Ateneo de Zamboanga University

SCHOOL OF MANAGEMENT AND ACCOUNTANCY

ACCOUNTING DEPARTMENT
FINAL EXAMINATION
FINACC O
( Financial Accounting)

TEST – I THEORY: MULTIPLE CHOICE: Select the correct answer for each of the
following questions (1 point each).

1. Trade receivable includes:

A. Advances to officers
B. Tax refund receivable
C. Claims against insurance entity
D. All of these are not included in trade receivables

2. It is a financing arrangement whereby one party formally transfer its rights

to accounts receivable to another party in consideration for a loan.

A. Pledge
B. Assignment
C. Factoring
D. Discounting

3. It is a financing arrangement that is usually done on a “without recourse,

notification basis”.

A. Pledge
B. Assignment
C. Factoring
D. Discounting

4. Why would an entity sell accounts receivable to another entity?

A. To improve the quality of its credit standing process

B. To limit its legal liability
C. To accelerate access to amounts collected
D. To comply with customer agreements

5. It is a predetermined amount withheld by a factor as a protection against

customer returns, allowances and other special adjustments.

A. Equity in assigned accounts

B. Service charge
C. Factor’s holdback
D. Loss on factoring

6. Which of the following cost flow assumptions is used for inventory when an
entity builds townhouse?

A. FIFO
B. Specific identification
C. Weighted average
D. Any of the cost flow assumptions
7. Debt investments that meet the business model and contractual cash flow tests
are reported at:

A. Net realizable value

B. Fair value
C. Amortize cost
D. The lower of amortized cost and fair value

8. Under PFRS, the presumption is that the equity investments are:

A. Held for trading

B. Held to profit from price changes
C. Held for trading and held for profit from price changes
D. Held as financial assets at fair value through other comprehensive
income

9. These are receivables consisting of open accounts with customers.

A. Trade receivables
B. Nontrade receivables
C. Accounts receivable
D. Notes receivable

10. Trade receivables are classified as current assets if they are reasonably
expected to be collected:

A. Within one year.

B. Within normal operating cycle.
C. Within one year or within the operating cycle, whichever is shorter.
D. Within one year or within the operating cycle, whichever is longer?

11. Debt investments not held for collection are reported at:

A. Amortized cost
B. Fair value
C. The lower of amortized cost and fair value
D. Net realizable value

12. FOB destination means:

A. The freight charge is paid by the seller but chargeable to the buyer.
B. The freight charge is paid by the buyer.
C. The ownership of the goods is transferred upon receipt of the goods by
the buyer at the point of the destination and seller is the owner of the
goods in transit.
D. The ownership of the goods is transferred upon shipment of the goods
and the buyer is the owner of the goods in transit.

13. ________________ is a nonphysical asset whose value is derived from

a contractual claim.

A. Commercial paper
B. Financial assets
C. Debt security
D. Share security
14. Which of the following items should be included in a company’s inventory
at balance sheet date?

A. Goods in transit which were purchase FOB shipping point.

B. Goods in transit which were purchased FOB destination.
C. Goods received from another company on consignment.
D. Goods in transit to a customer which were sold to the customer FOB
shipping point.

15. When the accounts receivable of a company are sold outright to a company
which normally buys accounts receivable, the accounts have been:

A. Pledge
B. Assigned
C. Factored
D. Collateralized

16. If a note receivable is discounted with recourse:

A. A contingent liability does not exist.

B. Note receivable discounted should be credited.
C. Liability for note receivable discounted should be credited.
D. Note receivable must be credited.

17. A short term unsecured promissory note issued by companies to obtain funds
to meet short term obligation.

A. Commercial paper
B. Financial asset
C. Bonds
D. Shares of stock

18. The following are examples of financial assets except:

A. Cash
B. An equity instruments of another entity
C. A contractual right to received cash or another financial asset from
another entity
D. Intangible assets

19. Which is not a debt security?

A. Corporate bonds
B. Treasury bills
C. Commercial paper
D. Notes receivable

20. ____________is the most recent price at which an investment (any other type
of asset) has traded.

A. Stock price
B. Share price
C. Quoted price
D. None of the above
21. A loss that results from holding on an asset after it has decrease in price,
rather than selling it and realizing the loss.

A. Realized los
B. Unrealized loss
C. Net loss
D. Operating loss

22. Biological assets:

A. Are found only in Biotech entities

B. Are living animals or living plants and must disclosed as a separate
line item in the statement of financial position
C. Must be measured at cost
D. Do not generally have future economic benefits

23. Agricultural activity results in which of the following type of asset?

A. Biological asset
B. Agricultural produce
C. Both biological asset and agricultural produce
D. Neither biological asset nor agricultural produce

24. Biological transformation results from asset changes through all of the
following, except:

A. Growth
B. Degeneration
C. Procreation
D. Production of agricultural produce

25. Agricultural produce as it grows on bearer plant is measured at the end of

each reporting period prior to harvest at:

A. Fair value
B. Fair value less cost of disposal
C. Fair value plus cost of disposal
D. Fair value less cost of disposal at the point of harvest

26. Which of the following does not affect the determination of depreciation charges
on an item of PPE?

A. Useful life
B. Cost
C. Residual value
D. Repairs and maintenance

27. Which of the following doers not form part of the initial costs of an item of PPE?

A. Purchase price, net of trade discounts and rebates

B. Freight costs
C. Installation and testing cost
D. Advertising and promotional cost
28. Which of the following is not classified as property, plant and equipment?

A. Land held for future plant site

B. Building used in business
C. Equipment held for environmental and safety reasons
D. Minor spare parts and short-lived stand-by equipment

29. Plant assets may property include:

A. Property held for investment purposes.

B. Land held for possible use as a future plant site
C. Self-constructed assets currently in use
D. Idle equipment awaiting sale.

30. Which of the following costs generally would be capitalized to a property, plant and
equipment account?

A. Interest on debt incurred to purchase the item

B. Property taxes relating to period after acquisition
C. Import duties incurred on purchase
D. Freight-out

31. According to PAS 38, intangible assets are measured as follows:

Initial measurement Subsequent measurement

A. Cost Fair value
B. Cost Cost model or revaluation model
C. Cost Cost model or fair value model
D. Fair value Cost model or revaluation model

32. According to PAS 38, research and development costs incurred in self-generating
An intangible asset are recognized as follows:

Research costs Development costs

A. Expense Expense
B. Capitalized Capitalized
C. Expense Capitalized
D. Expensed Expensed, but may be capitalized in
some circumstances

33. Intangible assets have all of the following characteristics, except:

A. their ownership confers rights, but no physical substance.

B. They have no physical substance.
C. They are relatively long-lived.
D. They provide benefits to current operations only.

34. A consideration in determining the useful life of an intangible asset is not the:

A. Initial cost.
B. Legal, regulatory, or contractual provisions.
C. Provisions for renewal or extension.
D. Expected actions of competitors.

35. A franchise should be classified on the statements financial position as a (n):

 A. Operational asset.
B. Deferred charge.
C. Intangible asset.
D. Current assets

36. Amortization of an intangible asset is usually recorded as a:

A. Debit to retained earnings and credit to a contra account.

B. Debit to retained earnings and credit to the intangible asset account.
C. Debit to amortization expense and a credit to a contra account.
D. Debit to amortization expense and a credit to the intangible asset account
or a contra account.

37. Which of the following confers exclusive right to conduct business in a particular
territory?

A. Franchise
B. Trademark
C. Leasehold
D. Patent

38. When deciding whether to capitalize development expenditure as an intangible

asset which of the following points must be satisfied? An entity must be able to
demonstrate:

I. its ability to sell the intangible asset.

II. its intention to complete the intangible asset.
III. the technical feasibility of completing the intangible asset.
IV. its ability to reliably measure the expenditure attributable to the
intangible.

A. I, II and IV only;
 B. I, III and IV only;
C. II, II and IV only;
 D. I, II, III and IV .

39. Which of the following intangibles may be capitalized by an entity?

A. Goodwill acquired in a business combination;

B. Internally generated mastheads;
 C. Publishing titles developed within the entity;
D. Customer lists produced by the entity's marketing division.

40. The concept that distinguishes other intangible assets from goodwill is:

A. Length of useful life;

B. Lack of physical substance;
C. Identifiability;
D. Materiality.
TEST II – Multiple Choice - Computational: Select the correct answer for each of the
following items, (2points each).

1. Roth Company received from a customer a one-year, P500,000 note bearing

annual interest of 8%. After holding the note for six months, Roth discounted
the note at regional Bank at an effective interest rate of 10%. What amount of
cash did Roth receive from the bank?

A. 540,000 C. 513,000
B. 523,810 D. 495,238

2. Faith Company reported the following information relating to current operations:

Accounts receivable, January1 4,000,000
Accounts receivable collected 8,400,000
Cash sales 2,000,000
Inventory, January1 4,800.000
Inventory, December31 4,400 000
Purchases 8,000,000
Gross margin on sales 4,200,000
What is the correct balance of accounts receivable?

A. 7,500,000 C. 4,500,000
B. 5,500,000 D. 6,200,000

3. Lankton Company has the following account balances at year-end:

Accounts receivable 60,000

Allowance for doubtful accounts 3,600
Sales discounts 2,400
Lankton should report accounts receivable at net amount of:

A. 54,000 C. 57,600
B. 56,400 D 60,000

4. Simpson Inc. purchased inventory as follows:

Jan.5 500 units at P10

15 1,000 units at P15
25 200 units at P 20

What is the average unit cost of inventory?

A 14.12 C. 13.00
B.15.00 D. 15.83

5. Hardaway Inc. purchase inventory as follows:

Jan. 10 200 units at P5.00

20 500 units at P10.00
30 800 units at P15.00

Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31.
Assuming the specific identification method is used and ending inventory consist of 100
units from January 10purchase, 300 units from the January 20 purchase, and 100 units
from the Jan.30 purchase, ending inventory would be:

A. 13,000 C. 7,500
B. 4,000 D. 5,000

6. Company Y has the following inventory data:

August 1 Beginning 20 units at P10

8 Purchases 130 units at P15
 17 Sale 80 units
25 Purchases 30 units at P20
30 Sale 60 units
Assuming that a perpetual inventory system (moving average) is used, what is ending
inventory under the average cost method for August?

A. 16.30 C. 14.30
B. 15.30 D. 13.30

7. Apex Company accepted from a customer P1,000,000 face amount, 6 month,

8% note dated April 15, 2016. On the same date Apex discounted the note at
Union Bank at a 10% discounted rate. How much cash should Apex receive from
the bank on April 15, 2016?

A. 1,040,000 C. 988,000
B. 990,000 D. 972,000

8. Marsh Company had 150,000 units of product A on hand at January 1, 2017,

costing P21 each. Purchases of product A during the month of January were
as follows:
Units Unit cost
January 10 220,000 22
18 250,000 23
28 100,000 24

A physical count on January 31 shows 250,000 units of product A on hand. The

cost of the inventory at January 31 under the FIFO method is:

A. 5,850,000 C. 5,350,000
B. 5,550,000 D. 5,250,000

9. The inventory card of Lane Company as at February 28 is as follows:

Purchase Units Balance

Price Units Used Units

January 10 100 20,000 20,000

31 10,000 10,000
February 8 110 30,000 40,000
9 Returns
from factory (Jan. 10 lot) (1,000) 41,000
28 11,000 30,000

Using the weighted average method, the inventory cost as at February 28 is:

A. 3,180,000 C. 3,120,000
B. 3,150,000 D. 3,300,000

10. On July 1, 2016, Lee company sold goods in exchange for P2,000,000,
8-month, noninterest –bearing note receivable. At the time of the sale, the
note’s market rate of interest was 12%. What amount did Lee receive when
it discounted the note at 10% on September 1, 2016?

A. 1,940,000 C. 1,900,000
B. 1,938,000 D. 1,880,000

11. Columbia Company provided the following information about assets in a

forest plantation and farm business.
Freestanding trees 5,000,000
 Land under trees 900,000
Roads in forest 500,000
Animals related to recreational activities 2,000,000
Bearer plants 1,500,000
Bearer animals 1,000,000
Agricultural produce harvested 2,000,000
Agricultural produce growing on bearer plants 600,000
What total amount should be reported as biological assets?

A. 6,600,000 C. 6,000,000
B. 8,500,000 D. 8,100,000

12. Using the information in number 11, what total amount should be reported
as property, plant and equipment?

A. 3,400,000 C. 1,400,000
B. 4,400,000 D. 2,500,000

13. On July 31, 2018, Carmen Corporation purchase an equipment from a

foreign company. The following information are as follows:

List price P82,000

Trade discount 10% of list price
Import duty P1,500
Delivery fees 2,050
Electrical installation costs 9,500
Pre-production testing 4,900

In accordance with PAS 16, all costs required to bring an asset to its present location
and condition for its intended use should be capitalized. How much is amount to be
capitalized?
A. 91,750 C. 80,750
B. 81,750 D. 70,750

14. Paul Company incurs the following costs in relation to the construction of a
new factory and the introduction of its products to the local market.

Php 000
Site preparation costs 240
Materials used 1,500
Labor cost 3,100
Testing of various processes in factory 150
Consultancy fees re: installation of equipment 220
Relocation of staff to new factory 110
General overheads 500
Cost to dismantle the factory at end of its useful
life in 10 years’ time 100
How much is the cost to be capitalized?

A. 5,310 C. 5,520
B. 5,420 D. 6,520

15. On January 10, 20X5, the Hole Sam Company applied for a tradename. Legal costs
associated with the application were P20,000. In January 20X6 the company
 incurred P8,000 of legal fees in a successful defense of its tradename. The
tradename is not impaired in 20x5and 20X6. What is the carrying value of the
tradename as of December 31, 20X6?

A. 8,000 C. 20,000
B. 12,000 D. 28,000

16. Given the following account balances at year end, compute the total intangible
assets on the balance sheet of Janssen Enterprises.
Cash 1,500,000
Accounts Receivable 1,000,000
Trademarks 1,200,000
Goodwill 2,500,000
Research & Development Costs 2,000,000

A. 9,700,000. C. 3,700,000
B. 5,700,000 D. 7,700,000

On June 30, 2007, Cey, Inc.

exchanged 2,000 shares of Seely
Corp. $30 par value
common stock for a patent owned
by Gore Co. The Seely stock was
acquired in 2007 at a
cost of $55,000. At the exchange
date, Seely common stock had a
fair value of $45 per
share, and the patent had a net
carrying value of $110,000 on
Gore's books. Cey should
record the patent at
a. $55,000.
b. $60,000.
c. $90,000.
d. $110,000
17. Ruth Corporation purchased a limited-life intangible asset for P180,000 on May 1,
2006. It has a useful life of 10 years. What total amount of amortization expense
should have been recorded on the intangible asset by December 31, 2008?

A. -0- C. 48,000
B. 36,000 D. 54,000

18. On June 30, 2017, Carlos Company exchanged 2,000 shares of Siren Corp. P30
par value common stock for a patent owned by Gore Co. . The Siren stock was
acquired in 2017at a cost of P55,000. At the exchange date, Siren common stock
had a fair value of P45 per share and the patent had a carrying value of P110,000
on Gore’s books,. Carlos should record the patent at:

A. 55,000 C. 90,000
B. 60,000 D. 110,000

19. On January 2, 2017, Kasen Corp. bought a trademark from Ray Co. for P500,000.
An independent research company estimated that the remaining useful life of the
trademark was 10 years .Its unamortized cost on Ray’ book was P400,000. In Kasen’s
2017 income statement, what amount should be reported as amortization expense?

A. 50,000 C. 25,000
b. 40,000 D. 20,000

20. Tony Company acquires equipment on January 1, 2017. Information on cost is

as follows:
Purchase price, gross of P10,000 trade discount 800,000
Non- refundable purchase taxes 20,000
Delivery and handling costs 40,000
Installation costs 30,000
Present value of decommissioning and
Restoration costs 10,000

How much is the initial cost of the equipment

A. 900,000 C. 870,000
B. 820,000 D. 890,000

21. Using the information in problem 20. Assume the equipment has a useful life of
10 years and a residual value of P90,000. The company uses the straight-line
method of depreciation. How much are the depreciation expense in 2017 and
the carrying amount of the equipment on December 31, 2018, respectively?

Depreciation expense Carrying amount – 12/31/18

A. 80,000 810,000
B. 80,000 730,000
C. 80,000 640,000
D. 80,000 540,000

22. Santos Company provided the following information about the company’
Receivable for the year 2018, as follows:

Dividends receivable 250,000

Advances to officers and employees 100,000
Subscriptions receivable 300,000
Accounts receivable (net) 1,000,000
Notes receivable 500,000
Advances to suppliers 150,000
Special deposits 200,000

How much is the total nontrade receivables for the year 2018 for the Santos
Company?
 A. 700,000 C. 900,000
B. 800,000 d. 1,000,000

23. A company has the following assets:

Buildings and Equipment,

less accumulated depreciation of 5,000,000 25,000,000
Patents 2,400,000
Trademarks 10,000,000
Land 12,000,000
Goodwill 2,000,000
Cash 8,000,000
The total amount reported under Property, Plant, and Equipment would be

A. 25,000,000 C. 47,000,000.
B. 37,000,000. D. 45,000,000.

24. On January 1, 2017, an entity purchased marketable equity securities

for P5,000,000. The equity securities qualify as financial asset held for trading.
The entity also paid P50,000 as commission to the broker. How much should be
Capitalized as the cost of the investment?

A. 5,050,000 C. 4,950,000
B. 5,000,000 D. 4.900,000

25. Baker Bakery Company just began business and made the following four inventory
purchases in June:
June 1 150 units P 1,040
June 10 200 units 1,560
June 15 200 units 1,680
June 28 150 units 1,320
P5.600

A physical count of merchandise inventory on June 30 reveals that there are 210 units
on hand. Using the FIFO periodic inventory method, the amount allocated to ending
inventory for June is:

A. 1,456 C. 1,824
B. 1,508 D. 1,848

All answers should be written on the answer sheet attached. Submit only the
answer sheet thru email add [email protected]. Deadline of
submission is on December 5, 2021 at 5:00pm. Late submission will not be
accepted

Ateneo de Zamboanga University

SCHOOL OF MANAGEMENT AND ACCOUNTANCY
ACCOUNTING DEPARTMENT

FINAL EXAMINATION
FINACC O
Answer Sheet

Name: __________________________________ Section:_______ Score: ________

TEST – I TEST - II

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