CFAS - Review

Problem

1. Mumuso Company reported net income of P520,000 for the year ended December 31, 202-.
Included in the computation of net income were: depreciation expense, P45,000; amortization of a
patent, P22,000; income from an investment in common stock of Mist Inc., accounted for under the
equity method, P34,000; and amortization of a bond discount, P16,000. Mumuso also paid an
P80,000 dividend during the year.

The net cash provided by operating activities would be reported at:

a. P569,000.
b. P536,000.
c. P234,000.
d. P344,000.

2. Zi Tao Corp.'s transactions for the year ended includes the following:
ｷ Acquired 50% of Lu Han Corp.'s ordinary shares for Php 180,000 cash which was
borrowed from a bank
ｷ Issued 5,000 shares of its preference shares in exchange of land having a fair value of
Php 32,000.
ｷ Issued 500 of its 11% debenture bonds, due 2013, for Php 392,000 cash.
ｷ Purchased a patent for Php 22,000 cash.
ｷ Paid Php 120,000 toward a bank loan.
ｷ Sold available-for-sale securities for Php 79,600.
ｷ Net increase in returnable customer deposits (long-term) of Php 88,000.
What is the net cash provided (used) by investing activities?
a. 122,400 – used
b. 57,600 – provided
c. 89,600 – provided
d. 259,600 – provided

3. During 2021, Stout Inc. had the following activities related to its financial operations:
Carrying value of convertible preference shares in Stout,
converted into ordinary shares of Stout $ 360,000
Payment in 2021 of cash dividend declared in 2020 to
preference shareholders 186,000
Payment for the early retirement of long-term bonds payable
(carrying amount $2,220,000) 2,250,000
Proceeds from the sale of treasury shares (on books at cost of $258,000) 300,000
The amount of net cash used in financing activities to appear in Stout's statement of cash flows for
2021 should be
a. $1,590,000.
b. $1,776,000.
c. $2,136,000.
d. $2,148,000.

4. This includes items of income and expenses that are not recognized in profit or loss but are
recognized directly as required or permitted by accounting standards.
 a. Discontinued Operations
b. Income from Continuing Operations
c. Net Income
d. Other Comprehensive Income

5. Jeffry Enterprises provided the following data for the current year:
Net income Php 2,014,000
Unrealized gain on derivative contract 507,000
Foreign currency translation adjustment – debit 51,500
Revaluation surplus 201,400

What is the comprehensive income for the current year?

a. 2,721,900
b. 2,670,900
c. 2,469,500
d. 2,521,000

6. Ellen Company had the following cash flows for the current year:
-Cash payment for dividends 500,000
-Cash receipts from customers 1,500,000
-Cash payment to purchase land 760,000
-Cash payment for taxes 150,000
-Cash receipts from issuance of preferred shares 2,500,000
-Cash receipts from repayment of loan made to another entity 1,000,000
-Cash payment for insurance 100,000
-Cash payment for wages and other operating expenses 850,000

What is the net cash provided by investing activities?

a. 240,000
b. 200,000
c. 300,000
d. 760,000

7. Nikki Company reported the following data for the current year:
Loss from impairment of plant assets P500,000
Correction of understatement of depreciation expense
in prior years, net of tax 800,000
Income omitted from last year’s financial statement 750,000
Loss on sale of one of Nikki’s warehouses 300,000
Unrealized gain on AFS 600,000
Dividends received 950,000

For the current year, Nikki would report other comprehensive income of
a. 300,000
b. 600,000
c. 1,550,000
d. 1,100,000

8. Money company reported the following balances at year end:

 Sales 7,800,000
Sales returns 60,000
Cost of sales 1,242,641
Gain on sale of equipment 300,000
Operating expenses 120,000
Unrealized holding gain on equity investment 88,000
Interest Income 12,000
Interest expense on bonds payable 6,000
Interest expense on bank loans 9,000
Revaluation surplus 16,000
Unrealized holding loss on debt investment 14,000
Loss on warehouse destruction due to flood 13,000

a. What is the net income to be reported at December 31?

a. 6,677,359
b. 6,690,359
c. 6,664,359
d. 6,661,359

b. What is the amount of other income and expenses?

a. P300,000
b. P312,000
c. P313,00
d. P287,000

c. What amount is allocated to other comprehensive income?

a. P90,000
b. P104,000
c. P74,000
d. P88,000

d. What is the year-end total comprehensive income?

a. P6,754,359
b. P6,574,359
c. P6,600,359
d. P6,587,359

9. Which of the following is not a long-term investment?

a. Cash surrender value of life insurance
b. Franchise
c. Land held for speculation
d. A sinking fund

10. Majo Company provided the following information:

-Cash was borrowed from bank to purchase real estate P1,000,000
-Sale of investment for cash P800,000
-Proceeds from sale of equipment P600,000
-Dividend declared P500,000
-Dividend paid P300,000
-Proceeds from sale of treasury stocks P400,000
 -Purchase of bond investment P700,000

What is the net cash provided by financing activities?

a. 1,000,000
b. 1,100,000
c. 1,600,000
d. 1,200,000

11. The following items were among those that were reported on Dye Co.'s income statement for the
year ended December 31, 2020:
Legal and audit fees $130,000
Rent for office space 180,000
Interest on inventory floor plan 210,000
Loss on abandoned equipment used in operations 35,000
The office space is used equally by Dye's sales and accounting departments. What amount of the
above-listed items should be classified as general and administrative expenses in Dye's income
statement?
a. $220,000
b. $255,000
c. $310,000
d. $430,000

12. Angeline Company had the following liabilities at December 31, 2021

Accounts Payable.                                   875,000

Accrued Expense.                                    215,000
Income Tax Payable.                                135,000
Deffered Tax liability.                                 315,000
Unsecured note, 12%, due, April 14, 2022.    475,000
Bonds Payable.                                         975,000
Discount on bonds Payable.                             145,000

How much current liability should be part in the balance sheet of Angeline Company's on December
31 2021?
a. P 1,850,000
b. P 1,700,000
c. P 1,750,000
d. P 1,705,000

13. The statement of financial position is useful for analyzing all of the following except
a. liquidity.
b. solvency.
c. profitability.
d. financial flexibility.

14. Koala Co. provided the following data for the current year
Purchase of real estate for cash 5,500,000
Cash was borrowed from bank to purchase real estate 5,500,000
Sale of investment for cash 5,000,000
Dividend paid 6,000,000
 Issuance of ordinary shares for cash 2,500,000
Purchase of patent for cash 1,250,000
Payment of bank loan 1,500,000
Issuance of bond payable for cash 3,000,000

What is the net cash provided by financing activities?

a. 5,000,000
b. 3,500,000
c. 4,500,000
d. 5,500,000

What is the net cash used in investing activities?

a. 6,750,000
b. 3,750,000
c. 1,750,000
d. 500,000

15. Accrual accounting is used because

a. cash flows are considered less important.
b. it provides a better indication of ability to generate cash flows than the cash basis.
c. it recognizes revenues when cash is received and expenses when cash is paid.
d. none of the above.

16. The following information on selected cash transactions for 2021 has been provided by Mancuso
Company:
Proceeds from sale of land $160,000
Proceeds from long-term borrowings 400,000
Purchases of plant assets 144,000
Purchases of inventories 680,000
Proceeds from sale of Mancuso ordinary shares 240,000
What is the cash provided (used) by investing activities for the year ended December 31, 2021, as
a result of the above information?
a. $16,000
b. $256,000.
c. $160,000.
d. $800,000.

17. When an entity discontinued an operation and disposed of the discontinued operation, the
transaction should be reported in the income statement as:
a. An amount after income from continuing operations and before net income
b. A prior period error
c. Other income and expense item
d. A bulk sale of plant assets included in income from continuing operations

18. Equity or debt securities held to finance future construction of additional plants should be classified
on a balance sheet as
a. current assets.
b. property, plant, and equipment.
c. intangible assets.
d. long-term investments.
19. The Tala Company reported a total sales of 9,500,000 for the current year. Below are the additional
information:
Interest revenue 250,000
Gain sale of equipment 100,000
Revaluation surplus during the year 1,200,000
Share in profit of associate 350,000
Cost of goods sold 6,000,000
Finance cost 150,000
Distribution costs 500.000
Administrative expenses 300,000
Translation loss on foreign operation 200,000
Income tax expense 950,000

What is the net income for the current year?

a. 2,300,000
b. 3,300,000
c. 4,200,000
d. 2,100,000

20. Bread Crumbs Company reported a net income of 1,640,000 for the year 2020. Included in the net
income were depreciation expense of 75,000 and a loss on sale of equipment of 4,000. On year
2020, the following accounts increased:
Accounts Receivable 560,000
Inventory 800,000
Prepaid rent 175,000
Accounts payable 275,000
What is the amount of cash provided by operating activities for Bread Crumbs Company for the
year ended December 31,2020?
a. 459,500
b. 459,000
c. 580,500
d. 480,500

21. Hydra Company had the following information for the year 2020:
Purchase of plant assets P 1,100,000
Acquired 20% of Sphynx Corporation’s ordinary shares 1,000,000
Issued 20,000 preference shares for land (20,000@P30) 600,000
Paid dividends 320,000
Payment for the early retirement of long-term bonds 960,000
payable (carrying amount 900,000)
Proceeds from sale of treasury shares (at cost of 350,000) 450,000

What is the cash provided (used) by financing activities for the year 2020?
a. (830,000)
b. 180,000
c. 190,000
d. 200,000
22. The board of directors of Akiko Corp. declared cash dividends of ¥265,000 during the current year.
If dividends payable was ¥83,000 at the beginning of the year and ¥77,000 at the end of the year,
how much cash was paid in dividends during the year?
a. ¥425,000
b. ¥271,000
c. ¥259,000
d. ¥265,000

23. In year 1, Casio Company provided the following information:

Sales P50,000,000 Cost of

goods sold 30,000,000
Distribution costs 5,000,000
General and Administrative expenses 4,000,000
Interest expense 2,000,000
Gain on early extinguishment of long-term debt 500,000
Correction of inventory error, net of income tax-credit 1,000,000
Investment income-equity method 3,000,000
Gain on expropriation 2,000,000
Income tax expense 5,000,000
Dividends declared 2,500,000

What is the income before income tax?

a. 9,500,000
b. 14,500,000
c. 15,500,000
d. 14,000,000

24. Andromeda Company provided the following information for the current year:
Sales P 9,500,000
Interest revenue 250,000
Gain on sale of equipment 100,000
Revaluation surplus during the year 1,200,000
Cost of goods sold 6,000,000
Finance cost 150,000
Distribution costs 500,000
Administrative expenses 300,000
Translation loss on foreign operation 200,000
Income tax expense 950,000

What is the net income for the current year?

a. 1,950,000
b. 2,300,000
c. 2,950,000
d. 2,100,000

25. On June 30, 2019, Hill Company incurred a P1,500,000 net loss from disposal of a business
segment. Also on June 30, the entity paid P350,000 for property and taxes assessed for the
calendar year 2019. What amount should be included in the determination of the net income or loss
for the six-month interim period ended June 30, 2019?
a. 1,675,000
 b. 1,500,000
c. 1,150,000
d. 1,850,000

26. Stan Lee Company committed to sell the comic book division, a component of the business, on
September 1, 2020. The carrying amount of the division was P4,000,000 and the fair value was
P3,500,000. The disposal date is expected on June 1, 2021. The division reported an operating loss
of P200,000 for the year ended December 31, 2020. What amount should be reported as pretax
loss from discontinued operation in 2020?
a. 500,000
b. 200,000
c. 700,000
d. 0

27. The following data were prepared by the Noon company on December 31,2019:
Accounts Payable 200,000
Accrued Expense 400,000
Mortgage Payable 4,500,000
Note Payable, due 2021 2,500,000
Unamortized Issue Cost 50,000
Premium on Note Payable 500,000
Share Premium 1,000,000
Retained Earnings, January 1, 2019 1,500,000
Net income 5,000,000

The amount to be reported as noncurrent liabilities is

a. 7,450,000
b. 5,700,000
c. 6,750,000
d. 8,000,000

28. This expenses constitute cost of administering the business and include all operating expenses not
related to selling and cost of goods sold.
a. Cost of goods sold
b. Administrative expense
c. Other expense
d. Selling expense

29. It is the traditional preparation of the income statement in conformity with accounting standards.
a. Transaction approach
b. Traditional approach
c. Accounting approach
d. Profit or Loss approach

30. Percy Jackson Company provided the following information on December 2019:
Cash in bank, net of bank overdraft P400,000 P 7,000,000
Accounts receivables 4,000,000
Prepaid expenses 800,000
Patents 1,500,000
Equipment 4,500,000
Available for sale securities- to be held indefinitely 3,000,000
 Bond sinking fund 2,000,000
Accounts payable, net of supplier’s account with 5,000,000
debit balance of P500,000
Bonds payable due May 27, 2021 3,500,000
Mortgage payable due April 8, 2022 2,000,000
Deferred Tax Liability 450,000

What total amount of noncurrent assets and noncurrent liabilities should be reported on December
31, 2019?
a. P 9,000,000; P 3,950,000
b. P 8,000,000; P 5,500,000
c. P 11,000,000; P 5,950,000
d. P 10,500,000; P 4,000,000

31.
Cooper Company provided the following information at year-end: 

Cash 2,750,000
Accounts Receivable 1,550,000
Trade installment receivables 350,000
Equity investment - FVPL 275,000
Equity investment - FVOCI 385,000
Equipment held for sale 1,325,000
Deferred tax asset 270,000
Bond sinking fund 2,850,000

What should be presented as total current assets at year-end?

a. 6,520,000
b. 6,250,000
c. 9,100,000
d. 9,350,000

32. Yi Fan Company reported the following information for January 2020:
Actuarial Loss on Defined Benefit Plan 75,250
Cash dividends received on the securities 64,000
Sales 659,000
Unrealized gain on equity investment - FVOCI 100,000
Unrealized Loss on equity investment - FVPL 96,750
Unrealized loss on debt investment - FVOCI 45,500
Unrealized gain on foreign currency conversion 68,000

What amount should be charge to other comprehensive income?

a. 42,750
b. 4 7,250
c. 181,500
d. 121,500
33. Hagibis, Inc. reported net income of 34,000 for the year ended December 31, 2021. Included in net
income was a gain on early extinguishment of debt of 60,000 related to bonds payable with a book
value of 1,200,000. Each of the following accounts increased during 2021:
Notes receivable 45,000
Deferred tax liability 10,000
Treasury shares 90,000

What is the amount of cash used by financing activities for Hagibis, Inc. for the year ended
December 31, 2021?
a. 1,230,000
b. 1,240,000
c. 160,000
d. 195,000

34. In preparing a statement of cash flows, sale of treasury stock at an amount greater than cost would
be classified as a(n)
a. operating activity.
b. financing activity.
c. extraordinary activity.
d. investing activity.

35. Moorman Corporation reports the following information:

Correction of understatement of depreciation expense
in prior years, net of tax $ 430,000
Dividends declared 320,000
Net income 1,000,000
Retained earnings, 1/1/2020, as reported 2,000,000
Moorman should report retained earnings, December 31, 2020, of
a. $1,570,000.
b. $2,250,000.
c. $2,680,000.
d. $3,110,000.

36. Jin Goo Co. reported a net income of 7,140,000 for the current year which included the following:
Unrealized loss on foreign currency translation (540,000)
Gain on early retirement of bonds 2,200,000
Adjustment of profit of prior year error in depreciation (750,000)
Loss from fire (1,400,000)

What amount should be reported as adjusted net income?

a. 6,500,000
b. 6,610,000
c. 8,430,000
d. 8,700,000

37. The cash transactions included the following information:

Gains on sale of equipment 100,000
Cash proceeds from the sale of plant assets 200,000
Purchase of new equipment 250,000
Cash proceeds from sale of land 340,000
 Loss on sale of land 670,000

What is the cash provided by investing acivities?

a. 890,000
b. 320,000
c. 790,000
d. 290,000

38. Minimi Incorporated reported net income of P39,000 for the year ended December 31, 2019
Included in net income were depreciation expense of P8,400 and a gain on sale of equipment of P
2,000. The equipment had an historical cost of P50,000 and accumulated depreciation of P22,000.
Each of the following accounts increased during 2013:
Patents 8,500
Prepaid rent 6,800
Available-for-sale securities 2,000
Bonds payable 5,000
What is the amount of cash provided by or used by investing activities for Jarvis, Inc. for the year
ended December 31, 2019?
a. ( 6,800)
b. 16,700
c. 19,500
d. 14,200

39. Lindsay Corporation had net income for 2021 of $3,000,000. Additional information is as follows:
Depreciation of plant assets $1,200,000
Amortization of intangibles 240,000
Increase in accounts receivable 420,000
Increase in accounts payable 540,000
Lindsay's net cash provided by operating activities for 2021 was
a. $4,560,000.
b. $4,440,000.
c. $4,320,000.
d. $1,680,000.

40. Caticlan Company provided the following data on December 31, 2020:

Cash, including sinking fund of P500,000 for bond

Payable due on June 30, 2021 2,000,000
Notes receivable 1,200,000
Note receivable discounted 700,000
Accounts receivable – unassigned 3,000,000
Accounts receivable – assigned 800,000
Equity of assignee in accounts receivable assigned 500,000
Inventory, including P600,000 cost of goods in transit
Purchased FOB destination. The goods were
Receive on January 3, 2021 2,800,000
Allowance for doubtful accounts 100,000

What total amount of current assets should be reported on December 31, 2020?
a. 7,900,000
 b. 8,400,000
c. 7,400,000
d. 7,700,000

41. Marvin Co. provided the following information for the current year:
Purchases 5,000,000
Purchases returns and Allowance 150,000
Rental Income 250,000
Selling expenses 950,000
Merchandise Inventory January 1 1,000,000
Merchandise Inventory December 31 1,500,000
Sales 7,850,000
Sales returns and allowances 140,000
Sales discounts 10,000
Administrative Expense 800,000
Freight in 500,000
Loss on sale of Equipment 50,000
Purchase Discounts 100,000
Dividend Revenue 150,000
Loss on sale of investment 50,000
Income tax 250,000

What should be reported as cost of goods sold?

a. 4,750,000
b. 5,000,000
c. 6,250,000
d. 4,700,000

How much should be reported as other revenue and expense?

a. 300,000
b. 400,000
c. 250,000
d. 150,000

What amount should be reported as net income?

a. 1,500,000
b. 1,250,000
c. 2,950,000
d. 950,000

42. The accountant for Optic Co. has determined the following information for the year ended,
December 31, 2019.

Profit or loss P300,000

Share of total comprehensive income after tax of associates 20,000
Share of profit (after tax) of associates 15,000
Exchange difference gain (net of tax of P3,000) on translation of
foreign operation up to the date sold (October 1, 2019) 7,000
 Exchange difference gain (net of tax of P9,000) on disposal of
foreign operation recognized in profit for the year 21,000
Increase in asset revaluation surplus (net of tax) 45,000

What is the total amount of other comprehensive income for Optic Co. for the year ended,
December 31, 2019?
a. P36,000
b. P57,000
c. P51,000
d. P72,000

43. Nami Company has the following items: common stock, P720,000; treasury stock, P85,000;
deferred taxes, P100,000 and retained earnings, P313,000. What total amount should Nami
Company report as stockholders’ equity?
a. P848,000.
b. P948,000.
c. P1,048,000.
d. P1,118,000.

44. For the year ended December 31, 2020, Transformers Inc. reported the following:
Net income $ 60,000
Preference dividends declared 10,000
Ordinary share dividends declared 2,000
Unrealized holding loss, net of tax 1,000
Retained earnings, beginning balance 80,000
Share capital – Ordinary 40,000
Accumulated Other Comprehensive Income,
Beginning Balance 5,000
What would Transformers report as total stockholders' equity?
a. $172,000
b. $168,000
c. $128,000
d. $120,000

45. Persephone Company provided the following information for the current year:

Income from continuing operations P 3,000,000

Income from discontinued operation 600,000
Unrealized gain on equity investments – FVOCI 550,000
Revaluation surplus 1,500,000
Translation loss on foreign operation 450,000
Remeasurement loss on defined benefit plan 400,000

What net amount should be reported as Other Comprehensive Income/OCI for the current year?
a. 1, 600,000
b. 4,800,000
c. 1, 250,000
d. 1, 200,000
46. On January 1, 2020, Zhang Inc. had cash and share capital of ¥5,000,000. At that date, the
company had no other asset, liability, or equity balances. On January 5, 2020, it purchased for cash
¥3,000,000 of equity securities that it classified as available-for-sale. It received cash dividends of
¥400,000 during the year on these securities. In addition, it has an unrealized loss on these
securities of ¥300,000. The tax rate is 20%.

Compute the amount of accumulated other comprehensive income/(loss).

a. (300,000)
b. 100,000
c. 80,000
d. 240,000

47. In a statement of cash flows, interest payments to lenders and other creditors should be classified
as cash outflows for
a. operating activities.
b. borrowing activities.
c. lending activities.
d. financing activities.

48. Using the data provided by Tempo Company for December 31, 2019, determine the company’s
total current assets?
Accounts receivable Php 1,200,000
Financial asset at fair value through profit or loss 400,000
Financial asset at amortized cost 1,000,000
Cash 8,800,000
Inventory 600,000
Equipment and furniture 2,100,000
Accumulated depreciation 600,000
Patent 99,000
Prepaid expenses 700,000
Equipment classified as held for sale 10,000,000

a. 11,700,000
b. 21,400,000
c. 21,700,000
d. 22,700,000

49. Use the following information (in thousands):

Sales revenue ¥150,000
Gain on sale of equipment 45,000
Cost of goods sold 82,000
Interest expense 8,000
Selling & administrative expenses 15,000
Income tax rate 30%

Determine the amount of net income.

a. 63,000
b. 10,500
c. 21,000
 d. 31,500

50. The term profit or loss is

a. The total of income less expenses, including the components of OCI
b. The total of sales less expenses, including the components of OCI
c. The total of income less expenses, excluding the components of OCI
d. The total of sales less expenses, excluding the components of OCI