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anywhere on this questionnaire. If the correct answer is not on the choices, shade E. Use a
calculator only, no other electronic devices are allowed. Use a ballpen for your final answer.
Return this questionnaire with your answer sheet at the end of the exam period. Cheating is
prohibited and punishable.

1. 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. Cash flow statement

2. Which of the following does not describe a current asset?

a. It is held primarily for the purpose of being traded

b. It is expected to be realized within twelve months after the balance sheet date
c. it is a cash or a cash equivalent restricted for more than 12 months from the balance
sheet date
d. It is expected to be realized, sold or consumed within the entity's-normal operating
cycle

3. Which of the following does not describe a current liability?

a. It is expected to be settled within the entity's normal operating cycle

b. It is held primarily for the purpose of being traded -
c. It is due to be settled within twelve months after the balance sheet date
d. the entity has an unconditional right to defer settlement of the abhy forast-east twelve
months after the balance sheet date

4. The basis of classifying assets as current assets is

a. The accounting cycle or one year, whichever is longer

b. The accounting cycle or one year, whichever is shorter
c. The operating cycle or one year, whichever is longer
d. The operating cycle or one year, whichever is shorter

5. An enterprise should prepare a cash flow statement and should present it as

a. Supplementary financial statement

b. Note to financial statement
c. Supporting schedule for amount appearing as cash and cash equivalent
d. Integral part of the enterprise's basic financial statements
6. In a cash flow statement, depreciation is treated as an adjustment to reported net
earnings because depreciation
a. Is a direct source of cash
b. Reduces reported net earnings but does not involve an outflow of cash
c. Reduces reported net earnings and involves an inflow of cash
d. Is an inflow of cash to a reserve account for replacement of assets

7. In a cash flow statement, which of the following would increase reported cash flows from
operating activities using the direct method?

a. cash received from customers

b. Loss on sale of equipment
c. Gain on early retirement of bonds
d. Cash paid to suppliers

8. In a cash flow statement using indirect method, a decrease in prepaid expense should
be

a. Reported as an outflow and inflow of cash

b. Reported as an outflow of cash
c. Deducted from net income
d. Added to net income

9. In a cash flow statement using indirect approach for operating activities an increase in
accrued expense should be presented as

a. Outflow of cash
b. Inflow and Outflow of cash
c. Addition to net income
d. Deduction from net income

10. Cash payments to owners to acquire or redeem the enterprise's shares are

a. Cash inflows from financing activities

b. Cash outflows for financing activities
c. Cash inflows from investing activities
d. Cash outflows for investing activities

11. According to PFRS8, disclosures for major customer stall be provided if revenues from
transactions with a single external customer amount to
a. at least 75% of the entity's external and internal revenues
b. at least 75% of the entity's external revenues
c. 10% or more of the entity’s external revenues
d. less than 10% of the entity’s external revenues
12. Which of the following is not considered a close family member under PAS 24?

a. the individual domestic partner and children

b. children of the individual's domestic partner
c. dependents of the individual or the individual's domestic partner
d. customer of individuals domestic partner

13. According to PAS 24, it is a transfer of resources, services or obligation between a

reporting entity and a related party, regardless of whether a price is charged

a. related party disclosure

b. related party relationship
c. related party transaction
d. Inter-company transfer

14. ABC Corp. reporting period is December 31, 2022. The draft financial statements were
submitted to the board of directors on January 31, 2023 and the board of directors
reviewed and finalized on March 1, 2023. The financial statements were published on
March 15, 2023. When is the date of authorization of the financial statements?

a. December 31, 2022

b. January 31, 2023
c. March 1, 2023
d. March 15, 2023

15. Which of the following is the proper time period in which to record a change in
accounting estimate?

a. Current and future periods

b. Current period and retroactively
c. Retroactive application
d. Current period only

16. Which of the following is a change in accounting policy?

a. A change from FIFO to Average inventory valuation

b. A change from 8 years to 5 years useful life of an asset
c. A change from straight line to sum-of-years digit method
d. All of the choices
 17. The correction of an error in the financial statements of a prior period error should be
reflected, net of applicable taxes, in current

a. income statement after income from continuing operations

b. income statement after other comprehensive income
c. retained earnings after net income and dividends
d. retained earnings as an adjustment of the opening balance

18. A non-refundable upfront fee is treated as performance obligation

a. if it relates to the transfer of goods or service

b. if it relates to administrative tasks to set up a contract
c. if it gives the customer a material right
d. when paid in cash

19. If the consideration in a contract is other than cash, revenue is recognized at

a. the fair value of the non-cash consideration

b. the selling price of the related goods or service
c. cost of the related goods or service
d. none of these

20. If the share based payment transaction with non employee, the recognized amount of
the asset is equal to

a. the fair value of the asset received

b. the par value of the share issued
c. the fair value of the shares issued
d. none of these

21. The following information is available from ABC Corp. records for the year end
December 31, 2021

Cash paid to suppliers and employees 1,202,000

Cash dividends paid 60,000
Cash received from customer 1,740,000
Rent received 20,000
Taxes paid 220,000

What is the amount of net cash flow provided by operating activities?

a. 278,000
b. 338,000
 c. 500,000
d. 520,000

22. ABC Corp. rent payable was P15,000 on December 31, 2020 and P40,000 on
December 31, 2021. During the year 2021, the reported rent expense is P100,000. What
is the amount of cash flows paid for rental during the year 2012?

a. 75,000
b. 125,000
c. 100,000
d. 115,000

23. During the year 2021, ABC Corp. acquired a building for P800,000, paying P200,000
cash and signing a 10% mortgage payable for 5 years. What is the amount of cash flow
spent for investing activities must be reported at the end of the year?

a. 800,000
b. 600,000
c. 200,000
d. 0

For numbers 24 to 26: ABC Corp. started its business in 2012 for a total capital of P1,000,000.
During the year, a total of P4,000,000 sales collected from customers and P3,000,000
purchases paid to suppliers. At the end of the year, a total of P100,000 sales invoices were not
collected and P250,000 supplier invoices not paid. The total goods not sold this year is
P180,000. What is the amount of profit at the end of the year?

24. What is the amount of profit for the year?

a. 2,000,000
b. 1,030,000
c. 920,000
d. 820,000

25. What is the amount of operating cash flows for the year?

a. 1,000,000
b. 2,000,000
c. 1,920,000
d. 1,820,000

26. What is the net cash flows for the year?

a. 2,000,000
b. 2,030,000
c. 2,920,000
d. 2,820,000

27. On December 31, 2021, ABC Corp. committed to a plan to dispose of its BAR business
component’s assets. The disposal meets the requirements to be classified as
discontinued operations. On that date, the estimated loss from the disposition of the
assets is P700,000 and BAR operating loss is P200,000. Tax rate is 30%. What should
be the amount reported as gain (loss) from discontinued operation in the 2021 profit or
loss statement?

a. (900,000)
b. (700,000)
c. (630,000)
d. (140,000)

28. ABC Corp. sold goods costing P200,000 for P250,000 to a customer who was granted a
special credit period of 2 years. ABC Corp. normally sells the goods for P220,000 with a
credit period of one month or with P3,000 discount for cash on delivery. What is the
amount of revenue from contracts with customers at inception?

a. 250,000
b. 217,000
c. 247,000
d. 0

29. On December 31, 2021, ABC Corp. sold goods for P300,000 to a customer who was
granted a credit period of 3 months. The goods were delivered at the contract date. The
cash selling price of the goods is P28,000 each if the customer buys two items at the
same time. What is the revenue from a contract with a customer at inception?

a. 30,000
b. 28,000
c. 25,000
d. 0

30. On 2022 ABC Corp. discovered that a purchased a machine on July 1, 2020 at
P400,000 and was recorded as repairs expense. The machine has a useful 5 years with
no residual value. The depreciation method allowed is straight line. On 2022, what is the
amount of prior period correction that will affect the January 1, 2022 balance on retained
earnings?

a. 400,000 credit
 b. 280,000 credit
c. 240,000 credit
d. 160,000 credit

31. ABC Corp. had the following balances at December 31, 2021:

Loss for the discontinued operation 50,000

Foreign currency translation loss 100,000
Profit from continuing operation 400,000
Unrealized gain on FVOCI equity securities 20,000

What is the amount of total comprehensive income for the year December 31, 2021?

a. 470,000
b. 270,000
c. 350,000
d. 320,000
32. On January 1, 2020, ABC Corp., purchases a new machine for P800,000. The machine
had an estimated useful life of eight years and residual value of P150,000 using a
straight line method. On January 12 2022, the fesiaualvalue estimate is now P40,000.
What is the amount of depreciation expense for the year ended December 31, 2027?

a. 81,250
b. 92,500
c. 96,250
d. 123,333

33. ABC Corp. has the following operating segment information:

Segment Sales Profit Assets

A 800 70 2,400
B 600 61 1,800
C 150 15 450
D 140 14 420
E 100 10 300
F 100 10 300

What segments are reportable based on PFRS 8?

a. A only
b. B only
c. A and B only
d. A,B and C
 34. During the year, ABC Corp. has the following classes of stock issued and outstanding for
the entire year:
100,000 ordinary shares, P100 par value
10,000 4% preference shares, P100 par. Each convertible into two ordinary shares.

Profit for the year is P900,000. The income tax is 30%. What Is the amount of diluted earnings
per share?

a. 8.18
b. 7.50
c. 6.00
d. 4.50

For numbers 35 to 37: ABC Corp. showed the following information on December 31, 2022:
Share capital, par value P10 1,000,000
Total other comprehensive income 100,000
Retained earnings 400,000

During the year, the total comprehensive income is P800,000 with P50,000 revaluation surplus
for the year. Also during the year, a total of P350.000 cash dividends and P200,000 small stock
dividends were declared. The dates of dividend distribution are on January 5, 2023.

35. What is the balance of share capital on December 31, 2022?

a. 1,000,000
b. 1,200,000
c. 1,550,000
d. 2,000,000

36. What is the balance of total other comprehensive income on December 31, 2022?

a. 100,000
b. 150,000
c. 50,000
d. 200,000

37. What is the balance of retained earnings on December 31, 2022?

a. 600,000
b. 650,000
c. 800,000
d. 850,000
38. On January 1, 2021, ABC Inc. agreed to issue 5,000 shares with P100 par value to RST
Construction in exchange for constructing a building. Ownership of the building was
transferred on November 30, 2021 with a total cost of P6,000,000 and market value per
share is P1,700. However, the contract price was settled on January 10, 2022 when the
market value of the shares is P1,500 per share. What is the amount of the building to be
recorded as of December 31, 2021?

a. 5,000,000
b. 6,000,000
c. 7,500,000
d. 8,500,000

39. Aguinaldo Company provided you the following Information for the year 2021:
Net purchases 200,000
Sales discounts 8,000
Income tax expense 24,000
Operating expenses 92,000
Sales revenue 400,000
Inventory, 1/1/21 100,000
Inventory, 12/31/21 60,000

In Aguinaldo's Profit or Loss Statement for the year 2021 using the Functional
presentation, the gross profit

a. should not be reported

b. should be reported at P36,000
c. should be reported at P152,000
d. should be reported at P160,000

40. The following information pertains to Quezon Company during 2021?

January 1, 2021 inventory, P450,000; December 31, 2021 inventory, P480,000;
Purchases during the year, P1,800,000, Purchase returns and allowances, P105,000;
Purchase discounts, P25,000; transportation in, P10,000; Sales during the year,
P3,850,000; sales discounts, P70,000; sales returns, P120,000; Selling expenses,
P990,000; Administrative expenses, P825,000; Rent income, P65,000, Dividend Income,
P150,000, Income tax expense, P131,200; and Retain earnings, January 1, 2021,
P1,200,000.

What is the amount of net income or profit for the year 2021?

a. 189,584
b. 278,800
c. 287,000
d. 410,000
 41. VSOTTO281954 Company uses the direct method to prepare its statement of cash
flows. VSOTTO281954 Company had the following cash flows during 2021:

Cash receipts from issuance of ordinary shares P800,000

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

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

a. (40,000)
b. 60,000
c. 80,000
d. 120,000

42. ALOCSIN231985 Company uses the direct method to prepare its statement of cash
flows. ALOCSIN231985 Company had the following cash flows during 2021:

Cash receipts from sale of an old van P160,000

Cash receipts from issuance of ordinary shares 2,000,000
Cash receipts from issuance of 10%, 10-year bonds 1,500,000
Cash receipts from customers 1,000,000
Cash receipts from repayment of loan made to other company 1,200,000
Cash receipts for dividends 150,000
Cash receipts as interest 150,000
Cash payments for operating expenses 650,000
Cash payments for taxes 300,000
Cash payments for equity securities bought 900,000
Cash payments for equipment purchased 300,000
Cash payments for land acquired 1,200,000

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

a. (1,040,000)
b. 1,540,000
c. 1,940,000
d. (2,240,000)
 43. Laurel Company had the following account balances for the year ended 2021:
Sales revenue P180,000
Cost of goods sold 90,000
Salaries expense 15,000
Depreciation expense 30,000
Dividend revenue 6,000
Utilities expense 12,000
Rent revenue 30,000
Interest expense 18,000
Sales returns 16,500
Advertising expense 19,500

What is the amount of income from operations for the year ended 2021?

a. 73,500
b. 45,000
c. 33,000
d. 15,000

For numbers 44 to 47: The adjusted trial balance of Roxas Company includes the following
accounts on December 31, 2021:
Sales revenue P 5,000,000
Commission income 28,000
Interest expense 180,000
Inventory. 12/31/21 520,000
Purchase, net of returns 2,800,000
Sales commission 500,000
Administrative salaries 720,000
Office supplies expense 110,000
Dividends declared 300,000
Dividend income 16,000
Gain on sale of equipment 100,000
Rent expense 400,000
Unrealized gain on investment at Fair Value through Profit or Loss 55,000
Unrealized gain on investment at Fair Value through Other Comprehensive Income 88,000
Depreciation expense - store equipment 70,000
Depreciation expense - office equipment 50,000
Freight-in 80,000
Freight-out 120,000

Additional information:
- Merchandise inventory, January 1, 2021, P450,000
- Income tax rate, 30%
- Rent expense is allocated 60% selling, 40% administrative.
 44. Cost of sales

a. 2,950,000
b. 2,870,000
c. 2,810,000
d. 2,730,000

45. Total selling expert ses/distribution cost

a. 690,000
b. 730,000
c. 810,000
d. 930,000

46. Profit or loss

a. 167,300
b. 228,900
c. 419,000
d. 239,000

47. Total comprehensive income

a. 167,300
b. 228,900
c. 255,300
d. 327,000

For numbers 48 to 50: The Statement of Financial Position of KMANUEL08 Company at the end
of 2021 and 2022 follow:
2021 2022
Cash 350,000 2,350,000
Accounts Receivable, net 700,000 800,000
Merchandise Inventory 850,000 1,050,000
Land 850,000 1,050,000
Equipment 4,400,000 5,300,000
Accumulated depreciation 800,000 1,050,000
Accounts payable 550,000 600,000
Bonds payable 2,100,000 2,100,000
Note payable - Long-term 0 500,000
Ordinary shares, P100 par 4,000,000 5,000,000
Share premium-Ordinary 1,750,000 2,450,000
Retained earnings 1,300,000 1,800,000
Treasury shares, at cost (700,000) 0
Additional information for the year 2022:
- Net income for the year 2022 was P3,000,000
- Cash dividends were declared and paid
- Equipment costing P200,000 was sold for P70,000 with book value of P50,000
- Purchased equipment for cash
- Land with a fair value of P500,000 was acquired through issuance of long-term note
- Issued 10,000 ordinary shares for cash at P150 per share
- Sold its entire treasury shares for cash at P900,000

48. How much is the net cash provided by/ used in operating activities?

a. 100,000
b. 1,030,000
c. 2,000,000
d. 3,130,000

49. How much is the net cash provided by/used in investing activities?

a. 100,000
b. 1,030,000
c. 2,000,000
d. 3,130,000

50. How much is the net cash provided by/used in financing activities?

a. 100,000
b. 1,030,000
c. 2,000,000
d. 3,130,000