1stLONGQUIZ

Account
ing123

THEORI ES.Readcar
eful
l
ythequest i
onsbelow andchoosethebeststatementamongthechoi
ces.
Writ
et heleter(
t i
nCAPITAL)correspondi
ngtoy ouransweront hesheetprovi
dedal
ongwiththi
s
questi
onnaie.Er
r asur
esoralt
erat
ionsofanykindwillnotbegi
venpoi
nts.

1.Whichofthefoll
owingshouldbediscl
osedinaSummar yofSi
gni
fi
cantAccount
ingPol
i
cies?
a.Ty pesofexecutorycont
racts
b.Amountf orcumul at
iveeff
ectofchangei
naccount
ingpri
nci
ple
c. Cl
aimsofequi t
yholders
d.Depr eci
ati
onmet hodfoll
owed

2.Theful ldisclosur epr inci

ple,asadopt edbyt heaccountingpr of
ession,isbestdescr i
bedby
whi
choft hef ollowing?
a.Al linformat ionr elatedt oanent i
ty'
sbusinessandoper ati
ngobj ect
ivesi
sr equi
redt obe
di
scl osedi nt hefinancial stat
ement s.
b.Inf ormationabouteachaccountbal anceappear i
ngi nthef inanci
alstat
ement sist obe
i
ncl udedi nthenot estot hef i
nancialstat
ement s.
c. Enoughi nformat i
onshoul dbedi scl
osedint hefi
nancialstatementssoaper sonwi shingt
o
i
nv estint hest ockoft hecompanycanmakeapr ofi
tabledecisi
on.
d.Di sclosure ofanyf i
nancialf acts si
gnif
icantenough t oi nf
luence the j
udgmentofan
i
nfor medr eader.

3.Ifabusi nessentityenteredi ntocer t

ainrel
atedpar t
yt r
ansacti
ons,itwouldber equir
edto
discloseallofthefoll
owinginfor mati
onexceptt he
a.nat ureoftherelat
ionshipbet weent hepar
ti
estothet r
ansacti
ons.
b.nat ureofanyfutur
etransactionsplannedbetweenthepart
iesandtheter
msi nvol
ved.
c. pesoamountoft het r
ansact i
onsf oreachoftheper i
odsforwhichani ncomest atementi
s
presented.
d.amount sduefrom ortorelatedpar t
iesasofthedateofeachbalancesheetpresented.

4.Eventsthatoccuraft
ertheDecember31, 2011balancesheetdat e(
butbef oret
hebalancesheet
i
si ssued)andpr ovi
deadditi
onalevidenceaboutcondi ti
onst hatexi
stedatt hebalancesheet
dateandaf fectt
hereali
zabi
li
tyofaccountsreceivableshouldbe
a.di scussedonlyintheMD&A( Management '
sDi scussi
onandAnal ysis)sect
ionoftheannual
r
eport.
b.di scl
osedonl yi
ntheNotestot heFinancialSt
atements.
c. usedt orecordanadjust
mentt oBadDebtExpensef ortheyearendingDecember31, 2011.
d.usedt orecordanadjust
mentdi r
ectl
yt otheRetainedEarni
ngsaccount

5.Whichofthef ol
lowingpost -
bal
ance- sheetevent
swouldgener
all
yr equi
redisclosur
e,butno
adj
ustmentofthef i
nancial
stat
ement s?
a.Retir
ementoft hecompanypr esident
b.Settl
ementofl it
igati
onwhent heev entt
hatgaver
iset
othelit
igati
onoccurredpriort
othe
bal
ancesheetdat e.
c. Employ
eest r
ikes
d.Issueofalargeamountofcapi talstock

6.Which of the f ol
lowing subsequent ev ents( post-
balance-sheet events) wouldrequi
re
adj
ustmentoft heaccountsbef orei
ssuanceofthef i
nancialstat
ement s?
a.Lossofpl antasar esultoffir
e
b.Changesi nt hequotedmar ketpri
cesofsecur i
ti
esheldasani nvest
ment
c. Lossonanuncol lecti
bleaccountrecei
vableresult
ingfrom acust omer’
smaj orf
loodl
oss
d.Lossonal awsuit,t
heout comeofwhi chwasdeemeduncer t
ainaty earend.

7.Whichofthefol
lowingisal
imitat
ionofthebal
ancesheet
?
a.Manyi temsthatareoff
inancialv
aluear
eomitt
ed.
b.Judgment sandestimat
esar eused.
c. Cur
rentfai
rval
ueisnotreported.
d.Allofthese

8.Thebal
ancesheeti
susef
ulf
oranal
yzi
ngal
loft
hef
oll
owi
ngexcept
a.li
quidi
ty.
b.solv
ency.
 c. prof
it
abi
li
ty.
d.f i
nanci
alf
lexi
bil
i
ty.

9.Bal
ancesheetinformationisusef
ulforal
lofthef
oll
owi
ngexceptt
o
a.comput eratesofreturn
b.analyzecashinflowsandout f
lowsfortheper
iod
c. ev
aluat
ecapi t
alstructur
e
d.assessfuturecashf lows

10.Bal
ancesheetinf
ormationi
susefulforal
lofthef
oll
owi
ngexcept
a.assessingacompany '
sri
sk
b.evaluat
ingacompany '
sli
qui
dity
c. ev
aluat
ingacompany '
sfi
nancialfl
exi
bil
i
ty
d.determini
ngfreecashfl
ows.

11.Ali
mitat
ionofthebalancesheetthatisnotal
soali
mi t
ati
onofthei
ncomest
atementi
s
a.theuseofjudgment sandest i
mates
b.omi t
tedit
ems
c. t
henumber sareaffect
edbyt heaccounti
ngmethodsemployed
d.valuati
onofit
emsathi stor
icalcost

12.Theamountoft i
met hati
sexpect
edt
oel
apseunt
ilanasseti
sreal
i
zedorot
her
wiseconv
ert
ed
i
ntocashisrefer
redtoas
a.solvency.
b.financi
alfl
exi
bil
ity
.
c. l
i
quidit
y.
d.exchangeabil
ity
.

13.Thebasi
sforclassi
fyi
ngasset
sascur r
entornoncurr
entisconv
ersi
ont
ocashwi
thi
n
a.theaccountingcycl
eoroneyear,
whicheveri
sshor t
er.
b.theoperat
ingcy cl
eoroneyear
,whicheveri
slonger.
c. t
heaccountingcycl
eoroneyear,
whicheveri
slonger.
d.theoperat
ingcy cl
eoroneyear
,whicheveri
sshorter
.

14.Thebasi sforcl assi

fyi
ngassetsascur rentornoncurrentistheperiodoftimenor
mal
l
yrequi
red
bytheaccount i
ngent i
tytoconvertcashinvest
edi n
a.inv entorybacki nt
ocash, or12mont hs,whicheverisshorter.
b.r eceivablesbacki nt
ocash, or12mont hs,whicheveri
sl onger.
c. tangiblefixedassetsbackintocash, or12mont hs,whicheverislonger
.
d.inv entorybacki nt
ocash, or12mont hs,whicheverislonger.

15.Whichoft hefol
lowi
ngi sacurr
entasset?
a.Cashsur r
enderval
ueofal i
feinsur
ancepolicyofwhichthecompanyi
sthebenef
ici
ary
.
b.Inv est
mentinequitysecuri
ti
esforthepurposeofcontrol
li
ngthei
ssui
ngcompany.
c. Cashdesignatedforthepurchaseoftangi
blefi
xedassets.
d.Tr adeinstal
l
mentr ecei
vabl
esnormallycoll
ecti
blei
n18mont hs.

16.Whichofthef oll
owingshoul dnotbeconsideredasacurrentasseti
nthebalancesheet
?
a.Install
mentnot esreceivabl
edueov er18mont hsinaccordancewit
hnormal tr
adepract
ice.
b.Pr epai
dt axeswhichcov erassessmentsoft hef
oll
owingoperati
ngcycl
eoft hebusi
ness.
c. Equit
yordebtsecur i
tiespurchasedwithcashavail
ableforcurr
entoper
ations.
d.Thecashsur r
endervalueofal i
feinsurancepol
icycarri
edbyacor por
ation,t
hebenefi
ciar
y,
onitspresident.

17.Whichoft hef oll

owingisnotalong-t
erminv
est
ment
?
a.Cashsur renderv al
ueofli
feinsur
ance
b.Fr anchise
c. Landhel df orspecul
ati
on
d.Asi nkingf und

18.Workingcapit
alis
a.capitalwhichhasbeenr ei
nvestedi
nthebusi
ness.
b.unappr opr
iatedret
ainedearni
ngs.
c. cashandreceivabl
eslesscurrentl
i
abi
li
ti
es.
d.noneoft hese.
19.Whichitem bel
owi snotacurrentl
i
abi
li
ty?
a.Unear nedrevenue
b.St ockdivi
dendsdistri
but
able
c. Thecurrentl
ymat ur
ingporti
onofl
ong-t
erm debt
d.Tr adeaccountspayable

20.Whichofthefoll
owingwoul dbecl
assi
fi
edi
nadi
ff
erentmaj
orsect
ionofabal
ancesheetf
rom
theot
hers?
a.Capitalst
ock
b.Commonst ocksubscri
bed
c. St
ockdivi
denddistr
ibutable
d.Stockinvest
mentinaf f
ili
ate

21.Which ofthe fol

lowing balance sheetcl
assi
fi
cat
ionswoul
d nor
mal
l
yrequi
ret
he gr
eat
est
amountofsupplement ar
ydisclosur
e?
a.Currentassets
b.Currentl
iabi
lit
ies
c. Pl
antassets
d.Long-ter
ml i
abili
ti
es

22.Typi
calcontract
ualsituat
ionst
hatar
edi
scl
osedi
nthenot
est
othebal
ancesheeti
ncl
udeal
lof
thefol
l
owingexcept
a.debtcov enants
b.leaseobligati
ons
c. adver
ti
singcontracts
d.pensionobl i
gati
ons

23.Whichofthef oll
owingisnotamethodofdi
scl
osingpert
inentinf
ormat
ion?
a.Suppor ti
ngschedules
b.Par ent
heticalexpl
anati
ons
c. Crossreferenceandcontr
ait
ems
d.All oft
hesear emethodsofdiscl
osi
ngpert
inenti
nfor
mat i
on.

24.Si
gnifi
cantaccountingpolici
esmaynotbe
a.selectedont hebasisofjudgment .
b.selectedfrom exist
ingaccept abl
ealt
ernat
ives.
c. unusualorinnovati
veinapplicati
on.
d.omi tt
edf r
om financial
-st
atementdiscl
osure.

25.General
-purposefinanci
alst
atementsar ethepr
oductof
a.f i
nancialaccounti
ng.
b.manager i
alaccounti
ng.
c. bothfi
nancialandmanager i
alaccounti
ng.
d.nei t
herfinanci
alnormanagerialaccounti
ng.

26.Theinf
ormationpr ovidedbyf i
nancial
report
ingpertainsto
a.indiv
idualbusinessent erpri
ses,ratherthantoi ndustri
esoraneconomyasawhol eorto
member sofsoci etyasconsumer s.
b.businessi ndustri
es,ratherthantoi ndi
vidualenterpr
isesoraneconomyasawhol eorto
member sofsoci etyasconsumer s.
c. i
ndiv
idualbusi nessent erpr
ises,indust
ries,andaneconomyasawhol e,rat
herthanto
member sofsoci etyasconsumer s.
d.aneconomyasawhol eandt omember sofsoci et
yasconsumers,r
atherthantoi
ndivi
dual
ent
erpri
sesori ndustri
es.

27.Whichoft hefollowi ngrepresentsaf

orm ofcommuni
cat
iont
hroughf
inanci
alr
epor
ti
ngbutnot
thr
oughf inancial statements?
a.Bal ancesheet .
b.Pr esident'
sl etter.
c. Incomest atement .
d.Not est ofinanci al st
atements.

28.Whati
samajorobj
ect
iveoff
inanci
alr
epor
ti
ng?
a.Provi
dei
nfor
mati
onthati
susefult
omanagementi
nmaki
ngdeci
sions.
 b.Pr ovidei
nformati
onthatcl
earl
yport
r aynonfi
nanci
altr
ansacti
ons.
c. Provide i
nfor
mation t
hatis usef
ult o assess t
he amounts,ti
ming,and uncer
tai
ntyof
perspecti
vecashrecei
pts.
d.Pr ovidei
nformati
onthatexcl
udesclaimstotheresources.

29.Whichofthefol
lowi
ngstatementsisnotanobj ecti
veoffinancialreporti
ng?
a.Pr ovi
deinf
ormat
ionthatisusefuli
ninvestmentandcr editdecisions.
b.Pr ovi
deinf
ormati
onaboutent erpr
iser
esour ces,cl
aimst ot hoseresources,andchangest
o
them.
c. Provi
deinf
ormat
ionont hel
iquidat
ionvalueofanent erpr
ise.
d.Pr ovi
deinf
ormat
ionthatisusefuli
nassessingcashf lowpr ospects.

30.Accr
ual accounti
ngisusedbecause
a.cashf lowsareconsideredlessi
mportant
.
b.itprovidesabetteri
ndicati
onofabi
li
tytogener
atecashfl
owsthanthecashbasi
s.
c. i
trecognizesrev
enueswhencashi srecei
vedandexpenseswhencashispai
d.
d.noneoft heabove.

31.Whichoft hef ol
lowingisagenerall
imi
tati
onof"general
purposefinancialst
atement
s"?
a.Gener alpur posef i
nanci
alstat
ementsmaynotbet hemosti nfor
mat i
veforaspeci f
ic
enterprise.
b.Gener alpurposef i
nanci
alst
atementsarecomparabl
e.
c. Gener alpurposef i
nanci
alst
atementsareassumedt opresentfai
rlythecompany'
sfinanci
al
operations.
d.Noneoft heabov e.

32.Whichoft hef oll

owingpr i
nci
plesbestdescr
ibestherati
onalef
ormat
chi
ngdi
str
ibut
ioncost
s
andadmi ni
strati
veexpenseswi thr
evenueofthecurr
entperi
od?
a.Directmat ching
b.Sy st
emat icandr at
ionalal
l
ocati
on
c. I
mmedi ater ecogni
tion
d.Par t
ialrecogniti
on

33.Awholesalebakerywouldnormall
yrecogni
zer
evenuewhen
a.Thepr oducti
sav ail
abl
eforsal
etoacustomer
b.Cashi srecei
vedfrom acustomer
c. Goodsaredeli
v er
edtothecustomer
d.Managementchoosest odoso

34.Anent i
tyhasal oanduef orpaymentinsixmonths’ti
me,buttheenti
tyhasopt
iont
or ef
inance
forrepaymentt woy earsl
ater.Theenti
typlanstorefi
nancet
hisloan.I
nwhichsect
ionoft he
stat
ementoff inanci
alposit
ionshoul
dthisloanbepresent
ed?
a.Cur rentl
iabil
it
ies
b.Cur rentassets
c. Noncurrentli
abil
iti
es
d.Noncur rentassets

35.Cur
rentasset sinastatementoffi
nanci
al posit
ionshoul
dneveri
ncl
ude
a.Ar eceiv
ablefrom acust
omernotcollectibl
ewithi
noneyear.
b.Cur r
enttaxasset.
c. Goodwi llar
isi
nginabusinesscombination.
d.Pr emi um paidonabondi nv
estment
.

PROBLEMS.Deter
minetheamount
saskedbyeachprobl
em.Finalanswersshoul
dbewr
it
tenont
he
spacepr
ovded.Er
i asur
esoral
ter
ati
onsofanyki
ndwi
llnotbegi
venpoints.
PROBLEM 1:Ex
empl
arCompanypr
ovi
dedt
hef
oll
owi
ngaccountbal
ancesonDecember31,
2011:

Account srecei
vabl
e P 450,
000
Adv ancestooffi
cersnotcurr
ent
lycol
l
ect
ibl
e 100,
000
Sinkingfund 400,
000
Building 5,
000,
000
Long- ter
mr ef
undabledeposi
t 50,
000
Cashandcashequi val
ents 500,
000
 Cashsur renderv al
ue 60,
000
Equi pment 1,
000,
000
Leaser ight s 100,
000
Accr uedi nter estonnot esreceiv
abl e 10,
000
I
nv entories 1,
300,
000
Land 1,
500,
000
Landhel df orspecul ati
on 500,
000
Not esrecei vabl e 250,
000
Comput ersof t ware 3,
250,
000
Prepaidexpenses 70,
000
Fi
nanci al asset sheldf ortradi
ng 280,
000
Unear nedr enti ncome 40,
000
Deficit 1,
800,
000
Shar epremi um onpr ef
erenceshar es 500,
000
Premi um onbondspay abl
e 1,
000,
000
Preferenceshar ecapi t
al 2,
000,
000
Shar epremi um onor di
naryshares 200,
000
Not espay able 300,
000
SSSpay abl e 10,
000
Account spay able 400,
000
Accr uedsal aries 150,
000
Accumul at eddepr eciati
on–bui lding 2,
000,
000
Accumul at eddepr eciati
on–equi pment 200,
000
All
owancef ordoubt fulaccounts 20,
000
Bondspay abl eduei n2012 5,
000,
000
Dividendspay able 120,
000
Withholdi ngt axpay able 30,
000
Ordinaryshar ecapi tal 5,
000,
000
Preferenceshar eredempt ionfund 350,
000

Basedont heinfor
mationgi
ven,deter
minethef ol
l
owi
ngamount
stobepr
esent
edi
nExempl
ar’
s
December31,2011stat
ementoff
inanci
alposi
ti
on:
1.Cur
rentasset
s:_
___
___
___
___
___
___
___
___
2.Non-
cur
rentasset
s:_
___
___
___
___
___
___
___
___
3.Cur
rentl
i
abi
l
iti
es:
___
___
___
___
___
___
___
___
_
4.Non-
cur
rentl
i
abi
l
iti
es:
___
___
___
___
___
___
___
___
5.Shar
ehol
der
s’equi
ty:
___
___
___
___
___
___
___
___

PROBLEM 2:Di
l
emmaCompanypr
ovi
dedy
ouwi
tht
hef
oll
owi
ngi
nfor
mat
iononDecember31,
2011:

Cash P 800,
000
Account sr eceiv able 750,
000
All
owancef ordoubt fulaccounts 50,
000
Prepai dexpenses 160,
000
I
nv entory 1,
000,
000
Fi
nanci alasset satf airval
ue 690,
000
Land 500,
000
Buildinginpr ocess 5,
000,
000
Patent 200,
000
Machi neryandequi pment 1,
500,
000
Accumul at eddepr eciation 300,
000
Discountonbondspay abl
e 200,
000
Account spay able 900,
000
Accr uedexpenses 150,
000
Not epay able 250,
000
Bondspay abl e 2,
000,
000
Shar ecapital 3,
000,
000
Retainedear nings 4,
000,
000
Appr opri
atedr etainedear ningsf
orcont
ingenci
es 150,
000

Addi
ti
onal
inf
ormati
onregardi
ngtheaccountbal
ancesf
oll
ows:
 Thefi
nanci
alasset
satfai
rval
ueinclude:
 ClearCompany ,1,000shar es P 400,000
Dil
emmaCompanyshar ecapi tal
,2,000shar es 250,
000
Dividendr eceivableonCl earCompanyshar ecapital 40,
000
 Thebal anceoft hebui ldi
ngi npr ocessaccountr epresent sthecost sexpendedt odateona
buil
dingi nt hepr ocessofconst ructi
on.Theent i
tyr entsf actoryspaceatt hepresenttime.The
l
andonwhi cht hebui l
dingi sbei
ngconst ructedisacqui redatacostofP500, 000andnowhasa
mar ketv alueofP1, 000,000.
 Thenot epay ablerepresent sbankl oandueJul y1,2013.Noi nt erestisaccr
uedont heloan.
 Thebondspay10%i nterestsemi -annuall
yonApr il1andOct ober1andmat ureonApr i
l1,2014.
Noi nteresthasbeenaccr uedont hebonds.
 Fortyt housandshar es,P100par ,areaut horized,ofwhi ch30, 000sharesareissuedi ncludi
ng
2,000shar esi nthet r
easur y.
 Ther et ai
nedear ni
ngsappr opri
at i
onbal anceofP150, 000wascr eatedinanti
cipati
onf orthe
resultofapendi ngl awsui tagainstt heentity.Shor t
lyaftert heendoft hereport
ingper i
od,the
suitwasami cablysettl
ed, t
heent itypayi
ngP100, 000.

Basedont heinf
ormat
iongiv
en,deter
minet hefol
l
owi
ngamount
sto bepr
esent
edi
nDi
l
emma’
s
December31,
2011stat
ementoff
inanci
alposi
ti
on:
6.Cur
rentasset
s:_
___
___
___
___
___
___
___
___
7.Non-
cur
rentasset
s:_
___
___
___
___
___
___
___
___
8.Cur
rentl
i
abi
l
iti
es:
___
___
___
___
___
___
___
___
_
9.Non-
cur
rentl
i
abi
l
iti
es:
___
___
___
___
___
___
___
___
10.Shar
ehol
der
s’equi
ty:
___
___
___
___
___
___
___
___

PROBLEM 3:Socor
roCompanypr
ovi
dedt
hef
oll
owi
ngi
nfor
mat
iononDecember31,
2011:

Currentasset
s P 3,
100,
000
Otherassets 5,
900,
000
Currentl
iabi
li
ti
es 1,
000,
000
Long-ter
ml i
abil
i
ties 1,
000,
000
Capital 7,
000,
000

Addi
ti
onali
nf or
mat i
onr egar dingthedi saggr egationoft heamountspresent
edf oll
ows:
 Currentasset sincl udet hef oll
owi ng:
Cash,i ncludi ng P200, 000 i nvest ed in money mar ket
inst rument s and r estri
cted f orei
gn deposit of
P300, 000 P 1,000,
000
Landhel dforundet ermi neduse 500,
000
Account sr ecei vablelessal lowanceofP50, 000 700,
000
I
nv ent ories 600,
000
Socor roCor por ati
onshar ecapital
,atcost 300,
000
 Otherasset si ncl ude:
Storesuppl ies P 50, 000
Buildingl essal l
owanceofP500, 000 3,000,
000
Equi pmentl essal lowanceofP250, 000 750,
000
Financi al assetatamor tizedcost 1,000,
000
Trademar k 300,
000
Adv ancest oof fi
cers-indef i
nit
erepay ment 150,
000
Patent 250,
000
Land 400,
000
 Currentliabilit
iesi ncl ude:
Account spay able P 500, 000
Not epay abl e, due12/ 31/ 2012 100,
000
I
ncomet axpay able 150,
000
Shar epr emi um 250,
000
 Long-terml iabi l
iti
esi nclude:
Unear nedl easehol di ncome( fi
vey earsstarti
ng2012) P 350, 000
Stockdi videndpay abl e 150,
000
Serial bondspay able( P100, 000mat uri
ngannuall
y) 500,
000
 Capitalincludes:
Retai nedear nings P 1,500,
000
Shar ecapi tal, P100par 5,000,
000
 Appr
opr
iat
edr
etai
nedear
ningsf
orpl
antexpansi
on 500,
000

Based on t
he inf
ormati
on gi
ven,det
ermine t
he f
oll
owi
ng amount
sto be pr
esent
ed i
n Socor
ro’
s
December31,2011stat
ementoffi
nanci
alposi
ti
on:
11.Cur
rentasset
s:_
___
___
___
___
___
___
___
___
12.Non-
cur
rentasset
s:_
___
___
___
___
___
___
___
___
13.Cur
rentl
i
abi
l
iti
es:
___
___
___
___
___
___
___
___
_
14.Non-
cur
rentl
i
abi
l
iti
es:
___
___
___
___
___
___
___
___
15.Shar
ehol
der
s’equi
ty:
___
___
___
___
___
___
___
___

PROBLEM 4:Thefol
lowi
ngtri
albalanceofReeseCorp.atDecember31,2010hasbeenpr
oper
ly
adj
ust
edexceptf
ort
heincometaxexpenseadj
ust
ment
.

ReeseCorp.
TrialBal
ance
December31,2010
Dr. Cr
.
Cash P 775,
000
Account sreceivable(net ) 2,
695,
000
I
nv entory 2,
085,
000
Proper t
y,plant,andequi pment(net
) 7,
366,
000
Account spay ableandaccr uedl
i
abi
li
ti
es P 1,
701,
000
I
ncomet axespay abl
e 654,
000
Deferredincomet axliabil
it
y 85,
000
Commonst ock 2,
350,
000
Additionalpaid-i
ncapi tal 3,
680,
000
Retainedear nings,1/1/10 3,
450,
000
Netsal esandot herr
ev enues 13,
360,
000
Costsandexpenses 11,
180,
000
I
ncomet axexpenses 1,
179,
000
P25,
280,
000 P25,
280,
000

Otherfi
nanci aldatafortheyearendedDecember31, 2010:
I
ncluded i n accountsr eceivableis P1,200,000 due from a customerand payablein quar
terl
y
inst
al l
ment sofP150,000.Thel astpay mentisdueDecember29, 2012.
Thebal anceintheDef err
edI ncomeTaxLi abil
it
yaccountpert
ainstoatempor
arydif
ferencet
hatarose
inapr ioryear,ofwhichP20, 000isclassif
iedasacur r
entli
abil
i
ty.
Duringt hey ear,esti
mat edt axpay mentsofP525, 000wer echar gedtoi
ncomet axexpense.The
currentandf uturetaxrateonal l
typesofi ncomeis30%.

Basedontheinf
ormati
ongiven,det
erminet
hef
oll
owi
ngamount
stobepr
esent
edi
nReese’
sDecember
31,2010st
atementoff
inanci
alposit
ion:

16.Cur
rentassets:__
____
__ _
____
_______
_____4,
955,000
17.Cur
rentl
iabi
lit
ies:_
____
_ __
____
_ _
_____
_____
_1,850,000
18.Adj
ustedretai
nedearningsbalance:__
_____
______
_ _
____
___
___4,
976,
000

PROBLEM 5:XCompany,apar
entcompanyhasr
epor
tedt
hef
oll
owi
ngcur
rentaccount
sini
tsf
inanci
al
recor
dsasofDecember31,
2014:

Cashandcashequival
ent
s P 3,000,000
Loansandrecei
vabl
es 20,000,000
Merchandi
seinv
entory 2,000,000
Prepai
dexpense 500,000
Total P25,
500,000

I
ncludedint heloansandr
ecei
vabl
ei saP5,000,
000l
oantoM Company,asubsidi
ary
.Thel oanis
r
epay abl
eont hedemandbutthedemandf eatur
eispri
mari
lyafor
m ofprotect
ionorat ax-
dri
ven
f
eatureoft heloananditi
stheintenti
onofbothpar
ti
esthatt
heloanwil
lremainoutst
andingfor
f
oreseeablefut
ure.

19.Whati
sthecor
rectamountofcur
rentassetshoul
dXCompanyr
epor
tini
tsDecember31,
2014
 fi
nancialposi
ti
on?20, 500,
000
PROBLEM 6:BrideCompanybeganoper ati
ononJanuary1,2014wit
hP1,000,
000f
rom t
heissuanceof
shar
esandbor r
owedf undsofP450,000.Neti
ncomefor2014wasP300,000andBri
depaidaP225,000
cashdi
videndonDecember19,2014.Noaddi ti
onaltr
ansacti
onsaff
ect
edowner’
sequit
yin2014.At
December31,2014,l
iabil
i
tiesofthecompanyhadincr
easedtoP597,
000.

20.I
nBri
de’sDecember31,2014st
atementoff
inanci
alposi
ti
on,howmuchshoul
dber
epor
tedas
i
tst
otal
assets?1,
672,
000

PROBLEM 7:Thefoll
owingdataareprovi
dedbyNor
wayCompany.Theendofreporti
ngper
iodi
s
December31,
2010andthefi
nanci
alst
atement
sar
eaut
hor
izedf
ori
ssueonMar
ch15,2011.

 OnDecember31,2010,NorwayCompanyhasar ecei
vableofP400,000from acustomerthat
due60daysaft
ertheendofrepor
ti
ngper
iod.OnJanuary15,2011,
ar ecei
verwasappoi
ntedfor
thesai
dcustomer.Therecei
veri
nfor
medNor waythattheP400,000woul dbepaidinfullby
June30,
2011.

 NorwayCompanymeasur esitsinvest
menti nlist
edshareashel dfort r
adingatf ai
rvalue
t
hroughprofi
torloss.OnDecember31, 2010,theseinv
estmentswer erecordedatt hemarket
val
ueofP5,000,
000.Duri
ngt heperi
oduptoFebr uar
y15,2011,
therewasast eadydecli
neinthe
marketv
alueofallthesharesintheportf
oli
o,andonFebr uary15,2011,themar ketval
uehad
f
all
enofP2,000,
000.

 NorwayCompanyhadr eport
edacontingentli
abil
it
yonDecember31, 2010relatedtoacourt
caseinwhichNorwayCompanywasdef endant.Thecasewasnotheardunt i
lthefir
stweekof
Februar
y2011.On February11,
2011,thej udgehanded down a decisi
on againstNorway
Company .Thej
udgedeter
minedthatNorwayCompanywasl i
abl
etopaydamagesandcost s
tot
ali
ngP3,000,
000.

 OnDecember31, 2010,NorwayCompanyhadar ecei

vabl
efr
om alar
gecustomerintheamount
ofP3,500,000.OnJanuar y31,2011,NorwayCompanywasadvisedbytheli
quidat
orofthesai
d
customert hatthecustomerwasi nsol
ventandwoul
dbeunabl
et orepayt
hefullamountowed
toNor wayCompany .Theliquidat
oradv i
sedNorwayCompanyinWr i
ti
ngthatonly10% oft
he
recei
vablewi l
lbepaidonApr i
l30,2011.

21.Whatshoul
d be r
epor
ted as t
otalamountof“
adj
ust
ing ev
ent
s”on December31,
2010?
6,
150,
000

PROBLEM 8:Gi
ngerCompanyi
scompl
eti
ngt
hepr
epar
ati
onofi
tsdr
aftf
inanci
alst
atementf
ort
hey
ear
endedDecember31,
20101.

OnMar ch15,
2011,adiv
idendofP1,
750,
000wasdeclaredandacontr
actualpr
ofi
tshar
epay
mentof
P350,
000wasmade, bot
hbasedonthepr
ofi
tfort
heyearendedDecember31,
2010.

OnFebr
uar
y1,2011,acust
omerwenti
ntoliqui
dati
onhavi
ngowedtheentit
yP340,000fort
hepast5
mont
hs.Noal
l
owancehasbeenmadeagainstthi
sdebti
nthedr
aftf
inanci
alst
atements.

On Mar
ch20,2011,amanuf
act
uri
ng pl
antwasdest
roy
ed byf
ir
eresul
ti
ng i
n af
inanci
all
ossof
P2,
600,
000.

22.Whattot
alamountshoul
dberecogni
zedinprofi
torlossfort
heyearendedDecember31,
2010
t
orefl
ectaadj
usti
ngevent
saf
tertheendofreport
ingperi
od?690,
000

PROBLEM 9:Thefol
l
owingdat
aareav
ail
abl
eforpur
posesofst
ati
ngt
hef
inanci
alposi
ti
onofPet
it
e
CompanyonDecember31,
2010:

Cash* 1,
200,
000
I
nv est
mentsecur it
iesheldfortrading( i
ncludi
ngl ong-
term
inv estmentofP500, 000inor dinaryshar esofAyal
aCompany) 2,
000,
000
I
nv ent
ories( i
ncludinggoodsr eceivedonconsi gnmentofP200,
000) 800,
000
Prepai
dexpenses( incl
udi
ngadeposi tofP50, 000madeon
inv entori
est obedeliv
eredin18mont hs) 150,
000
Propert
y, plant,andequipment( excludingP300, 000
ofequi pmentstil
li
nuse, butf ull
ydepreci at
ed) 10,000,000
Goodwi l
l(basedonest imatebyt hepr esi
dent) 1,000,000
Tot
alasset
s 15,
150,
000

Cashcompositi
on:
Cashingener
alchecki
ngaccount 600,
000
Cashinfundtobeusedtoret
ir
ebondsi
n2012 500,
000
Cashheldtopayval
ueaddedtaxes 100,
000
*Tot
alcash 1,
200,
000

23.Whatt
otal
amountofcur
rentasset
sshoul
dber
epor
tedonDecember31,
2010?2,
900,
000

PROBLEM 10:
Incl
udedi
nMazdaCompany
’sl
i
abi
l
itybal
ancesatDecember31,
2010wer
ethef
oll
owi
ng:

10%not
epay
abl
eissuedonOct
ober1,2009,maturi
ngOct
ober1,2011 2,
000,
000
12%not
epay
abl
eissuedonMarch1,2009,mat
uringonMarch1,
2011 4,000,
000

Mazda’s2010f i
nanci
alstat
ement
swer eissuedonMar ch31,2010.Undertheloanagr
eementf
ort
he
10%not epayabl
e,Mazdahasthediscr
eti
ont orefi
nancetheobligati
onforatl
eastt
welv
emonthsaf
ter
December31,2010.OnMar ch1,2011,theent i
reP4,000,000balanceofthe12% not
epayabl
ewas
ref
inancedthr
oughinsur
anceofalong-
ter
m obligati
onpay ablel
umpsum.

24.Whatamountoft
henot
espay
abl
eshoul
dbecl
assi
fi
edascur
rentonDecember31,
2011?4mi
l

PROBLEM 11:PeachCompanypreparedadraftofit
s2010stat
ementoff
inanci
alposi
ti
on.Thedr
aft
st
atementr
eport
edtot
alasset
sofP4,375,
000.Thetotal
asset
sexcl
udet
hefoll
owi
ngitems:

TreasurysharesofPeachCompanyatcost
,whi
chappr
oxi
mat
e
marketvalueonDecember31 120,
000
Unamor ti
zedpat ent 56,
000
Cashsur rendervalueofli
feinsur
ance 68,
000
Cumul ati
vetranslati
onloss 42,
000

25.Atwhatamountshoul
dtotal
asset
sbecor
rect
lyr
epor
tedi
ntheDecember31,
2010st
atementof
fi
nanci
alposi
ti
on?4,
499,
000
 FI
NANCIALSTATEMENTS
Account
ing123

ANSWERSHEET

Name:_
___
___
___
___
___
___
___
___
___
___ Scor
e:_
___
___
___

Er
asur
esoral
terat
ionsofanyki
ndshal
lbeconst
ruedAGAI
NSTt
hest
udent
.Ther
efor
e,nopoi
ntswi
ll
begi
venf
orsuch.

I
.THEORI
ES

1.
D 8.
C 15.
D 22.
C 29.
C
2.
D 9.
B 16.
D 23.
D 30.
B
3.
B 10.
D 17.
B 24.
D 31.
A
4.
C 11.
D 18.
D 25.
A 32.
C
5.
D 12.
C 19.
B 26.
A 33.
C
6.
D 13.
B 20.
D 27.
B 34.
C
7.
D 14.
D 21.
D 28.
C 35.
C

I
I.SHORTPROBLEMS

1.2.
84M 14.680T

2.10.
11M 15.7.
1M

3.7.
05M 16.4.
955M

4.0 17.1.
85M

5.5.
9M 18.4.
976M

6.3.
1M 19.20.
5M

7.6.
9M 20.1.
672M

8.1.
2M 21.6.
15M

9.2.
05M 22.690T

10.6.
75M 23.2.
9M

11.2.
05M 24.4M

12.6.
65M 25.4.
499M

13.920T