PART 1

ENGLISH, MATH, IT, ECONOMICS, FINANCIAL MANAGEMENT

For #1-6. Choose the word/s that best completes the sentence.
1. History is the witness that ___ passing of time. A) testifies the B) testifies for C) will testify for D) will testify

2. After 10 fruitful years, Juan finally quit his job. He ___ along with his immediate boss a long time before he finally
decided to look for a new job. A) didn’t get B) isn’t getting C) hasn’t been getting D) hadn’t been getting

3. Of the five candidates for that position, Rody is the ___ his experience in the field. A) most qualified because of B)
most qualified due to C) more qualified due to D)more qualified because of E) most qualified as a result of

4. The difference between the candidates is that ___. A) one is radical; the other, conservative B)one is radical; the
other being conservative C) while one is radical; the other, conservative D) one is radical, the other, is conservative E) one
is radical, although the other is more conservative.

5. President Quezon said: “I prefer a government ran like hell by Filipinos rather than one ran by foreigners.” This means
that ___. A) though difficult, Filipinos are preferred to lead B) foreign leaders are better in governing C)Filipinos are
incapable of administering their own affairs D) leadership can only be provided by foreigners E) Filipinos can never lead
their own government

6. “I will take the road less travelled by and be condemned if necessary.” This means that ___. A) regrets come before
decision B) decisions are made despite difference from the majority C) decisions are made on the crossroads D)
regrets come after decisions

For #7-9. Choose the underlined word or phrase labeled A,B,C,D which is not acceptable in formal written English.
Choose E if there in no error.
7. He is the only of the applicants who are fully qualified for the Position. No error.
A B C D E

8. Our’s is a critical period; we are confronted with grave problems which must be solved if we are to avert a tragedy. No
error.
A B C D E

9. The principle of equality is pillar of democracy; this is not true of other forms of government. No error.
A B C D E

For #10-12. Choose the best meaning of the underlined word in the sentence.
10. We must face the enemy without trepidation if we are to win the battle. A) fear B) reservation C) trauma D) depravity
E) logistics

11. There is no panacea that will solve our nation’s difficulties. A) solution B) problem C) cure-all D) criteria E) answer

12. Science is constantly seeking to discover the immutable laws of nature, A) silent B) unchangeable C) constant D)
Impenetrable E) varied

13. S1: Great chess players must be both analytical and creative; S2: They must be analytical because they need weigh the
short-term and long-term consequences of many possible moves; S3: They must be creative because they need to come up
with an unexpected plan of attack that will take their opponents off- guard. A) Creativity and analysis, above all, is
essential for great chess players to have. Analysis involves foreseeing the consequences of moves, while creativity, on the
other hand, involves developing new lines of attack. B) long-term and short-term, consequences of their actions. C) Chess
requires both analysis and creativity. Great players combine an uncanny ability to analyze the consequences of
their moves with an imaginative gift for developing new lines of attack. D) Creative people make the best chess
players. They are able to come up with new, unconventional plans of attack that will take their opponents by surprise.

14. Ignorance may be an effective stimulus to find new techniques or approaches that would make economic development
more progressive or more responsive The sentence best supports the statement that A) lack of knowledge on economy can
also encourage discovery of new ways or approaches B) from creativity and resourcefulness come new approaches C)
new approaches ensure economic success D) new techniques and systems bring about change and success E) ignorance
can also lead to discovery of new knowledge

15. Education is the solution to the economic ills of the society. Only when education is provided to both urban and rural
sectors shall real opportunities be realized. Skills and knowledge should be accorded to all sectors of the society. If
opportunities lie only on selected sectors, then education will remain in servitude to those sectors.
The paragraph best supports the statement that A) urban migration results from lack of economic opportunities in rural
areas B) education in rural areas is needed to provide rural economic opportunities C) education should be for all to
uplift economic and social lives D) education is concentrated on the urban sectors of the society E) education is only for
those who want it.

16. Of the 50 students enrolled in a subject, only 90% took the final exam at the end of the term and two-thirds of them
passed. How many students passed the exam? A) 30 B) 33 C) 34 D) 45 E) answer not given

17. Five average office workers earn a total monthly salary of P10,000. If the average monthly salary of two of these
workers total 4,000 what is the average monthly income of each of these remaining workers.
A) 2,000 B) 2,500 C) 4,000 D) 5000

18. A couple want to have only four children so spaced that the first is older than the second by 2 years, the second older
than the third by 3 years, the third older than the fourth by 4 years. If their plan is realized, how old will the eldest child be
when the youngest child is 9 years old?
A) 13 B) 16 C) 18 D) 23 E) answer not given

19. If 40 workers can finish a job in 12 days, how many workers needed to finish the job in 8 days?
A) 50 B) 55 C) 58 D) 60 E) 65

20. Mae Ann is paid P17,000 for a regular 40 hour week. Up to 40 hours, she is paid at the regular hourly rate. Above the
40 hours, she receives 1 ½ times as much as the regular hourly rate. How many hours did she working during a particular
week when she earned about P24,650?
A) 48 B) 52 C) 54 D) 55 E) answer not given

21. Mr. Bols left his house at 7am and drove his car at 50 kilometers per hour. He rested for half an hour. What time did
he reach his destination which is a 600 kilometers away?
A) 7:30 pm B) 7:00 pm C) 8:00 pm D) 8:30 pm E) answer not given

22. A concert sold 500 tickets. The price is P150 for students and P200 for non-students. If the total sales is P85,000, how
many students watched the concert?
A) 200 B) 230 C) 250 D) 260 E) 300

23. Evelyn purchased 4 pounds of mixed nuts at P20/pound. Vivian purchased 2 pounds of peanuts at P15/pound. What is
the average price per pound for the minute of both purchases?
A) P17.50 B) 18.33 C) P18.75 D) 20.00 E) answer not given

24. A state park is budgeted at an amount 9 times the amount budgeted for a nearby city park. If the combined yearly
budget of both parks is P1,000,000, the average monthly budget of city park is
A) P100,000 B) 900,000 C) P8,333.33 D) 75,000 E) answer not given

25. The estimated completion time for a particular 100 item test is 3 1/3 hours. Ten applicants actually took the test and
completed it in 3 hours. The difference between the actual and estimated rate of completion is ___ second per team.
A) 10 B) 12 C) 14 D) 16

26. You want to purchase a laptop 4 years from now and you plan to save P3,500 per year, beginning immediately. You
will make 4 deposits in an account that pays 5.7% interest. Under these assumptions, how much will you have 4 years
from today?
A) P16,112 B) 16,918 C) 17,763 D) 18,652 E) 19,584
27. You were left P100,000 in a trust fund set up by your grandfather. The fund pays 6.5% interest. You must spend the
money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately.
How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the
account?
A) P24,736 B) 26,038 C) P27,409 D) P28,779 E) P30,218

28. The ___ information system is an orderly arrangement of procedures, personnel, written records, equipment and
devices used for the systematic collection, processing and reporting financial and other information necessary to the
official business. A) financial B) personnel C) logistics D) accounting E) management

29. The basic elements of an EDP systems are the A) computer, input and output devices B) computer, hardware and
software C) hardware, software and live ware D) computer, CPU and keyboard E) answer not given

30. It is the regular, orderly, systematic procedure of assembling data into meaningful summary form A) data processing
B) system design C) flow chart D) documentation E) answer not given

31. Which characteristic is associated with the database approach to data management? A) data sharing B) multiple
storage procedures C) data redundancy D) excessive storage costs E) answer not given

32. A processing control designed to ensure the reliability and accuracy of data processing A) limit test B) validity check
C) both A and B D) neither A nor B

33. An upturn in economic activity is indicated by the following, except: A) increased housing starts B) reduction in
quantity of unemployment claims C) increase in personal travel D) reduction in amount of luxury purchases E) none of
the above

34. In national income terms, aggregate demand is the A) demand for money by the community in a period of full
employment B) total expenditure on capital goods by entrepreneurs during a period of full employment C) demand that is
needed if a country’s economy is to operate at optimum level and the level of investment is to be raised. D) total
expenditures on consumer goods and investment, including government and foreign expenditures, during a period.

35. The primary reason for allowing legal immigration into industrial nations is the immigrants’ potential for A) reducing
a trade deficit B) contributing to economic growth C) fulfilling a trade agreement D) fulfilling political agreement

36. Patents are granted in order to encourage firms to invest in the research and development of new products. Patents are
an example of A) entity barriers B) vertical integration C) market concentration D) Collusion E) none of the above

37. Which is a measure of productivity? A) The total amount of output produced each month B) The quantity of
capital equipment used divided by its price C) The annual percentage increase in production D) Output divide by
employment

38. As more labor is added to a fixed amount of input, the rate at which output goes up begins to decrease. This is called
A) diminishing marginal utility B) diminishing marginal productivity C) diminishing marginal cost D) diminishing
marginal profit

39. Price elasticity of demand measures the responsiveness of the A) quantity demanded to change in price B) quantity
supplied to change in price C) price to change in quantity demanded D) price to change in quantity supplied E) answer not
given

40. If a government were to use only fiscal policy to estimate the economy from a recession, it would A) raise consumer
taxes and increase government spending B) lower consumer taxes and increase government spending C) lower
consumer taxes and government spending D) increase the money supply and increase government spending E) none of the
above

41. When the government imposes health and safety regulations on certain products, one of the most likely results A)
higher prices for the product B) lower prices for the products C) greater consumption of the products D) greater tax
revenues E) answer not given
42. Interest rates are likely to increase if A) expected inflation increases B) companies have fewer productive
opportunities C) individuals increase their savings rate D) all of the above E) answer not given

43, Financial management involves decision within a business firm regarding the acquisition of funds, which includes the
following except A) financial planning B) working capital management C) capital budgeting D) none of the above

44. Which is not a true regarding the implementation of restricted working capital policy? A) credit sales and contribution
margin is reduced B) investment in long term assets is increase C) cost of capital as well as bad debts is decreased D)
noncurrent liability and related interest expense will decrease E) answer not given.

45. Cash management entails that firms should strive to ___ collections float and ___ disbursements float. A) minimize,
minimize B) maximize, maximize C) maximize, minimize D) minimize, maximize

46. Which investment generally pays the highest return A) money market B) treasury bills C) treasury notes D)
commercial paper

47. If easing a firm’s credit policy lengthens the collection period and results in a worsening of the aging schedule, then
why do firms take such actions? A) it normally stimulates sales B) to meet competitive pressures C) to increase firm’s
deferral period for payables D) A and B

48. Which might be attributed to efficient inventory management? A) high inventory turnover ratio B) low incidence of
production schedule disruptions C) high total assets turnover D) A and C are correct E) A,B and C are correct.

49. Which statement is not correct? A) working capital management strives to minimize the cash conversion cycle B)
shifting to a relaxed credit policy increases a firm’s receivable turnover C) implementing a tight credit policy increases the
opportunity costs like losing contribution margin on sales and cost of capital tied up to receivables D) ignoring safety
stock, reorder point will be equal to the anticipated demand during the lead time E) A and D

50. Which statement is incorrect? A) interest cost of short term debt is lower than that of long term debt B) short term
assets generally offers lower returns than long term assets C) compared to other firms in the industry, a firm that maintains
a conservative working capital policy will tend to have a lesser percentage of short term financing and greater ratio of
current assets D) none of the above E) all of the above

51.

52. A firm’s optimal structure A) maximizes the firm’s earnings per share B) minimizes the firm’s cost of capital C)
maximizes the price of the firm’s stock D) all of the above E) B and C only

53. ___ is the process of working with people and resources to accomplish organizational goals. A) Planning B) Leading
C) Controlling D) Decision making E) Management

54. S1: Ideally decision making should be done by those people most familiar with the situation to be decided and not
necessarily by the top management of a firm. S2: Accountability refers to the expectation that employees perform a job,
take corrective action when necessary, and report upward on status and quality of their performance A) both are true B)
both are false C) S1 is true D) S2 is true

55. The primary argument against corporate social responsibility is A) it is nothing but a public relations effort B) firms
do not know what society’s best interests are C) it causes firms to make too much money D) it may not maximize
shareholder wealth. E) it eliminates jobs and increases unemployment.

56. It is the set of benefits a company promises to deliver its customers to satisfy their needs. A) good customer service B)
attributes C) value proposition D) low pricing E) answer not given

57. Management by exception refers to management’s consideration of A) all items included in the plan B) items selected
at random C) items which vary materially from the plan. D) items considered rare events

58. Managerial accounting creates value by A) focusing manager’s attention on the relationship between financial
and non-financial sectors B) forcing managers to analyze historical figures and interpret the results C) eliminating all
pricing and costing errors D) all of the above E) answer not given
59. An approach to continuous improvement that focuses on serving customers and uses front line workers to identify and
solve problems systematically A) Total Quality Management B) Business Process Reengineering C) Theory of
Constraints D) Just in Time system E) Activity Based Management

60. Employee empowerment involves encouraging and authorizing workers to take initiatives to: A) improve operations
B) improve customer service C) reduce costs D) improve product quality E) all of the above

PART 1
ENGLISH, MATH, IT, ECONOMICS, FINANCIAL MANAGEMENT

For #1-6. Choose the word/s that best completes the sentence.
1. The measure of choosing well is whether or not man likes what he ___ A) chose B) has chosen C) choose D) is
choosing.

2. The terms of reference will not ___ these regulations no matter how you protest. A) exempt you from B) give
exemptions to C) exclude you from D) exempt

3. The child is ___ all the evidence before forming an opinion. A) neither encourage to be critical or to examine B) neither
encourage to be critical nor to examine C) either encouraged to be critical or to examine D) encouraged either to be
critical nor to examine E) not encourage either to be critical or to examine

4.___ leisure promotes health, efficiency and happiness. A) Using it wisely B) If used wisely C) Having used it wisely D)
Because it is used wisely E) Because of usefulness

5. “It is only with the heart that one can see rightly.” This means that ___ A) the heart is always correct about everything
B) important things are not always for the heart but for the brain. C) the heart should always be over and above the brains
D) only the heart can see the beauty of life and love.

6. “I will take road less travelled by and be condemned if necessary.” This means that___ A) regrets come before decision
B) decisions are made despite differences from the majority C) Decisions are made on the crossroads D) regrets come
after decision.

For #7-11. Choose the underlined word or phrase labeled A,B,C,D which is not acceptable in formal written English.
Choose E if there in no error.
7. Do not be irritated by his bad manners; he is merely trying to attract attention. No error.
A B C D E

8. I fail to understand why you are seeking my council after you ignored my advice last week. No error.
A B C D E

9. I will always remember you standing by me and offering me pieces of advice and encouragements. No error.
A B C D E

10. Diligence and honesty, as well as being intelligent are qualities which I look for when I interview applicants. No
error.
A B C D E

11. He can’t hardly do anything with his right hand ever since he had his stroke. No error.
A B C D E

For #12-14. Choose the best meaning of the underlined word in the sentence.
12. Indulgent parents spoil their children by giving in to their every demands and whims. A) loving B) generous C)
beneficial D) yielding E) indecisive

13. His diffidence caused him to miss many opportunities. A) ignorance B) laziness C) timidity D) arrogance E)
indifference
14. The father upbraided his children for their extravagance. A) advocated B) scorned C) scolded D) praised E) punished

15. “Necessity is the mother of invention.” A new machine system or device is created when there is a felt need for it.
People buy it especially if it is reasonably priced. Hence, there is a potential market waiting for it. Consequently, more
developed countries spend so much to discover the satisfaction of man’s insatiable quest for something to answer the felt
need of man. Ironically, inventions are given impetus when the inventor no longer exists. However, at present, is
gratifying to note that more and more attention is given, especially by advanced countries where effects of inventions are
focused on benefits to humanity.
This paragraph stresses that A) a market demand for a product creates the invention and production of the product
B) the product is an important commodity C) people need new product for invention D) a new device creates new
invention

16. Effective communication takes place when basic skills are present. The first is encoding skills, which are concerned
with speaking and writing. The other skills are listening and reading, called as decoding skills. Furthermore, the skill
considered the highest form of mental process is reasoning. The absence of the ability to speak and write, listen and read,
as well as the ability to think, prevents a person to communicate effectively
The paragraph emphasizes the fact that A) in any communication process, speaker-listener relationship must be stressed
B) certain communication skills are essential in order to have better communication of ideas C) without the ability to
speak and write, listen and read, plus the ability to think through, one cannot communicate effectively D) none of
the above

17. People from all walks of life and of all age levels show diversified behavior at different stages. The very young
occupy themselves with play and play activities to learn initial skills essential for mental, physical, social and emotional
growth. The middle aged group who are at peak of life, make adjustments in work, in marriage and parenthood. The
senior group who reaches the period where life activities are about to finish off, amuse themselves in relaxation and in
fellowship with their own age group.
The paragraph reveals that A) people have different interests and activities at different stages in life B) people
disagree to agree at different stages in life C) people are alike in so many different characteristics D) people enjoy
different things at different levels E) life is really a cycle that is difficult to comprehend.

18. If 2 tablespoons = 1 liquid oz and 5 tablespoons = ¼ cup, how many liquid oz are there in one cup?
A) 4 B) 8 C) 10 D) 16 E) 24

19. Diana answered all 25 test questions. Her percent score as taken by giving her 4 pts for every correct answer and by
subtracting 1 pt for every wrong answer. If she obtained a score of 70%, how many questions did she answer correctly?
A) 15 B) 17 C) 19 D) 20 E) 21

20. Santos, Gallardo and Valencia are partners of SGC Accounting firm. Santos capital is 40% of the partnership while
Valencia capital is 25% more than Santos. If the capital of Gallardo is P15,000, how much is the capital of Santos?
A) P45,000 B) 50,000 C) P60,000 D) P75,000 E) answer not given

21. CID Bookstore offers a book marked at P2,450 less discounts of 10% and 5%. Jet Bookstore offers the same book a
single discount of 15%. How much does the buyer save by buying at the best price?
A) P10.50 B) P12 C) P12.25 D) P12.50 E) P15

22. Erlinda and Ernestine have part time jobs. Last week, Erlinda worked 8 hours and Ernestine worked 5 hours, they
earned a total of P800. This week Ernestine worked 12 hours and Erlinda 4 hours, and they earned a total of P1,250. How
much is the hourly rate of Erlinda?
A) P44.08 B) P44.50 C) P45 D) P48 E) P49.50

23. The going rate of interest on a 5-year treasury bond is 4.25%. You have one that will pay P2,500 five years from now.
How much is the bond worth today?
A) P1,298.78 B) P2.030.30 C) P2,131.81 D) P2,238.40 E) P2,350.32

24. Your father is about to retire and wants to sell some of his stock to buy an annuity that will provide him with income
of P50,000 per year for 30 years, beginning a year from today. The going rate on such annuities is 7.25%. How much
would it cost him to buy such an annuity today?
A) P574,924 B) P605,183 C) P635,442 D) P677,214 E) P700,575
25. WAIS Inc. received the following offers from two banks in which it applies for a P75,000, 1-year loan.
BPI: 7% discount interest, with a 10% compensating balance
BDO: 8% simple interest, with interest paid monthly
What is the effective annual rate on the cheaper loan?
A) 7.23% B) 7.67% C) 8.00% D) 8.30% E) 8.43%

26. SMART Co. needed to borrow P25,000 for one year. Metrobank offered the following choices for 1 year loan;
a.15% simple interest, annual compounding
b.13% nominal interest, daily compounding (360-day year)
The first two loans would be require a single payment at the end of year, the third would require 12 equal monthly
payments beginning at the end of first month. What is the difference between the highest and lowest effective annual
rates?
A) 1.1% B) 2.48% C) 3.60% D) 4.25% E) 5.00%

27. In the relational database model of all of the following are true except A) data is presented to users as tables B) data
can be extracted from specified rows from specified tables C) a new table can be built by joining two tables D) only one-
to-many relationships can be supported E) answer not given

28. A user view A) presents the physical arrangement of record in a database for a particular user B) is the logical abstract
structure of the database C) specifies the relationship of data elements in the database D) defines how a particular user
sees the database E) answer not given

29. A modem is a device that A) is used to aid in backup procedures B) traces the execution of steps by a program C)
packs data in a disk file D) allows computer signals to be sent over a telephone line E) answer not given

30. The analysis tool for the system analyst and steering committee to use in selecting the best system alternative A) cost-
benefit analysis B) system design C) decision tree analysis D) user selection E) answer not given

31. A computer operator was in a hurry and accidentally used the wrong master file to process a transaction file. As a
result, the accounts receivable master file was erased. Which control would prevent this from happening? A) header label
check B) expiration date check C) version check D) validity check

32. A customer intended to order 100 units of product 296014, but incorrectly ordered nonexistent product Z96015.
Which control most likely would detect this error? A) hash total B) record count C) check digit verification D) redundant
data check

33. Economies often experience inflation but seldom experience long period of deflation. Which is true about deflationary
economy? A) interest rates tend to be high B) actual GDP is above potential GDP C) companies are hesitant to make
investments D) lower prices encourage consumers to make major purchases E) answer not given

34. Government borrowing to finance large deficits increases the demand for lendable funds and A) increases the supply
of lendable funds B) puts upward pressure to interest rates C)exerts downward pressure on interest rates D) has no
impact on interest rates

35. Which tool of monetary policy could a nation’s central bank use to stabilize the economy during inflationary period
A) selling government securities B) lowering bank discount rates C) lowering bank reserve requirements D) encouraging
higher tax rate

36. ___ theory holds that economy will eventually move towards full employment on its own and will not need fiscal or
monetary policies to stimulate the economy A) classical B) Keynesian C) monetarist D) neo – Keynesian E) none of the
above

37. Improvement in technology leading to improved worker productivity would most likely result in A) a shift to the
right in the supply curve and lowering of the price of the output B) a shift to the left in the supply curve and a
lowering of the price of the output C) an increase in the price of the output if demand is unchanged D) wage increases
38. Which is not a key assumption of perfect competition A) firms sell a homogenous product B) customers are
indifferent about which firm they buy from C) the level of firm’s output is small relative to the industry’s total output
D) each firm can price its product above the industry price E) none of the above

39. The primary goal of a publicly-owned firm interested in serving its stockholders should be to A) maximize expected
total corporate profit B) maximize the stock price per share

40. Which statement (about sole proprietor, partnership and corporation) is true D) all of the above

41. S1: Compensating managers with stock can reduce the agency problem between stockholders and managers. S2:
Restrictions are included in credit agreements to protect bondholders from the agency problem that exist between
bondholders and stockholders. A) both are true B) both are false C) S1 is true D) S2 is true

42. Which will not encourage a firm’s manager to make decisions that are in the best interest of shareholders? A)
executive compensation comes primarily in the form of stock options B) the state legislature recently passed a law that
makes it more difficult to successfully complete a hostile takeover C) Institutional investors such as mutual funds and
pension funds hold large amount of the firm’s stock D) the board of directors has become vigilant in its oversight of the
company’s management E) none of the above

43. Which statement is most correct A) one disadvantage of forming a corporation is that your shareholders have limited
liability B) relative to sole proprietorships, corporations generally face more regulations, but it find it easier to raise
capital C) bondholders generally want managers to select risky projects, but shareholders prefer that managers select safe
projects D) A,B and C are correct

44. Which is not a typical job of a treasurer? A) provision of capital B) credit approval and collections C) investment of
funds D) implementation of internal controls to protect assets E) none of the above

45. Which statement is incorrect A) issuance of new ordinary shares and new bonds of a firm are examples of a primary
market transactions B) money markets are where short-term, liquid securities are traded, whereas capital markets
represents the markets for long-term debt and common stock C) derivative is a security whose value is derived from the
price of some other “underlying” asset D) private securities are generally less liquid than publicly traded securities E)
none of the above

46. Which statement is incorrect A) interest cost of short-term debt is lower than that of long-term debt B) short-term
assets generally offers lower returns than long term assets C) compared to other firms in the industry, a firm that maintains
a conservative working capital policy will tend to have a lesser percentage of short term financing and greater ratio of
current assets E) none of the above

47. S1: An advantage of debt financing is that the obligation is generally fixed in terms of interest and principal payments.
S2: An advantage of equity financing in comparison to debt financing is that the firm has not mandatorily obliged to pay
dividends to ordinary shareholders A) both are true B) both are false C) S1 is true D) S2 is true

48. The optimal capital structure of a firm is the mix of debt, equity, and preferred stock that maximizes the firm’s A)
earnings per share B) stock price C) cost of capital D) all of the above E) none of the above

49. The ___ of an organization refers to the processes by which decisions are evaluated and made on the basis off right
and wrong. A) strategic voluntarism B) coalition building C) strategic retreat D) ethical climate

50. S1: Ideally, decision making should be done by those people most familiar with the situation to be decided and not
necessarily by the top management of a firm. S2: Accountability refers to the expectation that employees perform a job,
take corrective action when necessary, and report upward on the status and quality of their performance. A) both are true
B) both are false C) S1 is true D) S2 is true

51. S1: A leader is someone who influences others to attain goals and not necessarily the top level manager in a firm. S2:
Integrity as an identified leadership trait refers to the correspondence between action and words. A) both are true B) both
are false C) S1 is true D) S2 is true
 PART 2
ACCOUNTING, BUSINESS LAWS AND TAXATION

1.

2. Which statement is incorrect? C) In accordance to monetary unit assumption, accountants normally revise the
amounts to reflect the changing purchasing power of money due to inflation or deflation.

3. Which statement is true? A) cash equivalents refer to demand credit instruments like money order and bank draft B)
PCF is established to cover all normal operating expenses for a period of time C) a past due promissory note issued in
favor of an entity must be included by the entity in its account D) classification of a restricted cash balance as current
or noncurrent should parallel the classification of the related obligation for which the cash was restricted E) answer
not given

4. Under the adjusted balances method of bank reconciliation, bank credit memorandum is A) added to bank balance B)
deducted from bank balance C) added to book balance D) deducted from book balance E) answer not given

5. Credit balances of trade accounts receivables, if not material, should be treated as A) current liability B) deduction
from positive balances of trade receivables C) long term liability D) part of accounts payable E) answer not given

6. The interest on a non-interest bearing note is equal to A) zero B) excess of market value over a present value of a note
C) excess of present value over face value of note D) excess of face value over present value of note E) answer not
given

7. If a note receivable is discounted with recourse, which will not hold true? A) a contingent liability exist B) note
receivable discounted will be credited C) liability for note receivable discounted will be credited D) note receivable will
be credited upon settlement of the note E) none of the above

8. Goods in transit which are sold FOB shipping point should be included in the inventory of A) seller B) buyer C) either
seller or buyer D) neither seller or buyer E) answer not given

9. Transaction costs directly attributable to acquisition of financial asset shall be capitalized as cost of investment, except
for A) Trading securities B) FVOCI C) financial asset at amortized cost D) investment in equity securities E) answer not
given

10. Shares received in lieu of cash dividend are recorded as A) income at book value of the shares received B) income at
market value of shares received C) income at the cash dividend that would have been received D) stock dividends E)
answer not given

11. Accrued interest on bonds that are purchased between interest dates A) is ignored by both seller and the buyer B)
increases the amount a buyer must pay to acquire the bonds C) is recorded as a loss on the sale of the bonds D)
decreases the amount a buyer must pay to acquire the bonds.

12. An equipment acquired by issuing a bonds shall be measured at A) book value of the equipment B) fair value of the
equipment C) book value of the bonds D) fair value of the bonds

13. At January 1, 2014, JJ Co. had a credit balance of P260,000 in its allowance for uncollectible accounts. Based on past
experience, 2% of JJ’s credit sales have been uncollectible. During 2014, JJ Co. wrote off P325,000 of uncollectible
accounts. Credit sales for 2014 were P9,000,000. In its December 31, 2014, balance sheet what amount should JJ report as
allowance for uncollectible accounts?
A) P115,000 B) P180,000 C) P245,000 D) P440,000 E) answer not given

14. ABC Co’s inventory at Dec. 31, 2013, was P1,500,000 based on a physical count priced at cost, and before any
necessary adjustment for the following
a. Merchandise costing P90,000, shipped FOB shipping point from a vendor on Dec. 30, 2013, was received and
recorded on Jan. 5, 2014
b. Goods in the shipping area were excluded from inventory although shipment was not made until January 4,
2014. The goods billed to the customer FOB shipping point on Dec. 30, 2013, had a cost of P120,000.
What amount should ABC report as inventory in its December 31, 2013, balance sheet?
A) P1,500,000 B) P1,590,000 C) P1,620,000 D) P1,710,000 E) answer not given

15. On Dec. 1, 2014, AB Co. purchased a P400,000 tract of land for a factory site. AB Co. razed an old building on the
property and sold the materials it salvaged from the demolition. AB Co. incurred additional costs and realized salvage
proceeds during December 2014 as follows:
Demolition of old building P50,000
Legal fees for purchase contract and recording ownership 10,000
Title guarantee insurance 12,000
Proceeds from sale of salvaged materials 8,000
In its December 31, 2014 balance sheet, AB should report a balance in the land account of
A) P464,000 B) P460,000 C) P442,000 D) 422,000 E) answer not given

16. GG Co. determined that due to obsolescence, equipment with an original cost of P900,000 and accumulated
depreciation of P420,000 at January 1, 2012, had suffered permanent impairment, and as a result should have a carrying
value of only P300,000 as of the beginning of the year. In addition, the remaining useful life of the equipment was
reduced from 8 years to 3. In its December 31, 2012, balance sheet, what amount should Gel report as accumulated
depreciation?
A) P100,000 B) P520,000 C) P600,000 D) P700,000 E) answer not given

17. On May 1, 2011, LAG Co. purchased a short-term P2,000,000 face value, 9% debt instrument for P1,860,000
including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2014, and
pay interest semi-annually on January 1 and July 1. On December 31, 2011, the fair market value of the instruments is
98%. On March 2, 2012, LAG Co. sold the trading security for P1,980,000. How much will be recognized as income on
the 2011 income statement?
A) P100,000 B) P120,000 C) P160,000 D) P220,000 E) P280,000

18. Soprano Co. acquired 50,000 ordinary shares of Alto Co. on September 30, 2010 for P8,250,000. On October 30, the
shares were split into 2:1 (split-up). On November 30, 2011, Alto distributed 10% ordinary share dividends when the
market price of the December 31, 2011, how much should Soprano report as a gain on sale of investment?
A) P105,000 B) P150,000 C) P200,000 D) P250,000 E) answer not given

19. SUGAR Inc.’s trial balance reflected the following account balance at December 31, 2012:
Accounts payable P19,000 Dividends payable on 2/15/2013 P5,000
Bonds payable, due 2013 P34,000 Income tax payable P9,000
Deferred income tax payable P 4,000 Notes payable, due 1/19/2014 P6,000
Discount on bonds payable P 2,000
The deferred income tax payable is based on temporary differences that will reverse in 2014 and 2015. In SUGAR’s
December 31, 2012, balance sheet, the current liabilities total was:
A) P65,000 B) P67,000 C) P69,000 D) P71,000 E) answer not given

20. UBE Co. had the following capital structure during 2013 and 2014:
Preferred stock, P10 par, 4% cumulative, 25,000 shares issued and outstanding P250,000
Common stock, P5 par, 200,000 shares issued and outstanding P1,000,000
UBE Co. reported net income of P500,000 for the year ended December 31, 2014. UBE Co. paid no preferred dividends
during 2013 and paid P16,000 in preferred dividends during 2014. For the year 2014, UBE Co.’s basic earnings per share
must be ____?
A) P2.42 B) P2.45 C) P2.48 D) P2.50 E) answer not given

21. A partner’s capital account is credited for these transactions except: A)original and additional investment B) share in
net income C) bonus given to partner upon admission D) loans granted to the partner E) answer not given

22. A partner retires from the partnership and final settlement is more than his capital interest. Under the bonus method,
the excess is recorded as A) goodwill B) an expense C) decrease in partners’ capital accounts D) increase in partners’
capital accounts

23. A statement of financial condition that emphasizes liquidation values and provides relevant information for the trustee
in liquidating the debtor corporation. A) statement of affairs B) statement of liquidation and realization C) financial
statements D) Statement of Equity E) none of the above
24. Joint venture which involves the use of assets and other resources of the venturers is a A) jointly controlled assets B)
jointly controlled operations C) jointly controlled entities D) answer not given
25. C) delivery expenses for sold consigned goods

26. S1: Under installment sales method……. S2: Under the cost recovery method….. C) S1 is true

27. S2: When work to be done and the costs to be incurred in a long term construction project can be reliably estimated,
the percentage of completion method is the most preferable method for revenue recognition. S2: Under the percentage of
completion method, the gross profit recognized during the year is the estimated total gross profit multiplied by the % of
cost incurred during the year to the cost incurred to date A) both are true B) both are false C) S1 is true D) S1 is false

28. A transfer of merchandise from home office to branch should be recorded as A) increase in Home Office current
account B) increase in investment in branch account C) credit to shipment to branch D) debit to shipment from home
office E) all of the above

29. In business combination in which one entity acquired the net assets of another entity, the entity acquired: A) remains
a subsidiary of the acquiring entity B) is normally liquidated and its net assets are recorded by the acquiring entity C)
can never be liquidated D) must be purchased for cash E) answer not given

30. Which is true regarding the investment in subsidiary account? A) it is accounted for in the parent’s books and is
included as non-current assets in the parent’s balance sheet B) it is not included in consolidated balance sheet of parent
and subsidiary C) it is decreased and or increased by the difference between fair value and book value of net assets
of the subsidiary for consolidated purposes D) all of the above E) answer not given

31. The following items are included in determining Non-controlling interest in the net assets of subsidiary, except: A)
Share in equity of subsidiary prior to business combination B) share in net income or loss of subsidiary after business
combination C) share in unamortized difference between fair value and book value of net assets of subsidiary D) none of
the above E) answer not given

32. For a reorganization plan to be accepted and confirmed by SEC, it must be approved by A) all creditors B) majority of
creditors C) majority of creditors and shareholders D) majority of creditors and shareholders of at least two-thirds of
outstanding ordinary shares E) answer not given

33. Bacil converted his sole proprietorship by admitting Jonats as partner into the business. Business assets and liabilities
prior to admission of Jonats amounted to P275,000 and P75,000 respectively. Partners agreed to share profits and losses
equally by contributing equal amount of capital to the partnership. If the business assets is valued P200,000, how much
cash should Bacil (withdraw) or additionally contribute in order to formally establish the partnership with total
capitalization of P350,000?
A) P25,000 B) P25,000 C) P50,000 D) (P50,000) E) answer not given

34. On January 1, 2010, Josephine and Elvira have capital balances of P140,000 and P120,000, respectively. On July 1,
Josephine invested P20,000 and Elvira withdrew P12,000. Josephine and Elvira shall divide profits and losses in the ration
11:9 after the following: Josephine as the managing partner shall receive P72,000 salary and Elvira shall receive P60,000;
both partners shall receive interest of 10% on their beginning capital balances to offset difference in capital investments.
For the year ended December 31, 2010, Josephine received P64,000 as share in net income. How much was the share of
Elvira?
A) P52,364 B) P53,333 C) P54,000 D) None of the above

35. Evelyn and Lorie Ann are partners sharing profits and loss in ratio 3:2 with capital balances of P60,000 and P20,000,
respectively. They decided to form a new partnership with Vivian, who invested land acquired at P12,000 but have a
current value of P15,000 for a 20% capital interest in the new partnership. The new partnership elected to use the bonus
method to record the admission of Vivian. Vivian’s capital account should be credited for:
A) P12,000 B) P15,000 C) P16,000 D) P19,000 E) answer not given
36. DEAD partnership have the following balances prior to liquidation:
Cash P 64,200 Liabilities P 68,400
Receivable from De Leon 7,200 Payable to Acosta 14,600
Other Assets 147,000 De Leon, Capital (50%) 59,400
De Leon, Drawing 12,000 Acosta, Capital (30%) 44,400
Dagdag Capital (20%) 39,000
Dagdag, Drawing 4,800
Total credits P230,400
The partnership was liquidated and De Leon received P13,200 as final settlement of his claim in the partnership. How
much is the total loss on realization?
A) P10,800 B) P31,200 C) P54,000 D) P64,000 E) answer not given

37. During 2014, ABC Co. began offering its goods to selected retailers on a consignment basis. The following
information was derived from ABC Co.’s 2014 accounting records: Beginning inventory – P122,000; Purchases –
P540,000; Freight in – P10,000; Transportation to consignees – P5,000; Freight-out – P35,000; Ending inventory held by
C – P145,000; Ending inventory held by consignees – P20,000. In its 2014 income statement, what amount should ABC
Co. report as cost of goods sold?
A) P507,000 B) P512,000 C) P527,000 D) P547,000

38. On July 1, 2009, VIVA Co. lent P120,000 to a foreign supplier, evidenced by an interest-bearing note due on July 1,
2010. The note denominated in the currency of the borrower and was equivalent to 840,000 local currency units (LCU) on
the loan date. The note principal was appropriately included at P140,000 in the receivable section of VIVA Co.’s
December 31, 2009 statement of financial position. The note principal was repaid to VIVA Co. on the July 1, 2010 due
date when the exchange rate was 8 LCU to P1. In its oncome statement for the year ended, December 31, 2010, what
amount should VIVA Co. include as foreign currency transaction gain (loss)?
A) 33,000 B) 32,000 C) (35,000) D) (33,000) E) answer not given

39. The following are the transaction of Emmy Company relative to a fire that destroyed its apartment complex:
a. The unexpired premium on date of fire is P96,000
b. The fair value of the asset on date of fire is estimated at P60,000,000. The insurance policy is for P48,000,000
and contains a co-insurance clause
c. Salvaged materials are sold for P300,000
d. Expenses incidental to the fire and paid by the company are P80,000
e. Book Value of the asset which is 70% damaged by fire is P50,000,000.
The balance of fire loss account is:
A) P1,247,200 B) P1,303,000 C) P1,200,000 D) P1,245,000 E) answer not given

40. St. Bernard Hospital, a non-profit hospital with a religious group, reported these date for the year ended December 31,
2014:
Gross patient service revenue at the branch hospital’s full established rates P980,000
Bad debts expense 10,000
Contractual adjustments with third party payors 100,000
Allowance for discounts to hospital employees 15,000
For the year ended December 31, 2014, what amount should be reported as net patient service revenues?
A) P865,000 B) P880,000 C) P855,000 D) P955,000 E) answer not given

41. Management accounting is an integral part of the management process. As such, it provides essential information for
the following objectives, except: A) Measuring and evaluating performance B) Planning strategies and controlling current
activities C) Maintaining the current level of resource utilization as well as internal and external communication D)
Enhancing objectivity in decision making E) answer not given

42. Which statement is true when referring to fixed costs? A) Fixed costs increase in total throughout the relevant range
B) As volume increases, unit fixed cost and total fixed cost will change C) Committed fixed costs arise from the annual
decisions by management D) Discretionary fixed costs can often be reduced to zero for short periods of time without
seriously impairing the long-run goals of the company E) none of the above

43. At break-even point, the following holds true, except: A) net profit equals zero B) contribution margin equals fixed
costs C) total revenue equals total costs D) operating profit equals operating expenses E) none of the above
44. When sales exceed production, the net operating income reported under variable costing generally will be _____ net
operating income under absorption costing A) less than B) greater than C) equal to D) greater than or less than

45. Which variances would be least controllable by a production supervisor? A) Material usage B) Labor efficiency C)
Overhead volume D) Overhead efficiency E) answer not given

46. Which would increase a firm’s return on shareholder’s equity? A) issuance of 12% bonds and investing the proceeds
to earn more than 12% B) increase in the firm’s price earnings ratio C) increase in the market price of the firm’s ordinary
share D) issuance of ordinary shares to pay long term debts E) all of the above

47. The following statements are true concerning decentralization, except A) Decentralization helps train managers B)
Decentralization provides a basis for evaluating manager performance C) Decentralization motivates manager D) All of
the above E) none of the above

48. When resources are scarce, the primary step to consider to properly analyze the decision on how to use it is to
compute the: A) market limits B) best product combination C) contribution margin of each product D) contribution
margin per scarce resource of each product D) net income provided by the best product combination

49. Which is not a significant reason for planning? A) providing a basis for controlling operations B) forcing managers to
consider expected future trends and conditions C) ensuring profitable operations D) checking progress toward the
objectives of the organization E) answer not given

50. Which combination of investment policy and financing policy related to working capital provides the lowest risk but
entails the lowest potential profits? A) relaxed, conservative B) restricted, conservative C) relaxed, aggressive D)
restricted, aggressive E) answer not given

51. Which technique is best used if a company puts more value to minimizing the risk rather than maximizing the returns
on a capital investment project? A) payback method B) ARR C) NPV D) Time adjusted rate of return E) answer not given

52. The optimal capital structure the mix of debt, ordinary equity and preferred equity that ___ A) maximizes the
company’s EPS B) maximizes the company’s stock price C) minimizes the company’s WACC D) B and C are correct
E) all of the above

53. WAIS Inc. consistently generated these results for the past several years:
Sales 100%
Cost of Sales
Variable 50%
Fixed 10% 60%
Gross Profit 40%
Operating Expenses
Variable 20%
Fixed 15% 35%
Operating Income 5%

For the coming year, the expected total sales is P3 million. In pesos, how much should be the break-even sales?
A) P1,525,000 B) P1,875,000 C) P2,500,000 D) P2,850,000 E) answer not given

54. During 2012, Makers Inc. produced and sold 15,000 units of product creation with production costs as follows:
Direct Materials P 450,000
Direct labor 400,000
Overhead 500,000
Total Cost P1,350,000
The operations during 2011 showed that Makers earned a profit of P225,000, a contribution margin of P475,000 and a
contribution margin ratio of 25% while producing and selling 10,000 units. Selling and administrative expense are all
fixed, totaling to P100,000. The unit cost for 2012, calculated on the direct costing basis?
A) P90 B) P83.33 C) P75 D) P80 E) P86.67
55. A total of 6,850 kg of raw material was purchased at a total cost of P21,920. The material price variance was P1,370
favorable. The standard price per kg for the raw material must be:
A) P0.20 B) P3.00 C) P3.20 D)P3.40 E) answer not given

56. KTA Inc. has current ratio of 3.5 and acid test ratio of 2.9. Receivables and inventories amounted to P35,000 and
P49,000 respectively. The firm’s current liabilities must be
A) P49,000 B) P70,000 C)P100,000 D) P125,000 E) answer not given

57. Division 1 of Ace Co. makes and sells wheels that can either be sold to outside customers or transferred to Division 2.
The following data are available from last month:
Division 1:
Selling price per wheel to outside customers P60
Variable cost per wheel when sold to outside customers 35
Capacity in wheels 15,000
Division 2:
Number of wheels needed per month 5,000
Price per wheel paid to an outside supplier P47

If Division 1 sells the wheels to Division 2, Division 1 can avoid P2 per wheel in sales commissions. If Division 1 sells
11,5000 units each month to outside customers, its lowest acceptable transfer price would be:
A) P34.73 B) P37.50 C) P43.50 D) P47.00 E) answer not given

58. Below is the sales budget (in units) of LEVI Company for the period January to June 2009:
January 100,000 March 90,000 May 70,000
February 90,000 April 80,000 June 70,000

The firm’s projection is to have inventory on hand at end of each month equal to 70% of sales of next month. It is
assumed that inventory at end of Dec 2008 will meet this requirement and that 80,000 units will be sold in July 2009.
Total production budget in units for the six months period ending June 30, 2009 is?
A) P479,000 B) P486,000 C) P524,000 D) P556,000 E) answer not given

59. AB Co. has budgeted sales and cost of sales for the coming year are P73 million and P45 million respectively. Short
term interest rates are expected to average 10%. If the firm can increase inventory turnover from its current level of 9x a
year to 12x a year, its cost savings in the coming year would be
A) P125,000 B) P300,000 C) P375,000 D) P500,000 E) answer not given

60. The primary goal of the CPA in performing the attest function is to: A) detect fraud B) examine individual
transactions so that the auditor may certify as to their validity C) determine whether the client’s assertions are fairly
stated D) assure that the consistent application of correct accounting procedures

61. Auditing standards are A) rules imposed by SEC and PICPA B) maximum standards which denote excellent work C)
benchmark to be used on all audits, reviews and compilations D) general guidelines to aid auditors E) all of the above

62. An auditor need not abide by an auditing standard if the auditor believes that the A) amount is immaterial B)
requirement of the standard is impractical to perform C) requirement of the standard is impossible to perform D) any of
the above E) none of the above

63. When an independent auditor expresses an unqualified opinion he asserts that: S1: He performed the audit in
accordance with generally accepted auditing standards. S2: The company is a profitable and viable entity. S3: The
Financial statements examined and in conformity with GAAP. S4: The financial statements are accurate and free errors.
A) all are true B) all are false C) S1 and S3 are true D) S2 and S4 are true E) answer not given

64. If the auditor concludes that the fraud or error has a material effect on the financial statements and has not been
properly corrected in the financial statements, the auditor should issue a: A) unqualified opinion with explanatory
paragraph B) qualified or adverse opinion C) qualified or disclaimer of opinion D) adverse or disclaimer of opinion

65. Which is not a right of a partner? A) right to associate another person to his share B) right to admit another partner
C) right to inspect and copy partnership books D) right to ask dissolution of the firm at the proper time E) none of the
above
66. It is a contract wherein a person binds himself to render special service or to do something in behalf of another with
consent of the latter. A) contract of agency B) contract of exchange C) contract of piece of work D) contract of service

67. A delinquent stockholder is not entitled to the following rights, except the right to: A) be voted B) vote or be
represented in the meetings of stockholders C) dividends D) all of the above E) none of the above

68. Ownership of the thing sold is A) transferred to the buyer upon constructive or actual delivery of the thing sold
B) transferred to the buyer upon acceptance of the price C) acquired by the buyer upon perfection of the contract D)
retained by the seller in ”sale or return” E) all of the above

69. Jesus owes Maria P1,000 due on June 30, 2011. Maria owes Jesus P600 due on June 20, 2011 Maria owes Jesus P400
due on June 30, 2011. Maria owes Jose P1,000 due on June 25, 2011. On June 25, 2011 Maria cannot pay Jose P1,000 so
she assigns to Jose his credit of P1,000 against Jesus without the knowledge of Jesus. On July 2, 2011, Jose ties to collect
from Jesus the P1,000. How much can Jose compel Jesus to pay?
A) P1,000 B) P400 C) P600 D) Zero E) answer not given

70. A and B formed the limited partnership with A as general partner, B as limited partner and C as industrial partner, A
and B contributed P50,00 each. The partnership failed and after disposing all its aspects to pay partnership debts there still
remains a note payable in the sum of P30,000. A) a legal representative of a limited partner B) A and B are liable to pay
P15,000 C) only A is liable to pay P30,000 indebtedness D) C liable to pay P15,000 or E) answer not given

71. The following are remedies available to the taxpayers, except A) administrative protest B) institute a criminal action
C) appeal to the court of tax appeals D) claim for refund E) none of the above

72. This is remedy available to the government to enforce collection of taxes by seizing tangible and intangible personal
properties of a taxpayer to be sold at public auction if the tax dues are not voluntarily paid A) distraint B) police power
C) eminent domain D) levy E) answer not given

73. A taxpayer paid excessive tax on April 15, 2012. On December 20, 2013, she filed a written claim for refund. Her
claim was denied by the BIR and she received the denial on March 15, 2014. She filed a motion for reconsideration with
the BIR on March 31, 2014. On April 10, 2014, she received the final denial of the BIR. What will be the taxpayer’s
remedy? A) file another motion for reconsideration with the BIR within 30 days after receipt of final denial B) file an
appeal with the Court of Tax appeals on or before May 10, 2014 C) file an appeal with the Court of Tax appeals on or
before April 15, 2014 D) the taxpayer has no more remedy against the final denial

74. The basic personal exemption of a married individual with 2 children is

75. The total amount of 13th month pay, bonus, and other benefits of an employee that is exempted from income tax
A) P30,000 B) P50,000 C) P70,000 D) P82,000 E) answer not given