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Quizzes 6 10

The document contains 40 true/false questions related to accounting for inventories, cost of goods sold, related parties, cash flows, notes to financial statements, and other accounting topics. It tests understanding of concepts like inventory cost flow assumptions, what costs should be included in inventory valuation, when events after the reporting period require disclosure, and more.

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Elsel Enna Namalata
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28 views5 pages

Quizzes 6 10

The document contains 40 true/false questions related to accounting for inventories, cost of goods sold, related parties, cash flows, notes to financial statements, and other accounting topics. It tests understanding of concepts like inventory cost flow assumptions, what costs should be included in inventory valuation, when events after the reporting period require disclosure, and more.

Uploaded by

Elsel Enna Namalata
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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27.

Adjusting events after the reporting period are those that provide evidence of
conditions that exist after the reporting period.
a. True
b. False

28. Banks should classify interest paid and received under operating cash flows.
a. True
b. False

29. True or false: ABC Corp. recognized P10,000 doubtful accounts expense from its
transaction with a related party. In this case, the amount is a required disclosure in the
financial statement of ABC Corp.
a. True
b. False

30. Comprehensive income includes all, except


a. Dividend revenue
b. Loss on disposal of asset
c. Investment by owners
d. Unrealized gain on trading investment

31. After ABC Corp.'s 2022 financial statements had been finalized but before the
authorization of the Board for issuance, ABC Corp. announced on March 5, 2023 that it
will terminate most of its employees as a result of the closure of its major branch
(restructuring) in 2023. In this case, the restructuring event shall be disclosed in the 2022
financial statement of ABC Corp.
a. True
b. False

32. True or false: Cash equivalents are short-term highly liquid investments that are
readily convertible to known amount of cash and which are subject to a significant risk of
change in value.
a. True
b. False

33. All of the following are a component of other comprehensive income, except
a. Foreign currency translation adjustment
b. Unrealized gain and loss on financial asset held for trading
c. Deferred loss on derivative financial instrument designated as cash flow hedge
d. Change in revaluation surplus

34. True or false: The termination benefits of the CEO of ABC Corp. is a required
disclosure in the financial statements of ABC Corp.
a. True
b. False

35. ABC Corp was sued by DEF Corp. in 2022 because of a copyright infringement. In
January of 2023, before the financial statements were authorized for issuance, the court
decided that ABC Corp. will pay DEF Corp. P30,000 for damages. Should ABC Corp.
recognize the provision in its December 31, 2022 financial statements?
a. Yes
b. No

36. A presentation of assets and liabilities in increasing or decreasing order of liquidity


provides information that is reliable and more relevant than a current and concurrent
presentation for
a. Financial institution
b. Public utility
c. Manufacturing entity
d. Service provider

37. ABC Corp. and DEF Corp. both employ Mr. X as one of their directors. Are ABC and
DEF considered related parties because they both employ Mr. X?
a. Yes
b. No
38. In order to settle its bonds payable, ABC Corp. decided to pay its bond holders thru
issuance of its share capital instead of paying in cash. In this case, the transaction
should be reflected under financing activity in the statement of cash flows.
a. True
b. False

39. On February 20, 2023, the 2022 financial statements of ABC Corp. were submitted by
the management to the Board of Directors for review. The Board of Directors authorized
the financial statements for issuance on March 1, 2023. Before the financial statements
were submitted to the BIR and SEC, they were submitted first to the shareholders for
review and approval. The shareholders approved the financial statements for issuance
on March 30, 2023. In this case, when is the date the financial statements were authorized
for issuance?
a. February 20, 2023
b. March 1, 2023
c. March 30, 2023
d. December 31, 2022

40. Notes to financial statements provide narrative description or disaggregation of items


presented in the financial statements and information about items that qualify for
recognition
a. True
b. False
3rd Quiz - CFAS

1. ABC Company is engaged in the manufacturing of machineries. Input VAT from the
purchase of materials necessary to produce the machineries will form part of the cost of
inventories. True or false?
a. True
b. False

2. Cost of the rent where the inventories are being manufactured should form part of the
overhead cost of inventories. True or false?
a. True
b. False

3. The salary of accountant working for the corporate office where he/she is engaged
solely for bookkeeping and her services not attributed to the any of the inventories being
manufactured should form part of the cost of inventories. True or false?
a. True
b. False

4. The commission of sales agent who is engaged in selling a specific product of the
company should form part of the cost of inventories. True or false?
a. True
b. False

5. Michael Jordan asked Nike to produce sneakers with diamonds and with his name
engraved on its shoelaces. In this case, what is best cost formula to be used by Nike in
accounting for the cost of the sneakers?
a. First in first out
b. Weighted average
c. Specific identification
d. None of the above

6. ABC Corp. has materials which are near their maturity dates. The aggregate cost of the
materials is P60. Once converted into their finished state, the selling price of the product
is P100. It is estimated that the company will have to incur additional P50 in labor and
overhead in order to convert the materials into final product and P10 in order to sell the
finished product. As of the end of the year, how much should be the value of these
materials in books of ABC Corp.?
a. P50
b. P60
c. P40
d. P90
e. None of the above

7. Under the allowance method, the loss on inventory writedown will not form part of the
cost of goods sold. True or false?
a. True
b. False

8. ABC Corp. constructed a new machinery in which it hired a machinery specialist in


order to test whether the machine is operating for its intended use. The compensation
given to the machinery specialist should not form part of the cost of the machine. True or
false?
a. True
b. False

9. ABC Corp. acquired a new machinery on account. The list price of the machinery is
P100,000. The supplier gave ABC a trade discount of 2% based on the list price. If the full
amount will be paid on or before 20 days from the date of purchase, the supplier will give
ABC additional 2% discount based again on list price. ABC paid the supplier 30 days
from the date of purchase. In this case, how much should be the cost of machinery upon
acquisition?
a. P98,000
b. P100,000
c. P96,000
d. P96,040
e. None of the above

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