CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila
ADVANCED FINANCIAL ACCOUNTING AND REPORTING Sunday, July 28, 2024
FIRST PREBOARD EXAMINATION 1:00 p.m to 4:00 p.m.

Number 1
ABC Trading Co. has a branch in Manila. On December 31, 2024, the Investment in Manila Branch
account in the home office books showed a balance of P3,860,000. The interoffice accounts were in
agreement at the beginning of the year. For purposes of reconciling the reciprocal accounts, the
following facts were ascertained:
a. The home office erroneously recorded a remittance of P48,000 from its Malabon branch as a
remittance from its Manila branch.
b. The branch failed to take up a P15,000 debit memo from the home office representing its share in
training expenses.
c. The branch did not record a Home office credit memo for P21,000 representing collection from
branch customers.
Compute the unadjusted balance of the Home Office Current account on December 31, 2024
A. 3,908,000
B. 3,902,000
C. 3,914,000
D. 3,818,000

Number 2
A home office ships inventory to its branch at a mark-up of 125% based on cost. The required balance
of the unrealized intercompany account is P1,140,000. During the year, the home office sent
merchandise to the branch costing P7,200,000. At the start of the year, the branch's books showed
P1,440,000 of inventory coming from the home office.
The unrealized intercompany account must be decreased by
A. 9,800,000
B. 948,000
C. 2,088,000
D. 8,660,000

Number 3
The Home Office in Ortigas shipped merchandise costing P1,400,000 to the Ayala branch and paid for
the freight charges of P10,500. The home office bills the branch at 125% of the cost. The Ayala
branch was subsequently instructed to transfer one-half of the merchandise to the Pateros branch,
wherein the Pateros branch paid for the P3,500 freight. If the shipment was made directly from Ortigas
to Pateros, the freight cost would have been P7,000.
By how much will the Ayala Branch charge the Home Office Current account?
A. 880,250
B. 897,750
C. 885,500
D. 883,750

Number 4
Which of the following statements regarding Corporate Liquidation is FALSE?
A. The total free assets must deal with unsecured priority claims first.
B. The estimated payment to unsecured without priority claims may be equal to zero.
C. The statement of financial affairs is prepared when the appointed Trustee initiates an entity's actual
realization of assets.
D. In the statement of financial affairs, the estimated settlement to partially secured creditors may be
equal to the realizable value of the asset pledged to them.
 Page 2
Number 5
On December 31, 2024, the Home Office Current account in the books of the Makati Branch has a
balance of P5,850,000. In analyzing the activity in each of these accounts for December, you found
the following differences:
a. A P120,000 branch remittance to the home office initiated on December 21, 2024, was recorded
twice by the home office on December 26 and 28.
b. The home office incurred P216,000 advertising expenses and allocated 1/3 of this amount to the
branch on December 20. The branch recorded this transaction on December 22, amounting to
P7,200.
c. Inventory costing P301,800 was sent to the branch by the home office on December 15. The
billing was at cost, but the branch recorded the transaction at P318,000.
The adjusted balance of the reciprocal accounts on December 31, 2024
A. 5,801,400
B. 5,931,000
C. 5,898,600
D. 5,769,000

Number 6
The home office in Pasig shipped merchandise costing P333,000 to the Bicol branch and paid the
freight amounting to P25,200. The home office transfers merchandise to the branch at a 20% mark-up
based on cost. The Bicol branch was subsequently instructed to transfer the merchandise to the
Palawan branch, wherein the latter paid for P16,800 freight. If the shipment was made directly from
Pasig to Palawan, the freight cost would have been P37,200.
Compute the amount credited to the Home Office Current account in the books of the Palawan
branch
A. 362,800
B. 420,000
C. 370,200
D. 427,440

Number 7
A home office ships inventory to its branch and billed 125% of the cost during 2024. The branch
inventory allowance account shall be adjusted downward to P285,000. During the year, the home
office sent merchandise to the branch costing P1,100,000. At the start of the year, the branch's books
showed P105,000 of inventory on hand that was received from the home office. The branch inventory
allowance account was debited to P20,000 in the books of the home office at the end of 2024.
Compute the 2024 ending inventory in the books of the branch
A. 1,140,000
B. 1,425,000
C. 1,410,000
D. 1,125,000

Number 8
Which of the following statements regarding accounting for the home office and branch is FALSE?
A. The required balance of the branch inventory allowance account is the markup in the branch's
ending inventory from the home office.
B. The combined net income of the home office and its branches is presented in the separate
Statement of Comprehensive Income of the Home office.
C. The stockholders’ equity of the branch is eliminated in the working paper and not extended in the
combined statement of financial position.
D. The realized markup represents the understatement in the net income per branch books.
 Page 3
Number 9
The Home Office in Pasay shipped merchandise costing P1,680,000 to the Mandaluyong branch; the
freight collect amounting to P12,600. Mandaluyong branch was subsequently instructed to transfer
P1,008,000 of the merchandise to the Cainta branch, wherein the Cainta branch paid for P4,200 freight.
Had the merchandise been shipped directly from Pasay to Cainta, the freight cost would have been
P8,400.
Compute the excess freight chargeable to Pasay
A. 0
B. 8,400
C. 1,680
D. 3,360

Number 10
On June 1, 2024, Sta. Rosa, a home office, established an agency in Tagaytay, sending samples costing
P490,000, which are useful until the end of May 2025 and have a salvage value of 10% of cost. A
working fund of P398,125 is to be maintained on an imprest basis. In 2024, the agency submitted to
the home office a sales order amounting to P4,134,375. Sales per invoice were P3,215,625, which the
home office duly approved. Collections during the year amounted to P1,717,021.25 net of a 3% sales
discount. The cost of merchandise sold during the year equals 75% of the gross sales. Vouchers for
expenses amounted to P214,375.
How much net income would be reported by the Tagaytay agency on December 31, 2024?
A. 315,927.50
B. 508,865
C. 279,177.50
D. (95,427.50)

Number 11
Which of the following statements regarding Corporate Liquidation is TRUE?
A. Revenues earned and expenses incurred during the period are part of the Statement of Realization
and Liquidation.
B. Assets not realized in the Statement of Realization and Liquidation are the total assets presented in
the Statement of Financial Position at the end of the period.
C. A debit balance in retained earnings will result in an estate deficiency.
D. An increase in the supplementary debit/charges has a corresponding increase in liabilities.

Number 12
Which of the following statements is TRUE regarding accounting for the home office and branch?
A. Both the Investment in Branch and Home Office Current accounts are eliminated in the books of
the home office and the branch, respectively.
B. A debit memo received by the branch may be a notification from the home office regarding the
payment made by the home office to a branch supplier.
C. A credit memo increases the reciprocal accounts in their respective books.
D. In an interbranch transaction, the branch may use an investment in another branch account.

Number 13
Statement 1: Under IFRS 15, revenue may be recognized even if there is no observable stand- alone
selling price.
Statement 2: There may be one performance obligation per franchise contract.
A. Both statements are true.
B. Both statements are false.
C. Statement 1 is true; statement 2 is false
D. Statement 1 is false; statement 2 is true
 Page 4

Number 14

JKL Corporation provided the following balances on July 1, 2024: Statement of Financial Position:
Cash 480,000 Accounts payable 840,000
Accounts receivable 120,000 Wages payable 216,000
Inventories 480,000 Tax payable 144,000
Furniture 360,000 Notes payable 720,000
Equipment 720,000 Ordinary shares 360,000
Deficit/(RE) ( 120,000)
Total 2,160,000 Total 2,160,000
In the Statement of Realization and Liquidation, the following data were ascertained for the month of
July:
 Interests not accrued for the month were for the notes payable P108,000.
 P48,000 of the existing accounts receivable at the beginning of the month was collected for only
P30,000.
 P288,000 of the total inventories were sold for P360,000 cash.
 Furniture was sold for P264,000.
 Administrative expenses of P60,000 were paid.
 Additional sales on account amounting to P228,000 were made for the remaining inventories.
 Remaining non-cash assets are to be realized, and remaining liabilities are to be paid in the next
period(s) of liquidating JKL Corporation.
Compute the estate equity/(deficiency) at the end of July
A. (294,000)
B. (120,000)
C. 66,000
D. 240,000

Number 15

QRS Company is currently experiencing severe financial difficulties and is considering the possibility
of liquidation. At this time, the company has the following assets at estimated realizable value and
liabilities:
Assets (pledged against liabilities of P1,400,000) 2,320,000
Assets (pledged against liabilities of P2,600,000) 1,000,000
Other Assets 1,600,000
Liabilities with priority 840,000
Unsecured without priority 4,000,000
Compute the estimated payment to partially secured creditors
A. 1,480,000
B. 2,600,000
C. 1,000,000
D. 4,000,000

Number 16
Which of the following statements regarding IFRS 15 is FALSE?
A. A key feature of the revenue arrangement is that the signing of the contract by the two parties is
not recorded until one or both of the parties perform under the contract.
B. A performance obligation is a promise in a contract to provide a product or service to a customer.
C. To determine whether a performance obligation exists, the company must provide a distinct
product or service.
D. Services that are interdependent or interrelated may be accounted for separately.
 Page 5

Numbers 17 and 18

The following selected account balances were taken from the Statement of Financial Position of TUV
Corp. as of December 31, 2024, immediately before the takeover of the trustee:

Trading Securities P1,800,000

Inventories 660,000
Land 900,000
Building 2,400,000

Additional information:

 Trading securities are estimated to be realized in the amount of P1,920,000. These securities
have been pledged to secure notes payable of P1,680,000.
 The estimated worth of inventories is P420,000. However, inventories with a book value of
P300,000 have been pledged to secure notes payable of P360,000. The realizable value of the
inventories pledged is estimated to be P240,000.
 Land and buildings are estimated to have a total realizable value of P2,700,000. These
properties are pledged to secure the mortgage payable of P1,500,000.

17. Compute the estimated amount available for preferred claims and nonpriority claims out of
the assets pledged with fully secured creditors
A. 0
B. 1,440,000
C. 4,620,000
D. 1,620,000

18. Compute the amount of total free assets

A. 1,620,000
B. 4,860,000
C. 4,620,000
D. 1,440,000

Number 19

Statement 1: In some circumstances, the consignee may credit sales revenue upon transfer of control
relating to the merchandise held on consignment.
Statement 2: Freight-in and cartage cost related to returned goods previously held on consignment
affects the computation of the commission earned by the consignee.
A. Both statements are true.
B. Both statements are false.
C. Statement 1 is true; statement 2 is false
D. Statement 1 is false; statement 2 is true

Number 20

Statement 1: Construction in Progress and Progress Billings must equal the contract price upon
completion of the project except when there are variable considerations that change the contract price
on the year of completion.
Statement 2: Anticipated loss may be recognized using the percentage of completion.
A. Both statements are true.
B. Both statements are false.
C. Statement 1 is true; statement 2 is false
D. Statement 1 is false; statement 2 is true
 Page 6

Numbers 21 and 22

A trustee has been appointed for QRS Company, which is being liquidated under the Bankruptcy Law.
The following transactions occurred in the first month of liquidation after the assets were transferred to
the trustee.

1. Credit sales by the trustee were P700,000. The cost of goods sold was P504,000, consisting of all
the inventory transferred from QRS.
2. The trustee sold all P140,000 worth of marketable securities for P105,000.
3. Receivables collected by the trustee: P196,000 from the P350,000 existing at the beginning of the
month and P455,000 from the increase during the period. The remaining receivables are to be
realized by next month.
4. Disbursements by the trustee: Old current payables: P217,000 of the P455,000 transferred;
Trustee's expenses: P42,000. The remaining liabilities are to be liquidated next month.
5. Recorded P168,000 depreciation on the plant assets of P840,000 transferred from QRS.

21. Compute the net income/net loss of the trustee for the period
A. 84,000
B. (49,000)
C. (84,000)
D. (217,000)

22. Compute the total amount of assets not realized at the end of the period in the special report
of the trustee
A. 399,000
B. 1,071,000
C. 826,000
D. 1,239,000

Numbers 23, 24 and 25

TUV Inc. purchased 100,000 units costing P7,000,000 and paid P70,000 freight for its shipment. After
a week, the company consigned these goods to XYZ Inc., stating that the consignee is entitled to 10%
of the revenue from all sold units. The shipment from the consignor to the consignee amounted to
P35,000 with payment terms for freight collect. The gross profit amount to P4,832,100. The consignee
remitted a total of P9,142,000. Other notable expenses paid by the consignee on the consignor’s behalf
were P84,000 in advertising expenses, P21,000 in delivery charges to customers, and P54,600
installation fee on the customer’s premises.

23. Compute the selling price per unit

A. 133
B. 103.74
C. 119.70
D. 181.65

24. Compute the cost of goods still out on consignment

A. 1,540,000
B. 1,547,700
C. 1,555,400
D. 1,563,100

25. Compute the net income of the consignor

A. 3,635,100
B. 3,600,100
C. 3,565,100
D. 3,530,100
 Page 7

Numbers 26 , 27 and 28

JKL Company granted a franchise to a franchisee on the last day of January 2024. The franchise
agreement required the franchisee to pay a nonrefundable upfront fee in the amount of P3,000,000
upon contract signing and ongoing payment of royalties equivalent to 10% of the franchisee's sales.

In relation to the nonrefundable upfront fee, the franchise agreement required the entity to render the
following performance obligations, which were separate and distinct from each other:

 To construct the franchisee’s stall with a stand-alone selling price of P1,600,000.

 To deliver 6,000 units of raw materials to the franchisee with a stand-alone selling price of
P2,000,000.
 To allow the franchisee to access the entity's tradename for a period of 5 years from the date of
contract signing. The stand-alone selling price of the use of the trade name was P400,000.

On June 30, 2024, the entity completed the construction of the franchisee’s stall. On December 31,
2024, the entity delivered 4,500 units of raw materials to the franchisee. For the year ended December
31, 2024, the franchisee reported sales revenue amounting to P4,000,000.

26. Under IFRS 15, compute the amount JKL Company should recognize as revenue from
franchise fees on the Statement of Comprehensive Income for the year ended December 31,
2024
A. 2,385,000
B. 2,780,000
C. 2,785,000
D. 2,380,000

27. Under IFRS 15, compute the amount JKL Company should recognize as unearned revenue
in relation to the construction of the franchisee's stall on January 1, 2024
A. 1,200,000
B. 1,600,000
C. 3,000,000
D. 0

28. Under IFRS 15, compute the amount of franchise fee presented in the Statement of Financial
Position of JKL Company on December 31, 2024
A. 620,000
B. 3,000,000
C. 2,785,000
D. 615,000

Number 29
Statement 1: The consignee acts as an agent of the consignor for the purpose of selling merchandise to
outside customers.
Statement 2: Expenses paid by the consignee on behalf of the consignor may be debited as an expense
in the books of the consignee.
A. Both statements are true.
B. Both statements are false.
C. Statement 1 is true; statement 2 is false
D. Statement 1 is false; statement 2 is true
 Page 8

Numbers 30, 31 and 32

On January 1, 2024, FGH Inc. entered into a long-term construction contract to build an underpass for a
local government. The P60,000,000 construction project is expected to be completed in the last quarter
of 2028. Relevant excerpts from the contract are extracted:

 The contract price is subject to a bonus of P4,000,000 if the project is completed before October 1,
2028.
 A penalty of P6,000,000 shall reduce the contract price if the project is completed after December
31, 2028.

In year one, FGH Inc. estimates that it is 40% likely to complete the project in August 2028 and 25%
likely that the project will be completed in February 2029. This estimate remained unchanged for the
following year. The estimate was readjusted to a 50% chance for early completion and a 20% chance
for delayed completion starting in the third year and fourth year. The project was completed before the
due date. Other relevant information were as follows:

2024 2025 2026 2027 2028

Cost incurred to date 10,200,000 21,000,000 31,000,000 44,800,000 58,000,000
Estimated cost to complete 57,800,000 39,000,000 31,000,000 11,200,000 0

30. Compute the construction revenue of FGH Inc. recognized in the Statement of
Comprehensive Income for the year ended December 31, 2025
A. 12,000,000
B. 18,735,000
C. 9,015,000
D. 12,020,000

31. Compute the construction cost of FGH Inc. presented in the Statement of Comprehensive
Income for the year ended December 31, 2027
A. 13,800,000
B. 16,800,000
C. 13,200,000
D. 23,280,000

32. Compute the gross profit of FGH Inc. realized in the Statement of Comprehensive Income
for the year ended December 31, 2028
A. 6,000,000
B. 960,000
C. 2,160,000
D. 1,200,000

Number 33

Statement 1: Mobilization fee and contract retention are examples of contract liability and contract
asset, respectively.
Statement 2: In long-term construction contracts, a company recognizes revenue over a period of time
if it can reasonably estimate its progress toward satisfaction of the performance obligations.
A. Both statements are true.
B. Both statements are false.
C. Statement 1 is true; statement 2 is false
D. Statement 1 is false; statement 2 is true
 Page 9

Numbers 34 and 35
ABC entered into a long-term construction contract to construct an airport for an initial contract price
of P300,000,000. During 2025, the contract price decreased due to the change in the project design.
The following data were available:
2024 2025 2026
Cost incurred P72,000,000 P120,000,000 ?
Realized gross profit/(loss) ? (48,000,000) P16,000,000
Percentage of completion as of year-end 30% 60% 80%

34. Compute the cost of construction presented in the Statement of Comprehensive Income of
ABC for the year ended December 31, 2026.
A. 51,200,000
B. 74,000,000
C. 62,800,000
D. 42,000,000

35. Compute the Construction in Progress balance in 2026.

A. 229,200,000
B. 232,000,000
C. 259,200,000
D. 0

Numbers 36 and 37

Partners A and B will contribute the following: A will contribute cash, P1,500,000, and B will
contribute a Building with a carrying amount of P1,000,000 and an agreed value of P1,200,000. The
building has a mortgage of P100,000. The partners further agreed to make their capital balances equal
upon formation, and the mortgage would be the obligation of the partnership.

36. What is the contributed capital of Partner B?

A. 1,000,000
B. 1,100,000
C. 1,200,000
D. 1,300,000

37. What is the agreed capital of Partner A?

A. 1,500,000
B. 1,100,000
C. 1,200,000
D. 1,300,000

Number 38

A partner contributes a certain asset that has a mortgage and will be paid personally by that partner.
Which of the following is true when recording in the partnership books?
A. The capital of the partner will be debited in the amount of the mortgage
B. The cash of the partnership will decrease by the amount of the mortgage
C. The capital of the partner will be credited in the amount of the asset at the agreed value
D. The liability of the partnership will increase by the amount of the mortgage
 Page 10

Numbers 39, 40, and 41

Partners A and B formed a partnership on April 1, 2025, with original capital contributions of
P2,000,000 and P1,500,000, respectively. They agreed to distribute profits and losses with the
following provisions:

a) 10% on their original capital contributions

b) quarterly salaries of P15,000 and P20,000, respectively for A and B
c) The remainder shall be shared at 60:40

At the end of the year, due to unfavorable circumstances, the partnership generated a net loss of
P300,000.

39. What is Partner A's share of the net loss?

A. 211,500
B. 205,500
C. 214,000
D. 208,000

40. What is Partner B's share of the net loss?

A. 88,500
B. 86,000
C. 92,000
D. 94,500

41. What is the capital balance of Partner A on December 31, 2025?

A. 1,788,500
B. 1,786,000
C. 1,794,500
D. 1,792,000

Numbers 42 and 43

Partners A and B have capital balances of P500,000 and P300,000, respectively, before admitting
incoming Partner C. The new partner will invest P200,000 for 25% capital interest and 20% in the
profits and losses. Partners A and B share profits and losses 2:3. Partners also agreed that a certain asset
needs to be revalued.

42. What is the undervaluation/overvaluation of a certain asset?

A. 200,000 over
B. 66,667 under
C. 2,200,000 under
D. 0

43. What is Partner B's capital balance after admission?

A. 340,000
B. 1,020,000
C. 300,000
D. 180,000

Number 44

The following decreases the capital balance of the partner except

A. Permanent withdrawals
B. Temporary withdrawals
C. Share in the income summary debit balance
D. Share in the income summary credit balance
 Page 11

Numbers 45 and 46
Partners A and B have capital balances of P200,000 and P100,000, respectively, before admitting
incoming Partner C. The new partner will pay P50,000 for 20% capital interest in the partnership and
25% in the profits and losses. Partners A and B share profits and losses 2:3.

45. Which of the following is true in relation to the admission of Partner C?

A. The capital credit of Partner C is 50,000
B. Partner A will have a debit in the amount of P40,000 from his capital balance.
C. Partner B will have a credit of P20,000 to his capital balance.
D. The total agreed capital is P250,000.

46. Which of the following is false in relation to the admission of Partner C?

A. The capital balance of Partner A after admission is P160,000
B. The capital balance of Partner C after admission is P60,000
C. Partner B's capital balance decreased by P20,000
D. Partner C brings new capital in the amount of P50,000 to the partnership

Numbers 47 and 48
Partners A, B, and C have capital balances of P300,000, P200,000, and P100,000, respectively. The
following were also loan balances in the partnership books: a loan to A in the amount of P50,000 and a
loan from C in the amount of P30,000. Partner A decided to retire from the partnership, and they
agreed to pay P180,000 for his interest. They share profits and losses 30:30:40, respectively.

47. What is Partner C's capital balance after retirement?

A. 168,571
B. 198,571
C. 140,000
D. 170,000

48. What is the bonus to Partner B?

A. 30,000
B. 21,000
C. 51,429
D. 0

Number 49

The following were the balances in the Statement of Financial Position of AB Partnership before
liquidation: Cash P50,000; Non-cash P100,000; Liabilities P30,000; A, Capital P60,000 and B, Capital
P60,000.

All of the non-cash were sold at a loss of P35,000. Liquidation expenses were paid, and all outside
creditors were also paid. The total cash paid to partners was P70,000. All partners were declared
insolvent. The profit and loss ratio was 7:3, respectively.

What is the amount paid for the liquidation expenses?

A. 15,000
B. 45,000
C. 35,000
D. 50,000
 Page 12

Numbers 50 and 51

The following were the balances in the Statement of Financial Position of AB Partnership before
liquidation: Cash P100,000; Non-cash P300,000; Total liabilities P110,000 (including a loan from
Partner A P20,000); A, Capital P180,000 and B, Capital P110,000.

All of the non-cash assets were sold for P250,000. Liquidation expenses were paid in the amount of
P30,000. The outside creditors waived P20,000, and therefore, only P70,000 were paid. All partners
were declared insolvent. The profit and loss ratio was 6:4, respectively.

50. What is the amount of cash received by Partner A after liquidation?

A. 144,000
B. 156,000
C. 140,000
D. 164,000

51. What is the amount of cash received by Partner B after liquidation?

A. 70,000
B. 126,000
C. 86,000
D. 94,000

Numbers 52 and 53

The following were the balances in the Statement of Financial Position of AB Partnership before
liquidation: Cash P100,000; Total non-cash P300,000 (including a loan to Partner B P30,000); Total
liabilities P110,000 (including a loan from Partner A P20,000); A, Capital P180,000 and B, Capital
P110,000.

P170,000 book value of the non-cash assets were sold. Liquidation expenses were paid in the amount
of P30,000. The outside creditors were paid P70,000. Cash withheld for future liquidation expenses
was P20,000. At the end of the first installment liquidation, Partner A received P40,000. The profit and
loss ratio was 6:4, respectively.

52. What are the proceeds from the sale of non-cash assets during the first installment?
A. 96,000
B. 146,667
C. 110,000
D. 80,000

53. What is the total cash withheld during the first installment?
A. 20,000
B. 40,000
C. 60,000
D. 80,000

Number 54

Which of the following is false regarding admission by investment

A. The incoming partner brings new capital to the partnership
B. When the amount contributed by the new partner is less than the amount of capital credited to his
account, the result is a bonus to the new partner
C. When the total agreed capital of the partnership is less than the total contributed capital, an
identifiable asset of the partnership is overstated
D. The capital credit of the new partner is always based on the total agreed capital
 Page 13
Numbers 55, 56 and 57

The following were the balances in the Statement of Financial Position of AB Partnership before
liquidation: Cash P50,000; Non-cash P100,000; Liabilities P30,000; A, Capital P60,000 and B, Capital
P60,000.
The non-cash in the amount of P20,000 was sold for P5,000. Liquidation expenses were paid in the
amount of P12,000. Only P10,000 was paid to the outside creditors. Cash withheld for future
liquidation expenses was P3,000. The profit and loss ratio was 7:3, respectively.

55. What is the amount of cash received by Partner A at the end of the first installment?
A. 41,100
B. 49,500
C. 60,000
D. 0

56. What is the amount of cash received by Partner B at the end of the first installment?
A. 51,900
B. 27,000
C. 10,000
D. 0

57. What is the maximum possible loss in the first installment?

A. 83,000
B. 80,000
C. 103,000
D. 100,000

Number 58
When the amount paid by the partnership is greater than the interest of the retiring partner and the
capital balances of the remaining partner decrease, which of the following best describes the situation?
A. bonus to the retiring partner
B. bonus to the remaining partners
C. there is an overvalued asset of the partnership
D. there is an undervalued asset of the partnership

Number 59
Which of the following is true when a deficient partner is solvent?
A. the cash balance of the partnership will increase due to his contribution
B. the deficient partner will receive cash equal to his contribution
C. the liquidation process will cease
D. the other partners will absorb the deficiency of the said partner

Number 60
The maximum possible loss is computed as
A. The book value of the unrealized non-cash asset plus any cash withheld for future liquidation
expenses and unpaid outside creditors.
B. The fair value of the unrealized non-cash asset plus any cash withheld for future liquidation
expenses.
C. The book value of the unrealized non-cash asset plus any cash withheld for future liquidation
expenses and anticipated liabilities.
D. The fair value of the unrealized non-cash asset plus any cash withheld for future liquidation
expenses and anticipated liabilities.
 Page 14

Numbers 61 and 62

The following were extracted from the cost of production report of the company:

Job 166 Job 167 Job 168

Beginning inventory P15,000 - -
Direct materials used P10,000 P15,000 P22,000
Direct labor hours used 1,000 hrs 1,600 hrs 2,400 hrs
OH applied ? P10,000 P10,000

The direct labor rate per hour was P5 per direct labor hour, and the actual overhead cost was P13,000.
At the end of the period, the manufacturing overhead control account had a credit balance of P15,000.
Jobs 166 and 168 were completed, but only Job 168 were sold by the end of the period.

61. What is the cost of goods manufactured?

A. 67,000
B. 74,000
C. 82,000
D. 59,000

62. What is the cost of finished goods at the end?

A. 33,000
B. 38,000
C. 23,000
D. 30,000

Numbers 63 and 64

The total cost for 2,000 units produced for Job 108, including allowance for spoilage, was P150,000.
The cost of allowance for spoilage was P30,000. After further inspection, there were 500 spoiled units
and 100 defective units. Each spoiled unit can be sold for P40. The unit cost for reworking the
defective units was P35. The spoilage and defective units were due to the customer's exact
specifications.

63. What is the total cost transferred to the finished goods inventory account?
A. 133,500
B. 136,500
C. 103,500
D. 112,500

64. What is the cost per good unit of Job 108?

A. 69
B. 91
C. 89
D. 75

Number 65

It is a costing system that values manufactured products with the actual material costs, actual direct
labor costs, and manufacturing overhead based on a predetermined manufacturing overhead rate.
A. Actual costing system
B. Normal costing system
C. Standard costing system
D. Budgeted costing system
 Page 15

Number 66

If the under or over-applied factory overhead is insignificant, it shall be closed to

A. Cost of goods sold only
B. Finished goods and cost of goods sold proportionately
C. Work in process, finished goods, and cost of goods proportionately
D. Raw materials, work in process, finished goods, and cost of goods sold proportionately

Numbers 67 and 68

Rolex Co. adopted the Just-In-Time (JIT) production system and used Backflush Costing. They also
used a Raw and In-Process account for the materials. The following data were given:
Materials purchased on account P300,000
Decrease in Raw and In-Process P20,000
Direct labor cost P100,000
Overhead cost incurred P50,000
Conversion cost applied P170,000
Units produced 200
Units unsold 25

67. What is the cost of goods sold?

A. 393,750
B. 516,250
C. 376,250
D. 428,750

68. What is the cost of the finished goods inventory at the end?
A. 58,750
B. 61,250
C. 56,250
D. 73,750

Number 69

In job order costing, the rework cost, which is attributable to all jobs, shall be
A. Expensed as incurred
B. Charged or capitalized to that particular job
C. Charged to factory overhead account
D. Debited to work in process account

Number 70

It is a product costing system generally used in a just-in-time inventory environment. This costing
system delays the process until the production of goods is completed by eliminating the detailed
tracking of cost throughout the production system and preparing journal entries only at trigger points.
A. Backflush costing
B. Standard costing
C. Normal costing
D. Traditional costing

END