Republic of the Philippines

PARTIDO STATE UNIVERSITY

Camarines Sur
____________________________________________________________________

SET A SEAT NO.______

SIMULATED CERTIFIED PUBLIC ACCOUNTANT LICENSURE EXAMINATION
Analyze the theories and solve the following problems and provide the answer
for the questions/requirements. Choose the letter that best represents to your
answer and shade the appropriate box on the separate sheet provided.

1-10. The following information relates to CPA-by-2018-ParSu-BSA Company's

Statement of Financial Position at December 31, 2016.

A. Accounts Payable per general ledger control amounted to Php.5,440,000 net of

Php.240,000 debit balances in supplier's account. The unpaid voucher file
included the following items that not had been recorded as of December 31, 2016.
a.1 Claudine's Tinda-ko-Saod Mo Merchandising Company - Php.224,000 merchandise
shipped on December 31, 2016, FOB Destination; received on January 10, 2017.
a.2 Rizza Mae B. AccounTingi Merchandises Inc. - Php.192,000 merchandise shipped
on December 26, 2016, FOB Shipping Point; received on January 16, 2016.
a.3 Raymart Super Services Corp. - Php.144,000 security services for the 3-month
period ending January 31, 2017.
a.4 Merza Jane Electric Company - Php.67,200 electric bill covering the period
December 16, 2016 to January 15, 2017.
a.5 On December 28, 2016, a Supplier, Antonio Junior Para-Supply Company
authorized CPA-by-2018-ParSu-BSA to return goods billed at Php.160,000 and
shipped on December 20, 2016. The goods were returned on December 28, 2016 but
the Php160,000 credit memo was not received until January 7, 2017.

B. Items related to CPA-by-2018-ParSu-BSA Company's payroll as of December 31,

2015 are:
b.1 Accrued salaries and wages for 28 BSA employees (Best System Accountants)
amounted to Php.776,000.
b.2 Payroll deductions for: Income taxes withheld Php. 56,000, SSS Contributions
64,000, Phil Health Contributions 16,000 and Advances to employees 80,000.

C. In May 2016, CPA-by-2018-ParSu-BSA Company became involved in Litigation.

The suit is being contested but the Company Lawyer, Ms. Maricar De Vergara
believes it is possible that the Company may be held liable for damages for
damages estimated in range between Php.2,000,000 and Php.3,000,000, and no
amount is better estimate of Potential liability than any other amount.

D. A Note Payable to Lamb Bank of Lee Jean for Php.2,400,000 is outstanding on

December 31, 2016. The Note is dated October 1, 2015, bears interest at 18%,
and is payable in 3 equal annual installment of Php.800,000. The first equal
annual payment was made on October 1, 2016.

E. During 2016, CPA-by-2018-ParSu-BSA entered into non-cancellable commitment

to purchase 320,000 units of inventory at fixed price of Php.5 per unit to Bryan
Inc., delivery to be made in 2017. On December 31 2016, the purchase price of
this inventory item had fallen to Php.4.4 per unit. The goods covered by the
purchase contract were delivered on January 28, 2017.

F. On December 31, 2016, the Company's deferred income tax account has a 2016
ending credit balance of Php772,800, consisting of the following items: For
gross profit on installment sales Php376,000 Cr., For depreciation on PPE 576,000
Cr., For product warranty expense 179,200 Dr.

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Effectivity Date: February 3,2014
 Republic of the Philippines
PARTIDO STATE UNIVERSITY
Camarines Sur
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G. The Company has a one year product warranty on selected items in its product
line.
g.1 The estimated warranty liability on sales made during 2015, which was
outstanding as of December 31, 2015, amounted to Php.416,000.
g.2 The warranty cost on sales made in 2016 are estimated at Php.1,504,000.
g.3 Actual warranty costs incurred during the current 2016 fiscal year are as
follows: Warranty claims honored in 2015 and 2016, Php.416,000 and 992,000
respectively.

H. To increase sales, CPA-by-2018-ParSu-BSA Co. inaugurated a promotional

campaign on June 30, 2016.
h.1 The company placed a coupon redeemable for a premium in each package of
product sold. Each premium costs Php.100.
h.2 A premium is offered to customers who send in 5 coupons and a remittance of
Php30.
h.3 The distribution cost per premium is Php.20.
h.4 The Company estimated that only 60% of the coupons issued will be redeemed.
h.5 For the 6 mos. ended December 31, 2016, the following is available:
Packages of Product sold160,000, Premiums Purchased 16,000, and Coupons redeemed
64,000.

I. The Company's record also shows an account, Php.1,280,000 due to Joena Ruth
Finance Company as of December 31, 2016 made against Php.1,600.000 of trade
accounts receivable assigned to the finance company with recourse.

J. The Chief Accountant of the Company, Eboy receives an annual bonus of 10% of
Net Income after bonus and tax. Assume that the tax rate is 30% and the correct
income before bonus and tax is Php.9,600,000. (Ignore the effects of other given
items on Net Income).

Required: Determine the amount if any, that should be reported as Current

Liability in CPA-by-2018-ParSu-BSA Company's December 31, 2016 Statements of
Financial Position. (Ignore the effect of taxes). Compute/Determine the Current
Liabilities as of December 31, 2016.

1. Accounts Payable a. Php.722,600

b. 395,000
a. Php.5,923,200 c. 2,240,000
b. Php.5,712,000 d. 628,000
c. Php.5,601,600 e. None of the above
d. Php.5,841,600
e. None of the above 5. Notes Payable

2. Payroll Liability a. Php.800,000

b. 872,000
a. Php.776,000 c. 192,000
b. 992,000 d. 1,408,000
c. 832,000 e. None of the above
d. 912,000
e. None of the above 6.Deferred Taxes

3. Litigation Liability a. Php.772,800

b. 952,000
a. Php. 0 c. 196,800
b. 2,000,000 d. 0
c. 3,000,000 e. None of the above
d. 2,500,000
e. None of the above

7. Warranty Liability

4. Bonus a. Php.512,000
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 Republic of the Philippines
PARTIDO STATE UNIVERSITY
Camarines Sur
____________________________________________________________________
b. 1,504,000 a. Php.0
c. 0 b. 1,600,000
d. 96,000 c. 320,000
e. None of the above d. 1,280,000
e. None of the above
8. Premiums
10. Purchase commitment
a. 1,728,000
b. 1,152,000 a. Php.192,000
c. 1,600,000 b. 0
d. 576,000 c. 1,600,000
e. None of the above d. 1,408,000
e. None of the above

9. Advance from suppliers

11-16. Below the account balances prepared by the Bookkeeper, Ms. Maria
Francia of BSA4A-Pasado-Na Inc. as of the period ended December 31, 2016.
Assets Liabilities
Accounts
Cash Php.15,000.00 Php.20,000.00
Payable
Accounts Receivable 44,000.00 Notes Payable 100,000.00
Inventory 40,000.00
Prepaid Insurance 8,000.00
Prepaid Assets 5,000.00
Investment in
10,000.00
Subsidiary
Land Held for Sale 28,000.00
Property, Plant and
50,000.00
Equipment
Total Assets Php.200,000.00 Php.120,000.00
Additional Information

➢ Cash consists of the following: Petty Cash Fund (Unrepelenished petty cash
expenses, Php.1,500.00), Php.2,000, Cash in Bank (10,000), Payroll fund
14,000, Tax fund 7,000, Cash to be contributed to a sinking fund
established for the retirement of bonds maturing on December 31, 2019,
Php.2,000.00
➢ Checks amounting to Php.30,500 were written to suppliers and recorded on
December 30, 2016, resulting to a bank overdraft of Php.10,000. The checks
were mailed on January 5, 2017.
➢ Accounts Receivable consists of the following:

Accounts Receivable Php.40,000.00

Allowance for Uncollectibility (5,000.00)
Credit Balance in Customer’s Accounts (3,000.00)
Sale price of unsold goods sent on consignment to 12,000.00
Kayang-Kaya Company at 120% of cost and excluded
from Pasado-Na Inc.
➢ The inventory includes cost of goods amounting to Php.10,000 that are
expected to be sold beyond 12 months but within the ordinary course of
business. Also, the inventory includes the cost of consigned goods received
on consignment from Tukad-Pa Co. amounting to Php.5,000.00
➢ Prepaid Income tax represents excess of Payments for quarterly corporate
income taxes during 2016 over the actual annual corporate income tax as of
December 31, 2016.
➢ Prepaid Assets includes a Php.2,000.00 security deposits on an operating
lease which is expected to expire on March 31, 2018. The lease deposits
will be received on lease expiration.
➢ The Land Qualified for classification as Asset held for sale under PFRS 5
Non-Current Assets held for sale and Discontinued Operations as of December
31, 2016.

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PARTIDO STATE UNIVERSITY
Camarines Sur
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➢ Accounts Payable is net of Php.6,000.00 debit balance in suppliers’
accounts. Accounts payable includes the cost of goods held on consignment
from Tukad-Pa Co. which were included in inventory.
➢ The notes payable dated July 1, 2016 and are due on July 1, 2019. The notes
payable bears an annual interest rate of 10% interest is payable annually.

11. What is the adjusted cash 14. What is the adjusted prepaid
balance? assets balance?
a. Php.42,000 a. Php.3,000
b. 44,000 b. 5,000
c. 40,000 c. 2,000
d. 33,500 d. 8,000
e. None of the above e. None of the above

12. What is the adjusted accounts 15. What is the adjusted accounts
receivable balance? payable balance?
a. Php.35,000 a. Php.51,500
b. 40,000 b. 46,500
c. 45,000 c. 56,500
d. 37,500 d. 35,500
e. None of the above e. None of the above

13. What is the adjusted inventory 16. The Adjusted working capital is
balance? a. Php.107,500
a. Php.45,000 b. 105,700
b. 40,000 c. 150,700
c. 45,000 d. 107,500
d. 55,000 e. None of the above
e. None of the above

17-20. The Ledger of Kayang-kaya-Mo Inc. was prepared by Ms. April Joy,
Controller as of December 31, 2016 includes the following:

Petty Cash Fund Php.7,000.00

Cash in Bank- Banco De Oro 15,000.00
Cash in Bank-Metrobank 5,000.00
Accounts Receivable (including Php.15,000 pledged accounts) 35,000.00
Account Receivable - assigned 25,000.00
Equity in assigned receivables 10,000.00
Notes Receivable (Including Php.20,000 NR Discounted) 45,000.00
Notes Receivable discounted 20,000.00
Advances to subsidiary 32,000.00
Held for trading securities 20,000.00
Inventory 62,000.00
Deferred Charges 18,000.00
Cash Surrender Value 6,000.00
Bond Sinking Fund 100,000.00
Accounts Payable 40,000.00
Estimated warranty liability 14,000.00
Loans Payable related to assigned receivables (due in 12 mos.) 15,000.00
Accrued Expenses 13,000.00
Bonds Payable (due to on December 31, 2017) 100,000.00
Premium on Bonds Payable 8,000.00
Additional information:
➢ Petty Cash Fund includes IOU’s from employees amounting to Php.2,000.00.
The remaining balance of Php.5,000.00 represents bills and coins.
➢ Cash in Bank – Banco De Oro (BDO) represents the balance per bank statement.
As of December 31, 2016, deposits in transit amounted to Php.10,000.00
while outstanding checks Php.3,000.00. included in the bank statement as
of December 31, 2016 is an NSF check amounting to Php.8,000.00

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 Republic of the Philippines
PARTIDO STATE UNIVERSITY
Camarines Sur
____________________________________________________________________
➢ Cash in Bank – Metrobank represents the balance per ledger. As of December
31, 2016, deposits in transit amounted to Php.2,000.00 while outstanding
checks amounted to Php.1,000.00
➢ Accounts receivable (unassigned) includes uncollectible past due accounts
of Php.4,000.00 which need to be written-off.
➢ Also included in Accounts Receivable (unassigned) is a Php.5,000.00
receivable from customer which was given a special credit term, the
customer shall pay the Php.5,000.00 receivable in equal quarterly
installment of Php.625.00. The last payment is due on December 31, 2018.
➢ The held for trading securities include the reacquisition cost of Kayang-
kaya Inc.’s shares amounting to Php.4,000.00
➢ Inventory includes Php.30,000.00 goods in transit purchased FOB
Destination but excludes Php.12,000.00 goods in transit purchased FOB
Shipping point.

17. How much is the total inventory? 19. How much is the total current
a. Php.62,000 liabilities?
b. 32,000 a. Php.271,000.00
c. 74,000 b. 712,000.00
d. 44,000 c. 181,000
e. None of the above d. 172,000.00
e. None of the above
18. How much is the total current
assets? 20. What is the amount of working
a. Php.272.700 capital?
b. 227,500 a. Php.100,000
c. 527,200 b. 150,000
d. 272,500 c. 105,000
e. None of the above d. 100,500
e. None of the above
21. FAR Theories – Recognition
I. Bearer Plants are classified as Property, Plant and Equipment.
II. Bearer Animals are classified as Biological Assets.
III. There are two kinds of Biological Assets; Bearer and Consumable.
IV. Biological Assets are measured initially and subsequent at fair value less
cost to sell and Net Realizable Value, respectively.
V. Fishes and squids found in Lagonoy gulf are biological assets of LGU-San
Jose.

a. True, True, True, False, False

b. True, False, True, False, True
c. False, True, True, True, False, True
d. True, True, True, True, False
e. None of the above

22. The Accounting Equation can be stated as ________________.

a. A + L - E = 0
b. A-L + OE = 0
c. -A + L - OE = 0
d. A - L - OE = 0
e. None of the above

23. Mathematically, the Accounting Equation is _________________.

a. Quadratic Function
b. Logarithmic Function
c. Linear Function
d. Social Function
e. All of the above

24. FAR Theories - Foundation

I. Accounting is a social science aligned with sociology, anthropology,
history, archeology and etymology.

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PARTIDO STATE UNIVERSITY
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II. Accounting is dynamic and derived its principles from the necessity of
society.
III. Depreciation Expense is always an expense outright.
IV. Depreciation Expense is not recognized if the fair value of the asset
exceeds its carrying amount, even if the asset's residual value does not
exceed its carrying amount.
V. Depreciation can be capitalized as a cost of another asset.

a. True, True, True, False, True

b. False, True, True, True, False
c. False, True, True, False, False
d. True, True, False, False, False
e. None of the above

25. FAR Theories - Aggregation

I. The principle of Adequate disclosure is also called Principle of Sufficient
Condensation.
II. Revaluation Surplus is a component of OCI. Revaluation Loss is a component
of Profit or Loss.
III. Storage Cost, Wasted Materials, and Administrative Overheads are always
an Expenses outright.
IV. Research Expenditures are always charged to expense while Development
expenditures may be charged to expensed or may be capitalized.

a. False, True, True, True

b. True, True, False, True
c. False, False, False, False
d. True, True, True, True
e. None of the above

26. FAR Theories – Precision

i. Machine Set-Ups and Machine-Utility Consumption of a large factory without
Human Resources in its Production Activity can be classified as: Direct Labor
or Manufacturing Overhead from the discretion of the management.
ii. In Philippine Industry Practices, Indirect Materials are not deducted from
Raw Materials to arrive at Direct Material Used.
iii. Public Utility Companies in the Philippines adopted the UK Style of SFP.
Banks and Financial Institution present SFP in an unclassified format.
iv. The Hallmark of Accounting is Professional Judgment.

a. Four Statements are True

b. Three Statements are False
c. No statement is false
d. All statements are true
e. Only the first and Last statements are true.

27. FA Theories – RA9298

S1. The RA9892 was signed into law by former Pres. Gloria M. Arroyo, CPA
S2. The Independence is a separate component of the Code of Ethical Conduct
for CPAs.
S3. Don Vicente Fabella was the first Filipino Licensed Accountant while Belen
Enrile-Guittierez was the first Filipina Licensed Accountant.
S4. Philippine authoritative accountancy bodies work-out by making proposal to
grant an exclusive right for Filipino accountants to use the title CPA before
the name. i.e. instead of Emmanuel A. Onsay, CPA, it will become CPA. Emmanuel
A. Onsay

a. Two statements are wrong

b. One statement is wrong
c. All statements are wrong
d. Three statements are wrong
e. No statement is wrong

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 Republic of the Philippines
PARTIDO STATE UNIVERSITY
Camarines Sur
____________________________________________________________________
28. FAR Theories – Intangible and Biological Assets/Revaluation

S1.A computer software purchased as an operating system for the hardware or as

integral part of a computer controlled machine tool that cannot operate
without the specific software shall be treated as PPE.
S2. Ostriches, Zebras, Monkeys, and other animals in Manila Zoo are treated as
Biological Assets.
S3. Land near riverbanks, Lots in Marawi City where Maute Groups invaded and
Lands where Natural Calamities are frequently occurring are subject to
Depreciation.
S4. The classic or old CPA Licensure Examination Version is not Multiple
Choice Question, but problem solving and show your solution.
S5. The PSU CPA Passing rate last October 2017 CPALE exceeded the National
Passing Rate by 4 Percent.

a. Only Two statements are True.

b. Four statements are false.
c. First and Last statements are true.
d. Statement three is true in extremely rare circumstances.
e. All statements are true.

29. FAR Theories – Contemporary

SA. In an animal care clinic, the customers are animals, therefore service
revenues arise in the ordinary course of business, caring animals.
SB. In an animal pet shop, customers are humans, therefore Animals held for sale
are classified as Inventory.
SC. As of the present, there are 7 Core faculty members under BSA Program of
CBM namely; Maam Luz, Maam Meryl, Sir Ivan, Sir Ledesma, Sir Karl, Sir Jun, Maam
Rina and Eboy.
SD. As at this day, the Chairman of the Board of Accountancy (BOA) is Mr. Joel
Tan Torres, CPA. Former Commissioner of BIR and the Examiner of Taxation.
SE. Maam Bernadette C. Cledera, CPA is the Queen of Financial Accounting at
Partido State University. Mr. Karlo Pedro L. Medroso, CPA is the current BSA-
Program Director and Maam Pearlita D. Maniago, CPA is the current Accountant
III in PSU.

a. SA and SB are false.

b. SD and SE are True.
c. SC and SE are false.
d. SC is false.
e. All statements are True.

30. FAR Theories – Adjusting of Entries/Effect of Misstatements

X. The failure to record an accrued income at year end will result in

understating cash, Profit, and working capital.
Y. The failure to record an accrued expense at year end will result i overstating
errors of Net Income, working capital and Cash.
Z. The failure to record purchase of merchandise on account even though the
goods are properly included in the Physical inventory results in Understatement
of Liability and Overstatement of Equity.
W. A company discovered a 20,000 overstatement of its 2015 ending inventory
after the FS in 2015 were prepared. The effect of this error on 2015 FS was
Current Assets are overstated and income was overstated.
T. Error must be accounted on a retrospective basis.

a. T is false.
b. W is True
c. X is false
d. choices a and c are false.
e. choices b and c are true.

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 Republic of the Philippines
PARTIDO STATE UNIVERSITY
Camarines Sur
____________________________________________________________________
31. FAR Theories – Grammar
i. We are ____ the Planet.
ii. We are going to the Accounting Quiz Showdown _______ July 16.
iii. The other accountants, Florence or Rofel ______ to be awarded.
iv. Your accounting materials won’t arrive till Thursday, _____________, you
can use my calculator.
v. Good Character is ________than the CPA Title.

i. ii. iii. iv. v.

X. on in is in the meantime Better
Y. at in are for the meantime Better
Z. in in were for the time being Best
A. in on will in a while Better
C. on on is in the meantime Better

a. Row X is correct
b. Row C is correct
c. Row Z and Row C are incorrect
d. Row C is correct
e. All Rows are incorrect

32. FAR Theories – Code of Ethics

T. As a Professional Instructor, saying that Florence and Rofel are two of my
favorite students/brothers is a departure from Professional Socialization from
the Code of Conduct for Professional Accounting Teachers.

U. As a CPA, saying that Rofel and Florence are two of my favorite

students/brothers is being straightforward and honest in this material respect
and is not a violation of Objectivity clause of the Code of Ethics for
Professional Accountants.

V. Making actions that will bring accountancy profession into disrepute is a

violation of the standard of Professional Due Care.

W. Denigrating the work of other accountants is a violation of the standard of

Professional Behavior.

X. Shall in no case, a CPA is permitted to divulge information without authority

from Client.

Y. CPAs are required to earn 120 CPA Units for renewal of license and as a
requisite to practice public accountancy profession, this requirement is part
of the attainment of diligence that satisfies the standard of Competence.

Z. Timeliness, Double-Checking, Verifiability, Cross-footing, Reconciliation of

items are components of Objectivity standard.

T U V W X Y Z
i. Correct Incorrect Incorrect Incorrect Correct Incorrect Incorrect
ii. Incorrect Incorrect Incorrect Correct Incorrect Correct Incorrect
iii. Correct Correct Incorrect Correct Correct Correct Incorrect
iv. Incorrect Correct Incorrect Correct Incorrect Incorrect Incorrect
v. Correct Correct Correct Incorrect Incorrect Correct Correct
vi. Incorrect Incorrect Correct Incorrect Correct Correct Correct
vii. Correct Incorrect Correct Incorrect Correct Correct Correct

a. Row i and iv are incorrect

b. All rows are incorrect except Row vii
c. Row iv is correct
d. All rows are incorrect
e. None of the above

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PARTIDO STATE UNIVERSITY
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____________________________________________________________________
33. Which of the following statements relating to the FRSC and standard setting
process in the Philippines is (are) true?
I Members of the FRSC who are recommended by PICPA as the
representatives of the four sectors of the accountancy profession
should new CPAs.
II The Financial Reporting Standards Council (FRSC), Board of
Accountancy (BOA), the Philippine Institute of CPAs (PICPA), the
Philippine Interpretations Committee (PIC) and the Professional
Regulations Commission (PRC) are all involved in the standard
setting process with PRC as the final approving authority.
III Members of the accountancy profession may participate in the
accounting standard-setting process by responding to invitations
to comment on the Exposure Drafts issued by the accounting
standard-setters

a. I and II are true

b. I and III are true
c. I is true
d. I,II and III are true

34. FAR Theories – Grammar

i. Rofel is one of my students who ___________ in the 10th PICPA National
Accounting Quiz Showdown.
ii. Of all my students, He is the only one who ______________ about senior CBM
faculty.
iii. The number of applicants in PSU____________ year by year.
iv. A number of companies ________________ in developing Philippine Eco-
tourism.
Required: Identify the correct SV agreement.

a. has competed, has cared, increases, invest

b. have competed, cares, are increasing, has been investing
c. have competed, care, increased, had invested
d. Competed, have cared, increases, invests
e. have competed, cares, is increasing, have been investing

35. FAR Theories - SV Agreement/Appositives

E. Neither the applicants nor the interviewer know the new hiring procedure.
F. Either the administration or the employees are expecting to inform their
clients about the new enrollment processes.
G. None of the new standards has been realistic for accountants.
H. Does your boss, the chief accountant usually scolds the employees?
L. Florence, my close friend and one of my best students, together with other
delegates enjoys the Quiz bee so much.
M. Rofel, a close friend of mine and one of my best students, never failed to
send his regards to me.
N. Maam Hazel, a charming lady, together with Rose Ann, Binky, Ruby, Aira,
Cristine, and Kiara or female faculty from BSA are invited to be the judge for
CBM's Search for Ms. and Mr. CALCULATOR 2017.
O. Compute! (Is a sentence with complete thought even without subject or
predicate.)

a. L and M are conceptually correct but M is grammatically incorrect. E, F, G,

and H are grammatically incorrect.
B. F and G are grammatically correct. N is conceptually and grammatically
correct.
C. All statements are grammatically correct. O is conceptually incorrect.
D. Only G is incorrect. All sentences are conceptually correct except G.
E. E and H are grammatically correct. M is grammatically and conceptually
correct, except for the word "to send", it must be "in sending."

36-40. Sige-Lang Inc. presented the following financial information:

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Sige-Lang Inc.
Statement of Financial Position
As of December 31, 2016

Assets Liabilities and Equity

Cash Php.80,000.00 Accounts Payable Php.32,000.00
Accounts Receivable 160,000.00 Notes Payable 64,000.00
Notes Receivable 48,000.00 Capital Stock 160,000.00
Inventories 400,000.00 Retained Earnings 432,000.00
Total Php.668,000.00 Total Php.668,000.00

Further investigation of the company’s books revealed the following omissions

and errors which were not corrected during the year of errors.

Particulars 2013 2014 2015 2016

Deferred Expense Php.14,400.00 11,200 8,000 9,600
Deferred Income 6,400 4,800
Accrued Expense 13,200.00 1,200 1,600 800
Accrued Income 2,000 2,400
Ending Inventory – 112,000 128,000
Overstated
Ending Inventory - 96,000.00 144,000
Understated
Net Income 120,000.00 88,000.00 104,000.00 120,000.00

No dividends were declared during the years of 2013-2016 and no adjustments

were made to retained earnings. The company’s books reported the following Net
Income:

36. What is the correct Net Income e. None of the above

in 2013?
39. What is the correct Net
a. Php.35,200 income/loss in 2016?
b. 198,400
c. 233,600 a. Php.388,800
d. 227,200 b. 392,000
e. None of the above c. 390,400
d. (152,000)
e. None of the above
37. What is the correct Net
Income/Loss in 2014?
40. What is the net adjustment to
a. Php.290,400 retained earnings as of January 1,
b. (29,600) 2014 and the correct amount of
c. (119,200) Retained earnings as of December
d. (125,600) 31, 2014?
e. None of the above
a. Php.121,600 debit and 582,400
respectively
38. What is the correct Net b. 129,000 debit and 294,400
income/loss in 2015? respectively
a. Php.88,800 c. 121,600 credit and 582,400
b. (23,200) respectively
c. 89,600 d. 129,000 credit and 294,400
d. 120,800 respectively
e. None of the above

41. Hanz Miko Company keeps limited records. Its assets and liabilities at the
beginning and end of the year are as follows:

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Particular Beginning Ending
Cash in Bank Php.30,000.00 50,000.00
Accounts Receivable, Net 50,000.00 70,000.00
Merchandise Inventory 100,000.00 80,000.00
Accounts Payable 40,000.00 20,000.00
Notes Payable – Bank 20,000.00 25,000.00
Equipment, Net 80,000.00 60,000.00

During the year, the owner withdraws cash of Php.120,000 and more additional
investment of Php.50,000. How much is the Net Income or Loss for the year?

a. Php.85,000.00
b. 58,000.00
c. 200,000.00
d. 215,000.00
e. None of the above

42. Jenna Dianna Co. uses the direct method to prepare its statement of cash
flows. Jenna Dianna had the following cash flows during 2017:

Cash receipts from issuance of ordinary shares Php.800,000

Cash receipts from customer 400,000
Cash receipts from dividends on long term investment 60,000
Cash receipts from repayment of loan made to another company 440,000
Cash payments for wages and other operating expense 240,000
Cash payments for insurance 20,000
Cash payments for dividends 40,000
Cash payments for taxes 80,000
Cash payments to purchase land 160,000

What is the net cash provided (used) from operating activities?

a. Php.160,000
b. 120,000
c. 560,000
d. 280,000
e. 260,000

43. Abegail Inc. uses the direct method to prepare its statement of cash
flows. Abegail had the following cash flows during 2017:

Cash receipts from sale of an old van Php.160,000

Cash receipts from issuance of ordinary shares 2,000,000
Cash receipts from issuance of 10%, 10 year bonds 1,500,000
Cash receipts from Customer 1,000,000
Cash receipts from repayment of loan made 1,200,000
Cash payments for dividends 150,000
Cash payments for interest 150,000
Cash payments for operating expenses 650,000
Cash payment for taxes 300,000
Cash payment for equity securities bought 900,000
Cash payment for equipment purchased 300,000
Cash payment for land acquired 1,200,000
What is the net cash provided (used) from investing activities?
a. Php.(2,540,000)
b. (1,040,000)
c. 1,640,000
d. 1,450,000
e. None of the above

44. Jun Kenny company uses the direct method to prepare its statement of Cash
flows. Jun Kenny had the following cash flows during 2016:
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 Republic of the Philippines
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Cash receipts from issuance of bonds Php.800,000
Cash receipts from issuance of Ordinary shares 1,400,000
Cash receipts from customer 700,000
Cash payments for dividends on long term investment 105,000
Cash receipts from repayment of loan made to another company 660,000
Cash payment for wages and other operating expenses 250,000
Cash payments for dividends 70,000
Cash payment for taxes 140,000
Cash payment to purchase land 280,000

What is the Net Cash provided from operating activities?

a. Php.1,775,000
b. 1,577,000
c. 1,705,000
d. 1,670,000
e. 2,195,000

45. The Conceptual Framework deals with

a. Accounting Regulations
b. Quantitative Characteristics
c. Code of Ethics for Professional accountants
d. Concepts of Capital
e. Philippine Financial Reporting Standards

46. Which of the following is true about revaluation model for valuing PPE?
a. Revaluation must be made with sufficient regularity.
b. There is no rule for the frequency or date of revaluation
c. Revaluation must be made every two years.
d. Revaluation must be made on the last day of fiscal year
e. Revaluation should be assed if there is an indication of impairment

47. Aura Corp. has the following classes of shares outstanding at December 31,
2017:
➢ Ordinary shares capital, P100 par P 360,000
➢ 6% Preference share capital, P 100 par,
Cumulative and fully participating 120,000
➢ Dividends on preference shares are in arrears for 2015 and 2016.
If P 57, 600 are to be distributed as dividends, the total dividends to
be given on preference shareholders would be
a. Php.32,400
b. 30,000
c. 24,400
d. 25,200
e. None of the above

48. At 31 December 2017 the following require inclusion in Irish company’s

financial statements;
On 1 January 2017 the company made a loan of p 12, 000 interest to an
employee, repayable on 1 January 2018, charging interest at 2 % per year. On
the due date she repaid the loan and paid the whole of the interest due on the
loan to that date.
The company paid an annual insurance premium of P 9, 000 in 2017, covering the
year ending 31 August 2018.
In January 2018 the company received rent from a tenant of P 4,000 covering
the six months to 31 December 2017.
For these items, what should be included as current assets in the company’s
statement of financial position as at 31 December 2017?

a. Php. 22,240
b. 19, 240
c. 18, 240
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 Republic of the Philippines
PARTIDO STATE UNIVERSITY
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d. 15, 240
e. 14, 760

49. The general ledger trial balance of Khristine May Corporation includes the
following statement of financial position accounts at December 31, 2017:

Inventory (including inventory expected in the ordinary

course of operations to be said beyond 12 months
accounting to P70, 000) Php.110,000

Trade receivables 120,000

Prepaid Insurance 8,000
Listed investments held for trading purposes at fair
value 20,000

Available for sale investments 80,000

Cash and cash equivalents 30,000
Deferred tax assets 15,000
Bank overdraft 25,000

The amount that should be reported as current assets on Khristine May’s statement
of financial position is

a. Php.298,000
b. 218,000
c. 368,000
d. 288,000
e. 862,000

50. Annadel Corp. was a development stage enterprise from October 10, 2016
(inception) through December 31, 2017. The year ended December 31, 2018 was
the first year in which Annadel qualified as an established operating
enterprise. The following are among the costs incurred by Annadel:

For the period For the year

10/10/16 to 12/31/17 ended 12/31/18
Leasehold improvements, equipment Php.1,000,000 Php.330,000
and furniture
Security deposits 60,000 30,000
Research and development 750,000 900,000
Laboratory operations 175,000 550,000
General and administrative 225,000 685,000
Depreciation 25,000 115,000
Php.2,235,000 Php.2,530,000

From its inception through the period ended December 31, 2018, what is the
total amount of costs incurred by Annadel that should be charged to
operations?

a. 1,775,000
b. 1,350,000
c. 2,250,000
d. 3,425,000
e. 2,150,000
The Trial Balance of Dai-Maghinugak Inc. shown below does not balance

Dai-Maghinugak Inc.
Trial Balance
June 30, 2017
Particulars Debit Credit
Cash Php.2,699.00
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 Republic of the Philippines
PARTIDO STATE UNIVERSITY
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Accounts Receivable 7,600.00
Supplies 600.00
Equipment 8,300.00
Accounts Payable 9,766.00
E, Capital 1,952.00
E, Drawing 1,500.00
Service Revenue 15,200.00
Wages Expenses 3,800.00
Repair Expenses 1,600.00
Total Php.26,099.00 26,918.00
An examination of ledger and journal reveals the following errors:

1. Each of the above listed accounts has a normal balance per general ledger.
2. Cash of Php.270 received from a customer on account was debited to cash
Php.720 and credited to accounts receivable the Php.720.
3. A Withdrawal of Php.300 by the owner was posted as a credit to E, Drawing,
Php.300 and credit to cash Php.300.
4. A debit of Php.300 was not posted to wages expenses.
5. The purchase of an equipment on account for Php.700 was recorded as a debit
to Repairs expense and a credit to accounts payable for Php.700.
6. Services were performed on account for a customer, Php.620, for which the
accounts receivable was debited Php.620 and service revenue was credited
Php.62.
7. A payment on account for Php.225 was credited to cash for Php.225 and
credited to Accounts Payable for Php.252.

Required: Reconstruct the accounts to answer the following questions.

51. In Dai-Maghinugak Inc. which is true?

a. Only Capital and Equipment did not change.
b. Drawings will be added twice by the amount omitted.
c. In the corrected trial balance, capital balance will be Php.1,652.
d. Equipment and supplies account will not change.
e. All the following are true.

52. In Dai-Maghinugak Inc. which is true?

a. In error 2, the journal entry is correct but the posting is incorrect.
b. In error 4, journalizing and posting is done with incorrect amount.
c. In error 7, the journal entry is not balanced by Php.477.
d. In error 2, slide is committed.
e. None of the above is true

53. In Dai-Maghinugak Inc. which is false?

a. Capital and Supplies amount did not change.
b. Service Revenue corrected amount is Php.15,758.
c. To correct Repair Expense, Php.700 is deducted.
d. Transposition is committed in recording the collection of the Receivables.
e. Both b and c

54. In Dai-Maghinugak Inc. which is true?

a. The correct equal amount of the trial balance is the original amount of
debit.
b. There is insufficient data to balance the trial balance.
c. The Net Income for the period is Php.10,578.
d. Wages Expense is adjusted by Php.300 debit entry.
e. Both b and d.
55. In Dai-Maghinugak Inc. which is true?
a. Wages Expense is adjusted by Php.300 credit.
b. Repair expense is adjusted by Php.700 debit.
c. The original total expense is Php.5,000.
d. The total expense is adjusted by Php.400 net credit.
e. None of the above

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56. Which reconstruction statement is correct?
a. The correct cash balance is adjusted by debit of Php.450.
b. The correct balance of permanent accrual accounts are Php.9,289 for
receivables and Php.8,050 for payables.
c. To correct the drawing account, the journal entry includes debit to E,
Drawing of Php.700.
d. E, Capital of Php.1,952 remained unchanged.
e. Both D and B are false.

57. Which reconstruction statement is correct?

a. The correct balance of equipment account is Php.700 lower than the original
price.
b. Correct trial balance is impossible.
c. Correct Net asset is Php.10,610.
d. After all corrections, correct trial balance total asset is Php.700 lower
than the original trial balance.
e. Correct trial balance can be reconstructed if sir eboy would extend us an
hour to finalize our answers.

58. Which reconstruction statement is correct?

I. Current asset after all corrections is Php.10,499.
II. The reconstructed accounting equation can be expressed as Php.19,899 =
Php.9,289 + Php.10,610.
III. After all corrections, the accounting equation expressed in amount is
Php.19,899 = Php.9,766 + Php.10,133.
IV. Total corrected amount for expenses is Php.5,000 from Php.5,400.

a. I and II
b. II Only
c. II and IV Only
d. III and IV
e. All of the following are correct statements

59. Which reconstruction statement is correct?

I. After all corrections, total decrease in E, Capital is Php.7,000.
II. Service Revenue is increased by Php.558.
III. After all corrections, total increased in E, Capital is Php.14,642.
IV. After all corrections, the net decrease in equity is Php.8,658.

a. I and II
b. II Only
c. II and IV Only
d. III and IV
e. All of the following are correct statements

60. What is the total debit in trial balance after all corrections?
a. Php.27,000.00
b. 26,000.00
c. 26,008.00
d. 27,001.00
e. None of the above, because it is a 5-digit number with 4 inverse demonic
number that even our accounting instructor would not dare to write.

61. Grachelle Corporation has completed its current year financial statement
which reveal, in part, the following information.

➢ Profit for the year – Php.110,000

➢ Total Comprehensive Income – 130,000
➢ Other Comprehensive income relates to the revaluation of Land and buildings
to fair value
➢ Dividends Paid – Php.35,000

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Effectivity Date: February 3,2014
 Republic of the Philippines
PARTIDO STATE UNIVERSITY
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➢ Opening Equity balances – share capital Php.300,000, Retained Earnings
Php.220,000, Asset Revaluation Surplus Php.60,000
➢ No more share capital was issued during the reporting period.

Apply PAS 1. The Closing Retained Earnings and Closing Total Equity are
________________.

a. Php.295,000 and 675,000 respectively

b. 315,000 and 580,000 respectively
c. 355,000 and 655,000 respectively
d. 375,000 and 695,000 respectively
e. None of the above and 675,000 respectively

62. Ronelyn Inc. had a plantation forest that is likely to be harvested and
sold in 30 years. The income should be accounted for in which of the following
way?
a. Income should be measured annually and reported using a fair value approach
that recognizes and measures biological growth.
b. No income should reported annually until first harvest and sale in 30 years.

c. The eventual sale proceeds should be estimated and matched to the profit
and loss account over the 30 year period.
d. The plantation forest should be valued every 5 years and the increase in
value should be shown in the statement of recognized gains and losses.

63. The unadjusted current assets section and shareholders' equity section of
Vince Company on December 31, 2014 are as follows:

Current assets
Cash 600,000
Available for sale securities (including cost
of P300,000 of John Company's shares) 1,000,000
Trade accounts receivable 3,500,000
Inventory 1,500,000
Total 6,600,000

Shareholders' equity
Share capital 5,000,000
Share premium 2,000,000
Retained
500,000
earnings
Total 7,500,000

In the statement of shareholders' equity, the total equity at December 31,

2017 is

a. 7,500,000
b. 7,200,000
c. 7,800,000
e. 5,200,000
f. Can’t be determined/None of the above

64. In which of the following does X have significant influence?

a. X owns 80% of Y, and Y owns 40% of Z. In Y’s separate financial

statements, the investment in Z is classified as “held for sale” in
accordance with PFRS 5.
b. X owns 30% of the preference shares of Z Co.

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c. X owns 30% of the voting shares of ABC Co., the other 60% is held by Y
and all seats on the board of directors are appointed by Y.
d. X owns 15% of the voting shares of ABC Co., all other shares are held in
very small blocks and therefore X has representatives in the board of
directors.

65. FAR - Conversion

The Income Statement of Rizza Mae S. Company

Particulars November December

Sales Php.80,000.00 Php.90,000.00
Cost of Sales (48,000.00) (54,000.00)
Gross Profit 32,000.00 36,000.00
Selling Expenses (8,500.00) (8,800.00)
Administrative (9,200.00) (9,400.00)
Net Income Php.14,300.00 Php.17,800.00

The owner, Mr. Compute Pa. More, enlist your help to develop a CVP
relationship for planning and control.
Required: Convert the Income Statement of Financial Accounting to Income
Statement of Management Accounting using quantitative relationship to answer
the following questions.

i. Total Variable Cost is Php.54,000

ii. Total Contribution Margin is Php.31,500
iii. Variable Selling Expenses represent 3 percent of Total Cost of Sales.
iv. Net Income increases by Php.3,400.
v. Total Fixed Cost is Php.14,700

a. All statements are true.

b. Four statements are true.
c. Three statements are true.
d. None of the above is true.
e. Insufficient Information. Professional Judgment can't be applied.

66. Revenue from an artistic performance is recognized once

a. Cash has been received from the ticket sales.
b. The event takes place.
c. The tickets for the concert are sold.
d. The audience register for the event online.
e. None of the above

67. Carol Co. reported that the following changes in account balances during
the current year:

Particulars Increase
Assets 8,900,000.00
Liabilities 2,700,000.00
Share Capital 6,000,000.00
Share Premium 600,000.00

Except for a Php.1,300,000.00 dividend payment and the year’s earnings, there
were no changes in retained earnings for the year. What is the net income for
the current year?

a. Php.400,000.00
b. 900,000.00
c. 1,300,000.00
d. 1,700,000.00

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PARTIDO STATE UNIVERSITY
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e. None of the above

68. Czarina Incorporated experienced the following changes in selected accounts

for the current year:

Particulars Increase
Accrual Sales Php.5,000,000.00
Accounts Receivable, January 1 800,000.00
Accounts Receivable, December 31 500,000.00
Advances from Customers, January 1 300,000.00
Advances from Customers, December 31 400,000.00

What total amount of cash was received from customers during the year?
a. Php.5,400,000.00
b. 5,300,000.00
c. 4,800,000.00
d. 4,600,000.00

69. Presented below is the balance sheet of Marriane Corporation, a small and
medium-sized entity, as of December 31, 2017.

Huwag-Sumuko Corporation
Partial Statement of Financial Position
December 31, 2017
Particulars Amounts
Goodwill (Note 2) Php. 1,200,000
Buildings (Note 1) 12,300,000
Inventories 3,121,000
Land 7,500,000
Accounts receivables 1,700,000
Treasury shares (50,000 shares) 870,000
Cash on hand 1,759,000
Assets allocated to trustee for plant expansion; 700,000
Cash in bank and
BSP treasury notes, at cost and fair value 1, 380,000
Notes payables (Note 3) P6, 000, 000
Share capital- Ordinary, authorized and issued, 1,000,000 11, 500,000
shares
Retained earnings 6, 580,000
Appreciation capital (Note 1) 5, 700,000
Income taxes payable 750,000

Note 1: Buildings are stated at revalued amount. Appreciation capital represents

the excess of revalued amount over the carrying amount.
Note 2: Goodwill in the amount of P 1,200,000 was recognized because the company
believed that book value was not an accurate representation of the fair market
value of the company. The gain of P 1,200,000 was credited to retained earnings.
Note 3: Notes payable are long-term except for the current installment due of P
1,000,000.
Total shareholders’ equity as adjusted would amount to __________________.
a. Php. 22,580,000
b. 21,710,000
c. 16,880,000
d. 16,010,000
e. 10,116,000
70. Last-Na-Ini Inc., paid P 1,200,000 in December 2016 for its inventory. In
December 2017, one half of the inventory was sold for P 1, 000,000 when the
replacement cost of the original inventory was P 1, 400,000. Ignoring income
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PARTIDO STATE UNIVERSITY
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____________________________________________________________________
taxes, what amount should be shown in the current cost accounting income
statement for 2017?

a. Php.500,000
b. 400,000
c. 300,000
d. 200,000
e. 100,000
______________________________________________________________________________

(This AREA is reserved for your COMPUTATION)

______________________________________________________________________________

ACCOUNTABLE NOTES TO PONDER

The great accounting skills can only be unleashed through WILLINGNESS to

learn, NOT by the capacity to learn!

“Be an ACCOUNTANT of VALUE not just of PRICE!

Prepared by: Reviewed by: Approved:

EMMANUEL A. ONSAY, CPA KARLO PEDRO L. MEDROSO II, CPA LEA V. LUSTRE, DBA
Faculty Program Director Dean

______________________________________________________________________________________________
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Effectivity Date: February 3,2014