteness. (his is e+ience b" a
promissor" note stating therein the wors KI promise to pa" :ucas or orer the amount of
Php1<<,<<<*. %g. =elo". (he instrument is non-negotiable.
.
n
%tatement D =ila ga+e =alou a chec? wherein the onl" item not flle up is the space for the
amount. =ila instructe the pa"ee to place the amount Php1,<<< in the chec?. Iowe+er, =alou
place therein Php1<<,<<<. =alou negotiate the chec? to =arissa who is a holer in ue course.
=arissa can hol =ila liable for P1<<,<<<.
a. 1
st
statement is wrong, .
n
statement is correct
b. 1
st
statement is correct, .
n
statement is wrong.
c. Coth statements are correct
. Coth statements are wrong.
... =aggie ma?es a promissor" note for P3<,<<< pa"able to the orer of Iomer. Iomer negotiates the
note to =argie who inorses it to Ienr". Ienr" inorse the instrument to =elissa who with the
consent of Ienr" raises the amount to P1<<,<<< an thereafter inorses it to Iilar", Iilar" to
=enanro, an =enanro to Ielen, who is a holer in ue course. In this case
a. Ielen can reco+er P3<,<<< as against =aggie.
b. Ielen can reco+er P1<<,<<< from =aggie.
c. =enanro an =elissa are liable to Ielen for P3<,<<<
. =aggie an Iomer are not liable to Ielen.
.0. M-cite :imite partnership has M, as general partner, N, as limite partner, an O, as inustrial
partner contributing P18<,<<<; P8<<,<<<; an ser+ices respecti+el". (he partnership faile an after
isposing all its assets to pa" partnership ebts there still remains an outstaning obligation in the
sum of P1.<,<<<. (he liabilit" of the partners to the creitor will be as follows$
a. M Q P1.<,<<<
b. M an O Q soliaril" liable for P1.<,<<<
c. M Q P3<,<< NQ P3<,<<< OQ P3<,<<<
. M Q P9<,<< NQ P< OQ P9<,<<<
.3. Which among the following statements is not correct?
a. (he Cureau of Internal &e+enue is part of the aministrati+e machiner" for the assessment an
collection of internal re+enue ta5es.
b. (he Cureau of 2ustoms is also charge with the collection of internal re+enue ta5es.
c. (he local go+ernment units, such as the municipalities, cities an pro+inces, form part of the
national ta5 s"stem.
. Pri+ate ban?s ma" be authori-e to collect internal re+enue ta5es.
.8. Properties ac!uire b" gratuitous title uring the marriage are generall" classife as$
I. %eparate properties uner con,ugal partnership of gains.
II. 2ommunit" properties uner absolute communit" of properties.
a. Pnl" I is correct c. Coth I an II are correct
b. Pnl" II is correct . Coth I an II are incorrect
.9. ) resient eceent, hea of famil", left the following$
Personal properties P1,<<<,<<
<
&eal properties (incluing famil" home +alue at P1,8<<,<<<) .,<<<,<<<
4euctions claime (incluing actual funeral e5penses of P.<<,<<<,
an meical e5penses of P9<<,<<<) 1<<,<<<
Iow much was the ta5able net estate?
a. P.8<,<<< b. P1,1<<,<<< c. P1,.8<,<<< . P.,1<<,<<<
.;. =ar-an sol his resiential house uner the following terms$
2ash recei+e, Lanuar" 1<, .<<B P1<<,<<<
)mount recei+e, Lune 1<, .<<B 1<<,<<<
Installment ue, Lune 1<, .<<1 9<<,<<<
)itional information$
2ost of resiential house 18<,<<<
=ortgage assume b" the bu"er .<<,<<<
=ortgage on the resiential house e5ecute b" the
bu"er in fa+or of the seller to guarantee pa"ment 9<<,<<<
'air mar?et +alue of resiential house 1<<,<<<
Iow much was the capital gains ta5 ue in .<<B?
a. P18,BB. b. P1;,93; c. P83,<<< . P9<,<<<

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.B. Which of the following go+ernment-owne or controlle corporations shall be sub,ect to the
corporate income ta5?
I. Philippine )musement an Haming 2orporation (P)H2P&).
II. #ational 4e+elopment 2orporation (#42).
III. Philippine 2harit" %weepsta?es PFce (P2%P).
I6. %ocial %ecurit" %"stem (%%%).
.1. (he following fringe benefts were gi+en b" an emplo"er to its emplo"ees for the !uarter ening
=arch 01, .<<B$
Iousing benefts to super+isors an managers (representing total
rents)
P03<,<<<
&eimburse e5penses of ran? an fle emplo"ees .<<,<<<
4e minimis benefts (not e5ceeing the ma5imum) 1<<,<<<
Iow much was the fringe beneft ta5 pa"able for the !uarter?
a. PB<,<<< b. P1<B,B<< c. P19<,<<< . P1;.,B<<
0<. (he CI& ma" compromise pa"ment of internal re+enue ta5es when$
'irst groun$ ) reasonable oubt as to the +aliit" of the claim against the ta5pa"er e5ists.
%econ groun$ When collection costs o not ,ustif" the collection of the ta5.
a. Coth grouns are correct c. Pnl" frst groun is correct
b. Coth grouns are incorrect . Pnl" secon groun is correct
A&DI"IN= "#E$R%
01. (he nee for assurance ser+ices arises because$
a. (here is a consonance of interests of the preparer an the user of the fnancial statements.
b. (here is a potential bias in pro+iing information.
c. Aconomic transactions are less comple5 than the" were a ecae ago.
. =ost users toa" ha+e access to the s"stem that generates the fnancial statements the" use.
0.. Which of the following is e5plicitl" inclue in the )uitor>s responsibilit" section of the auitorRs
report?
a. &eason for moifcation of opinion
b. KPhilippine 'inancial &eporting %tanarsK
c. KPhilippines %tanars on )uiting*
. 4i+ision of responsibilit" with another auitor
00. (he term Spresent fairl", in all material respectS, means
a. (he fnancial statements conform to H))P.
b. (he auitor consiers onl" those matters that are signifcant to the users of the fnancial
statements.
c. (he fnancial statements ma" still be materiall" misstate because the auitors ma" not ha+e
isco+ere the errors.
. (he fnancial statements are accuratel" prepare.
03. Case on &.). 1.1B, how man" "ears can a partner who sur+i+e the eath or withrawal of other
partner(s) continue to practice uner the partnership name after becoming a sole practitioner?
a. 1 "ear
b. . "ears
c. 0 "ears
. Inefnite perio of time
08. )n auitor who isco+ers that client emplo"ees ha+e committe an illegal act that has a material
eEect on the clientRs fnancial statements most li?el" woul withraw from the engagement if
a. (he illegal act is +iolation of generall" accepte accounting principles.
b. (he client oes not ta?e the remeial action that the auitor consiers necessar".
c. (he illegal act was committe uring a prior "ear that was not auite.
. (he auitor has alrea" assesse control ris? at the minimum le+el.
09. Which of the following statements woul least li?el" appear in an auitorRs engagement letter?
a. 'ees for our ser+ices are base on our regular per iem rates, plus tra+el an other out-of-poc?et
e5penses.
b. 4uring the course of our auit we ma" obser+e opportunities for econom" in, or impro+e
controls o+er, "our operations.
c. Pur engagement is sub,ect to the ris? that material errors or frau, incluing efalcations, if the"
e5ist, will not be etecte

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. )fter performing our preliminar" anal"tical proceures we will iscuss with "ou the other
proceures we consier necessar" to complete the engagement.
0;. (he auit wor? paper that re/ects the ma,or components of an amount reporte in the fnancial
statements is the
a. Inter-ban? transfer scheule
b. 2arr" forwar scheule
c. %upporting scheule
. :ea scheule
0B. Which of the following best escribes the primary purpose of auit proceures?
a. (o etect errors or frau
b. (o compl" with generall" accounting principles
c. (o gather suFcient, appropriate e+ience
. (o +erif" the accurac" of account balances
01. )nal"tical proceures use in planning an auit shoul focus on ientif"ing
a. =aterial wea?ness in the internal control s"stem.
b. (he preictabilit" of fnancial ata from ini+iual transactions.
c. (he +arious assertions that are emboie in the fnancial statements
. )reas that ma" represent specifc ris?s rele+ant to the auit.
3<. )s the acceptable le+el of etection ris? decreases, an auitor ma" change theT
a. (iming of substanti+e tests; perform them at an interim ate rather than at "ear-en
b. #ature of substanti+e tests; select from less eEecti+e to a more eEecti+e proceure.
c. (iming of tests of controls; perform them at se+eral ates rather than at one time
. )ssessment of inherent ris?; assume a higher le+el.
31. (he auit wor? performe b" each assistant shoul be re+iewe to etermine whether it was
ae!uatel" performe an to e+aluate whether the
a. )uit has been performe b" persons ha+ing ae!uate technical training an profcienc" as
auitors.
b. )uitorRs s"stem of !ualit" control has been maintaine at a high le+el.
c.&esults are consistent with the conclusions to be presente in the auitorRs report.
. )uit proceures performe are those prescribe in the technical stanars.
3.. Which of the following acts are consiere a frau?
I. Alteration of records or documents.
II. Misinterpretation of facts.
III. Misappropriation of assets.
IV. Recording of transactions without substance.
V. Clerical mistakes.
a. III
b. I an III onl"
c. I, III, an I6 onl"
. )ll of them
30. When the auitor has to etermine the nee to use the wor? of an e5pert, he woul consier the
following except$
a. (he cost of using the ser+ices of an e5pert.
b. (he !uantit" an !ualit" of other auit e+ience a+ailable.
c. (he materialit" of the fnancial statement item being consiere
. (he ris? of misstatement base on the nature an comple5it" of the matter being consiere.
33. Which of the following oes not re!uire the ser+ices of an e5pert?
a. 6aluations of certain t"pes of assets li?e lan an builings.
b. :egal opinions concerning interpretations of engagements, rules an regulations.
c. 4etermination of amounts using speciali-e techni!ues.
. )pplication of accounting methos in computing in+entor" balances.
38. )n auitor shoul esign a written auit program so that$
a. )ll material transactions will be selecte for substanti+e testing.
b. %ubstanti+e tests prior to the balance sheet ate will be minimi-e.
c. (he auit proceures selecte will achie+e specifc auit ob,ecti+es.
. ach account balance will be teste uner either tests of controls or tests of transactions.
MANA=EMEN" AD,I'$R% 'ER,ICE'

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39. 'rom the gi+en ata "ou are to compute the unit sales price !ad"usted to the nearest full centa#o$ at
which the %ta. )na =anufacturing Inc. must sell its onl" prouct in .<<8 in orer to earn a bugete
operating proft (before ta5es of 08@) of P9<,<<<. %ta. )na =anufacturing Inc.>s conense income
statement for .<<3 follows$
%ales (0<,<<< units) P 38<,<<<
&eturns, allowances an iscounts 10,8<<
#et sales P 309,8<<
2ost of goos sol 0<9,<<<
Hross proft P 10<,8<<
%elling e5penses 9<,<<<
)ministrati+e e5penses 0<,<<<
Pperating proft P 3<,8<<
(he buget committee has estimate the following changes in income an costs for .<<8$
o 0<@ increase in number of units sales.
o .<@ increase in material unit cost.
o 10@ increase in irect labor cost per unit.
o 1<@ increase in prouction o+erhea cost per unit.
o 13@ increase in selling e5penses, arising from increase +olume as well as from a higher price
le+el,
o ;@ increase in aministrati+e e5penses, re/ecting anticipate higher wage an suppl" price
le+els. )n" changes in aministrati+e e5penses cause solel" b" increase sales +olume are
consiere immaterial for the purpose of this buget.
)s in+entor" !uantities remain fairl" constant, the committee consiere that, for buget purposes,
an" change in in+entor" +aluation can be ignore. (he composition of the cost of a unit of fnishe
prouct uring .<<3 for materials, irect labor, an prouction o+erhea, respecti+el", was in the ratio
of 0 to . to #o changes in prouction methos or creit policies were contemplate for .<<8.
a. P19.<1 b. P18.80 c.P 19.33 . P 13.1.
3;. 4uring "our e5amination of the fnancial statements of %an Pablo Inustries, the presient
re!ueste "our assistance in the e+aluation of the following fnancial management problem in his
home appliances i+ision which he summari-es for "ou as follows$
). (he i+ision>s current margin ratio is 8@ of annual sales of P1, .<<,<<<. )n in+estment of
P3<<, <<< is neee to fnance these sales. (he 2ompan">s basis for measuring i+isional suc-
cess is &eturn on In+estment (&PI).
C. =anagement is consiering the following two alternati+e plans submitte b" emplo"ees for
impro+ing operations in the home appliances i+ision$
o )ntonio belie+es that sales +olume can be ouble b" greater promotional eEort, but his metho
woul lower the margin rate to 3@ of sales an re!uire an aitional in+estment of P1<<,<<<.
o Huaalupe fa+ors eliminating some unproftable appliances an impro+ing eFcienc" b" aing
P.<<,<<< in capital e!uipment, his metho woul ecrease sales +olume b" 1<@ but impro+e the
margin ratio to ;@.
(he pro,ecte sales price for a new prouct, %antto, (which is still in the e+elopment stage of the
prouct life c"cle) is P8<. (he compan" has estimate the life-c"cle cost to be P0< an the frst-
"ear cost to be P9<. Pn this t"pe of prouct, the compan" re!uires a P1. per unit proft. What is
the target cost of %antto?
a. P9< b. P0< c. P0B . P3.
3B. Nahweh Inc. has a return on assets of 18@ an a 1<@ proft margin. (he compan" has
sales e!ual to P8 million. What are Nahweh>s total assets (in millions)?
a. 0.<<
b. 0.00
c. 0.;0
. 3.1;
31. %t. Lue =anufacturing has assemble the ata appearing below pertaining to two
popular proucts. Past e5perience has shown that the f5e manufacturing o+erhea
component inclue in the cost per machine hour a+erages P1<. %t. Lue has a polic" of
flling all sales orers, e+en if it means purchasing units from outsie suppliers.
Luicer %licer
4irect materials P 9 P11
4irect labor 3 1

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'actor" o+erhea at P19 per hour 19 0.
2ost if purchase from an outsie
supplier
.< 0B
)nnual eman (units) .<,<<< .B,<<<
If 8<,<<< machine hours are a+ailable, an %t. Lue =anufacturing esires to follow an
optimal strateg", it shoul
a. Prouce .8,<<< %licers an purchase all other units as neee.
b. Prouce .<,<<< Luicers an 18,<<< %licers an purchase all other units as neee.
c. Prouce .<,<<< Luicers an purchase all other units as neee.
. Purchase all units as neee.
8<. %t. 2hristopher>s =otors, Inc. is consiering a new prouct for the coming "ear, an
electric motor which it can purchase from a reliable +enor for P.1.<< per unit. (he
alternati+e is to manufacture the motor internall". %t. 2hristopher>s =otors, Inc. has
e5cess capacit" to manufacture the 0<,<<< motors neee in the coming "ear e5cept for
manufacturing space an special machiner". (he machiner" can be lease for P38,<<<
annuall". 'inishe goos warehouse space a,oining the main manufacturing facilit",
lease for P01,<<< annuall", ma" be con+erte an use to manufacture the motors.
)itional oE-site space can be lease at an annual cost of P83,<<< to replace the
fnishe goos warehouse. (he estimate unit costs for manufacturing the motors
internall", e5clusi+e of the leasing costs itemi-e abo+e, are$
4irect material P B.<<
4irect labor 3.<<
6ariable manufacturing o+erhea 0.<<
)llocate f5e manufacturing
o+erhea
8.<<
(otal manufacturing cost per unit P.<.<<
) cost-beneft anal"sis woul show that %t. 2hristopher>s =otors, Inc. woul sa+e
a. P83,<<< b" purchasing the motors from the outsie +enor.
b. P91,<<< b" purchasing the motors from the outsie +enor.
c. PB1,<<< b" ma?ing the motors internall".
. P19,<<< b" ma?ing the motors internall".
81. Hi+en the following information about %t. 6incent, compute for its economic +alue ae$
Aarnings before interest an ta5es P.<,<<< (a5 rate 3<@
Interest-bearing liabilities P8<,<<< 2ost of e!uit" capital 13@
4ebt to e!uit" 1$1
)itional information$
o %t. 6incent pa"s 1<@ annual interest to its creitors.
o (here are no current liabilities hel signifcant b" %t. 6incent.
a. P B,<<<.<< b. P .,<<<.<< c. P 89<<.<< . P <
8.. (he following ata ha+e been e5tracte from the buget wor?ing papers of W& :imite$
)cti+it" P+erhea cost
(In machine hours)(In pesos)

In =arch .<<., the actual acti+it" was 10,;B< machine hours an the actual o+erhea
cost incurre was P13,8.1.
(he total o+erhea e5peniture +ariance is nearest to
a. P1,;8< (') b. P.8< (') c. P.8< ()) . P3,8.< ())
80. In the conte5t of buget preparation the term Kgoal congruenceK isT
a (he alignment of bugets with ob,ecti+es using fee-forwar control
b (he setting of a buget which oes not inclue buget bias
c (he alignment of corporate ob,ecti+es with the personal ob,ecti+es of a manager
(he use of aspiration le+els to set eFcienc" targets.
83. =#P plc prouces three proucts from a single raw material that is limite in suppl".
Prouct etails for perio 9 are as follows$
Proucts = # P
=a5imum eman 1,<<< .,3<< .,B<<
Pptimum planne prouction ;.< - .,B<<

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Gnit 2ontribution (Pesos) 3.8< 3.B< ..18
&aw materials cost per unit 1..8 1.8< <.;8
(P<.8< per ?g)

(he planne prouction optimi-es the use of the 9,<<< ?gs of raw material that is
a+ailable from =#P plc>s normal supplier at the price of P<U8< per ?g. Iowe+er, a new
supplier has been foun that is prepare to suppl" a further 1,<<< ?gs of the material.
What is the ma5imum price that =#P plc shoul be prepare to pa" for the aitional
1,<<< ?gs of the material?
) P.,1<< C P.,.3< 2 P.,0<< 4 P.,398
88. ( plc has e+elope a new prouct, the ('B. (he time ta?en to prouce the frst unit was
1B minutes. )ssuming that an B<@ learning cur+e applies, the time allowe for the ffth
unit (to . ecimal places) shoul be
a. 8U;1 minutes b. ;U80 minutes c. 1<U;. minutes . 11U8.
minutes
%ote: 'or an B<@ learning cur+e " Q a5 -<U0.11
89. Which of the following are re!uire to etermine the brea?e+en sales +alue in a multi
prouct manufacturing en+ironment?
(i) ini+iual prouct gross contribution to sales ratios;
(ii) the general f5e cost;
(iii) the prouct-specifc f5e cost;
(i+) the prouct mi5 ratio;
(+) the metho of apportionment of general f5e costs.
a. (i), (ii), (iii) an (i+) onl".
b. (i), (iii) an (i+) onl".
c. (i), (ii) an (i+) onl".
. )ll of them.
8;. (he cost of purchasing a machine is P1<<,<<< pa"able immeiatel". Its isposal +alue is
e5pecte to be P1<,<<< in f+e "earsR time.
(he same asset can be lease for a perio of f+e "ears with rentals of P.8,<<< pa"able
annuall" in a+ance.
(he asset is returne to the lessor at the en of the lease perio.
What is the net present +alue (to the nearest P1<) to the lessor compan" if it purchases
the machine then leases it to the user on the abo+e terms if it applies an annual iscount
rate of 1<@? (Ignore ta5.)
a. P11< b. P1<,39< c. minus P1,19< . minus P11,33<.
8B. ) compan" retains ;<@ of its earnings an istributes the remaining 0<@. 2apital
in+estment pro,ects generate an annual post-ta5 return on in+estment of 18@ an a pre-
ta5 return of .<@. Gsing the Horon Hrowth =oel, what is the annual rate of growth?
a 3.8@ b 9.<@ c 1<.8@ 13.<@
81. ) compan" uses the Caumol cash management moel. 2ash isbursements are constant
at P.<,<<< each month. =one" on eposit earns 8@ a "ear, while mone" in the current
account earns a -ero return. %witching costs (that is, for each purchase or sale of
securities) are P0< for each transaction.
What is the optimal amount (to the nearest P1<<) to be transferre in each transaction?

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a P8<<
b. P1,;<<
c P3,1<<
P1;,<<<
9<. Gsing the capital asset pricing moel (2)P=), the beta of compan" MRs shares is 1U9, the
ris? free rate is 8@ an the re!uire return on compan" MRs shares is 19U.@. 2ompan" N
is !uote in the same stoc? mar?et, but has a beta of 1.3.
What is the re!uire rate of return on compan" NRs shares?
a 1.U<@
b 10U<@
c 10U.@
13UB@
A&DI"IN= PR$B.EM'
Nou were engage to e5amine the accounts of Power Pla" 2orp. as of 4ecember 01, .<<;
an "our auit isclose the following$
91. (he cash counte on 4ecember 01, .<<; inclue two customers> chec?s amounting to
P8,<<< both ate in Lanuar" .<<B. (hese chec?s were recore in the boo?s in
4ecember an were accepte for eposit b" the ban? on ue ates.
(he a,usting entr" is$
4ebit 2reit
a. 2ash in ban? 8,<<< 2ash on han 8,<<<
b. )ccounts recei+able 8,<<< 2ash 8,<<<
c. 2ash 8,<<< )ccounts recei+able 8,<<<
. )ccounts recei+able 8,<<< %ales 8,<<<
9.. Nour auit isclose that chec?s with a total of P1<,<<< as pa"ment to suppliers were
prepare an ta?en up as ebits to accounts pa"able. Pne of these chec?s in the
amount of P.,<<< was cancelle on Lanuar" 8, .<<B an replace with another for the
correct amount of P.,8<<. #o entr" was mae for the cancellation.
(he a,usting entr" is$
4ebit 2reit
a. 2ash .,8<< )ccounts pa"able .,8<<
b. 2ash .,<<< )ccounts pa"able .,<<<
c. 2ash 8<< )ccounts pa"able 8<<
. #o a,ustment necessar"
90. 2ustomers> chec?s amounting to P3,8<< were returne uring 4ecember .<<; b" the
ban? with the notation K#%'*. Pf these chec?s P0,<<< ha been reeposite an cleare
b" the ban? uring the month. #o entries were mae for the return or reeposit.
(he a,usting entr" is$
4ebit 2reit
a. 2ash 0,<<< )ccounts recei+able 0,<<<
b. )ccounts recei+able 3,8<< 2ash 3,8<<
c. 2ash 1,8<< )ccounts recei+able 1,8<<
. )ccounts recei+able 1,8<< 2ash 1,8<<
93. Hoos costing P.<,<<< were e5clue from the ening in+entor". (he selling price of
these goos was P0<,<<<. (he goos were shippe b" "our client on 4ecember .1,
.<<;. 'PC shipping point. (he transaction was not recore in .<<;.
(he a,usting entr" is$
4ebit 2reit
a. 2ost of sales .<,<<< In+entor" .<,<<<
b. In+entor" .<,<<< 2ost of sales .<,<<<
c. )ccounts recei+able 0<,<<< %ales 0<,<<<
. %ales 0<,<<< )ccounts recei+able 0<,<<<
98. =erchanise costing P18,<<< were still inclue in ening in+entor" although these were
alrea" in+oice an recore as sales to customers on 4ecember 01. (he sales
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in+oices totaling P.8,<<< were no longer recore when the goos were eli+ere on
Lanuar" 8, .<<B.
(he a,usting entr" is$
4ebit 2reit
a. 2ost of sales 18,<<< In+entor" 18,<<<
b. )ccounts recei+able .8,<<< %ales .8,<<<
c. %ales .8,<<< )ccounts recei+able .8,<<<
. #one of the abo+e
(he %toc? In+estment account showe the following etails$
%toc? In+estment in Platinum
Lan 1 auite balance, 'eb .B cash i+ien 1,<<<
.,<<< shares 3<,<<< )pril 1 sale of rights 0,<<<
=ar 01 bought shares 3,8<< Lune 0< sale of shares 8,<<<
(he following transactions occurre$
99. ) cash i+ien of P<.8< per share was recei+e on 'eb. .B
(he a,usting entr" is$
4ebit 2reit
a. %toc? in+estment 1,<<< 4i+ien income 1,<<<
b. &etaine earnings 1,<<< 4i+ien income 1,<<<
c. 4i+ien income 1,<<< %toc? in+estment 1,<<<
. 2ash 1,<<< 4i+ien income 1,<<<
9;. Pn =arch 18, stoc? rights were recei+e entitling shareholers to purchase one share for
e+er" f+e hel at P18 per share. =ar?et +alues on this ate were shares, P.<; rights P8.
(he a,usting entr" to recogni-e the cost allocate to the right is$
4ebit 2reit
a. %toc? rights B,<<< %toc? in+estment B,<<<
b. %toc? rights 1<,<<< %toc? in+estment 1<,<<<
c. %toc? rights 8,<<< %toc? in+estment 8,<<<
. #o entr"
9B. Pn =arch 01, 0<< shares were purchase with the partial e5ercise of these right.
(he a,usting entr", after the a,ustment in #o. 08 abo+e has been eEecte, is
4ebit 2reit
a. %toc? in+estment 1,<<< %toc? rights 1,<<<
b. %toc? in+estment 9,<<< %toc? rights 9,<<<
c. %toc? rights 9,<<< %toc? in+estment 9,<<<
. %toc? in+estment 9,<<< 2ash 9,<<<
91. Pn )pril 1, the remaining rights were sol for P0,<<<.
(he a,usting entr" is$
4ebit 2reit
a. %toc? in+estment 0,<<< Hain on sale of rights 0,<<<
b. %toc? in+estment 0,<<< %toc? rights
gain on sale of rights
.,<<<
1,<<<
c. %toc? in+estment
:oss on sale of
rights
.,<<<
1,<<<
%toc? rights 0,<<<
. 2ash 0,<<< %toc? rights 0,<<<
;<. Power Pla" 2orp. ecie that the allowance for ba ebts shoul be a,uste to e!ual
the estimate amount re!uire base on aging the accounts as of 4ecember 01.
'ollowing ate were gathere$
)llowance for bae ebts, Lanuar" 1, .<<; P1.<,<<
<
Pro+ision for ba ebts uring .<<;
(.@ of P0,<<<,<<< sales) 9<,<<<
Ca ebts written oE in .<<; ;8,<<<
Astimate ba ebts per aging of
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accounts on 4ecember 01, .<<; B<,<<<
(he ba ebts pro+ision shoul be a,uste b"
4ebit 2reit
a. Ca ebts e5pense 18,<<< )llowance for ba
ebts
18,<<<
b. )llowance for ba
ebts
38,<<< )ccounts recei+able 38,<<<
c. )llowance for ba
ebts
.8,<<< Ca ebts e5pense .8,<<<
. Ca ebts e5pense B<,<<< )llowance for ba ebt B<,<<<
;1. (he lan account was ebite for P0<<,<<< on =arch 01, .<<; for an a,oining piece of
lan which was ac!uire in e5change for 18,<<< shares of Power Pla" 2orp.>s own stoc?
with a par +alue of P1<. )t the time of the e5change, the shares were selling at P.3.
(ransfer an legal fees of P.<,<<< were pai an charge to Professional 'ees.
(he a,usting entr" is
4ebit 2reit
a. :an 13<,<<< Premium on capital
stoc?
13<,<<<
b. :an 19<,<<< 2apital stoc?
2ash
18<,<<<
1<,<<<
c. :an B<,<<< Professional fees
Premium on capital
stoc?
.<,<<<
9<,<<<
. :an .<,<<< Professional fees .<,<<<
;.. Nou complete "our fle wor? for .<<; on )pril 1<, .<<B. Cefore issuance of "our auit
report on )pril .8, .<<B, "ou were a+ise that on )pril 18, .<<B a large recei+able from
a customer who is facing ban?ruptc" was written oE as uncollectible. What shoul "ou
o about this fact?
a. isclose the loss in the .<<; statements
b. a,ust the .<<; fnancial statements
c. ate "our report )pril 1<, .<<B
. ta?e up the loss in the .<<B statements
PRAC"ICA. ACC$&N"IN= 1
;0. In .<<B, Paul I"permar?et awars lo"alt" points to customers who use Paul
I"permar?et>s own creit car to pa" for purchases. (he awar is at the rate of one point
for e+er" P.8< charge to the car an each point entitles the customer to a certain
creit against future purchases, without time limit. Paul I"permar?et estimates the fair
+alue of each point at P3 an in .<<B, P.8<,<<<,<<< is charge to the Paul
I"permar?et>s creit car. #one of the customers ha+e claime their corresponing
creit points uring .<<B.
(he amount to be reporte as re+enue for .<<B b" Paul I"permar?et is
a. P.8<,<<<,<<< b. P.31,<<<,<<< c. P.39,<<<,<<< . P.38,<<<,<<<
Gse the following information for numbers ;3 an ;8
Pn Lanuar" 1, .<<9 :u?e 2ompan", a fnancial ser+ices entit" which is also in+ol+e in real
estate e+elopment, has purchase a plot of lan in =a?ati 2it" for P.,<<<,<<< which it
intens to e+elop an e+entuall" sell. Pn Lul" 1, .<<9, :u?e 2ompan" purchase 1<
passenger +ehicles for a total consieration of P.,8<<,<<<. :u?e 2ompan">s intention was to
use the passenger +ehicles to transport :u?e 2ompan">s emplo"ees. :u?e 2ompan" uses
the straight-line epreciation metho for the passenger +ehicles with no e5pecte sal+age
+alue an an estimate useful life of B "ears.
Pn 4ecember 01, .<<;, :u?e 2ompan" entere in a lease agreement with Lohn 2ompan" for
its lan in =a?ati 2it" an its passenger +ehicles. 4e+elopment cost incurre until
4ecember 01, .<<; was P;<<,<<<. (he fair +alues of the lan in =a?ati 2it" an the 1<
passenger +ehicles were P.,18<,<<< an P.,1B1,.8< respecti+el". )ssets classife b" :u?e
2ompan" as in+estment properties are presente at fair +alue.
)t the en of .<<B, the fair +alues of lan an 1< passenger +ehicles were 0,1<<,<<< an
P.,.<1,.8< respecti+el".
;3. (he gain (loss) to be reporte in .<<; in relation to the reclassifcation to in+estment
propert" is
a. < b. 18<,<<< c. .8<,<<< . 3<<,<<<
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;8. (he re+aluation surplus balance at 4ecember 01, .<<B is
a. < b. 18<,<
<<
c. 088,8
;;
. 3B.,8
<<
;9. Cefore "ear-en a,usting entries, Cass 2ompan"Rs account balances at 4ecember 01,
.<<1, for accounts recei+able an the relate allowance for uncollectible accounts were
P8<<,<<< an P38,<<<, respecti+el". )n aging of accounts recei+able inicate that
P9.,8<< of the 4ecember 01 recei+ables are e5pecte to be uncollectible. (he net
reali-able +alue of accounts recei+able after a,ustment is
a.P3B.,8<<. b. P30;,8<<. c. P01.,8<<. . P388,<<<.
;;. Isaac 2o. assigne P8<<,<<< of accounts recei+able to 4i5on 'inance 2o. as securit" for a
loan of P3.<,<<<. 4i5on charge a .@ commission on the amount of the loan; the
interest rate on the note was 1<@. 4uring the frst month, Isaac collecte P11<,<<< on
assigne accounts after eucting P0B< of iscounts. Isaac accepte returns worth
P1,08< an wrote oE assigne accounts totaling P0,;<<.
(he amount of cash Isaac recei+e from 4i5on at the time of the transfer was
a. P0;B,<<<. b. P31<,<<<. c. P311,9<<. . P3.<,<<<.
;B. Pn Lune 1, .<<B, Pslo 2orp. sol merchanise with a list price of P18,<<< to =ea on
account. Pslo allowe trae iscounts of 0<@ an .<@. 2reit terms were .718, n73< an
the sale was mae f.o.b. shipping point. Pslo prepai P0<< of eli+er" costs for =ea as
an accommoation. Pn Lune 1., .<<B, Pslo recei+e from =ea a remittance in full
pa"ment amounting to
a. PB,.0. b. PB,8.9. c. PB,80.. PB,01;.
;1. In Lanuar" .<<B, Len?s =ining 2orporation purchase a mineral mine for P3,.<<,<<< with
remo+able ore estimate b" geological sur+e"s at 0,<<<,<<< tons. (he propert" has an
estimate +alue of P3<<,<<< after the ore has been e5tracte. Len?s incurre P1,18<,<<<
of e+elopment costs preparing the propert" for the e5traction of ore. 4uring .<<B,
03<,<<< tons were remo+e an 0<<,<<< tons were sol. 'or the "ear ene 4ecember
01, .<<B, Len?s shoul inclue what amount of epletion in its cost of goos sol?
a. P30<,99; b. P0B<,<<< c. P318,<<< . P891,<<<
B<. 4own 2o. bought a traemar? from 2ater 2orp. on Lanuar" 1, .<<B, for P11.,<<<. )n
inepenent consultant retaine b" 4own estimate that the remaining useful life is 8<
"ears. Its unamorti-e cost on 2aterRs accounting recors was P89,<<<. 4own ecie to
write oE the traemar? o+er the ma5imum perio allowe. Iow much shoul be
amorti-e for the "ear ene 4ecember 01, .<<B?
a. P1,1.<. b. P1,3<<. c. P.,.3<. . P.,B<<.
Gse the following information for !uestions B< an B1
Pn Lanuar" ., .<<B, Iernane-, Inc. signe a ten-"ear non-cancelable lease for a hea+" ut"
rill press. (he lease stipulate annual pa"ments of P;<,<<< starting at the en of the frst
"ear, with title passing to Iernane- at the e5piration of the lease. Iernane- treate this
transaction as a capital lease. (he rill press has an estimate useful life of 18 "ears, with
no sal+age +alue. Iernane- uses straight-line epreciation for all of its plant assets.
)ggregate lease pa"ments were etermine to ha+e a present +alue of P3.<,<<<, base on
implicit interest of 1<@.
B1. In its .<<B income statement, what amount of interest e5pense shoul Iernane- report
from this lease transaction?
a. P<. b. P.9,.8< c. P08,<<<. . P3.,<<<.
B.. In its .<<B income statement, what amount of epreciation e5pense shoul Iernane-
report from this lease transaction?
a. P;<,<<<. b. P39,99;. c. P3.,<<<. . P.B,<<<.
B0. Pn Pctober 01, .<<B, Ceta 2ompan" engage in the following transactions$
Pbtaine a P8<<,<<<, si5-month loan from 2it" Can?, iscounte at 1.@. (he compan"
plege P8<<,<<< of accounts recei+able as securit" for the loan.
'actore P1,<<<,<<< of accounts recei+able without recourse on a non notifcation basis
with I"pe 2ompan". I"pe charge a factoring fee of .@ of the amount of recei+ables
factore an withhel 1<@ of the amount factore.
What is the total cash recei+e from the fnancing of recei+ables?
a. P1,0.<,<<< b. P1,08<,<<< c. P1,0B<,<<< .
P1,3;<,<<<
B3. (he closing in+entor" of Hanhi 2ompan" amounte to P.B3,<<< at 4ecember 01, .<<B.
(his total inclues two in+entor" lines about which the in+entor" ta?er is uncertain.
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Item 1- 8<< items which ha cost P18 each an which were inclue at P;,8<<.
(hese items were foun to ha+e been efecti+e at the balance sheet ate.
&emeial wor? after the balance sheet ate cost P1,B<< an the" were then
sol for P.< each. %elling e5penses were P3<<.
Item .- 1<< items that ha cost P1< each but after the balance sheet ate, these
were sol for PB each with selling e5penses of P18<.
What fgure shoul appear in Hanhi>s balance sheet for in+entor"?
a. P.B0,98< b. P.B0,18< c. P.B3,<<< .
P.B3,0<<
B8. In reconciling the 2ash in ban? of Nna 2ompan" with the ban? statement balance for the
month of #o+ember .<<B, the following ata are summari-e$
Coo? ebits for #o+ember, incluing Pctober 2= for note collecte,
P9<,<<<
P
B<<,<<<
Coo? creits for #o+ember, incluing #%' of P.<,<<< an ser+ice charge of
PB<< for Pctober 9.<,<<<
Can? creits for #o+ember incluing 2= for #o+ember for ban? loan of
P1<<,<<< an Pctober eposit in transit for PB<,<<< ;<<,<<<
Can? ebits for #o+ember incluing Pctober outstaning chec?s of
P1;<,B<< an #o+ember ser+ice charge of P.<< 9<<,<<<
What is the amount of outstaning chec?s for #o+ember ?
a. P .<,<<< b. P1;<,.<< c. P1;1,<<< .
P111,<<<
PRAC"ICA. ACC$&N"IN= 2
B9. &oel, Le?ell an =i?e, 2P)s, ecie to form a partnership an agree to istribute profts in
the ratio 8$0$.. It is agree, howe+er, that &oel an Le?ell shall guarantee fees from their
own clients of P9<<,<<< an P8<<,<<< respecti+el", that an" efcienc" is to be charge
irectl" against the account of the partner failing to meet the guarantee, an that an"
e5cess is to be creite irectl" to the account of the partner with fees e5ceeing the
guarantee. 'ees earne uring .<53 are classife as follows$
'rom clients of &oel P1,<<<,<<<
'rom clients of Le?ell 3<<,<<<
'rom clients of =i?e 1<<,<<<
Pperating e5penses for .<53 are P.<<,<<<. 4etermine the share of &oel on the
operating results for the "ear .<53.
a. P1<<,<<< b. P8<<,<<< c. P.<<,<<< . P0<<,<<<
B;. 2aine, Psman, an &oberts forme a partnership on Lanuar" 1, .<53, agreeing to
istribute profts an losses in the ratio of original capitals. Priginal in+estments were
P9.8,<<<, P.8<,<<< an P1.8,<<< respecti+el". Aarnings of the frm an rawings b"
each partner for the perio .<53-.<59 follows$
Dra)ing! >
Net incoe /lo!!2 Caine $!an
Ro+ert!
.<53 P33<,<<< P18<,<<< P;B,<<< P8.,<<<
.<58 1B8,<<< 18<,<<< ;B,<<< 8.,<<<
.<59 ( 1<8,<<<) 1<<,<<< 8.,<<< 8.,<<<
)t the beginning of .<5;, 2aine an Psman agree to permit &oberts to withraw
from the frm. %ince the boo?s for the frm ha ne+er been auite, the partners agree
to an auit in arri+ing at the settlement amount. In withrawing, &oberts was allowe to
ta?e certain furniture an was charge P18,<<<, although the boo? +alue was P38,<<<;
the balance of &oberts> interest was pai in cash.
(he following items were re+eale in the course of the auit.
End o9 20x< End o9 20x4 End o9
20x8
Gnerstatement of accrue e5penses P 3,<<< P 8,<<< P 9,8<<
Gnerstatement of accrue re+enue .,8<< 1,<<<
1,8<<
P+erstatement of in+entories 18,<<< .<,<<<
.<,<<<
Gnerstatement of epreciation e5pense
Pn assets still hel 1,8<< 0,8<< .,<<<
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Iow much must &oberts recei+e from the partnership?
a. P811,.8< b. P189,8<< c. P18,.8< . P11,.8<
BB. )t the beginning of .<<B, % 6ieo establishe a V2 Cranch an a =2 Cranch in orer to
pro+ie wier istribution of its merchanise. =erchanise is transferre to the branches
at a pric 0<@ abo+e cost. )ll branch merchanise is ac!uire from the home oFce. )t
the en of .<<B, the V2 Cranch an the =2 Cranch reporte net income an ening
in+entor" balances as follows$
Net incoe Ending inventor?
V2 Cranch P38,8<<
P98,<<<
=2 Cranch 8.,<<< ;B,<<<
(he "ear-en balances in the home oFce account>s allowance for unreali-e gross
margin in branch in+entor" are P 3B,;8< for the V2 Cranch an P8B,8<< for the =2
branch.
(he income from Cranch, home oFce shoul recor is$
a. P1;1,;8< b. P1;,8<< c. P10<,8<< . P;3,.8<
B1. Pn Lanuar" 1, .<<B, )shle" 2orp. purchase ;8@ of the common stoc? of &ac?s 2orp.
%eparate balance sheet ata for the companies at the combination ate are gi+en below$
)shle" &ac?s
2ash P B3,<<< P ;.1,<<<
(rae &ecei+able 8<3,<<< 11,<<<
=erchanise In+entor" 39.,<<< 100,<<<
:an .;0,<<< 11.,<<<
Plant )ssets .,38<,<<< 1,<8<,<<<
)ccumulate 4epreciation (B3<,<<<) (.1<,<<<
)
In+estment in &ac?s 1,0;.,<<<
(otal )ssets P3,0<8,<<< P1,B1;,<<<
)ccounts Pa"able P ;.1,<<< P
31;,<<<
2apital %toc? .,B<<,<<< 1,<8<,<<
<
&etaine Aarnings ;B3,<<< 08<,<<
<
(otal A!uities P3,0<8,<<< P
1,B1;,<<<
)t the ate of combination the boo? +alues of &ac?s net assets was e!ual to the fair
+alue of the net assets e5cept for &ac?>s in+entor" which has a fair +alue of P.1<,<<<.
Pn the ate of ac!uisition in the consoliate balance sheet$
Iow much is the total assets?
a. P 0,800,.8< b. P3,1B3,<<< c. P 9,830,.8< . P
8,1;1,.8<
1<. (he following ata pertaine to Pogi 2ompan">s construction ,obs, which commence
uring .<<B$
P&PLA2( 1 P&PLA2( .
2ontract Price P3.<,<<< P0<<,<<<
2ost incurre uring .<<B .3<,<<< .B<,<<<
Astimate cost to complete 1.<,<<< 3<,<<<
Cille to customers uring .<<B 18<,<<< .;<,<<<
&ecei+e from customers uring .<<B 1<,<<< .8<,<<<
If Pogi compan" use the percentage of completion metho, what amount of proft (loss)
woul Pogi 2ompan" report in its .<<B income statement?
a. P(.<,<<<) c. P..,8<<
b. P.<,<<< . P3<,<<<
11. Pn )pril 1, .<<B, &ingo 2orp. entere into franchise agreement with Vuart 2orp. to sell
their proucts. (he agreement pro+ies for an initial franchise fee of P3,.1B,;8< pa"able
as follows$ P1,1B1,.8< cash to be pai upon signing of the contract an the balance in
f+e e!ual annual pa"ment e+er" 4ecember 01, starting at the en of .<<B. &ingo signs
1.@ interest learning note for the balance. (he agreement further pro+ies that the
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franchise must pa" a continuing franchise fee e!ual to 8@ of its monthl" gross sales. Pn
)ugust 0< the franchisor complete the initial ser+ices re!uire n the contract at a cost
of P1,08<,<<< an incurre inirect costs of P.0.,8<<. (he franchise commence
business operations on %eptember 0, .<<B. (he gross sales reporte to the franchisor
are %eptember sales, P11<,<<<; Pctober sales, P1.8,<<<; #o+ember sales P10B,<<<; an
4ecember sales, P181,<<<. (he frst installment pa"ment was mae on ue ate.
)ssume the collecti+it" of the note is reasonabl" assure. In its income statement for the
"ear ene 4ecember 01, .<<B how much is the reali-e gross proft?
a. P.,B9B,;8< b. P.,109,..8 c. P.,B18,08< .
P0,19B,;.8
1.. (he trustee for Lohn 2orp. prepares a statement of aEairs which shows that unsecure
creitors whose claims total P 83<,<<< ma" e5pect to recei+e appro5imatel" P 3<8,<<< if
assets are sol for the beneft of creitors.
a. 4anielle 2orp. hols a note for P..,8<< on which interest of P1,08< is accrue,
propert" with a boo? +alue of P1B,<<< an a reali-able amount of P .;,<<< is
plege on the note.
b. &anolph, an emplo"ee is owe P9,;8< for his salar".
c. Caltimore 2orp. hols a note of P83,<<< on which interest of P.,;<< is
accrue, securities with a boo? +alue of P 8B,8<< an a reali-able amount of
P38,<<< is plege on the note.
. #ic? 2orp. hols a note for P1,<<< on which interest of P8<< is accrue,
nothing has been plege for the note.
Iow much ma" each of the following creitors recei+e? 4anielle 2orp; &anolph 2orp;
Caltimore 2orp.; #ic? 2orp., respecti+el".
a. P .;,<<< ; P8,<90; P80,;;8 ; P < c. P.;,<<< ; P9,;8<; P89,;<< ; P <
b. P .0,B8<; P 9,;8<; P89,;<<; P;,1.8 , P.0,B8<; P9,;8<; P80,;;8 ; P
;,1.8
10. (he following information was ta?en from I 2ompan">s accounting recors for the "ear
4ecember 01, .<<B$
Increase in raw materials in+entor" P 18,<<<
4ecrease in fnishe goos in+entor" 08,<<<
&aw materials purchase 30<,<<<
4irect labor cost .<<,<<<
'actor" o+erhea control .9<,<<<
'reight-in 38,<<<
(here was no wor? in process in+entor" at the beginning or en of the "ear. I>s .<<B
cost of goos sol is if 'PI is applie at 13<@ of labor costs$
a. P18<,<<< b. P198,<<< c. P1;8,<<< . P118,<<<
13. 2 2ompan" has unerapplie factor" o+erhea of P38,<<< for the "ear ene 4ecember
01, .<<B. Cefore isposition of the unerapplie o+erhea, selecte 4ecember 01, .<<B,
balances from 2>s accounting recors are as follows$
%ales P1,.<<,<<<
2ost of goos sol ;.<,<<<
In+entories$
4irect materials 09,<<<
Wor? in process 83,<<<
'inishe goos 1<,<<<
Gner 2>s cost accounting s"stem, o+er D or unerapplie o+erhea is allocate to
appropriate in+entories an cost of goos sol base on "ear D en balances. In its .<<B
income statement, 2 shoul report cost of goos sol of
a. P9B.,8<< b. P9B3,<<< c. P;89,<<< . P;8;,8<<
18. 6ioleta compan" as materials at the beginning of the process in 4epartment ).
Information concerning the materials use in )pril .<<B is as follows$
Gnits
Wor? in process )pril TTTTTTTTTTTTTTTTTT............... P1<,<<<
%tarte uring )prilTTTTTTTTTTTTTTTTTTTTTTTT.. 8<,<<<
2omplete W (ransferre to the ne5t epartment uring )prilTTTT. 09,<<<
#ormal spoilage incurreTTTTTTTTTTTTTTTTTTTTTT 0,<<<
)bnormal spoilage incurreTTTTTTTTTTTTTTTTTTTTT 8,<<<
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Wor? in process at )pril 0<TTTTTTTTTTTTTTTTTTTTT. 19,<<<
Gner 6ioleta>s accounting s"stem, the cost of normal spoilage are treate as part of the
cost of goo units prouce. Iowe+er, the cost of abnormal spoilage is charge to
factor" o+erhea. Gsing weighte a+erage metho, what are the e!ui+alent units for the
materials unit cost calculation for the month of )pril?
a. 3;,<<< b. 8.,<<< c. 88,<<< . 8;,<<<
19. )genc" =a?aba"an recei+e #otice of 2ash )llocation (#2)) D P38,<<<,<<< for the "ear
.<<B, the entr" woul be$
a. #o entr"
b. =emoranum entr" in &egistr" of )llotments
c. #ational 2learing )ccount 38,<<<,<<<
)ppropriation )llote 38,<<<,<<<
. 2ash-#ational (reasur", =4% 38,<<<,<<<
%ubsi" Income from #ational go+ernment 38,<<<,<<<
1;. %a+e the Planet, a pri+ate nonproft research organi-ation, recei+e a X8<<,<<<
contribution from =s. %usan 2lar?. =s. 2lar? stipulate that her onation be use to
purchase new computer e!uipment for %a+e the Planet>s research staE. (he contribution
was recei+e in )ugust of .<<1, an the computers were ac!uire in Lanuar" of .<<.. 'or
the "ear ene 4ecember 01, .<<1, the X8<<,<<< contribution shoul be reporte b"
%a+e the Planet on its
a. %tatement of acti+ities as unrestricte re+enue.
b. %tatement of acti+ities as eferre re+enue.
c. %tatement of acti+ities as temporaril" restricte re+enue.
. %tatement of fnancial position as eferre re+enue.
1B. Pn Lanuar" 1, .<50, Pi?e 2ompan" purchase B<@ of the outstaning +oting shares of
%wor compan" for PB<<,<<<. Pn that ate, %wor ha P0<<,<<< of capital stoc? an
P9<<,<<< of retaine earnings. )ll assets an liabilities of %wor ha boo? +alues
appro5imatel" e!ual to their fair mar?et +alues. Hoowill, if an", is not amorti-e. Pi?e
uses the complete e!uit" metho to account for its in+estment in %wor.
Pn )pril 1, .<50, Pi?e sol e!uipment with a boo? +alue of P3<,<<< to %wor for P9<,<<<.
(he e!uipment is e5pecte to ha+e a useful life of f+e "ears from the ate of the sale
an no sal+age +alue. %wor will use straight-line epreciation. 'or "ear .<50, %wor
reporte net income of P.<<,<<< an pai i+iens of P3<,<<<.
4etermine the income from in+estment uner the complete e!uit" metho.
a. P130,<<< b. P133,<<< c. P190,<<< . P111,<<<
11. P 2ompan" owns controlling interests in % an ( 2orporations, ha+ing ac!uire an B<
percent interest in % in .<51 an a 1< percent interest in ( on Lanuar" 1, .<5.. P>s
in+estments in % an ( were at boo? +alue e!ual to fair +alue.
In+entories of the aFliate companies at 4ecember 01, .<5. an 4ecember 01,
.<50 were as follows$
Dece+er 11@ 20x2 Dece+er 11@ 20x1
P in+entories P9<,<<< P83,<<<
% in+entories 0B,;8< 01,.8<
( in+entories .3,<<< 09,<<<
P sells to % at a .8 percent mar?up base on cost, an ( sells to P at a mar?up of .<
percent. P>s beginning an ening in+entories for .<50 consiste of 3<@ an 8<@,
respecti+el", of goos ac!uire from (. )ll of % in+entories consiste of merchanise
ac!uire from P.
(he in+entor" that shoul appear in the 4ecember 01, .<50 consoliate balance
sheet shoul amount to$
a. P1<1,9<< b. P1<9,<<< c. P11<,8<< . P1.1,.8<
1<<. In "ear .<5B, a 1< percent-owne subsiiar" sol lan to its parent at a gain. (he
parent still owns the lan. In the consoliate balance sheet at 4ecember 01, .<51, the
minorit" interest in the subsiiar" shoul be shown at$
a. 1< percent of the subsiiar">s total e!uit".
b. 1< percent of the subsiiar">s total e!uit" less 1< percent of the gain on the lan sale.
c. 1< percent of the subsiiar">s total e!uit" plus 1< percent of the gain on the lan sale.
. 1< percent of the subsiiar">s total e!uit" less 1<< percent of the gain on the lan
sale.
END $F E;AMINA"I$N'
=$$D.&CABBB
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