AUDIT

1. An auditor is determining whether an issuance of notes payable for cash was correctly recorded.
Her best course of action would be to:
a. Verify that the amount was included in a footnote disclosure
b. Trace the cash received from the proceeds to the accounting records
c. Confirm with the underwriter as to the appropriate market yield of the bonds
d. Confirm with the bond trustee as to the amount of bond issued

2. A weak internal control system allows a department supervisor to “clock in” for a
fictitious employee and then approve the employee’s time card at the end of the pay period. This
fraud would be detected if other controls were in place, such as having an independent party:
a. Foot the payroll journal and trace postings to the general ledger and the payroll master file
b. Re-compute hours worked from time cards
c. Compare the date of the recorded check in the payroll journal
d. Distribute paychecks

3. Only three management assertions are associated with TRAO. Which one of the following is not?
a. Existence or Occurrence
b. Completeness
c. Valuation or Allocation
d. Presentation and Disclosure

4. Assume that the client's valuation of an inventory item is $10 per unit for 1,000 units, using first-
in, first-out (FIFO). If the most recent acquisition of inventory was for 400 units at $10 per unit and
the immediately preceding acquisition was for 700 units at $9,5 per unit, the inventory item is in
error and it is:
a. Overstated $400
b. Understated $400
c. Understated $300
d. Overstated $300

5. The auditor’s primary concern relative to presentation and disclosure-related objectives is

a. Existence
b. Occurrence
c. Accuracy
d. Completeness

6. If the perpetual inventory master files show lower quantities of inventory than the physical count,
an explanation of the difference might be unrecorded
a. Purchase discount
b. Sales
c. Sales discount

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 d. Purchases

7. When auditing depreciation expense the two majors concerns related to the accuracy audit
objectives are
a. Correctness of calculations and consistent application of depreciation method
b. Consistent application of depreciation methods and useful lives
c. All answer are false
d. Consistent application of depreciation method and classification of assets

8. An auditor is vouching a sample of hourly employees from the payroll master file to approved time
clock or time sheet data in order to provide evidence that
a. Segregation of duties is present between the payroll function and the payment function for cash
disbursement
b. Employees work the number of hours for which they are paid
c. Product cost information is accurate
d. Payments are made at the contractual rate

9. Which of the following groups has the responsibility for identifying and deciding the appropriate
accounting treatment for recording or disclosing contingent liabilities?
a. Management
b. Management and the auditors
c. Legal counsel
d. Auditors

10. Because of many types of errors and irregularities that may be found in the acquisition and payment
cycle represent a misstatement of earnings and are of significant concern to the auditor, tolerable
exception rate selected by the auditor will be?
a. Average
b. Low
c. High
d. 15% or less

11. Narratives, flowchart, and internal control questionnaires are three common methods at
a. Documenting the auditor’s understanding of a client’s organization structure
b. Documenting the auditor’s understanding of internal control
c. Designing the audit manual and procedure
d. Testing the internal control

12. The highest level of assurance is provided for in which one of the following engagement
a. All answer are false
b. Compilation
c. Audit
d. Review

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13. The primary audit objectives to focus on when auditing debt are:
a. Accuracy and valuation
b. Accuracy and existence
c. Completeness and valuation
d. Accuracy and completeness

14. All of the following would not be uncovered by a bank reconciliation except for:
a. Duplicate payment of a vendor’s invoice
b. Payments on notes payable debited directly to the bank account by the bank but not recorded
on the books
c. Improper payments of officers’ personal expenditures
d. Payment to an employee for more hours than he worked

15. The inventory and warehousing cycle can be thought of as having two separate but closely related
systems, one involving the actual physical flow of goods, and the other the:
a. related costs
b. storage of the goods
c. internal control over those goods.
d. prevention of waste, obsolescence, and theft

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 SYSTEM

1. Which of the following statements about the control environment is false?

a. An overly complex or unclear organizational structure may be indicative of problems
that are more serious
b. Supervision is especially important in organizations that cannot afford elaborate
responsibility reporting or are too small to have an adequate separation of duties
c. Management's attitudes toward internal control and ethical behavior have little impact
on employee beliefs or actions.
d. A written policy and procedures manual is an important tool for assigning authority
and responsibility

2. In the HR and Payroll Cycle time card used to record

a. Time worked by an hourly-wage employee
b. The activities performed by a salaried professional for various client
c. List of each employee’s gross pay, payroll deduction and net pay
d. Gross pay, net pay, and itemizes all deduction both for the current period and for the year to
end date

3. A fraud in which supplier pays a buyer or purchasing agent in order to sell its products or services,
is known as:
a. Kickbacks
b. Misappropriation of assets
c. Corruption
d. Procurement card

4. The Information System that gathers data, describing firms activities, transform data into
information and make information available to users both inside or outside the firm is called:
a. Accounting Information System
b. Information System
c. Transaction Processing System
d. Management Information System

5. In the general, system translated as

a. A group of elements or component that are closely related to each other, that work together to
achieve the goal
b. Forms, notes, and reports organized by the company to provide information that helps in
decision making
c. A sequence …………
d. …………….

6. The portion of a data record where the data value for a particular attribute is stored is called
a. A record

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 b. An attribute
c. An entity
d. A field

7. When a customer pay for each sales transaction with separate check and is not allowed to pay by
installment in every single selling item or selling transaction. The relation between sales entity and
cash receipt entity can be modified as following
a. M : N
b. 1 : 1
c. 1 : N
d. 0 : N

8. Methods used in gaining access to a computer system without permission is known as

a. Rootkit
b. Piggybacking
c. Hacking
d. Logic bomb

9. The views of managers and others employees who are the database users is:
a. Internal schema
b. Logical schema
c. Conceptual schema
d. External schema

10. The following is an advantage of developing system with a modular model, except
a. The addition of modules doesn’t need to implicate the existing code
b. The addition of modules doesn’t change the existing system form
c. The addition of modules doesn’t interfere the existing system operation
d. The deletion of certain modules will not shut down the whole system

11. Methods of maintaining customer accounts that generates payments for each individual sales
transaction is called
a. Cycle billing
b. CRM system
c. FED
d. Open invoice method

12. What internal control procedure would best prevent or detect the following problems: the “rush
order” tag on a partially completed production job become detached from the materials and los,
resulting in a costly delay
a. Limit authority to prepare or authorize materials requisition to production planning personnel
b. Have production schedules indicates the high priority jobs
c. Hold the recipient responsible for shortages to provide an incentive to accurately count what is
received

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 d. Flag any amounts that are unreasonably high or low and have the system display a request that
the worker reenter the quantity

13. What is the most appropriate procedure to avoid crediting customer payment to wrong account
a. Segregation of duties of handling cash and maintaining accounts receivables
b. Periodic reconciliation of pre-numbered sales order with pre-numbered shipping document
c. Reconciliation of packing lists with sales orders
d. Mail monthly statements to customers

14. The following which is not a component of computer based Information System is:
a. Hardware
b. Software
c. Information
d. Procedure

15. Which of the following statements is true?

a. All answer are true
b. The controls for protecting confidentiality are not effective for protecting privacy
c. Cookies are text file that only store information they cannot perform any action
d. Encryption is sufficient to protect confidentiality and privacy

16. Choose the most adequate procedure to defer the threat of paying for items not received, in
expenditure cycle:
a. Only accept deliveries for which an approved purchase order exists
b. Cancel or mark “paid” all supporting documents in a voucher package when a check is issue
c. Only issue checks for a complete voucher package (receiving report, supplier invoice, purchase
order)
d. Automated comparison of total change in cash to total changes in account payable

17. An internal control structure consists of the following, except:

a. Decision support system
b. Control environment
c. Control activity
d. Risk assessment

18. General control related to segregation of duties is:

a. Merchandise inventory master file is entered according to shipping order and sales
b. Limited physical access in computer and server
c. Programming functions is separated from source code library
d. Cancellation of unsatisfactory project

19. Sales invoice, purchase requisition, and employee time cards are called
a. Turnaround documents
b. Source documents

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 c. Voucher documents
d. Production automation documents

20. In a revenue information system, the followings cannot be depicted as a process in Data Flow
Diagram (DFD):
a. Deposit fund into account
b. Send message
c. Pay bills
d. Bill customers

21. Purchasing process starts with a … from original department for the products or services.
a. Purchase order
b. Purchase quote
c. Purchase requisition
d. Purchase report

22. What is the name of the basic option for replacing It infrastructure that is an empty building,
prewired for necessary telephone and internet access, plus a contract with one or more vendor to
provide all necessary equipment within specific period of time
a. A hot site
b. A cold site
c. A switch site
d. A domain site

23. The integrated database underlying an ERP system results in which of the following general threats
for the revenue cycle?
a. Inaccurate or invalid master data
b. Unauthorized disclosure of sensitive data
c. Loss or destruction of data
d. All of the above

24. Which of the following procedures is designed to prevent the purchasing agent from receiving
kickback?
a. Maintaining a list of approved suppliers and requiring all purchases to be made from suppliers
on that list
b. Requiring purchasing agents to disclose any financial investment in potential suppliers
c. Requiring approval of all purchase orders
d. Pre-numbering and periodically accounting for all purchase order

25. Which control procedure is probably least effective in reducing the threats of inventory loss?
a. Limiting physical access to inventory
b. Documenting all transfer of inventory within the company
c. Regular materials usage reports that highlight variances from standards

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 d. Periodically counting inventory and investigating any discrepancies between those counts and
recorded amount

26. Which of the following is an important supporting document to authorize the transfer of funds to
the payroll back account?
a. Earnings statement
b. Time card
c. Payroll register
d. Tax register

27. Which of the following statements does not illustrate the information function in improve decision
making
a. Reduce uncertainty
b. Provide feedback on the effectiveness of previous decision
c. Increased information quantity
d. Identify situations that require management actions

28. A document that specifies how much a finished goods to be produced during a specific time period
is called
a. Job order document
b. Production order
c. Lean manufacturing
d. Job time ticket

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 COST & MANAGEMENT ACCOUNTING

1. At the end of the year, Paola Company had the following account balances after applied factory
overhead had been closed to Factory Overhead Control:
Factory Overhead Control.............................................................. $ 1,000 CR
Cost of Goods Sold ......................................................................... 980,000 DR
Work in Process............................................................................. 38,000 DR
Finished Goods .............................................................................. 82,000 DR
The most common treatment of the balance in Factory Overhead Control would be to:
a. carry it as a deferred credit on the balance sheet
b. credit it to Cost of Goods Sold
c. prorate it between Work in Process and Finished Goods
d. report it as miscellaneous operating revenue on the income statement

2. Valentino Corporation makes aluminum fasteners. Among Valentino's 19- manufacturing costs
were:
Wages and salaries:
Machine operators $80,000
Factory supervisors 30,000
Machine mechanics 20,000
Direct labor amounted to:
a. $110,000
b. $100,000
c. $130,000
d. All wrong

3. Production of a special order will increase contribution margin when the additional revenue from
the special order is greater than:
a. DM and DL in production the order
b. Marginal costs in production order
c. Indirect cost of production order
d. Non-variable costs incurred in the production order

4. Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.
Inventories
Beginning Ending
Materials .......................................................................................... $75 $ 85
Work in process .............................................................................. 80 30
Finished goods ................................................................................. 90 110

Materials used, $326

Total manufacturing costs charged to production during the year (including direct materials, direct
labor, and factory overhead applied at the rate of 60% of direct labor cost), $686

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 Cost of goods available for sale, $826
Selling and general expenses, $25
The cost of direct materials purchased during the year amounted to:
a. $441
b. $316
c. $360
d. $336

5. Flintstone Company uses flexible budgeting for cost control. Flintstone produced 10,800 units of a
product during March, incurring indirect material costs of $13,000. Its static budget for the year
reflected variable indirect material costs of $180,000 at a production volume of 144,000 units. A
flexible budget for March production would reflect indirect material costs of:
A. $11,700
B. $13,500
C. $13,975
D. $13,000

6. When the number of units manufactured increases, the most significant change in average unit cost
will be reflected as
a. An increase in the semi-variable element
b. A decrease in the variable element
c. An increase in the variable element
d. A decrease in the non-variable element

7. Factory overhead includes

a. All manufacturing costs, except DM and DL
b. All manufacturing costs
c. Indirect labor but not indirect material
d. Indirect material but not indirect labor

8. Todco planned to produce 3,000 units of its single product, Teragram, during November. The
standard specifications for one unit of Teragram include six pounds of material at $0.30 per pound.
Actual production in November was 3,100 units of Teragram. The accountant computed a favorable
materials purchase price variance of $380 and an unfavorable materials quantity variance of $120.
Based on these variances, one could conclude that:
a. The actual cost of materials was less than the standard cost.
b. More materials were purchased than were used.
c. The actual usage of materials was less than the standard allowed.
d. More materials were used than were purchased

9. The Webb Company’s new process will be carried out in one department. The production process
has an expected learning curve 80%. The costs subject to the learning effect for the first batch
produced by the process were $10,000, using the simplest form of the learning function, the
cumulative average cost after the sixteenth batch is:

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 a. $5,120
b. $10,000
c. $3,276
d. $4,096

10. The term “Conversion cost” refer to

a. Manufacturing cost incurred to produce units of output
b. The sum of direct material and direct labor cost
c. The sum of direct labor and factory overhead cost
d. Cost that are associated with marketing, shipping, warehousing and billing activities

11. Application rates for FOH best reflect anticipated fluctuations in sales over a cycle of years when
they are computed under the concept of
a. Expected actual capacity
b. Practical capacity
c. Normal capacity
d. Maximum capacity

12. Havart Corporation manufactures 2 products out of joint process- Compod & Ultrasene. The joint
cost incurred $250.000 for a standard production run that generates 120.000 gallons of Compod
and 80.000 gallons of Ultrasene. Compod sells for $2/gallon, while Ultrasene sells for $3,25/gallon.
If there are no additional processing costs incurred after split of, the amount of joint cost allocated
to Compod by the quantitative unit method is
a. $130.000
b. $150.000
c. $120.000
d. $100.000

13. Spoilage occurs as a result of normal production shrinkage in a process cost system. Using average
costing, the number of equivalent units that production costs should be changed to would be based
upon:
a. Units transferred out and spoiled units
b. Spoiled units
c. Units transferred out and units in ending inventory
d. Units transferred out, spoiled units, and units in ending inventory

14. In make or buy decision”

a. Only prime costs are relevant
b. Fixed cost that can be avoided in future are relevant
c. Fixed cost that will continue regardless of the decision are relevant
d. Only variable cost are relevant

A company manufactures a single product which has the following cost structure based on a production
sales budget of 10.000 units

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 Materials (4 kg at £3 per kg) £12
Direct labour hours (5 hours at £2 per hour) £35
Variable overheads are recovered at £8 per direct labour hour
Other cost include
Factory fixed overheads £120.000
Selling and distribution overheads £160.000
Fixed administration overheads £ 80.000
The selling and distribution overheads include variable element due to a distribution cost of £2 per
unit. Selling price is £1,29
15. How many units have to be sold for the class to breakeven?
a. 8.500
b. 9.000
c. 9.500
d. 1.000

16. The level of revenue which would give a net profit of £40.000 is
a. £1 million
b. £1.225.500
c. £1.300.250
d. £1.325.000

17. The margin of safety is

a. 1.000 units
b. 1.250 units
c. 1.440 units
d. 1.500 units

18. If the company sells 9.500 units at £129 each and still incurred £197.500 of overheads, what will
maximum buy in price?
a. £100
b. £102
c. £104
d. £108

19. Company KL Ltd. operate a marginal costing system. For the forth coming year, variable costs are
budgeted to the 60% of sales value & fixed costs to be 10% of sales value. If the company increase
their selling price by 10% and fixed cost, variable cost, and sales volume remain the same, the
effect on contribution
a. A decrease of 5%
b. No change
c. An increase of 15%
d. An increase of 25%

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The following five question (20-24) are based on budgeted and actual figures for XYZ Ltd in the
financial year 2005/2006.
Budget
Sales 50.000 units at £100
Production 55.000 units
Materials 110.000 kg at £20 per kg
Labour 82.500 hours at £2 per hour
Variable overhead 82.500 hours at £6 per hour
Fixed overhead 82.500 hours at £10 per hour
Standard cost of production £67
Budgeted profit £1.650.000

Actual
Sales 53.000 units at £95
Production 56.000 units
Materials purchased 130.000 kg
Closing stock 20.000 kg
Materials purchase price £2.700.000
Labour 85.000 hours paid at £180.000
Labour 83.000 hours worked
Variable overhead £502.000
Fixed overhead £935.000
Actual profit £1.319.000

20. The sales price variance was:

a. £265.000 (U)
b. £265.000 (F)
c. £99.000 (U)
d. £99.000 (F)

21. The material usage variance was:

a. £20.000 (U)
b. £20.000 (F)
c. £40.000 (U)
d. £40.000 (F)

22. Idle time was

a. £2.000 (F)
b. £2.000 (U)
c. £4.000 (F)
d. £4.000 (U)

23. The variable overhead expenditure variance was

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 a. £2.000 (F)
b. £2.000 (U)
c. £4.000 (F)
d. £4.000 (U)

24. The fixed overhead volume variance was

a. £15.000 over
b. £15.000 under
c. £10.000 over
d. £10.000 under

25. The first in first out method of process costing will produce the same Cost of Goods Manufactured
amount as the average cost method when:
a. Beginning and ending inventory are each 50% complete
b. There is no beginning inventory
c. There is no ending inventory
d. Beginning inventory are 100% complete as materials

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 TAX

1. List of non-taxable service according to VAT law, except for:

a. Catering service
b. Finance and banking service
c. Construction service
d. Educational service

2. According to law, notice of underpayment tax assessment should be paid within 1 months since
its issuance. If tax player failed to pay within the time given, he/she may get …. immediately
a. Notice of additional underpayment tax assessment
b. Coercive warrant
c. Reprimand letter
d. Seizure

3. Listed below are list of non-income tax object of PPh 23, except for
a. Land/building rental income
b. Machine rental income
c. Interest payment received by bank from its loan customer
d. Dividend received from investment in corporation

4. Non-deductible expense
a. Depreciation expense calculate according to act 10 of Income Tax Law
b. Interest expense, after deducting with interest income received
c. Promotion expense, with complete nominative list
d. Charity expense, given to local community near the office/factory

5. According to the law, taxpayer may amend the tax return, and if the amandement resulted in
underpayment of tax, then the taxpayer must pay the underpayment amount and tax payer will pay
2% interest per month calculated from ………. until the date of amandement.
a. The latest between end of taxable year or deadline of tax return submission
b. The deadline of tax return submission
c. The end of taxable period
d. The end of taxable year

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 FINANCIAL ACCOUNTING

1. Henke Co. uses the retail inventory method to estimate its inventory for interim statement purposes.
Data relating to the computation of the inventory at July 31, 2010, are as follows:
Cost Retail
Inventory, 2/1/10 $ 200,000 $ 250,000
Purchases $1,000,000 $1,575,000
Markups, net $175,000
Sales $1,600,000
Estimated normal shoplifting losses $20,000
Markdowns, net $110,000
Under the lower-of-cost-or-market method, Henke's estimated inventory at July 31, 2010:
a. $96.000
b. $72.000
c. $120.000
d. $84.000

2. Which of the following is true regarding the use of LIFO for inventory valuation?
a. For purpose of externa financial report, LIFO may not be used with LCNRV
b. If LIFO used for external financial report, must be also used for internal reports
c. If LIFO used for external financial report, then cannot be used for tax purposes
d. None of these

3. In preparing its August 31, 2010 bank reconciliation, Annie Corp. has available the following
information:
Balance per bank statement, 8/31/10 $21,650
Deposit in transit, 8/31/10 $3,900
Return of customer’s check not sufficient funds, 8/30/10 $600
Outstanding checks, 8/31/10 $2,750
Bank service charges for August $100
At August 31, 2010, Annie’s adjusted cash balance is?
a. $20.800
b. $22.200
c. $22.800
d. $22.100

4. When depreciation is computed for partial periods under a diminishing charge depreciation method,
it is necessary to:
a. charge a full year's depreciation to the year of acquisition
b. determine depreciation expense for the full year and then prorate the expense between the two
periods involved
c. use a residual value equal to the first year's partial depreciation charge
d. use the straight-line method for the year in which the asset is sold or otherwise disposed of

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5. Presented below are data for Antwerp Corp.
2010 2011 2012
Assets, January 1 $2,800 $3,360 ?
Liabilities, January 1 1,680 ? $2,016
Stockholders' Equity, Jan. 1 ? ? 2,100
Dividends 560 420 476
Common Stock 504 448 500
Stockholders' Equity, Dec. 31 ? ? 1,596
Net Income 560 448 ?

Stockholders' Equity at January 1, 2010 is

a. $560
b. $1624
c. $1120
d. $504

6. Watts Corporation made a very large arithmetical error in the preparation of its year end financial
statements by improper placement of a decimal point in the calculation of depreciation. The error
caused the net income to be reported at almost double the proper amount. Correction of the error
when discovered in the next year should be treated as
a. an other expense item for the year in which the error was made
b. a component of income for the year in which the error is discovered, but separately listed on
the income statement and fully explained in a note to the financial statements
c. a prior period adjustment
d. an increase in depreciation expense for the year in which the error is discovered

7. A general description of the depreciation methods applicable to major classes of depreciable assets
a. is not essential to a fair presentation of financial position
b. should be included in corporate financial statements or notes thereto
c. is needed in financial reporting when company policy differs from income tax policy
d. is not a current practice in financial reporting

8. Which of the following should be reported as a prior period adjustment?

a. Change in estimated lives of depreciable assets : Yes, Change from unaccepted principle to
accepted principle : Yes
b. Change in estimated lives of depreciable assets : No, Change from unaccepted principle to
accepted principle : Yes
c. Change in estimated lives of depreciable assets : Yes, Change from unaccepted principle to
accepted principle : No
d. Change in estimated lives of depreciable assets : No, Change from unaccepted principle to
accepted principle: No

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9. Freight in $30.000, Purchase return $75.000, Selling expense $150.000, Ending inventory $260.000
Cost of goods sold is 400% selling expense
Cost of goods available for sales is
a. $815.000
b. $600.000
c. $860.000
d. $890.000

10. IFRS requires all of the following when classifying receivables except
a. Disclose any receivables pledged as collateral
b. Indicate the receivables classified as current and non-current in the statement of financial
position
c. All of the choices are required by IFRS when classifying receivables
d. Disclose all significant concentrations of credit risk arising from receivables

11. On January 1, 2010, Solis Co issued its 10% bonds in the face amount of $3.000.000 which mature
on January 1, 2020. The bonds were issued for $3.405.000 to yield 8 resulting in bond premium of
$405.000. Solis uses the effective interest method of amortizing bond premium. Interest is payable
annually on December 31. At December 31 2010 the carrying value of the bonds should be…
a. $3.405.000
b. $3.364.500
c. $3.304.500
d. $3.377.400

12. Which of the following is a method used to generate cash from accounts receivable?
a. Assignment; No , Factoring; Yes
b. Assignment; No , Factoring; No
c. Assignment; Yes , Factoring; Yes
d. Assignment; Yes , Factoring; No

13. Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of
the period when purchased is an example of the application of the
a. Matching cost principle
b. Historical cost principle
c. Materiality constraint
d. Consistency characteristic

14. January 2, 2008, Koll, Inc. purchased a patent for a new consumer product for $270,000. At the
time of purchase, the patent was valid for 15 years; however, the patent’s useful life was estimated
to be only 10 years due to the competitive nature of the product. On December 31, 2011, the product
was permanently withdrawn from the market under governmental order because of a potential
health hazard in the product. What amount should Koll charge against income during 2011,
assuming amortization is recorded at the end of each year?
a. $189.000

18
 b. $216.000
c. $162.000
d. $27.000

15. On July 1, 2009, Noble, Inc. issued 9% bonds in the face amount of $5,000,000, which mature on
July 1, 2015. The bonds were issued for $4,695,000 to yield 10%, resulting in a bond discount of
$305,000. Noble uses the effective-interest method of amortizing bond discount. Interest is payable
annually on June 30. At June 30, 2011, the carrying value of the bond should be:
a. $4.756.000
b. $4.785.000
c. $4.735.950
d. $4.745.000

16. On January 1, 2007, Russell Company purchased a copyright for $1,000,000, having an estimated
useful life of 16 years. In January 2011, Russell paid $150,000 for legal fees in a successful defense
of the copyright. Copyright amortization expense for year ended December 31, 2011, should be?
a. $75.000
b. $62.500
c. $0
d. $71.875

17. On January 2, 2010, York Corp. replaced its boiler with a more efficient one. The following
information was available on that date:
Purchase price of new boiler $150,000
Carrying amount of old boiler 10,000
Fair value of old boiler 4,000
Installation cost of new boiler 20,000
The old boiler was sold for $4,000.
What amount should York capitalize as the cost of the new boiler?
a. $170,000
b. $166,000
c. $160,000
d. $150,000

18. Expensing the cost of copy paper when the paper is acquired is an example of which constraint?
a. Industry practices
b. Cost-benefit
c. Conservatism
d. Materiality

19. On January 2, Matthews Corporation acquired 20% of the outstanding common stock of Edmonds
Company for $350,000. For the year ended December 31, Edmonds reported net income of $90,000
and paid cash dividends of $30,000 on its common stock. At December 31, the carrying value of
Matthews' investment in Edmonds under the equity method is

19
 a. $344.000
b. $350.000
c. $362.000
d. $356.000

20. Hite Co. was formed on January 2, 2010, to sell a single product. Over a two-year period, Hite's
acquisition costs have increased steadily. Physical quantities held in inventory were equal to three
months' sales at December 31, 2010, and zero at December 31, 2011. Assuming the periodic
inventory system, the inventory cost method which reports the highest amount of each of the
following is
a. Inventory December 31, 2010; FIFO , Cost of Sales 2011: FIFO
b. Inventory December 31, 2010; Average , Cost of Sales 2011: Average
c. Inventory December 31, 2010; FIFO , Cost of Sales 2011: Average
d. Inventory December 31, 2010; Average , Cost of Sales 2011: FIFO

21. If inventory level are stable or increasing, an assignment which is not an advantage of LIFO
methods as compare to FIFO is
a. Cost assignments typically parallel the physical flow of goods
b. Cost of sales tends to be stated at approximately current costs on the income statement
c. Income tends to be smoothed as price change over time
d. Income taxes tends to be reduced in periods of rising prices

22. At December 31, 2010, the following information was available from Kohl Co.'s accounting
records:
Cost Retail
Inventory, 1/1/10 $147,000 $ 203,000
Purchases 833,000 1,155,000
Additional markups 42,000
Available for sale $ 980,000 $1,400,000
Sales for the year totaled $1,050,000
Markdowns amounted to $10,000
Under the lower-of-cost-or-market method, Kohl's inventory at December 31, 2010 was
a. $245.000
b. $294.000
c. $252.000
d. $238.000

23. At the end of fiscal year, Alpha Airlines has an outstanding purchase commitment for the purchase
for the purchase of 1 million gallons of jet fuel at a price of $4.60 per gallon for delivery during the
coming summer. The company prices its inventory at the lower cost or marker. If the market price
for jet fuel at end of year is $4.25, how would this situation be reflected in the annual financial
statements?
a. Record unrealized losses of $350.000 and disclose the existence of the purchase commitment
b. No impact

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 c. Disclose the existence of the purchase commitment
d. Record unrealized gains of $350.000 and disclose the existence of the purchase commitment

24. Ringler Corporation exchanges one plant asset for a similar plant asset and gives cash in the
exchange. The exchange is not expected to cause a material change in the future cash flows for
either entity. If a gain on the disposal of the old asset is indicated, the gain will
a. be reported in the Other Revenues and Gains section of the income statement
b. effectively increase the amount to be recorded as the cost of the new asset
c. effectively reduce the amount to be recorded as the cost of the new asset
d. be credited directly to the retained earning account

25. In 2010, Orear Manufacturing signed a contract with a supplier to purchase raw materials in 2011
for $700,000. Before the December 31, 2010 balance sheet date, the market price for these materials
dropped to $510,000. The journal entry to record this situation at December 31, 2010 will result in
a credit that should be reported
a. as an appropriation of retained earnings
b. on the income statement
c. as a valuation account to Inventory on the balance sheet
d. as a current liability

26. Tang, Inc. sells collectible jewelry on consignment from various manufacturers. Additionally, Tang
sells its own line of specialty jewelry manufactured in-house. On December 31, 2011, during Tang,
Inc's annual inventory count, an inexperienced new staff member included in Tang's ending
inventory $350,000 worth of inventory held on consignment from Metcalf Associates. Which of
the following is correct regarding the impact of this error on Tang's income statement and statement
of financial position at December 31, 2011?
a. Ending inventory is understated by $350,000
b. Retained earnings is overstated by $350,000
c. Cost of goods sold is overstated by $350,000
d. The financial statements are correctly stated

27. Compared to the accrual basis of accounting, the cash basis of accounting overstates income by the
net increase during the accounting period of the:
a. Accounts receivable: Yes ; Accrued expenses payable: No
b. Accounts receivable: Yes ; Accrued expenses payable: Yes
c. Accounts receivable: No ; Accrued expenses payable: No
d. Accounts receivable: No ; Accrued expenses payable: Yes

28. On May 5, 2011, MacDougal Corp. exchanged 2,000 shares of its $25 par value treasury ordinary
shares for a patent owned by Masset Co. The treasury shares were acquired in 2010 for $45,000.
At May 5, 2011, MacDougal's ordinary shares was quoted at $34 per share, and the patent had a
carrying value of $55,000 on Masset's books. MacDougal should record the patent at?
a. $45.000
b. $50.000

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 c. $55.000
d. $68.000

29. Younger Company has outstanding both common stock and nonparticipating, non-cumulative
preferred stock. The liquidation value of the preferred is equal to its par value. The book value per
share of the common stock is unaffected by
a. the declaration of a share dividend on preference payable in preference share when the market
price of the preference is equal to its par value
b. the declaration of a share dividend on ordinary share payable in common stock when the
market price of the ordinary share is equal to its par value
c. the payment of a previously declared cash dividend on the common stock
d. a 2-for-1 split of the common stock.

30. Wheeler Company issued 5,000 shares of its $5 par value ordinary shares having a market value of
$25 per share and 7,500 shares of its $15 par value preference shares having a market value of $20
per share for a lump sum of $240,000. The proceeds allocated to the preference share is
a. $215.000
b. $150.000
c. $130.909
d. $109.091

31. On July 1, 2012, Nall Co. issued 2,500 shares of its $10 par ordinary shares and 5,000 shares of its
$10 par convertible preference shares for a lump sum of $125,000. At this date Nall's ordinary
shares was selling for $24 per share and the convertible preference share for $18 per share. The
amount of the proceeds allocated to Nall's preference share should be
a. $62.500
b. $75.000
c. $90.000
d. $68.750

32. On December 31, 2010, the stockholders' equity section of Arndt, Inc., was as follows:
Share capital ordinary, par value $10; authorized 30,000 shares;
issued and outstanding 9,000 shares $ 90,000
Share premium ordinary 116,000
Retained earnings 174,000
Total equity $380,000
On March 31, 2011, Arndt declared a 10% share dividend, and accordingly 900 additional shares
were issued, when the fair value of the was $18 per share. For the three months ended March 31,
2011, Arndt sustained a net loss of $32,000. The balance of Arndt’s retained earnings as of March
31,2011, should be:
a. $125,800
b. $133,000
c. $134,800
d. $142,000

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33. Assume the following sales data for a company
2015 £1,600,000
2014 1,280,000
2013 1,120,000
2012 800,000
If the 2012 is the base year, what is the percentage increase in sales from 2012 to 2014?
a. 100%
b. 160%
c. 60%
d. 62,5%

34. Under which of the following cases may a percentage change be computed?
a. The trend of the amounts is decreasing but all amounts are positive
b. There is no amount in the base year
c. There is a negative amount in the base year and a negative amount in the subsequent year
d. There is a negative amount in the base year and a positive amount in the subsequent year

35. In performing a vertical analysis, the base for prepaid expense is

a. Total current assets
b. Total assets
c. Total equity and liabilities
d. Prepaid expenses in previous year

36. Asset turnover measures

a. How often a company replaces its assets
b. How efficiently a company uses its assets to generate sales
c. The portion of the assets that have been financed by creditors
d. The overall rate of return on assets

37. The statement of cash flow should help investors and creditors assets each of the following except
the
a. Entity’s ability to generate future income
b. Entity’s ability to pay dividend
c. Reasons for the difference between net income and net cash provided by operating activities
d. Cash investing and financing transactions during the period

38. By examining the statement of cash flows, investors can make prediction of the
a. Amounts of future cash flow
b. Timing of future cash flow
c. Uncertainty of future cash flow
d. All of these answer choices are correct

39. Entity must apply equity method of accounting on following situations, except

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 a. Entity consolidate an subsidiary
b. Entity has joint operations with other entities
c. Entity has investment in associate company
d. Entity has joint venture

40. According to PSAK 55, if companies sell more than insignificant amount of investment classified
as held to maturity, before its maturity date, then :
a. All remaining investment in all categories must be classified to available for sales, and for this
year and next 2 years aren’t allowed to have any investment classified in any classification
b. All remaining investment in all categories must be classified to fair value through profit loss,
and for this year and next 2 years aren’t allowed to have any investment classified in any
classification
c. All remaining investment in held to maturity must be classified to available for sales, and for
this year and next 2 years aren’t allowed to have any investment classified in held to maturity
d. All remaining investment in held to maturity must be classified to fair value through profit
loss, and for this year and next 2 years aren’t allowed to have any investment classified in held
to maturity

41. According to PSAK 58, if companies decide to sell the fixed assets, and it became known than it’s
carrying amount is $10.000, its fair value $20.000, its cost to sell is $1.000 and cost to dispose is
$2.000. How much the amount of fixed asset that should be presented in the statements of financial
positions:
a. $10.000
b. $20.000
c. $18.000
d. $19.000

42. According to PSAK 1, entities presented its income statements has to classified its other
comprehensive income (OCI) reporting into two parts: OCI that can be reclassified to profit-loss
and OCI that can’t be reclassified to profit-loss. Which of the following is OCI that can be
reclassified to profit-loss:
a. Gain or loss from investment in shares, classified in available for sale
b. Gain or loss from translation of financial statements
c. Gain or loss from revaluation of fixed and or intangible assets
d. Gain or loss from re-measurements or defined benefit obligations

43. According to PSAK 68 in measuring fair value, entities must used fair value hierarchy. One of the
fair value hierarchy is measuring with “observable input”. Which of the following is “observable
input”:
a. Price of BMRI shares, obtained in Indonesian Stock Exchange
b. Price of inventory in retail market, adjusted for differences due to locations
c. Price of options, measured by Black-Scholes-Merton option model
d. Price of shares, measured by Capital Assets Pricing Model (CAPM)

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44. Entity that has investment properties and elect to choose cost model instead of fair value model has
to di… conduct accounting treatment like this, except:
a. Disclosing fair value of its properties
b. Measuring the investment properties at its cost
c. Measuring the investment properties at its cost less accumulate depreciation
d. Has not to do impairment testing

45. PT. F develop software intended for its online store. PT. F incurred $50.000 for developing the
website programmer. 30% of this cost incurred in the first phase and 70% incurred in last phase.
First phase is programming phase and last phase is designing webpage and interconnected with
company’s …. Technical Feasibility studies not yet conducted, but the programmer is certain that
online store …. technically. Which accounting treatment that most correct regarding to situations?
a. Capitalized all costs as software assets
b. Expensed all costs as software assets
c. Capitalized all costs as software assets on first phase only
d. Capitalized all costs as software assets on second phase only

46. From lessee perspectives, lease is classified as financial lease if substantially transfer all risk and
rewards regarding leased assets from lessor to lessee. Which of the following that cannot be used
to determined whether … “substantially transfer all risks and rewards”?
a. Bargain purchase tests
b. Lease terms tests
c. Minimum lease payments tests
d. Residual value guaranteed tests

47. If retrospective applications were deemed “impracticable”, what should entity do first, according
to PSAK 257
a. Apply retrospective applications from the date when it deemed practicables
b. Apply current/catch up adjustments from current year
c. Apply prospectively
d. All the a, b, and c, can be do as the first entry

48. Ryan Distribution Co. has determined its December 31, 2010 inventory on a FIFO basis at
$250,000. Information pertaining to that inventory follows:
Selling price $255,000
Cost to sell $10,000
Cost to complete $30,000
Ryan record losses that result from applying LCNRV rule. At December 31, 2010, the loss that
Ryan should recognize is
a. $35.000
b. $0
c. $5.000
d. $25.000

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49. Net income is understated if, in the first year, estimated salvage value is excluded from the
depreciation computation when using the
Straight-line Method Production or Use Method
a. Yes Yes
b. No No
c. No Yes
d. Yes No

50. Of the following costs related to the development of natural resources, which one is not a part of
depletion cost?
a. Tangible equipment costs associated with machinery used to extract the natural resource
b. Intangible development costs such as drilling costs, tunnels, and shafts
c. Exploration costs
d. Acquisition cost of the natural resource deposit

51. On September 10, 2010, Jenks Co. incurred the following costs for one of its printing presses:
Purchase of attachment $55,000
Installation of attachment 5,000
Replacement parts for renovation of press 18,000
Labor and overhead in connection with renovation of press 7,000
Neither the attachment nor the renovation increased the estimated useful life of the press. However,
the renovation resulted in significantly increased productivity. What amount of the costs should be
capitalized?
a. $78,000
b. $67,000
c. $0
d. $85,000

52. A plant asset with a five-year estimated useful life and no residual value is sold at the end of the
second year of its useful life. How would using the sum-of-the-years'-digits method of depreciation
instead of the double-declining balance method of depreciation affect a gain or loss on the sale of
the plant asset?
a. Gain: increase ; loss: decrease
b. Gain: decrease ; loss: decrease
c. Gain: increase ; loss: increase
d. Gain: decrease ; loss: increase

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