1.

Which statement is incorrect regarding the International Accounting Standards Board

(IASB) Structure?
a. The IFRS Monitoring Board approves and oversees the trustees of the IFRS
Foundation.
b. The IFRS Foundation appoints, oversees and reviews effectiveness
funding
c. The IASB sets technical agenda, approves standards, exposure drafts and
interpretation
d. The IFRIC members are appointed by IASB

2. What is meant by comparability when discussing financial accounting

information?
a. Information has predictive or feedback value.
b. Information is reasonably free from error.
c. Information is measured and reported in a similar fashion across a companies
d. Information is timely

3. The Conceptual Framework assists the FRSC

I. In applying PFRS
II. In the review of existing PFRS
III. In interpreting the information contained in financial statement
a. I and II only
b. I, II, III
c. II Only
d. II and III only

4. Which of the following ingredients of fundamental qualities is part of faithful

representation?
a. Neutrality
b. Productive Value
c. Confirmatory Value
d. Timeliness

5. The FRSC was created by the Board of Accountancy (BOA) to assist the BoA in carrying
out its power to function to
a. Promulgate accounting standards in the Philippines
b. Promulgate auditing standards in the Philippines
c. Ensure that all higher educational instruction and offering accountancy comply
with the policies, standards and requirements of the course prescribed by CHED.
d. Implement CPE program

6. Which of the following adjusting entries will not affect both the balance sheet and income
statements?
a. None of the choices, both statements are affected by adjusting journal
entries
b. Accrued income
c. Prepayments using the expense method
d. Unearned income using the liability method

7. Revenue are:
a. A subdivision of equity, providing information about why equity increased
b. Impacted by debits and credits in the same way that expenses are impacted by
debits and credits
c. Reported on the statement of financial position as a current item
d. All of the choices are correct

8. Which statement is incorrect regarding Philippine Financial Reporting Standards

(PFRSs)?
a. PFRSs set out recognition, measurement, presentation and disclosure
requirements dealing with transactions and events that are important in general
purpose financial statements.
b. PFRSs are designed to apply to the general purpose financial statements and
 other financial reporting of all profit-oriented entities.
c. PFRSs are designed to apply to not-for-profit activities in the private sector.
d. All of the above

9. The real accounting issue in revenue recognition is the

a. The amount of income recognized
b. Type of income recognized
c. Timing of the recognition
d. Basis of income recognition

10. Which of the following adjusting entries will not affect both the balance sheet and
income statements?
a. None of the choices, both statements are affected by adjusting journal
entries
b. Accrued income
c. Prepayments using the expense method
d. Unearned income using the liability method

11. Which of the following is the foundation of the Conceptual

Framework?
a. The objective of general purpose financial report
b. A reporting entity concept
c. The qualitative characteristics of, and the constraint on, useful financial
information
d. The elements of financial statements

12. The Statement of Financial Position shall classify one of these as a non-current asset
a. Cash funds set aside for payment of equipment to be delivered a month after the
reporting period
b. Goods which are in process of production for sale in the ordinary course of
business
c. Debt and equity securities acquired principally for the purpose of generating a
profit from short-term fluctuations in price or dealer’s margin
d. Amounts due from customers within a period of 12 to 18 months, extend within
the usual credit term of the enterprise

13. On December 31, 2022, Cignal HD had the following cash balances:
Cash in bank…………………………………………………………………….P 1,800,000
Petty cash fund (all funds were reimbursed on 12/31/15)…………………. 50,000
Time deposit (due February 1, 2023)………………………………………… 250,000
Cash in bank included P600,000 of compensating balance against short-term borrowing
arrangement on 12/31/22. The compensating balance is legally restricted as to withdrawal.

On December 31, 2022, what is the amount that is to be reported as cash and cash
equivalents?
a. P 2,100,000
b. P 1,950,000
c. P 1,500,000
d. P 1,250,000

14. Winter Inc. uses four-column bank reconciliation. The bank reconciliation for March
shows outstanding checks for P300. During April, the company wrote check totaling
P23,600.
The bank statement for April shows P23,010 of checks clearing the company’s account.
The amount of outstanding checks on April bank reconciliation must be:
a. P 890
b. P 600
c. P 300
d. P 1,200
Summer Company reported the following information at year end:
- Share investments of P1,000,000 that are very actively traded in the stock
market
- Government treasury bills of P2,000,000 with a 10-year term but purchased on
December 31 at which time they had two months to go until maturity
- Cash of P3,400,000 in the form of coin, currency, saving and checking account
- Commercial papers of 1,500,000 with term of nine months but purchased on
December 31 at which time they had three months to go until maturity

15. What total amount should be reported as cash?

a. 3,400,000
b. 4,900,000
c. 4,400,000
d. 5,400,000

16. What total amount should be reported as cash equivalents?

a. 2,000,000
b. 1500,000
c. 3,500,000
d. 4,500,000

Amber Company provided the following data for the current year:
Allowance for doubtful accounts – January 1 180,000
Sales 9,500,000
Sales returns and allowances 800,000
Sales discounts 200,000
Accounts written off as uncollectible 200,000
The entity provided for doubtful accounts expense at the rate of 5% of net sales.

17. What is the allowance for doubtful accounts on December 31?

a. 415,000
b. 425,000
C. 405,000
d. 605,000

18. What amount should be reported as doubtful accounts expense?

a. 435,000
b. 425,000
c. 475,000
d. 415,000

ACER Company reported P5,000,000 of inventory on December 31, 2022 based on

physical count. Additional information is as follows:
i. Excluded from the physical count were goods billed to customer, FOB shipping
point, on December 31, 2022. The goods had a cost of P200,000 and had been
billed at P350,000. The shipment is ready for pick-up by the delivery contractor on
January 5, 2023
ii. Goods were in transit from a vendor. The invoice cost was P300,000 and goods
were shipped FOB shipping point on December 31, 2022
iii. Work in process costing P400,000 was sent to an outside processor for finishing
on December 10, 2022
iv. Goods out on consignment with sales price of P1,000,000 and markup of 25%
on cost. Shipping cost amounted to P50,000.

19. What is the correct amount of inventory on December 31, 2022?

a. P6,750,000
b. P6,700,000
c. P6,550,000
d. P6,950,000
Frame Company has an 8% note receivable dated June 30, 2018, in the original amount
of 1,500,000. Payments of P500,000 in principal plus accrued interest are due annually
on July 1, 2019, 2020 and 2021.

20. What is the balance of note receivable on July 1, 2019?

a. 1,000,000
b. 1,500,000
c. 500,000
d. 0

21. In the June 30, 2020 statement of financial position, what amount should be reported
as a current asset for interest on the note receivable?
a. 80,000
b. 120,000
c. 40,000
d. 0

22. At year-end, Rim Company held several investments with the intent of selling them in
the near term. The investments consisted of P1,000,000 8% five-year bonds purchased for
P920,000 and equity securities purchased for P350,000. At year-end, the bonds were
selling on the open market for P1,050,000 and the equity securities had market value of
P500,000. What amount should be reported as trading securities at year-end?
a. 1,270,000
b. 1,420,000
c. 1,550,000
d. 500,000

23. On June 1, 2022, Hanabishi sold merchandise with a list price of P5,000,000 to a
customer. Hanabishi allowed trade discounts of 20% and 10%. Credit terms were 5/10,
n/30 and the sale was made FOB shipping point. Hanabishi prepaid P100,000 of delivery
cost for the customer as an accommodation. On June 11, 2022 what is the full remittance
from the customer?
a. P3,520,000
b. P3,600,000
c. P3,420,000
d. P3,700,000

At the beginning of current year, Laudable Company acquired 200,000 ordinary shares of
an investee for P9,000,000. The investment is measured at fair value through other
comprehensive income. At the time of purchase, the investee of outstanding 800,000
shares with a carrying amount of P36,000,000. The following events took place during the
year:
• The investee reported net income of P1,800,000.
• Laudable Company received from the investee a dividend of P0.75 per ordinary share.
• The market value of the investee’s share had declined to P40 at year-end.
24. What is the carrying amount of the investment at year-end?
a. 9,000,000
b. 8,000,000
c. 9,300,000
d. 9,450,000

25. Judicious Company acquired an equity investment a number of years ago for
P3,000,000 and classified it as at fair value through other comprehensive income.

On December 31, 2022, the cumulative loss recognized in other comprehensive income
was P400,000 and the carrying amount of the investment was P2,600,000.

On December 31, 2023, the issuer of the equity instrument was in severe financial difficulty
and the fair value of the equity investment had fallen to P1,200,000.
What cumulative amount of unrealized loss should be reported as component of other
comprehensive income in the statement of changes in equity for the year ended December
31, 2023?
a. 1,400,000
b. 1,800,000
c. 1,000,000
d. 0

26. Trinidad Company provided the following portfolio of equity investments measured at
fair value through other comprehensive income:
Aggregate cost 1,700,000 Unrealized gains 40,000
Unrealized losses 260,000
Net realized gains during the current year 300,000
On January 1, 2022, the entity reported an unrealized loss of P15,000 as a component of
other comprehensive income. In the 2022 statement of changes in equity, what cumulative
amount should be reported as unrealized loss on these securities?
a. 260,000
b. 220,000
c. 205,000
d. 0

Inspiration Company had trading and nontrading investments held throughout 2022 and 2023.
The nontrading investments are measured at fair value through other comprehensive income.
The investments had a cost of P3,000,000 for trading and P3,000,000 for nontrading. The
investments had the following fair value at year-end:
December 31, 2022 December 31, 2023
Trading 4,000,000 3,800,000
Nontrading 3,200,000 3,700,000

27. What amount of cumulative unrealized gain or loss should be reported as component of
other comprehensive income in the statement of changes in equity on December 31,
2023?
a. 500,000 gain
b. 500,000 loss
c. 700,000 gain
d. 700,000 loss

28. What amount of unrealized gain or loss should be reported in the income statement for
2023?
a. 200,000 gain
b. 200,000 loss
c. 300,000 gain
d. 300,000 loss

During 2022, Latvia Company purchased trading securities with the following cost and market
value on December 31, 2022:
Security Cost Market value A – 1,000 shares 200,000 300,000
B – 10,000 shares 1,700,000 1,600,000
C – 20,000 shares 3,100,000 2,900,000 5,000,000 4,800,000

The entity sold 10,000 shares of Security B on January 15, 2023, for P150 per share.

29. What amount of unrealized gain or loss should be reported in the income statement for
2022?
a. 200,000 loss
b. 200,000 gain
c. 300,000 loss
d. 300,000 gain

30. What amount should be reported as loss on sale of trading investment in

2023?
 a. 200,000 gain
b. 200,000 loss
c. 100,000 gain
d. 100,000 loss
During the current year, Magic Company purchased 80,000 shares at P60 per share. The
investment was classified as trading. During the year, the entity sold 20,000 shares at P70
per share. At year-end, the market price per share is P55.

31. What amount should be reported as unrealized loss in the income statement for the
current year?
a. 100,000
b. 300,000
c. 540,000
d. 0

32. What amount of gain on sale of investment should be reported in the income statement
for the current year?
a. 200,000
b. 800,000
c. 600,000
d. 0
On January 1, 2016, Miller Company purchased a machine for 2,750,000. The machine
was depreciated using the sum of years’ digits method based on the useful life of 10
years with no residual value. On January 1, 2017, the entity changed to straight line
method of depreciation. The entity can justify the change.

33. What is the carrying amount of the machine on January 1, 2017?

a. 2,750,000
b. 2,250,000
c. 2,475,000
d. 1,800,000

34. What is the depreciation for 2017?

a. 180,000
b. 220,000
c. 250,000
d. 275,000

35. Indeygo Company acquired a patent for a drug with a remaining legal and useful life of
six years on January 1, 2022 for P5,400,000. On January 1, 2024, a new patent is received
for an improved version of the same drug. The new patent has a legal and useful life of
twenty years. What is the amortization expense for 2024?
a. 900,000
b. 200,000
c. 180,000
d. 300,000
36. Johnny Company incurred P1,600,000 of research and development costs to develop a
product for which a patent was granted at the beginning of the current year. Legal fees and
other costs associated with registration of the parent totalled P300,000. At year-end, the
entity paid P450,000 for legal fees in a successful defense of the patent. What is the total
amount that should be capitalized for the patent at year-end?
a. 750,000
b. 300,000
c. 2,050,000
d. 2,350,000

Use the following information for the next two questions. Joan Company provided the
following data:
 Value of biological asset at acquisition cost on December 31,2022 - P 600,000
Fair valuation surplus on initial recognition at fair value on December 31, 2022 - 700,000
Change in fair value to December 31, 2023 due to growth and price fluctuation - 100,000
Decrease in fair value due to harvest 90,000

37. What is the carrying amount of the biological asset on December 31, 2023?
a. 1,400,000
b. 1,310,000
c. 1,300,000
d. 1,490,000

38. What is the gain from change in fair value of biological asset that should be shown in the
2023 income statement?
a. 100,000
b. 800,000
c. 710,000
d. 10,000

In packages of the products, Curran Company included coupons that may be presented at retail
stores to obtain discounts on other Curran products. Retailers were reimbursed for the face amount
of coupons redeemed plus 10% of that amount for handling costs. The entity honored requests for
coupon redemption by retailers up to three months after the consumer expiration date. The entity
estimated that 70% of all coupons issued would ultimately be redeemed. The consumer expiration
date is December 31, 2022.The total face amount of coupons issued was P600, 000.00 and the total
payments to retailers during 2022 amounted to P 220,000.00

39. What amount should be reported as liability for unredeemed coupons on December 31,
2022?
a. 308,000
b. 242,000
c. 200,000
d. 0
40. What is the premium expense for 2022?
a. 600,000
b. 462,000
c. 180,000
d. 198,000

On December 31, 2022, Boston Company purchased a machine from Helix Company in
exchange for a noninterest bearing note requiring eight payments of P 200,000.00. The first
payment was made on December 31, 2022 and the others are due annually on December 31.
At date of issuance, the prevailing rate of interest, for this type of note was 11%. The PV of an
ordinary annuity of 1 at 11% for 8 periods is 5.146 and the PV of an annuity of 1 in advance at
11% for 8 periods is 5.712.

41. On December 31, 2022, what is the carrying amount of the note payable?

a. 1,142,400
b. 1,029,200
c. 1,046,200
d. 942,400

42. What is the interest expense for 2023?

a. 125,664
b. 103,664
c. 176000
d. 154,000
On January 1, 2022, Ezekiel Company received P 1,077,200 for P 1,000,000 face amount 12%
bonds. The bonds were sold to yield 10%. Interest is payable semiannually every January 1 and July
1.The entity has elected the fair value option for measuring the financial liability. On December 31,
2022, the fair value of the bonds is determined to be P 1, 064,000.00 due to market and interest
factors.

43. What is the carrying amount of the bonds payable on January 1, 2022?

a. 1,000,000
b. 500,000
c. 1,077,200
d. 538,600

44. What is the interest expense for 2022?

a. 120,000
b. 107,720
c. 100,000
d. 129,264

45. Which statement best describes a possible result of treasury share transactions?

a. May decrease but not increase retained earnings

b. May increase but not decrease retained earnings
c. May increase net income if the cost method is used
d. May decrease but increase net income

46. Loss on retirement of treasury shares shall be debited to

a. Retained earnings
b. Share premium from treasury shares and then retained earnings
c. Share premium from treasury shares, share premium from original issuance and then
retained earnings
d. Share premium from original issuance, share premium from treasury shares and
then retained earnings

47. If shares are issued to extinguish a financial liability, what is the initial measurement of the
shares issued?
a. Fair value of the shares issued
b. Par value of the shares issued
c. Fair value of the liability extinguished
d. Book value of the shares issued

45.An entity acquired a subsidiary exclusively with a view to selling it. The subsidiary met the criteria
to be classified as held for sale. At the end of reporting period, the subsidiary has not yet been sold
and six months have passed since the acquisition. How w i l l the subsidiary be measured i n the
statement of financial position at the date of the first financial statements after acquisition?
a. At the lower of cost and fair value less cost of disposal
b. At fair value
c. At carrying amount
d. In accordance with applicable PFRS

49. The shareholders’ equity of Glee Company revealed the following information on December
31, 2022
Preference share capital, P100 par 2,300,000
Share premium - PS 805,000
Ordinary share capital, P15 par 5,250,000
Share premium 2,750,000
Subscribed ordinary share capital 500,000
Retained earnings 1,900,000
Note payable 4,000,000
Subscriptions receivable - ordinary 400,000
How much is the legal capital?
a.8,050,000
b. 7,650,000
c. 9,950,000
d. 11,605,000

All of the outstanding and treasury shares were originally issued in 2021 for P11 per share.
The treasury shares are reacquired on March 31, 2022. During 2023, the following events
or transactions occurred relating to shareholders’ equity: • February 15 – Issued 400,000
shares for P12.50 per share.
• June 15 – Declared a cash dividend of P0.20 per share to shareholders of record on
April 1 and payable on April 15. This was the first dividend ever declared. • September 15
– The president retired. The entity purchased from the retiring president 100,000 shares
for P13.00 per share which was equal to market value on this date. These shares were
cancelled.
• December 15 – Declared a cash dividend of P0.20 per share to shareholders of record
on January 2, 2014, and payable on January 15, 2024.
• On December 31, 2023, the entity is being sued by two separate parties for patent
infringement. The management and outside legal counsel share the following opinion
regarding these suits:
Likelihood of losing the
Suit suit Estimated loss
#1 Reasonably possible 600,000
#2 Probable 400,000

50. What is the increase in share premium arising from the issuance of 400,000 shares on
February 15?
a. 4,000,000
b. 5,000,000
c. 4,600,000
d. 400,000

51. What is the decrease in share premium arising from the retirement of 100,000 shares on
September 15?
a. 1,300,000
b. 1,200,000
c. 1,000,000
d. 100,000

52. The entity decided to appropriate retained earnings for all loss contingencies that are not
properly accruable by a charge to expense. How much of loss contingencies should be
appropriated be a charge to unappropriated retained earnings?
a. 1,000,000
b. 600,000
c. 400,000
d. 500,000

53. What amount of cash dividend should be charged against unappropriated retained earnings
in 2023?
a. 700,000
b. 680,000
c. 360,000
d. 340,000

Summer Company provided the following information pertaining to operating segments for the
year ended December 31, 2022:
Combined profit of segments reporting profit 30,000,000
Combined loss of segments reporting loss (20,000,000)
Combined profit and loss of all segments 10,000,000

54. To qualify as reportable segment, the segment operating profit or loss should atleast be what
amount?
a. 1,250,000
b. 1,000,000
c. 2,000,000
d. 3,000,000

55. Wild Company provided the following profit (loss) relating to operating segments
V 3,400,000

W 1,000,000

X (5,000,000)

Y 400,000

Z (200,000)

Which of the segments are considered as reportable segments

a. V, W, X and Y
b. V, W and X
c. V and W
D. All Segments

56. Bronze Company provided the following information on December 31, 2023:

Share capital 5,000,000 Subscribed share capital 3,000,000 Subscription receivable

2,000,000 Share premium 1,500,000 Cumulative translation adjustment - debit
500,000 Treasury shares, at cost 700,000 Retained earnings 1,000,000 Cumulative
unrealized gain on futures contract designated
as cash flow hedge 600,000 What is the contributed capital on December 31, 2023?
a. 9,500,000
b. 7,500,000
c. 8,500,000
d. 6,800,000

57. During inflation in which liability account balance remains constant, which of the following
occurs?
a. A purchasing power loss if the item is a nonmonetary liability
b. A purchasing power gain if the item is a nonmonetary liability
c. A purchasing power loss if the item is a monetary liability
d. A purchasing power gain if the item is a monetary liability

Spring Company purchased equipment for P5,000,000 on January 1, 2022 with a useful life of
8 years and no residual value. On December 31, 2022, the entity classified the asset as held
for sale. The fair value of the equipment on December 31, 2022 is 4,100,000 and cost of
disposal is P50,000. On December 31, 2023, the fair value of the equipment is P3,980,000 and
the cost of disposal is P80,000. On December 31, 2023, the entity believed that the criteria for
classifications as held for sale can no longer be met. Accordingly, the entity decided not to sell
the asset but continue to use it.

58. What is the impairment loss to be recognized on December 31, 2022?

a. 350,000
b. 300,000
c. 325,000
d. 750,000

59. Using the data of Spring Company, what is the measurement of the equipment that
ceases to be held for sale on December 31, 2023?
a. 3,900,000
b. 3,500,000
 c. 3,400,000
d. 4,150,000

60. Using the data of Spring Company, what amount should be recognized as gain or loss as
a result of the reclassification in 2023?
a. 750,000 gain
b. 750,000 loss
c. 150,000 gain
d. 150,000 loss

On January 1, 2023, Silver Company sold goods to Gold Company. Gold signed a non-interest
bearing note requiring payment of P600,000 annually for seven years. The first payment was
made on January 1, 2018. The prevailing rate of interest for this type of note at date of issuance
was 10%.

PV of an ordinary annuity of 1 at 10% for 6 periods 4.36

PV of an ordinary annuity of 1 at 10% for 7 periods 4.87

61. What amount should be recorded as sales revenue in January 2023?

a. 3,216,000
b. 2,922,000
c. 2,616,000
d. 2,142,000
62. What is the carrying amount of the note receivable on January 1, 2023?
a. 3,600,000
b. 2,616,000
c. 3,000,000
d. 2,322,000

63. What is the interest income for 2023?

a. 300,000
b. 232,200
c. 261,600
d. 360,000

64. What is the carrying amount of the note receivable on December 31, 20?
a. 3,600,000
b. 3,000,000
c. 2,277,600
d. 2,877,600
Grum Company is subject to the requirements of segment reporting. In the income statement
for the current year, the entity reported revenue of P50,000,000 excluding intersegment sales
of P10,000,000. expenses of P47,000,000 and net income of P3,000,000. Expenses
included payroll costs of P15,000,000. The combined total assets of all operating segments
at year end amounted to 40,000,000.

65. In the financial statements, the entity should disclose major customer data If sales to any
single customer amount to at least
a. 5,000,000
b. 4,000,000
c. 6,000,000
d. 4,700,000

66. External revenue of reportable operating segment must be what

amount? a. 22,500,000
b. 30,000,000
c. 33,750,000
d. 37,500,000

67. Under accrual basis of accounting, cash receipts and disbursements may a. Precede,
coincide with or follow the period in which revenue and expense are recognized
b. Precede or coincide with but never follow the period in which revenues and
 expenses are recognized
c. Coincide with or follow but never precede the period in which revenue and
expenses are recognized
d. Only coincide with the period in which revenue and expenses are recognized

68. All of the following would indicate that hyperinflation exists, except
a. The general population regards monetary amounts in terms of relatively stable
foreign currency
b. The cumulative inflation rate over three years is approaching, or exceeds 100%
c. Inflation rates have exceeded interest rate in three successive years d. The
general population prefers to keep its wealth in nonmonetary assets

69. During inflation in which liability account balance remains constant, which of the following
occurs?
a. A purchasing power loss if the item is a nonmonetary liability
b. A purchasing power gain if the item is a nonmonetary liability
c. A purchasing power loss if the item is a monetary liability
d. A purchasing power gain if the item is a monetary liability

70. Which of the following will not self-correct in the next year?
a. Accrued expenses not recognized at year end
b. Accrued revenue not recognized at year end
c. Depreciation expense overstated for the year
d. Prepaid expense not recognized at year end

71. The branch of accounting concerned with the presentation of financial information primarily for
use of third person outside of business enterprise. (CPA Diary)
a. Financial Accounting
b. Management Accounting
c. Government Accounting
d. All of the above
72. The normative attitudes or ideas of the accounting profession as to what ought to represent good
accounting practice and which modify the application of accounting principles are known as
a. accounting postulates
b. accounting conventions
c. accounting procedures
d. accounting principles

73. On December 31, year 1, Brooks Co. decided to end operations and dispose of its assets within
3 months. At December 31, year 1, the net realizable value of the equipment was below historical
cost. What appropriate measurement basis for equipment included in Brooks’s December 31, year 1
balance sheet?
a) Historical cost
b) Current reproduction cost
c) Net realizable value
d) Current replacement cost
74. The expected cash flow approach to measuring present value
a) Uses a single set of estimated cash flows
b) Is limited to assets and liabilities with contractual cash flows
c) Encompasses all expectations about possible cash flows
d) Determines the single most likely amount or best estimate

75. In analyzing a company’s financial statements, which financial statement would a potential
investor primarily use to assess the company’s liquidity and financial flexibility?
a) Balance sheet
b) Income statement
c) Statement of retained earnings
 d) Statement of cash flows

76. Current assets are reasonably expected to be realized in cash or sold or consumed during the
normal operating cycle of the business. Current assets most likely include.
a) Intangible assets
b) Purchased goodwill
c) Organization costs
d) Trading securities

77. According to the net method, which of the following items should be included in the cost of
Inventory? Freight Costs Purchase Discounts not taken

a) Yes No
b) Yes Yes
c) No Yes
d) No No

78. The following information applied to Fenn, Inc. for 2015:

Merchandise purchased for resale P400,000
Freight-in 10,000
Freight-out 5,000
Purchase returns 2,000
Fenn’s 2015 inventoriable cost was (CPAR)
a) P400,000
b) P403,000
c) P408,000
d) P413,000

79. The lower-of-cost-or-market rule for inventories may be applied to total inventory, to groups of
similar items, or to each item. Which application usually results in the lowest inventory amount
a) All applications result in the same amount
b) Total inventory
c) Groups of similar items
d) Separately to each item

80. The original cost of an inventory item is below the NRV and above the net realizable value
minus a normal profit margin. The inventory item’s replacement cost is below the net realizable
value minus normal profit margin. Under the LCM method, the inventory item should be valued
at
a) Original cost
b) Replacement cost
c) NRV
d) NRV minus normal profit margin

81. Which of the following methods of inventory valuation is allowable at interim dates but not at
year end?
a) Weighted average
b) Estimated gross profit
c) Retail method
d) Specific identification

82. The retail inventory method includes which of the following in the calculation of both cost and
retail amounts of goods available for sale?
a) Purchase returns
b) Sales returns
 c) Net markups
d) Freight-in

83. The effect of a material transaction that is infrequent in occurrence but not unusual in nature
should be presented separately as a component of income from continuing operations when the
transaction results in a
Gain Loss
a) Yes Yes
b) Yes No
c) No No
d) No Yes
84. The correction of an error in the financial statements of a prior period should be reported, net of
applicable income taxes, in the current
a) Retained earnings statement after net income but before dividends
b) Retained earnings statement as an adjustment of the opening balance
c) Income statement after income from continuing operations and before extraordinary
Items
d) Income statement after income from continuing operations and after extraordinary
items

85. A non-current asset held for sale should be measured at:

a) The higher of the asset's carrying amount when originally classified as held for sale and its
fair value less costs to sell
b) The asset's carrying amount when originally classified as held for sale, less any
accumulated depreciation since that date
c) Fair value less costs to sell
d) The lower of the asset's carrying amount when originally classified as held for sale
and its fair value less costs to sell

86. A non-current asset should be classified as held for sale only if:
a) Its carrying amount will be recovered principally through a sale transaction rather
than through continuing use
b) Its carrying amount will be recovered wholly through a sale transaction rather than
through continuing use
c) Its carrying amount will be recovered principally through continuing use rather than
through a sale transaction
d) Its carrying amount will be recovered wholly through continuing use rather than through a
sale transaction

87. A material loss should be presented separately as a component of income from continuing
operations when it is
a) An extraordinary item
b) The cumulative effect of a change in accounting principle
c) Unusual in nature and infrequent in occurrence
d) Not unusual in nature but infrequent in occurrence

88. A transaction that is unusual in nature and infrequent in occurrence should be reported
separately as a component of income
a) After cumulative effect of accounting changes and before discontinued operations of a
component unit
b) After cumulative effect of accounting changes and after discontinued operations of a
component unit
 c) Before cumulative effect of accounting changes and before discontinued operations of a
component unit
d) Before cumulative effect of accounting changes and after discontinued operations of
a component unit.

89. How should the effect of a change in accounting estimate be accounted for?
a) By restating amounts reported in financial statements of prior periods
b) B reporting pro forma amounts for prior periods
c) As a prior-period adjustments to beginning retained earnings
d) In the period of change and future periods if the change affects both

90. The effect of a change in accounting principle that is inseparable from the effect of a change in
accounting estimate should be reported
a) By restating amounts reported in financial statements of prior periods presented
b) As a correction of an error
c) In the period of change and future periods if the change affects both
d) As a separate disclosure after income from continuing operations in the period of change
and future periods if the change affects both

91. In financial reporting for operating segments of a public business enterprise, the revenue of an
operating segment must include
a) Intersegment billings for the cost of shared facilities
b) Intersegment sales or transfers
c) Equity in income from unconsolidated subsidiaries
d) Extraordinary items

92. What information should a public company present about geographic areas, if practicable?
a) Disclose the revenues from external customers attributed to all foreign countries in Total
b) Disclose as a combined amount sales to external customers and intersegment sales
c) Disclose separately the amount of sales to each external customer in a foreign country
d) No disclosure of revenues from foreign operations needs to be reported.

93. Conceptually, interim financial statements can be described as emphasizing

a) Timeliness over reliability
b) Reliability over relevance
c) Relevance over comparability
d) Comparability over neutrality

94. For interim financial reporting an extraordinary gain occurring in the second quarter should be
a) Recognized ratably over the last three quarters
b) Recognized ratably over all four quarters with the first quarter being restarted
c) Recognized in the second quarter
d) Disclosed by footnote only in the second quarter

95. In which order are liabilities usually listed in the balance sheet
a) The order in which they were incurred
b) The order of smallest to largest
c) Alphabetical order
d) The order in which they are expected to be repaid

96. The income statement

a) is a summary of revenues and expenses.
b) is used to report the results of operations over a specific period of time.
c) explains, in part, how the company's financial position changed over a specific time
 Period.
d) is all of the above.
97. "Significant Accounting Policy" disclosures normally provide detailed information in relation to all
of the following, except:
a) income taxes.
b) employee benefits.
c) depreciation methods.
d) stock option plans.

98. Which of the following is not a topic that is likely to be discussed as a significant accounting
Policy?
a) Depreciation method.
b) Earnings per share of common stock calculation details.
c) Inventory valuation method.
d) Method of consolidation of subsidiaries.

99. According to the accounting profession, which of the following would be considered a cash-flow
item from an "investing" activity?
a) cash inflow from interest income.
b) cash inflow from dividend income.
c) cash outflow to acquire fixed assets.
d) all of the above.

100. According to the Financial Accounting Standards Board (FASB), which of the following is a
cash flow from a "financing" activity?
a) cash outflow to the government for taxes.
b) cash outflow to shareholders as dividends.
c) cash outflow to lenders as interest.
d) cash outflow to purchase bonds issued by another company.
Investments
101. Kale Co. purchased bonds at a discount on the open market as an investment and intends to
hold these bonds to maturity. Kale should account for these bonds at (CPAR)
a) cost
b) amortized cost
c) fair value
d) lower of cost or market

102. A company should report the marketable equity securities that it has classified as trading at
a) lower of cost or market with holding gains and losses included in earnings
b) lower of cost or market with holding gains included in earnings only to the extent of
previously recognized holding losses
c) fair value with holdings gains included in earnings only to the extent of previously
recognized holding losses
d) fair value with holding gains and losses included in earnings