1. What function does trial balance serve in the accounting process?

a. Recording
b. Classifying
c. Summarizing
d. Reporting
2. Which ONE of the following is stated as an underlying assumption according to the
IASB’s Conceptual Framework for Financial Reporting?
a. Neutrality
b. Relevance
c. Accruals
d. Going Concern
3. Which journal is used to record credit purchase of furniture and fixture transaction?
a. General journal
b. Purchase journal
c. Sales journal
d. Cash disbursements journal
4. Comparability is sometimes sacrificed for
a. Relevance
b. Conservatism
c. Objectivity
d. Reliability
5. Under PAS I, which of the following DOES NOT refer to a current asset?
a. It is held primary for the purpose of being traded
b. It is expected to be realized within twelve months after the balance sheet date
or within the normal operating cycle whichever is shorter
c. It is a cash or a cash equivalent unrestricted for more than 12 months from BS
date
d. It is expected to be realize, sold or consumed within the entity’s normal
operating cycle
6. Offsetting of liabilities and assets is
a. Allowed in all cases
b. Not allowed in all cases
c. Allowed unless not permitted by PFRS
d. Not allowed unless permitted by PFRS
7. It is a liability of uncertain timing or account. It can be probable or measurable
but not both
a. Provision
b. Unearned income
c. Accrued liability
d. Contingent liability
8. They refer to increase in equity from ordinary transactions of an entity
a. Revenues
b. Dividends
c. Comprehensive income
d. Gains
e.
9. An entity neglected to amortize the DISCOUNT on outstanding bonds payable.
What is the effect of the failure to record discount amortization on interest
expense and bond carrying amount, respectively?
a. Understated and understated
b. Understated and overstated
c. Overstated and overstated
d. Overstated and understated
10. The failure to record an accrued expense at year-end will result in
overstatement of
Net Income Working Capital Cash
a. No No Yes
b. No Yes No
c. Yes No No
d. Yes Yes No
PROBLEMS
1. Popong and Company factored P600,000 of accounts receivable. Control was
surrendered. The factor accepted the accounts receivable subject to recourse
for nonpayment. The factor assessed a fee of 3% and retains a holdback equal
to 5% of the accounts factored. In addition, the factor charged 15% interest
computed on a weighted-average time to maturity of 54 days. The fair value of
the recourse obligation is P9,000. What amount of cash was initially received?
(use 365 days)
a. 529,685
b. 538,685
c. 547,685
d. 556,685
2. Sisi Company was organized in June 2015. The following transactions pertain
to land and building:
June 1 – Organization fees paid to the state 150,000
30 – Land and old building with fair value of P1,000,000 3,000,000
30 – Corporate organization costs 300,000
July 1 – Title clearance fees 50,000
Aug 31 - Cost of razing old building to make room 100,000
for new building
Sept 1 – salaries of Sisi executives with no participation 600,000
in construction.
Dec 31 - Land real state tax for 6 months ended December 31, 2015 90,000

What is the cost of the land?

a. 3,500,000
b. 2,050,000
c. 3,050,000
d. 2,095,000
3. Bryan Company implemented a defined benefit plan on January 1, 2016. The
following date are provided on December 31, 2016?

Projected benefit obligation P 103,000

Plan assets at fair value 78,000
Net periodic pension cost 90,000
Employer’s contribution 70,000
What amount should be recorded as pension liability on December 31, 2016?
a. 45,000
b. 25,000
c. 20,000
d. 0
4. On January 1, 2014, Terrence Company reported patent cost of P1,920,000 and
related accumulate amortization of P240,000. The patent was purchased on
January 1, 2012 at which date the remaining legal life was 16 years. On
January 1, 2014, the useful life of the patent was determined to be only 8
years from the date of acquisition. On January 1, 2014, the entity paid
P800,000, of which ¾ was for trademark, and ¼ was for the other entity’s
agreement not to compete for a 5-year period in the line of business covered
by the trademark. The entity considered the life of the trademark indefinite.
Moreover, the entity agreed to pay P50,000 to the other entity as consulting
fee each year for 5 years payable very January 1. What is the amortization of
intangible assets for 2014?
a. 320,000 b. 280,000 c. 250,000 d. 370,000
5. Mitch Company prepared the following reconciliation for the first year of
operations:

Pretax financial income for 2015 4,500,000

Tax exempt interest ( 375,000)
Temporary Difference (1,125,000)
Taxable Income 3,000,000
The temporary difference will reverse evenly in 2016 and 2017, at an enacted
tax rate of 35% in 2016 and 32% in 2017. The enacted tax rate for 2015 is
30%. What amount should be reported as deferred tax asset of liability on
December 31, 2015?
a. 376,875 asset
b. 376,875 liability
c. 360,000 asset
d. 360,000 liability
6. Carisse Company has established a defined benefit pension plan for the
employees. Annual payments under the pension plan are equal to 3% of an
employee’s highest lifetime salary multiplied by the number of years with the
entity. An employee’s salary in 2015 was P300,000. The employee is expected
to retire in 10 years, and the salary increases are expected to average 4%
per year during that period. As of December 31, 2015, an employee has worked
for 12 years. The future value of 1 at 4% for 10 periods is 1.48. what is the
amount of annual pension payment that will be used in computing the employee’s
projected benefit obligation on December 31, 2015?
a. 108,000
b. 159,840
c. 198,000
d. 293,040
7. The accounts below appear in the December 31, 2019 trial balance of Mara
Company:

Authorized common stock 5,000,000

Unissued common stock 2,000,000
Subscribed common stock 1,000,000
Subscription receivable, long-term 400,000
Additional paid in capital 500,000
Retained earnings unappropriated 600,000
Retained earnings appropriated 300,000
Revaluation surplus 200,000
Treasury stock, at cost 300,000

In its December 31, 2019 balance sheet, Mara should report total shareholders’
equity at
a. 5,200,000
b. 5,500,000
c. 4,900,000
d. 5,000,000
8. Nerve Company was organized on January 1, 2019. On that date it issued 200,000
shares at P15 par value (400,000 shares were authorized). During the period
January to December 2019, Nerve reported net income of P750,000 and paid cash
dividends of P380,000. On January 5, 2019, Nerve purchased 12,000 of its own
common stock at P12 per share. On December 15, 2019, 8,000 treasury shares
were sold at P8 per share and retired the remaining 4,000 shares.

What is the total stockholders’ equity on December 31, 2019?

a. 3,290,000
b. 3,306,000
c. 3,338,000
d. 3,370,000
9. Reynaldo Company provided the following share transactions for the current
year:

Jan 1 Shares Outstanding 44,000 shares

Feb 1 Issued shares for cash 56,000
May 1 Acquired treasury shares 25,000
Aug 1 25% stock dividend
Sept 1 Resold treasury shares 10,000
Nov 1 Issued 3 for 1 share split

What is the weighted average number of shares for EPS computation?

a. 305,000
b. 307,500
c. 103,750
d. 311,250
10. Presented below is the stockholders’ equity section of the Caper Corporation
on January 1, 2019:

Common share, par value P20

50,000 shares authorized
30,000 shares issued and outstanding 600,000
Share premium 150,000
Retained earnings 230,000

During 2019, the following transactions occurred relating to stockholders’

equity:

i. 1,000 shares were reacquired at P28 per share.

ii. 900 shares were reacquired at P30 per share.
iii. 1,500 shares of treasury were sold at P32 per share.
For the year ended December 31, 2019, Caper reported a net income of
P110,000. What should the company report as total stockholders’ equity on
the December 31, 2019 statement of financial position?
(Note: When problem is silent, use FIFO method in reissuance of Treasury
Shares)
a. 1,071,000
b. 1,078,000
c. 1,083,000
d. 973,000