Professional Documents
Culture Documents
Set A
PARSON
P1, 800,000
3,000, 000
(1,100,000)
( 600.000)
( 400,000)
( 800,000)
(1,900,000)
BOOK VALUE
P 975,000
1,300,000
300,000
(800,000)
(400,000)
(200,000)
(775,000)
SONAR
FAIR VALUE
P 1,025,000
1,400,000
280,000
800,000
530,000
On the consolidated balance sheet after acquisition, how much will be the additional paid in capital of the controlling
interest, assuming that all the requirements for pooling of interest, have been met?
A.
B.
C.
D.
P 1,000,000
P 1,200,000
P 1, 160,000
P 800,000
39. The following information pertains to a river- control project or Rathaus Konstrukt Inc. In Tabuk, Kalinga which
was commented in 19X3 and completed the following year:
Cost incurred to date
At June 30, 19X3
P 9, 750,000
At June 30, 19X4
15, 750,000
Estimated total cost
At completion
At June 30, 19X3
19,500,000
At June 30, 19X4
20,250,000
The project is a P22,500 fixed- price construction contract and Rathaus uses the percentage- of completion method
of accounting. What is the income reported by Rathaus on its Kalinga project on June 30, 19X4?
A. P 750, 000
b. P 1, 500,000
C. P 1, 750,000
D. P 250, 000
40. Ovid company makes use of the two-way analysis of overhead variances. Ovids budgeted factory overhead for
fixed costs is p 1,200,000 per month, plus a variable factory overhead rate of P96 for every direct labor hour. The
standard direct labor hours allowed for May, 19X 6 productions are 432,000 hours. An analysis of the factory
overhead showed that, in May, Ovid had an unfavourable budget (controllable) variance of P24,000 and a favorable
volume balnce of P 12,000. What is the applied factory overhead in May?
A.
B.
C.
D.
P5, 371,200
P5, 359, 200
P5, 335, 200
P5, 347, 200
41. Paradim Co. recently paid P5,000,000 cash for the net assets of Supreme Co. which had a book value of P
5,000,000 of P4, 000,000 . The book values of the assets and liabilities approximate their fair values except as
noted below.
BOOK VALUE
Inventory.............................
.P 400,000
Land......................................
300,000
Building and equipment, net...............1,400,000
FAIR VALUE
P 450,000
500,000
1,550,000
68. Which of the two methods ( the present of the automated has higher income at the level of sales of 26,000
units?
a. Present, P 60,000
b. Automated P60,000
c. Present, P 240,000
d. Automated, P 240,000
69. A fira has the following capital structures : 70 debt and 320 equity interest rate on debt is 12 and on common
stock is 14 if the weighted average cost of the capital is 9.66 then what is the marginal tax rate?
a. 350
b. 400
c 600
d. 650
70. Samantha Manufacturing recently completed and sold an order of 50 units that had the following costs:
Direct materials
P1, 500
Direct labor
8,500
Variable overhead
4,000
Fixed overhead
1,400
TOTAL
P 15,400
Applied on the basis of direct labor hours.
Applied at the rate of 10 of variable cost.
The company has now been requested to prepare a bid order for another set of 50 units of the same product.
If an 80 learning curve were applied, Samanthas total cost on this order would be estimated at
a. P 6,400
b. P 8,600
c. P 9,900
d. P 15,400
47. Timepieces Company manufactures and sells watches that carry a 2- year unconditional warranty against
product failure. Based on a reliable statistical, timepieces knows that between the sale and the lapse of the product
warranty; 10% of units sold will require an average cost of P 250 per unit for repairs. The following data reflect the
recent experience of the company for the past 3 years.
Number of units sold
Number of units repaired:
2008
2009
2010
2008
6,000
80
2009
8,500
150
2010
10,000
200
250
350
400
2, 5000,000
5,600,000
1,000,000
800,000
200,000
1,500,000
400,000
300,000
75,000
75,000
500,000
The entire amount of P 950,000 was charged to rent expense in 2010 . Monthly rentals were paid as scheduled from
August to December 31, 2010 under the operating lease?
a. 530,000
b. 500,000
c. 125,000
d. 450,000
50. Brisbane company reported the following information for 2010 Sales revenue of P 2,800,000 cost of goods sold
of P 1,000,000, distribution costs of P 400,000, administrative expenses of P 350,000, depreciation of P 250,000,
interest expense of P 80,000 and income tax expense of P 280,000. All sales were made for cash and all expenses
other than depreciation and bond premium amortization of P 20,000 were paid in cash. All current assets and
current liabilities remained unchanged. What is the net cash provided by operating activities during 2010?
a. 440, 000
b. 690,000
c. 670,000
d. 710. 000
PRACTICAL ACCOUNTING PROBLEMS
1. Understatement of 2009 warranty cost
ANSWERS
600,000 A
600,000
500,000
1,100,000 B
3.
Perpetual
Periodic
Unadjusted balances
Unrecorded sales
Goods sold FOB SP
Goods sold FOB destination
Goods held on consignment
Goods purchased FOB Dest (arrived)
Obsolete inventory
Adjusted inventory
3,600,000
(200,000)
(500,000)
(150,000)
3,450,000
400,000
(150,000)
(, 100,000)
3,360.000
(500,000)
(150,000)
300,000
3,300,000 D
4.
Fair value of share alternative 60,000X35)
Less. Fair value of cash alternative (30,000 X 50)
Grant date fair value of equity component
2009
FV of equity component (60,000//3)
FV of liability component (30,000X 60/ 3)
Compensation expense
2010
FV equity component (60,000/3)
Fair value of liability component (30,000X75)/ 3X2) 600,000
Compensations expense
2,100,000
1,500,000
600,000
1,5000,000
4,000,000
5,600,000
3,100,000 B
6. net investmen
Less: PV of GRV (500,000 x.58)
Net Investment to be recovered from rentals
Rentals (3,924,000/4.36)
Gross investment (900,000x6)+ 500,000 residual value
Less : Net Investment
Financial revenue
4,204,000
280,000
3,924,000
900,000
5,900,000
4,204,000
1,696,000 B
700,000
10%
7,000,000
5,500,000
1,500,000 C
10,600,000
10,300,000
300,000
200,000
600,000
800,000
200,000
900,000
1,100,000 C
(1,500,000)
(1,000,000)
1,200,000
(1,300,000) D
1,200,000
500,000
(800,000)
900,000
(200,000)
(600,000)
350,000
450,000 B
400,000
1,000,000 C
225
300,000
800,000
1,600,000
4,800,000
7,500,000
Accounts payable
Bonds payable
Total liabilities
400,000
700,000
1,100,000
3,000,000
3,550,000 B
750,000
6,400,000
9,000,000
2,250,000
6,750,000
5,250,000
1,500,000
450,000
1,050,000
105,000
945,000 A
25%
650,000 B
15. cost
Less: Accumulated depreciation (3M x 10% x 3)
Carrying amount 1/1/10
2010 Depreciation (2.6 M-500)x 7/28) (7 years remaining)
3,500,000
900,000
2,600,000
525,000 D
5,200,000 B
580,000
600,000
1,350,000
290,000
200,000
140,000
3,160,000 A
5,950,000 B
13,500,000
500,000
14,000,000
1,200,000
11.67 C
1,900,000 A
10,400,000
2,000,000
8,400,000
210,000
4000 A
3,500,000
(1,000,000)
(800,000)
1,700,000
1,500,000
(1,000,000)
(800,000)
2,500,000
2,200,000
(1,500,000)
1,700,000
(1,300,000)
(1,100,000) B
800,000
1,400,000
300,000
2,500,000C
800,000
1,000,000
1,800,000 A
4,000,000
300,000
3,700,000 A
26. Proceeds
Cash Surrender Value
Unexpired Insurance premium (90,000/ 12 x 2)
Gain
3,000,000
(145,000)
(15,000)
2,840,000 B
1,200,000 C
3,000,000 B
2,100,000 B
1,250,000
200,000
(80,000)
25,000
(75,000)
(36,000)
1,284,000
3,000,000
2,000,000
1,000,000
6,000,000
6,000,000
2,000,000
8,000,000
5,000,000
3,000,000 B
2,000,000
600,000
(800,000)
(2,000,000)
(150,000)
4,350,000 B
35. Cost
Less: 2006 and 2009 amortization (5M/ 5 x 2) ( Lease term)
Carrying amount 12/31/09
5,000,000
2,000,000
3,000,000
750,000
2,250,000 A
3,220,000 A
37. Collections
Rent receivable and
White off
Total
Less: Rent receivable beginning
Rental revenue-accrual
5,000,000
400,000
50,000
5,450,000
700,000
4,750,000B
1,250,000
850,000
400,000 B
39. B=552,250-10B
1,108=550,000
Bonus =(550.000/1.10)
500,000 B
1,200,000
2,400,000
1,200,000
2,800,000 A
24%
41. BI
Net purchases
TGAS
Less: Adjusted EI (600,000 + 80,000)
COS
500,000
5,300,000
5,800,000
680,000
5,120,000 A
10,000
1,200,000
500,000
700,000
1,200,000
(700,000)
500,000
1,500,000
10,000
150 B
5,600,000
5,248,700
251,300 A
6,200,000
(2,500,000)
(2,400,000)
1,300,000 B
6,600,000
5,600,000
1,000,000
6,000,000
7,000,000 A
23,000 C
212,500
62,500
150,000
250,000
400,000
167,500
212,500 D
4,000,000
(1,800,000
200,000
2,400,000
1,600,000 B
2,500,000
(1,500,000)
(400,000)
2,400,000
450,000
50,000
500,000 B
670,000 C
100,000 B
PROBLEM I
The following information was obtained in the audit of the cash account of CHELSEE COMPANY as of December
31, 2010. Assume that the CPA satisfied himself as to the propriety of the cash book the bank statements and the
returned checks, except as noted:
1. The bookkeepers bank recon dilation at November 30, 2010
Balance per bank statement
P 194,000
Add: Deposit in transit
11,000
Total
P 205,000
Less: Outstanding checks
No. 1434
P 1,400
1562
7,500
1571
5,800
1584
8,000
1591
300
Balance per books
23,000
P182,000
Age of Accounts
0-30 days
31-60 days
61-90 days
91-120 days
Over 120 days
Rate
1%
1.5%
3%
10%
50%
The allowance for bad debts account had a debit balance of P5,500 on December 31, 2010 before adjustment.
6. The companys accounts receivable under 61-90 days category should be
a. P 32,600
b. P44,320
c. P 44,600
d. P 42,000
7. The companys accounts receivable under 91-120 category should be
a. P 38,320
b. P 40,000
c. P 29,400
d. P 12,000
8. The allowance for bad debts to be reported on the statement on financial position at December 31, 2010 is
a. P 9,699
b. P 15, 199
c. P 4,199
d. P5, 500
9. What entry should be made on December 31, 2010, to adjust the allowance for bad debts account?
a. Bad debt expense
15,199
Allowance for bad debts
15,199
b. Bad debt expense
4,199
Allowance for bad debts
4,199
c. Allowance for bad debts
5,500
Bad debts expense
5,500
d. Bad debt expense
9,699
Allowance for bad debts
9,699
PROBLEM NO. 3
The MALAWI COMPANY is an importer and wholesaler. Its merchandise is purchased from a number of suppliers
and is warehoused until sold to consumers.
In conducting his audit for the year ended December 31,2010, the company CPA determined that the system of
internal control was good. Accordingly, he observed the physical. Inventory at an interim date, November 30, 2010 ,
instead of at year end.
The following information was obtained from the general ledger.
Inventory, January 1, 2010
Inventory, November 30, 2010
Sales for eleven months ended November 30, 2010
Sales for year ended December 31, 2010
P 90,000
225,000
800,000
950,000
Purchases for eleven months ended November 30,2010 (before audit adjustments)
Purchases for year ended December 31, 2010 (before audit adjustment)
720,000
810,000
10,000
14,000
5,000
7,000
18,500
20,000
3,000
12,000
18,500
7,000
4,000
11. What is the correct amount of net purchases for the month of December 2010?
a. P83,000
b. P91,500
c. P82,500
d. P101,500
12. The correct inventory on November 30, 2010 is
a. P206,500
b. P214,500
c. P237,000
d. P218,500
13. What is the gross profit for eleven months ended November 30, 2010?
a. P234,000
b. P217,000
c. P224,000
d. P237,500
14. What is the cost of sales ratio for eleven months ended November 30, 2010?
a. 73%
b. 70%
c. 28%
d. 72%
15. What is the estimated inventory on December 31, 2010?
a. P183,100
b. P175,900
c. P184,400
d. P190,000
PROBLEM NO. 4
You have been asked by the proprietor of the SOMALIA CO. to verify the accountability of the cashier bookkeeper,
who was allowed to take a vacation leave a few days ago
A. The bank reconciliation statements prepared by the cashier bookkeeper are presented below:
November 30, 2010
Balance per bank statement
Cash on hand
Total
Outstanding checks:
No. 2520
2521
2522
Erroneous bank charge
Erroneous bank credit
Book balance
December 31, 2010
Balance per bank statement
Cash on hand
Total
Outstanding checks
No. 2674
2675
2676
Erroneous bank charge
Erroneous bank credit
Book balance
P 21,500
500
22,000
P2, 000
1,400
1,900
(3,300)
2,000
(500)
P20,200
P 135,000
6,300
141,300
P31, 000
10,300
5,000
(41,300)
3,000
(600)
P 102,400
B. The cash in Bank account in the general ledger shows the following debits and credits during December
Cash in bank
Dec.
Dec.
1balance
P 20,200
1Checks Issued
P2,000
2 Received from customers
4,500
5 Checks Issued
5,200
7 Received from customers
5,000
14 Checks Issued
31,000
12 Received from customers 20,000
24 Checks Issued
46,000
17 Received from customers 30,000
28 Checks Issued
7,600
23 Received from customers
9,000
27 Received from customers 70,000
31 Received from customers 48,500
31balaced
102,400
Total
P198,200
Total
P198,200
C. the following summarized transactions were taken from the bank statements for the months of December 2010.
Balance, December 1, 2010
Total deposits
The total deposits per bank statement include:
a. Collection of notes receivable
P 5,000
b. Correction of November erroneous bank charge
2,000
c. December 10 deposit of Lava, Inc. Credited in error to Somalia
600
Total
P3, 500
16.
17.
18.
19.
20.
D. cash on hand per count in the morning of January 2, 2011 amounted to P 6, 300
E. before leaving his company for a one week vacation, the proprietor had left several signed blank checks
that the cashier bookkeeper had cashed for his personal use.
What is the adjusted cash balance on November 30, 2010?
a.P16,500
b.P13,200
c.P20,200
d.P14,500
The amount of uncounted in December is
a.P11,000
b.P13,200
c.P9,000
d.P15,100
The amount of unrecorded/unsupported disbursements in December is
a.P15,100
b.P10,900
c.P7,000
d.P5,000
What is the total cash shortage as of December 31, 2010?
a.P26,000
b.P15,100
c.P33,000
d.P7,000
What is the adjusted cash balance on December 31, 2010
a.P102,400
b.P125,000
c.P87,400
d.P111,400
Indicators that the assets of the unit were impaired. The carrying amounts of the assets and liabilities of the unit at
December 31, 2010 were:
Buildings
Accumulated depreciation buildings
Factory machinery
Accumulated depreciation machinery
Goodwill
Inventory
Receivables
Allowance for doubtful accounts
Cash
Accounts payable
Loans
- Depreciated at P 600,000 per annum
- Depreciated at P 450,000 per annum
P4, 200,000
(1,800,000)
2,200,000
(400,000)
150,000
800,000
400,000
(50,000)
200,000
300,000
200,000
POTPOT: determined the value use of the unit to be P 5,350,000. The receivables were considered to be collectible,
except those considered doubtful.
During the year 2011, POTPOT increased the depreciation charge on building to P650, 00 per annum, and to P
500,000 per annum for factory machinery. The inventory on hand at January 1, 2011 was sold by the end of the
year, at December 31, 2011, POTPOT Company, due to a retum in the market to use of the traditional barrels for
wines and an increase in wine production, assessed the recoverable amount of the cash generating unit to be P
300,000 greater than the carrying amount of the unit. As a result, POTPOT recognized a reversal of the impairment
loss.
21. What amount of impairment loss on December 31, 2010 should be allocated to inventory?
a.P56,000
b.P 28, 829
c.P32,000
d.P 0
22. What is the factory Machinery net carrying amount (after allocation of impairment kiss) on December
31,2010?
a.P 1, 735, 135
b.P 1, 674, 000
c.P 1,800, 000
d.P 1, 728, 000
23. What amount or reversal of impairment loss should be recognized on December 31, 2011?
a.P 300, 000
b.P 268, 000
c.P 168, 000
d.P 200, 000
24. Assume that the recoverable amount at December 31, 2011 was P 200,000 greater than the carrying
amount of the cash generating unit. What is the net carrying amount of the buildings after recognition of the
impairment recovery?
a.P 1,313, 219
b.P 1, 768, 781
c.P 1, 800, 000
d.P 1,750, 000
25. Assume that the recoverable amount at December 31, 2011 was P 200,000 greater than the carrying
amount of the cast generating unit and that the recoverable amount of the Buildings was P 1,750,000. What
is the next carrying amount of the factory machinery after the recognition of the impairment recovery?
a.P 1,332,000
b.P1,313,219
c.P1,228,000
d.P 1,324,000
Goding , Inc. preference
Sonata Co. ordinary
(30% ownership)
60,000
1,200,000
1,290,000
trading
600,000
34,200,000
33,900,000
investment in
Associate
750,000
2,025,000
1,500,000
BORDO COMPANYS investment had the following market values at December 31, 2010
Omar Co. ordinary
Goding, Inc. preference
Sonata Co. ordinary
Jordan Co. ordinary
P 3,060,000
1,290,000
33,450,000
1,700,000
Assume that all of the above securities were acquired in 2009 and none of the indicated declines in market value
are considered other than temporary.
26. Which of the following should be reported in Bordos 2009 income statement?
a.Unrealized loss of P 60,000
b.Unrealized loss of P 585, 000
c.Unrealized loss of P 200, 000
d.Unrealized loss of P 150, 000
27. What amount of loss in the above securities should be included in Bordos statement of comprehensive
income for the year ended December 31, 2009 as component of other comprehensive income?
a.P 675,000
b.P 465, 000
c.P 585, 000
d.P525,000
28. Assume that Jordan Co.s ordinary shares market decline is other than temporary. What valuation entry is
required for this investment at December 31, 2009 under this change in assumption?
a.Impairment loss
525,000
Investment in AFS securities
525,000
b.Unrealized loss on AFS securities
525,000
Investment in AFS securities
525,000
c.Impairment loss
525,000
Unrealized loss on AFS securities
525,000
d.No valuation entry is necessary
525,000
Assume that the investment categories remain the same and that all declines in 2009 and 2010 are temporary
except for the 2009 decline in Jordan Co.s ordinary shares
29. In its 2009 income statement, Bordo should report
a.Unrealized gain of P 150, 000
b.Unrealized gain of P 410, 000
c.Gain on impairment recovery of P 200, 000
P 127,000
150,000
128,500
You are performing the audit for the year ended December 31,2010. During your examination you discover
the following errors
a. As a result of errors in the physical count, ending inventories were misstate as follows:
December 31, 2009
P14, 000
overstated
December 31, 2010
P23, 000
understated
b. On December 29, 2010. Dominica recorded as a purchase, merchandise in transit which cost P
15,000. The merchandise was shipped FOB Destination and had not arrived by December 31. The
merchandise was not included in the ending inventory.
c. Dominica records sales on the accrual basis but failed to record sales on account made the end of
each year as follows
2008
P4, 000
2009
5,000
2010
3,500
d. The company failed to record accrued office salaries as follows
December 31, 2008
P 10,000
December 31, 2009
14,000
e. On March 1, 2009, a 10% stock dividend was declared and distributed. The par value of the shares
amounted to 10,000 and market value was P 13,000. The stock dividend was recorded as follows
Miscellaneous expense
13,000
Ordinary share capital
10, 000
Retained earnings
3,000
f.
On July 2009, Dominica acquired a three year insurance policy. The three year premium of P6,000
was paid on that date , and entire premium was recorded as insurance expense.
g. On January 1, 2010 Dominica retired bonds with a book value of P 120, 000 for P 106, 000 the gain
was incorrectly deferred and is being amortized over 10 years as a reduction of interest expense on
other outstanding obligations.
31. What is the adjusted net income for the year ended December 31, 2008?
a.P 133,000
b.P 117, 000
c.P121,000
d.P 113, 000
32. What is the adjusted net income for the year ended December 31, 2009/
a.P 151, 000
b.P 187, 000
c.P 104, 400
d.P 203, 600
33. What is the adjusted net income for the year ended December 31, 2010?
a.P129, 600
b.P131,000
c.P 104, 400
d.P 203, 600
34. What adjusting entry should be made on December 31, 2010, to correct the error describe in item B?
a. Purchases
15,000
Accounts payable
15,000
b. Accounts payable
15,000
Purchases
15,000
c. Accounts payable
15,000
Cash
15,000
d. No adjusting journal entry is necessary
35. The adjusting entry on December 31, 2009, to correct the error described in item E should include a debit to
a. Retained earnings of P 16, 000
b. Ordinary share capital of P 10,000
PROBLEM NO. 8
In making the first adult of the Delivery Equipment account of DELTA CORPORATION as of December 31, 2010,
you encounter the following facts.
DATE
PARTICULARS
DEBIT
CREDIT
1/1/08
Tracks 1,2,3, and 4
P3,200,000
3/15/09
Replacement of Truck 3 tires
25,000
7/01/09
Truck 5
800,000
7/10/09
Reconditioning of truck 4, which was damaged in a collision
35,000
9/1/09
Insurance recovery on truck 4 accident
P33,000
10/01/09
Sale of truck 2
600,000
4/01/10
5/2/10
6/30/10
Truck 6
Repainting of truck 1
Truck 7
12/1/10
Accumulated Depreciation
DATE
PARTICULARS
12/31/08
Depreciation expense
12/31/09
Depreciation expense
12/31/10
Depreciation expense
1,000,000
27,000
720,000
150,000
22,000
DEBIT
CREDIT
P300,000
300,000
300,000
Additional information:
1. On July 1,2009, Truck 3 was traded in for a new truck , truck 5 costing P 850,000 the selling party allowed a
P 50, 000 trade in value for the old truck
2. On April 1, 2010, truck 6 was purchased for P 1,000,000; truck 1 and cash of p 850,000 being given for the
new truck
3. You are instructed by the senior in charge of the audit to accept the depreciation rate of 20% by unit basis
4. Unit cost of trucks 1 to 4 is at P 800,000 each
36. The net increase (decrease) in retained earnings should be
a.(P1,102,000)
b.(P545,000)
c.P 80,000
d.(P1,022,000)
37. What is the loss on trade in of Truck No. 3?
a.P430,000
b.P510,000
c.P560,000
d.P0
38. What is the gain on sale of Truck no. 2?
a.P120,000
b.P200,000
c.P80,000
d.P 0
39. What is the loss on trade in of Truck No.1?
a.P290,000
b.P170,000
c.P150,000
d.P 0
40. What is the correct cost of truck No. 5?
a.P850,000
b.P800,000
c.P900,000
d.P560,000
41. What is the correct cost of truck No. 6?
a.P440,000
b.P305,000
c.P800,000
d.P1,000,000
42. What is the correct depreciation expense for 2009?
a.P725,000
b.P305,000
c.P605,000
d.P600,000
43. The entry correct depreciation expense for 2010?
a.P552,000
b.P592,000
c.P712,000
d.P300,000
44. The entry correct the depreciatin charges for the years 2008/through 2010 should include a credit to
accumulated depreciation of
a.P645,000
b.P937,000
c.P900,000
d.P292,000
45. The balance of the Delivery Equipment accounts at December 31, 2010 should be.
a.P5,770,000
b.P3,320,000
c.P4,170,000
d.P3,370,000
PROBLEM NO. 9
The GUNDING Co. is on calendar year basts. The following data were found during your audit.
a. Goods in transit shipped FOB shipping point on December 28 by a supplier in the amount of P 100,000 had
been excluded from the inventory and further testing revealed that the purchase had been recorded.
b. Goods costing P 30, 000 had been received, included in inventory, and recorded as a purchase. However,
upon your inspection the goods were found to be defective and would be immediately returned.
c. Materials costing P170,000 and billed on December 30 at a selling price of P 264,000 had been segregated
in the warehouse of shipment to a customer. The materials had been excluded from inventory as a signed
purchase order had been received from the customer. Terms FOB destination.
d. Goods costing P 70, 000 was out on consignment with Gundara Inc. since the monthly statement from
Gundara listed those materials as on hand, the items had been excluded from the final inventory and
invoiced on December 31 at P 80,000.
e. The sale of P 150,000 worth of materials and costing p 120,000 had been shipped FOB point of shipment on
December 31. However, this inventory was found to be included in the final inventory.
f. Goods costing P 100,000 and selling for P140,000 had been segregated , but not shipped at December 31,
and were not included in the inventory. A review of the customers purchase order set forth terms as FOB
destination. The sale had not been recorded.
g. Your client has an invoice from a supplier, terms FOB shipping point, but the goods had not arrived as yet.
However, these materials costing P134,000 had been included in the inventory count, nut no entry had been
made for their purchase.
h. Merchandise costing p 200,000 had been recorded as a purchase but not included in Inventory. Terms of
sale are FOB shipping point according the supplier warehouse which had arrived by December 31.
Further Inspection of the clients records revealed the following December 31 balances: Inventory, P
1,350,000; Accounts receivable, P 630,000 ; accounts payable, P 690,000; sales P6,032,000; Purchases, P
3, 150,000; Net Income , P727,000.
Based on the preceding information, determine the adjusted balances of the following:
46. Inventory
a.P700,000
b.P934,000
c.P1,900,000
d.P1,840,000
47. Accounts receivable
a.P286,000
b.P380,000
c.P146,000
d.P405,000
48. Purchases
a.P3,354,000
b.P3,150,000
c.P3,254,000
d.P3,120,000
49. Sales
a.P5,848,000
b.P6,376,000
c.P5,683,000
d.P5,768,000
50. Net Income
a.P769,000
b.P569,000
c.P829,000
d.P709,000
PROBLEM 10:
Presented below are COMBANTRIN COMPANYS comparative statements of financial position and income
statements
COMBANTRIN COMPANY
COMPARATIVE STATEMENTS OF FINANCIAL POSITION
December 31, 2010 and 2009
Assets
2010
2009
Cash
P119,000
P98,000
Accounts receivable
312,000
254,000
Inventory
278,000
239,000
Prepaid expenses
35,000
21,000
744,000
612,000
59,000
536,000
409,000
Accumulated depreciation
(76,0000)
(53,000)
519,000
356,000
Total assets
P1,263,000
P968,000
Current assets
P212,000
98,000
10,000
350,000
125,000
475,000
Shareholder equity:
Ordinary share capital
Retained earnings
Total shareholders equity
Total liabilities and shareholders equity
600,000
188,000
788,000
P1,263,000
P198,000
76,000
_________
274,000
__________
274,000
550,000
144,000
694,000
P968,000
COMBANTRIN COMPANY
CONDENSED COMPARATIVE INCOME STATEMENTS
For the Years Ended December 31, 2010 and 2009
Net sales
Cost of goods sold
Gross income
Expenses
Net income
2010
P3, 561,000
2,789,000
772,000
521,000
P251,000
2009
P3, 254,000
2,568,000
686,000
486,000
P200,000
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
b.The contract is enforceable because A did not make a special promise to answer for the default of
another person
c.The contract shall be enforceable if there is ratification by A
d.The contract shall be unenforceable if the value is at least P 500.00
Under the negotiable instruments law to be a holder in due course , the holder must have acquired the
instrument before it is overdue . does this apply to the payee to whom the maker issued an overdue note?
a.Yes, because the payee is still considered a holder
b.Yes, because issuance to the payee is not considered a negotiation
c.No, because the law does not distinguish between payee and subsequent holder
d.No, because the payee is privy to the contract between himself and the maker
In which of the following is demand necessary to make the debtor in delay in the performance of his
obligation?
a.When the time of performance is of the essence
b.When the time of performance has been stipulated
c.When the law so provides
d.When demand would be useless
With written authority from his principal, the agent sold orally the land of the principal. The sale is
a.Rescissible
b.Voidable
c.Uncoforceable
d.Void
Without authority from B, A orally sold Bs house in Bs name. The sale is
a.Rescissible
b.Voidable
c.Uncoforceable
d.Void
S sold B his land on September 19, 2010. On September 25, an absolute deed of sale was executed and
notarized on September 30, the sale was registered with the Registry of Deeds , On October 5, B took
actual possession of the land by building a fence thereon. When did B acquire ownership of the land?
a.On September 19
b.On September 25
c.On September 30
d.On October 5
S sold to B his car on September 19, 2010. On September 25, an absolute deed of sale was executed and
notarized . on September 30, the sale was registered with the LTO. On October 5, B took actual possession
of the car. When did B acquire title to the car?
a.On September 19
b.On September 25
c.On September 30
d.On October 5
A and B are co owners of a percel of land A donated his share to C can B redeem the said share from C?
a.Yes, because the law looks with disfavour at co-ownership
b.No, because legal redemption applies only in case of onerous transfers
c.No, unless he enforce his right through count action
d.Yes, but in proportion to his interest in the land as co-owner
Dowes C a sum of money with M as mortgagor of his land to secure the loan. Is the mortgage valid even if
the mortgagor is not the debtor?
a.Yes, provided M is the absolute owner of the property mortgaged
b.Yes, provided it is in writing and registered
c.No, the mortgagor must be the debtor himself
d.No, unless the mortgagor is a co-debtor
In three of the following case s, the agency cannot be revoked without a just cause except:
a.It is means of fulfilling an obligation already existing
b.A bilateral contract depends upon it
c.It is coupled with interest common to the great and principal
d.Partner is appointed manager in the articles of partnership
P appoints A as guarantee commission agent to sell his products A sold them to B who failed to pay despite
the diligent efforts of A in collecting is A still liable for the purchase price?
a.Yes, because of the guarantee commission given to him
b.No, because he was not at fault in the collection
c.No, if her returns to guarantee commission
d.Yes, but he is not entitled anymore to the commissions
P appointed A1 and A2 as his agents for a common transaction and they agreed that they shall be solidarity
liable for P for damages in case of violations of their obligations as such. What is the agent at fault the only
one liable for damages even if solidarity has been stipulated?
a.If the other agent is not at fault
b.Both of them shall be liable always since solidarity was agreed upon
c.If the one at fault shall answer for all the damages
d.If the one at fault acted in excess of authority
A, B, and C entered into an oral contract of partnership each contributing P2M each of the common fund but
failed to register the partnership with the SEC. In the partnership valid/
a.No, because every contract of partnership having a capital of three thousand pesos or more in money
or property must be in public instrument and registered with the SEC
b.Yes, because public instrument is necessary is case of contributions of immovables
c.Yes, because a partnership contract does not require a specific form to be valid
d.No, because registration with the SEC is essential for a partnership to be valid and acquire judicial
personality
30. A and B are co-owners of a parcel of land from where they share the profits equally as co-heirs in
inheritance. Is there a partnership
a.There is a prima facie presumption of partnership because of the equal sharing of profits
b.There is no partnership because co-ownership by itself does not establish a partnership despite the
sharing of profits
c.There is no partnership since in partnership, division of profits is not always necessary among partners
d.There is a prima facie presumption of partnership they being co-owners and co-possessors
31. A and B are partners in AB partnership. While A was performing his duties as a partner in the course of
business , he negligently cause damage to X and third person. Who shall be liable to X and up to what
extent?
a.Only the partnership is still liable it being a juridical person separate and distinct from the partners
b.Only A shall be liable for he is the only one at fault
c.Both A and B shall be liable solidarity to X
d.A,B and the partnership are all liable solidarity to X
32. A, B, and C as partners in a partnership stipulated that A shall not share in the profits and losses. Is the
agreement valid?
a.Yes, among the partners but not valid to third persons
b.Yes, valid as long as third persons are not prejudiced
c.Not valid stipulations exempting a partner from sharing in the profits and losses
d.Not valid as against third persons or partnership creditors
33. In the matter of management of the corporation this is supreme
a.President
b.Chairman of the Board of Directors
c.Stockholders
d.Board of Directors
34-37 A promissory note reads
I promise to pay P or order Php 100,000. Sgd. M, The promissory note was issued by M to P in payment of
merchandise purchased from P. However, P delivered only Php 60,000. Later P. made a qualified endorsement to A,
who was not aware of the partial absence of consideration. Thereafter, A made a special endorsement to B, then B
made a blank endorsement to C both B and C are aware of the partial absence of consideration.
34. In the hands of A, A can collect from M
a.Php 100,000
b.Php 60,000
c.Php 40,000
d.P 0
35. In the hands of B, B can collect from M
a.Php 100,000
b.Php 60,000
c.Php 40,000
d.P 0
36. Using the preceding number, if M dishonours the nota, B can collect from P
a.Php 100,000
b.Php 60,000
c.Php 40,000
d.P 0
37. In the hands of C, C can collect from M
a.Php 100,000
b.Php 60,000
c.Php 40,000
d.P 0
38. Which of the following is not negotiable?
a.I promise to pay P or order Php 100,000 , 30 days after date
Sgd M
b.I promise to pay P or bearer Php 100,000
Sgd M
c.Pay to P or order Php 100,000 on Dec. 25, 2010
Sgd M
d. Pay to P or bearer Php 100,000 and charge the name against my deposit with you Sgd M to Y
39-40
39. M male a negotiable promissory note payable to the order of P. later made a special endorsement to A. Then
B stole the note from A and indorsed it to C who received the note in good faith. Later C indorsed the note
to D. which of the following is correct?
a.D can collect from M but not from A
b.If M will not pay , D can collect from P
c.C can collect from endorsers P and B
40. Using the preceding number, if M pays D in good faith, which of the following is incorrect?
a.The obligation of M is extinguished
b.A can collect from M
c.Sales of non agricultural, non-electric and non credit cooperatives duly registered with Cooperative
Development authority if the capital contribution of each member does not exceeds P 15,000
d.Sales of electric cooperatives duly registered with Cooperative Development Authority relative to the
generation and distribution of electricity
50. A common carrier by land is engaged in the transport of passenger , goods and cargoes . As gross receipts
amounted to P3M, 50% of which came from transport of passengers. He is not VAT registered, what
business taxes will A pay?
a. 12% value added tax
b. 3% common carrier tax
c. 3% tax on VAT exempt persons on gross receipts from transport of goods and cargoes and 3
common carrier tax on gross receipts from transport of passengers
d. 12% VAT on gross receipts from transport of goods and cargoes and 3% common carriers tax on
gross receipts from transport of passengers.
51. A keeper of garage whose gross receipts for the year exceed P 1,500,000 is subject to:
a. Value added tax
b. Common carrier tax
c. Excise tax
d. Franchise tax
52. The following are related to the tax assessment of a tax payer
Assessment received
January 1,2010
Petition for reconsideration filed with BIR
February 1,2010
Documents supporting the petition filed with BIR
February 7, 2010
Decision of BIR denying the petition received by the taxpayer
March 22, 2010
Second request for reconsideration filed with BIR
March 30, 2010
Decision of denial of second request for reconsideration was received
April 12, 2010
53.
54.
55.
56.
57.
58.
September
P1M
1M
800,000
200,000
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
b.P60,000
c.P30,000
d.P15,000
79. XYZ filed its income tax return and paid the tax due for calendar year 2008 showing a tax liability of
P175,000. However, upon audit, it was discovered that its income tax return was false or fraudulent
because it did not report other taxable income. Per investigation the correct income tax due is P 350,000.
The corporation was duly informed of this finding through a preliminary assessment notice. Failing to protect
on time against the preliminary assessment notice, a formal letter of demand and assessment notice was
issued on May 31, 2010 calling for payment of deficiency income tax on or before July 15, 2010. The
amount due on July 15, 2010 is
a.P 306,250
b.P 437, 500
c.P240, 625
d.P612, 500
80. Where no notice or audit or investigation of tax return, statement or declaration has been actually served
upon the taxpayer, the tax return may be modified, changed or amended by the taxpayer , from the date of
such filing, within.
a.30 days
b.180 days
c.3 years
d.5 years
SET A
1. In comparing management accounting, which of the following statements is true?
a.Both are historical cost as their primary unit of measurement
b.Both depend on the double entry system of accounting
c.Both require adherence to PFRS
d.Financial accounting reports are more objectives , whereas management accounting reports are more
subjective
2. Management accounting and financial accounting are similar in which of the following respects?
a.Both use the sense unit of measurement
b.Both rely heavily on the double entry systems
c.Both produce almost all of their respective informational reports on a routine monthly basis
d.Both provide relevant and useful information to management
3. Firms with a high degree of operating leverage
a.Will have a more significant shift in income as sales volume changes
b.Have lower fixed costs
c.Have low contribution margin ratios
d.Are less dependent volume to add profits
4. The treasurer function includes
a.Tax administration
b.Evaluating and consulting
c.Investor relations
d.Economic appraisal
5. The use of information systems facilities on focus on the collection, organization, integration and long term
storage of entity wide data is known as
a.Data independence
b.Data mining
c.Data redundancy
d.Data warehousing
6. Which of the following technologies would an organization use to prevent access to its private network?
a.Digital signature
b.Firewall
c.Web assurance service
d.Encryption
7. Which of the following systems is one where the transactions are posted and the master and open files are
updated, immediately?
a.Microcomputer system
b.Mainframe computer system
c.Batch system
d.Real times system
8. Which of the following controls most likely would assure that an organization can reconstruct its files?
a.Hardware controls that are built into the computer by the computer manufacturer
b.Back up copies of the data and program files that are stored away from originals
c.Personnel, who are independent of data input , perform parallel simulations
d.System flowcharts that provide accurate descriptions of input and output operations
9. Which of the following statements about the visual fir method is (are) true?
I. The method results in the creation of a scatter diagram
II. The method is not totally objective because of the manner in which the cost line is determined
III. The method is especially helpful in the determination of outliers
a.II only
b.I and II
c.I and III
d.I, II and III
10. A flatter slope is the variable cost line indicates a
a.High variable cost per unit
b.High influence of activity on total variable cost
c.Low influence of activity on total variable costs
d.Large amount of fixed costs
11. Cielos Hotdog Stand sells hotdogs for P25 each. The variable costs per hotdog are P10. Cielos fixed costs
are currently P 8,000 per month. Cielo is considering expending her business to three hotdog stands which
will increase fixed costs per month by P 12,000.
If Cielos does expand her business to three stands, how many additional hotdogs will need to be sold per
year in order to break even?
a.800
b.600
c.9600
d.7200
12. Do Dante Corporation is contemplating to method a new product that requires an increases in fixed costs by
P 1,400,000 for production of 50,000 units or less and P1,800,000 for more than 50,000 units. The variable
costs ratio is 60 percent of sales. The product is expected to sell for P80 per unit. How any units must Don
Dante sell just breakeven?
a.43,750
b.56,250
c.50,000
d.Either 43,750 or 56,250
13. In most companies , machines break down occasionally and employees are often less than perfect which
type of standard acknowledges these characteristics when determining the standard cost of a product?
a.Efficiency standard
b.Ideal standard
c.Practical standard
d.Budgeted standard
Question number 14 and 15 are based on the following
Moon Products applies fixed overhead at a rate of P3 per direct labor hour. Each unit produced is expected to take 2
direct labor hours. Moon expected production in the current year to be 10,000 units but 9,000 units were actually
produced. Actual direct labor hours were 19,000and actual fixed overhead costs were P 62,000
14. Moons fixed overhead spending variance is:
a.P 8,00 F
b. P 8,000U
c. P 2,000 F
d.P 2,000U
15. Moons fixed overhead volume variance is:
a.P 2,000
b.P 6,000
c.P 8,000
d.P0
16. Which of the following statements is correct regarding budgeting?
a.Is a primary focused on past performance
b.Is primarily bookkeeping task
c.It should be build from the ground up each year
d.It involves input from a broad range of managers
17. It is most budget in the master budget is likely the
a.Cash budget
b.Capital budget
c.Personnel budget
d.Purchases budget
18. Which of the following is not a typical cash outflow associated with a capital investment?
a.Repairs and maintenance needed for purchased equipment
b.Additional operating costs resulting from the capital investment
c.Salvage value received when the newly purchased equipment is sold
d.Purchase price of a new equipment
19. Depreciation charges indirectly affect the after tax flow because the company
a.Can deduct depreciation expenses on their financial statements, reducing reported income before tax
b.Can deduct depreciation expenses on their financial statements , increasing cash inflows
c.Can deduct depreciation expenses on their income tax returns, reducing cash outflow for taxes
d.Cannot deduct depreciation expenses on their income tax returns
20. The calculation of the profitability index (PI) is most helpful for which type of decisions?
a.Screening
b.Preference
c.Qualitative
d.Short term
21. O Mai Mai Company purchased an asset costing P 90,000. Annual operating cash inflows are expected to
be P 20,000 each year for six years. No salvage value is expected at the end of the asset life. The company
applies a 16 percent minimum acceptable rate of return for this kind of investment . the details of the present
values at 16% sex periods and
Present value of ordinary annuity of 1
3.6847
Present value of annuity due of 1
4.2743
Assuming Omaimai cost of capital is 16 percent , what is the asset net present value? ( ignore income
taxes)
a. P 16,306
b.P30,000
c.P4,514
d.P4,800
22. Pacam, Inc. Requires all its capital investment to generate an internal rate of return of 14 percent the
company is considering an investment costing P80,000 that is expected to generate equal annual cash
inflows for 5 years. The present value of 1 . end of 5 years is 0.51937 and the present value inequity of 1 is
3.4331 based on 14 percent required rate of return.
To meet the 14% minimum acceptable rate return, the estimated annual cash inflow (ignoring income taxes)
is :
a.P23,803
b.P51,550
c.P274,648
d.P154,033
Question Nos. 23 through 25 are based on the following
Lakewood Company is considering the purchases of a purpose bottling machine for P 280,000. It is expected to
have a useful life of 7 years with a zero terminal disposal price. The plant manager estimates the following savings
in cash operating costs
YEAR
1
2
3
4
5
6
7
Lakewood uses required rate of return of 12% in its capital budgeting decisions. remittal tax rate of 40%. The
company uses straight-line depreciation. The present value of annuity of 1 at 12% for years 4,56376. The details of
the present value
YEAR
ANNUAL CASH SAVINGS
1
0.89286
2
0.79719
3
0.71178
4
0.63552
5
0.56743
6
0.50663
7
0.45235
23. The number of years to recover the amount investment is
a.4.83 years
b.3.63 years
c.2.38 years
d.4.00 years
24. What is the net present value of this investment?
a.P4,723
b.P8,559
c.P(2.159)
d.P0
25. What is the accounting rate of return based on initial investment
a.6.43%
b.12.86%
c.20.71%
d.41.42%
26. Escape Company regularly pays its accounts payable on the tenth day and enjoys the 2 percent cash
discount , term: net 30. Because of an oversight, one supplier invoice is not paid within the discount period
27.
28.
29.
30.
31.
32.
33.
but paid 10 days after. What is the annual cost of that incident of paying an invoice on the 20 th day instead of
the tenth day? Use 360 days a year
a.73.44%
b.36.73%
c.30.02%
d.2.04%
P18,591,650 at 8 persons on a one year discounted loan, what is the effective interest rate?
a.8.00 percent
b.8.70 percent
c.9.07 percent
d.7.41 percent
Toledo, Inc. Has recently calculated the inventory turnover for current year to be 30 . in prior years , the
same ratio was always lower. Which of the following statements would be the best interpretation for the
reason for the ratios change?
a.The company had less sales in the current year then in prior years
b.The company purchased less inventory in the current year than in prior years
c.The company took fewer days to sell its inventory in the current year than in prior years
d.The company took more days to sell its inventory in the current year than in prior years
Which of the following statements is true regarding a companys segment margin?
a.It is primarily used to make short term decisions such as cost volume profit (CVP) analysis and special
order decisions
b.It ignores all fixed costs
c.It is primarily a measure of long term profitability
d.It should not be used to make decisions on whether or not to drop a product line
Which of the following statements about the balanced scorecard approach is false?
a.It requires managers to focus on financial measures more than nonfinancial measures
b.It looks at performance from the following perspectives, financial, customer, internal business and
learning and growth
c.It helps balance short term operating performance with long term strategies
d.It recognizes that traditional measures of performance are often not adequate to fully assess
companys performance
Determining the market share for a companys product would be a measure of performance , which
perspective of the balanced scorecard?
a.Internal business
b.Customer
c.Financial
d.Learning and growth
Which of the following statement about quality costs is true?
a.Even in theory , external failure costs can never be reduced to zero
b.The less of companys spreads on prevention costs, the less they will have to spend on internal failure
costs in the future
c.If a company produces and sells a defective product, external failure cost are likely to exceed all the
other types of quality costs
d. Low level of internal failure costs usually indicators that more attention needs to be paid to
prevention and appraisal costs
HNW Ltd. Manufactures and sells food processors. A popular consumer magazine has recently evaluated
food processors and has ranked HNWs processors as being of poor quality. As a result HNWs
management team has begun to analyze all costs associated with their food processors in more detail and
the following data has been compiled:
Scrap costs
P 80,000
Quality training
75,000
Warranty claims
100,000
Rework costs
50,000
Inspection of incoming
30,000
materials
Product quality audits
60,000
Statistical process control
40,000
2010
P5,520,000
3,795,000
P1,725,000
2009
P4,000,000
3,000,000
P1,000,000
39. Assume that the selling price increased by 20 percent effective January 1, 2010. What is the amount of
increase in sales due to change in selling price and units sold, respectively?
a.P920,000 and P 600,000
c.P720,000 and P800,000
b.P 1,104,000 and P416,000
d.P (1,380,000) and P2,900,000
40. Independent of question number 39 , assuming that the cost price per unit decreased by 4 percent effective
January 1, 2010. How much were the change in sales due to change in quantity sold and change in cost of
goods sold due to change in unit cost?
41.
Change in sales
change to cost of Goods Sold Due
42.
Change in Quantity
to change in unit cost
a.P1,270,800 increase
P158,125 decrease
b.P249,200 increase
P953,125 decrease
c.P1,262,400 increase
P151,800 decrease
d.P1,262,400 increase
P953,125 decrease
43. The primary purpose of management advisory service is
a.To conduct special studies, preparation of recommendations , development of plans and provision of
advice and assistance in their implementation
b.To provide services or to fulfil some social need
c.To improve the clients use of its capabilities and resources to achieve the objectives of the
organization
d.To earn the best rate of return on resources entrusted to its care with safety of investment being taken
into account and consistent with the firms social and legal responsibilities
44. The fixed overhead application rate is a function of a predetermines normal activity level. If standard hours
allowed for good output equal predetermined activity level for a given period the volume variance will be
a.Zero
c.Unfavourable
b.Favorable
d.All of the above
45. The AMVians is planning its annual Blast Extravaganza. The extravaganza committee has assembled the
following expected costs for the event:
46. Dinner per person
P70
47. Programs and souvenier per person
30
48. Orchestra
15,000
49. Tickets and advertising
7,000
50. Auditorium rental
48,000
51. Floor show and strolling entertainment
10,000
52.
53. The committee members would like to charge P300 per person for the evening activities
54. Assuming that only 250 persons are expected to attend the extravaganza, what ticket price must be
charged to breakeven?
a.P420
c.P320
b.P350
d.P390
55. Gabgalang Company uses a monthly cost formula for overhead of P50,000 + 30,000 for each direct labor
hour worked. For the coming year, gabgalang plans to manufacture 200,000 units. Each unit requires five
minutes of direct labor. Gabgalang total budgeted overhead for the coming year is
a.P550,000
c.P1,100,000
b.P1,200,000
d.P650,000
56. How will a favorable volume variance affect net income under each following methods?
57.
ABSORPTION
VARIABLE
a.Reduce
no effect
b.Reduce
increase
c.Increase
no effect
d.Increase
reduce
58. The following information has been extracted from Bautista & Magsombol Companys financial records for
its first year of operations?
59.
60. Units produced
10,000
61. Units sold
7,000
62. Variable costs per unit
63.
Direct materials
P8
64.
Direct labor
9
65.
Factory overhead
3
66. Selling
4
67. Fixed costs:
68. Manufacturing overhead
P70, 000
69. Selling
30,000
70.
71. Based on absorption costing, Bautista & Magsombols income in its first year of operations will be
a.P21,000 higher than it would be under variable costing
b.P70,000 higher than it would be under variable costing
c.P30,000 higher than it would be under variable costing
d.Higher than it would be under variable costing, but he exact difference cannot be determinable from
this information
72. Balara Company has intra company service transfers from Internal Division , a cost center, to World Division
, a profit center. Under stable economic conditions, which of the following transfer prices is likely to be most
conductive to evaluating whether both divisions have met their responsibilities?
a.Actual cost
c.Standard variable cost
b.Market price
d.Negotiated price
73. De Chavez Company is considering an investment in a new casting machine to replace its existing one.
Information on the existing machine and the replacement machine follows:
74.
75. Cost of new machine
P40,000
76. Net annual savings in operating costs
9,000
77. Salvage value now of the old machine
6,000
78. Salvage value of the old machine in 8 years
0
79. Salvage value of the new machine in 8 years
5,000
80. Estimated
8 years
81.
82. What is the expected payback period for the new machine?
a.4.44 years
b.3.22 years
c.4.00 years
d.3.78 years
83. Kiel Dimayaga Company has a total assets turnover of a 0.30 and a profit margin of 10 percent Patrick. The
President , is unhappy with the current return on assets and be thinks it could be doubled. This could be
accomplished (1) by increasing the profit margin to 12 percent , and (2) by increasing the total assets
turnover. What new asset turnover ratio, along with the 12 percent profit margin, is required to double the
return on assets?
a.25%
b.50%
c.36%
d.60%
84. The examples of activating at the product level include
a.Scheduling , setting up and moving
b.Designing changing and advertising
c.Beating, lighting and security
d.Cutting, painting and packaging
85. A systematized approach knows as acro-based budgeting
a.Presents the plan for only one level of activity and does not adjust to changes in the level of activity
b.Presents a statement of expectations for a period of time but does not present a firm commitment
c.Divides the activities of individual responsibility centers into a series of packages which are ranked
ordinally
d.Classifies budget requests by activity and estimates the benefits arising from each activity
86. The CEO of a rapidly growing high technology firm has exercised centralized authority over all corporate
functions. Because the company now operates in four geographically dispersed locations. The CEO is
considering the advisability of decentralizing operation control over production and sales. Which of the
following conditions probably would result from and be a valid reason for decentralizing?
a.Greater local control over compliance with government regulations
b.More efficient use of headquarters staff officials and specialists
c.Quicker and better operating decisions
d.Greater economies in purchasing
87. The following are details of the monthly unit cost to manufacture and sell a particular product for Grace
Company:
88. Manufacturing cost:
89. Direct materials
P3.00
90. Direct labor
4.00
91. Variable indirect
2.00
92. Fixed indirect
1.50
93.
94. Marketing costs:
95. Variable
2.00
96. Fixed
1.00
97.
98. Grace must decide to continue making the product or buy it from outside supplier. The supplier has offered
to make the product at the same level of quality that the company can make it. Fixed marketing costs would
be unaffected, but variable marketing costs would be reduced by 25% if the company were to accept the
proposal. What is the minimum amount per unit that Grace can pay the suppliers without decreasing its
operating income?
a.P9.50
b.P10.50
c.P11.50
d.P12.50
99. The Salinas Division of Soriano Company expects the following result for 2011.
100.
Unit sales
70,000
101.
Unit selling price
P10
102.
Unit variable cost
P4
103.
Total fixed cost
104.
Total fixed costs
P300, 000
105.
Total investment
P500, 000
106.
The minimum required RO1 is 15percent, and divisions are evaluated on residual income. A foreign
customer has approached Salinas manager with an offer to buy 10,000 units at P7 each. If Salinas accepts
the order, it would not lose any of the 70,000 units at the regular price. Accepting the order would increase
fixed costs by P10,000 and investment by P40,000
107.
108.
What is the minimum price that Salinas could for the order and still maintain its expected residual
income?
a.P5.00
b.P4.75
c.P5.60
d.P9.00
109.
Morr Co. has a total annual cash requirement of P 9,075,000 which are be paid uniformly. Morr has
the opportunity to invest the money at 24% per annum. The company spends, on the average P40 for every
cash conversion to markeable securities.
110.
What is the optimum average cash balance?
a.P60,000
b.P45,000
c.P55,000
d.P27,500
111.
The dividends and stock price of Feudo Company are expected to grow at 7 percent per year by the
end of this year. Feudos common stock sells for P25 per share, it last dividend was P2.50 and the company
will pay P2,675 at the end of the current year. Feudo should pay P 2.50 flotation cost.
112.
What are the expected returns on retained earnings for Feudo Company?
a.17.7 percent
b.18.45 percent
c.18.89 percent
d.19.72 percent
113.
Baguio Companys accounts receivable were P600, 000 at the beginning of the year and P 800,000
the end of the year. Cash sales for the year were P300, 000. The accounts receivable turnover for the year
was 5 times. Baguio Companys total sales for the year were
a.P 800,000
b.P 3,300,000
c.P1,300,000
d.P3,800,000
114.
The Baraguio Corporation purchases 60,000 headbands per year. The average purchase lead time is
20 working days. Maximum lead time is 27 working days. The corporation works 240 days per year.
115.
The appropriate safety stock level and the recorder point for the company are
116.
117.
Safety Stock
Recorder Point
a. 1,750
6,750
b.1,750
5,250
c.1,167
6,750
d.1,167
5,250
118.
Almires Building company uses the critical path method to monitor construction jobs. The companys is
currently 2 weeks behind schedule on Job WW. Which subject to a P10,500 per week completion penalty.
Path A-B-C-F-G-H-I has a normal completion time of 20 weeks and critical path A-D-E-F-G-H-I- has a
normal completion time of 22 weeks. The following activities can be crashed.
119.
Activities
cost to crash 1 week
cost to
crash 2 weeks
120.
B-C
P8,000
P15,000
121.
D-E
10,000
19,600
122.
E-F
8,800
19,500
123.
124.
Almires desires to reduce the normal completion time of job WW and at the same time, report the
highest possible income for this year. Almires should crash
a.Activity B-C 1 week and Activity EF 1 week
b.Activity B-C 2 weeks
c.Activity D-E 1 week and activity B-C 1 week
d.Activity D-E 1 week and activity E-F 1 week
125.
The capital asset pricing model (CAPM) computes the expected return on a security by adding the risk
rate return to the incremental yield of the expected market return which is adjusted by the companys beta.
What is MNOs expected rate of return if the equity market is expected to earn 12 percent; the treasury
bonds are currently yielding 5 percent. The beta coefficient for MNO is estimated to be 0.60. MNO is subject
to an effective corporate income tax rate of 40%.
a.12.00 percent
b.9.20 percent
c.12.20 percent
d.7.20 percent
126.
Trading on the equity refers to the
a.Amount or working capital
b.Amount of capital provided by owners
163.
Fixed
25% direct labor costs
164.
Fixed selling and administrative costs
10% of the total manufacturing costs
165.
4. Normal time required for rework is one month
166.
66. How much peso contribution would the sale to Kay Corporation add to CABRAL before tax profit?
a.P53,848
b.P55,948
c.P55,900
d.P9,300
67. How much peso contribution would the alternative of converting the special machinery to standard model
add to CABRALs before tax profit?
a.P52,200
b.P54,475
c.P52,825
d.P7,650
68. If Kay makes CABRAL a counteroffer, what is the lowest price CABRAL should accept fot the reworked
machinery from Kay?
a.P10,400
b.P12,500
c.P10,722
d.P12,887
69. How much would the alternative of selling unmodified machinery to the potential buyer contribute to
CABRALs before tax profit?
a.P50,440
b.P1,740
c.P49,920
d.P49,400
70. A construction company has just completed two bridges over the Visayan area. The first bridge the company
ever built required 100 weeks to complete. Now having hired a bridge construction crow with some
experience, the company would like to continue building bridges. Because of the investment in heavy
machinery needed continuously by this crew, the company believes it wound have to bring the average
construction time less than a year (52 weeks) per bridge to earn a sufficient return on investment. The
average construction time will follow an 80% learning curve. To bring the average construction time (over all
bridges constructed) below one year per bridge, the crew would have to build approximately
a.6 additional bridges
b.7 additional bridges
c.3 additional bridges
d.8 additional bridges
167.
168.
169.
170.
171.
172.
173.
174.
175.
176.
177.