❖ At December 31, 2019, Prontedo Co.

had the following balances in the accounts it maintains

at First State Bank: Checking account #415 P175,000. Checking account #313 (10,000).
Money market account 25,000. 90-day certificate of deposit, due 2/28/20 50,000. 180-day
certificate of deposit, due 3/15/20 80,000. In its December 31, 2019 statement of financial
position, what amount should Protendo report as cash and cash equivalents?
a. 190,000
b. 200,000
c. 240,000
d. 320,000

❖ An interest bearing note is recorded at face value when *

a. the stated rate is greater than the market rate of interest
b. the stated rate is less than the market rate of interest
c. the stated rate us equal to the market rate of interest
d. none of the above

❖ The cost of internally generated intangible asset includes the following except

a. cost of materials and services used or consumed in generating the intangible asset
b. cost to register a legal right
c. salaries, wages and other employment-related cost of personnel directly engaged in
generating the asset
d. expenditure on training staff to operate the asset

❖ On June 1, 2018, Starr Company had an equipment with a cost of P10,000,000 and
accumulated depreciation of P7,500,000. On the same date, the entity classified the
equipment as held for sale and decided to sell it within one year. The equipment had an
estimated selling price of P2,000,000 and a remaining useful life of 4 years. It is estimated
that selling cost associated with the disposal of the equipment will be P200,000.On
December 31, 2018, the estimated selling price of the equipment had increased
toP2,300,000 with estimated cost of disposal of P250,00. What amount of impairment loss
should be recognized on June 1, 2018?

A. 700,000
B. 500,000
C. 300,000
D. 0

❖ A machine has a cost of P60,000, has an annual depreciation of P12,000, and has
accumulated depreciation of P30,000 on December 31, 2016. On April 1, 2017, when the
machine has a fair value of P24,000, it is exchanged for a similar machine with a fair value
of P72,000 and the proper amount of cash is paid. The loss to be recognized on exchange
is

a. 6,000
b. 3,000
c. 21,000
d. 0

❖ Which of the following is true when accounts receivable are factored without recourse?

a. the transaction may be accounted for either as a secured borrowing or as a sale depending
upon the substance of the transaction
b. the receivables are used as collateral for a promissory note issued to the factor by the owner
of the receivable
c. the factor assumes the risk of collectibility and absorbs any credit losses in collecting the
receivables
d. the financing cost should be recognized ratably over the collection period of the receivables

❖ PFRS 9 impairment requirements do not apply to

a, contract assets under PFRS 15

b. financial assets that are debt instruments measured at amortized cost
c. financial assets that are debt instruments measured at fair value through other
comprehensive income d. financial assets that are debt instrument measured at fair value
through profit or loss

❖ Which of the following is incorrect regarding identifying an asset that may be impaired?

a. at the end of each reporting period and entity is required to assess whether there is an
indication that an asset may be impaired
b. if there is an indication that an asset may be impaired, then the asset's recoverable amount
must be calculated.
c. an indication that an asset may be impaired may indicate that an asset's useful life,
depreciation method or residual value may need to be reviewed or adjusted.
d, only internal indicators of impairment should be considered. Which of the following is true
when accounts receivable are factored without recourse?

❖ Sparkly Clean prepares a bank reconciliation at the end of every month. At the end of July,
the balance in the general ledger checking account was P2,750 and the bank balance on
the bank statement was P2,980. Outstanding checks totaled P680 and deposits in transited
were P400. The bank statement revealed that a check written for P120 was incorrectly
recorded by Sparkly Clean as a P220 disbursement. The bank statement listed service
charges and NSF check charges totaling P150. The corrected cash balance is:

a. 2,270
b. 2,550
c. 2,470
d. 2,700

EBONY MAW’s trial balance on December 31, 2019, includes the following cash and cash
equivalents related accounts: Cash in bank – Landbank 3,741,600. Cash in bank –
BDO(restricted account for plant expansion, expected to be disbursed in early 2020) 3,500,000.
Petty cash fund 150,000. Time deposit, placed December 10, 2019, and due February 10,2020
25,000,000. What is the adjusted balance of Cash in bank – Landbank on December 31, 2019?

a. 2,145,550
b. 2,163,550
c. 2,276,050
d. 2,500,050

❖ If an investor ceases to have significant influence over an associate, how should the related
investment be treated?

a. using the equity method

b. in accordance with PAS 39
c. frozen at the date at which the investor ceases to have significant influence
d. at cost

❖ On January 1, 2019, Vudijhukphaisal Company sold equipment with a carrying amount of

P800,000 in exchange for a P1,200,000 note. The note bears an interest rate of 5% and is
to be repaid in three annual installments of P400,000 (plus interest on the outstanding
balance). The first payment was received on December 31, 2019. The market price of the
equipment is not reliably determinable. The prevailing rate of interest for notes of this type
is 10%. The carrying amount of the note receivable as of December 31, 2019 is

a. 994,760
b. 800,000
c. 747,100
d. 694,200

❖ If ending accounts receivable exceeds the beginning accounts receivable:

a. cash collections during the period exceed the amount of revenue earned
b. net income for the period is less than the amount of cash basis income
c. no cash was collected during the period
d. cash collections during the year are less than the amount of revenue earned

❖ Younseonam Company acquired land and an old building. Younseonam acquired the land
and building by providing 40,000 of its shares that were trading on the Stock Exchange at
price of P13 per share, and by paying off the existing mortgage of P30,000 and back taxes
on the old building of P5,000. Younseonam also paid P20,000 to demolish the old building
on the land, P30,000 to an architect to design a new building, and P220,000 to a contractor
to build the building. How much is the cost of the new building in accordance with PIC Q&A
2012-2?

a. 250,000
b. 270,000
c. 300,000
d. 305,000
❖ ABC Company uses the allowance method in recognizing uncollectible accounts. Ignoring
deferred taxes, the entry to record write off a specific amount

a. affects neither net income nor working capital

b. decreases both net income and accounts receivable
c. affects neither net income nor accounts receivable
d. decreases both net income and working capital

❖ Jay Company received a government grant of P600,000 related to depreciable asset

acquired on January 1, 2018 for P6,600,000. This grant was deducted from the cost of the
asset with a useful life of 10 years and residual value of P500,000. On January 1,2020, the
grant became fully repayable due to non-compliance with conditions. What is the
depreciation for 2018?

a. 600,000
b. 550,000
c. 610,000
d. 660,000

❖ Which of the following is not considered cash for financial reporting purposes? *

a. petty cash funds and postal money order

b. unrestricted compensating balances
c. dividend, interest and tax fund
d. postdated and stale checks

❖ Which of the following would not be reported as inventory?

a. goods out on consignment

b. goods in transit sold under FOB destination
c. foods in transit purchased under FOB seller
d. goods purchased under a buyback agreement

❖ On January 1, 2018, Zhang Inc. sold a machine with cash price amounting to P1,000,000.
The buyer signed a deferred payment contract that provides for a downpayment of
P200,000 and an 8-year note bearing interest at 10%. The note is to be paid in 8 equal
annual installments inclusive of the interest. The payments are made on December 31 each
year beginning 2018. In its December 31, 2018 statement if financial position, what amount
should raptors report as note receivable

a. 700,000
b. 720,000
c. 730,000
d. 780,000

❖ Which of the following cost of conversion cannot be included in the cost of inventory?
a. cost of direct labor
b. salaries of sales staff
c. factory rent and utilities
d. factory overhead based on normal capacity

❖ After reviewing the aging schedule of its accounts receivable at December 31, 2021,Pacers
Company found out that the net realizable value of the receivables at that date was
P150,250. Additional information as follows: Accounts receivable at December 31, 2021
P192,500. Allowance for uncollectible accounts, January 1, 2021 28,000. Accounts written
off, October 4, 2021 21,000. The uncollectible accounts expense for the year ended
December 31, 2021 is

a. 31,000
b. 35,250
c. 42,460
d. 49,250

❖ The Viewbox sells TVs. The perpetual inventory was stated as P305,000 on the books at
December 31, 2017. At the close of the year, a new approach for compiling inventory was
used and apparently a satisfactory cut-off for preparation of financial statements was not
made. Some events that occurred are as follows. * TVs shipped to a customer January 2,
2018, costing P50,000 were included in inventory at December 31, 2017. The sale was
recorded in 2018. * TVs costing P100,000 received December 30, 2017, were recorded as
received on January 2, 2018. * TVs received during 2017 costing P46,000 were recorded
twice in the inventory account. * TVs shipped to a customer December 28, 2017, f.o.b.
shipping point, which cost P150,000, were not received by the customer until January,
2018. The TVs were included in the ending inventory. * TVs on hand that cost P61,000
were never recorded on the books. Compute the correct inventory at December 31, 2017.

a. 320,000
b. 259,000
c. 220,000
d. 270,000

❖ Wells Fargo Company acquired an equipment on January 1, 2017, at a cost of P440,000. It

was expected to have a useful economic life of 10 years. Wells Fargo uses the sum-of-the-
years digits method in depreciating its equipment and reports on a calendar year basis. On
December 31,2019, Wells Fargo decided to change the basis of measuring this equipment
from the cost model to the revaluation model. The equipment was appraised as having a
gross replacement cost of P495,000 on December 31, 2019. How much should be credited
to revaluation surplus on December 31, 2019?

a. 187,000
b. 28,000
c. 38,500
d. 271,000
❖ Which of the following best describe an owner occupied property under PAS 40? A. Property
held for sale in the ordinary course of business. B. Property held for use in the production
and supply of goods and services. C. Property held to earn rentals. D. Property held for
administrative purposes.

a. A and B
b. B and D
c. B and C
d. C and D

❖ A bank statement provides information about all of the following except *

a. chcks cleared during the period

b. NSF checks
c. bank charges
d. errors made by the company

❖ A piece of machinery has a marked price of P550,000. It was purchased under the term,
15%, 10%, and 5% discounts. The cost of freight and installation after deducting the P8,000
sales proceeds of the old machinery which was replaced is P12,000. The new machinery
shall be recorded at a cost of

a. 411,712
b. 405,000
c. 419,712
d. 397,000

❖ Which of the following statement is incorrect regarding the derecognition of plant, property
and equipment?

a. derecognition is the removal of a previously recognied asset from an entity's tatement of

financial position.
b. an asset should be removed from the statement of financial position on disposal or when it s
withdrawn from use and no future economic benefits are expected from its disposal.
c. the gain or loss on disposal is the difference between the net disposal proceeds and the
carrying amount and should be recognized in the income statement,
d. gains on disposal of property, plant and equipment may be classified as revenue

❖ Investments in equity securities that provide neither control nor significant influence over the
investee are measured at the end of the reporting period at

a. fair value
b. cost
c. carrying value
d. net realizable value
❖ On May 31, 2017, the PabiCo. acquired the rights to a coal mine containing an estimated
reserves of 1,000,000 tons of coal. The company estimated that 12,500 tons of coal would
be extracted and sold each month. Cost allocable to coal was P3,500,000.Also on May 31,
2017, the company purchased an equipment to be used in the production, costing P95,000
which has an estimated useful life of 10 years. The equipment was expected to become
obsolete after all the coal deposits had been extracted from the mine and only P5,000
selling price of the equipment could be expected. Production was in full blast since June 1,
2017. What would be the depletion expense for the year ended December 31, 2017?

a. 525,000
b. 262,500
c. 153,125
d. 306,250

❖ Receivables not measured initially at their transaction costs are measured initially at

a. fair value
b. fair value less cost to sell
c. fair value minus transaction costs that are directly attributable to the acquisition of the
financial asset d. fair value plus transaction costs that are directly attributable to the acquisition
of the financial asset

❖ Ending inventory assuming FIFO in a perpetual inventory system would be:

a. 4,960
b. 5,060
c. 5,080
d. 5,140

❖ The following information relates to Mattis Corp. for the year ended 30 June 2019. Sales
revenue P450,000. Opening balance of trade receivables (net of allowance) 100,000.
Closing balance of trade receivables (net of allowance) 132,500. Doubtful debts expense
5,000. Increase in allowance for doubtful debts 2,000. Bad debts are written off against the
allowance for doubtful debts. What is the amount of cash collected from customers during
the year ended 30 June 2019?

a. 412,500
b. 418,500
c. 481,500
d. 487,500
❖ Cody Company purchased a machine on December 2, 2019 at an invoice price of
P4,500,000 with terms 2/10, n/30. On December 10, 2019, Cody paid the required amount
for the machine. On December 2, 2019, Cody paid P80,000 for delivery of the machine and
on December 31, 2019, it paid P310,000 for installation and testing of the machine. The
machine was ready for use on January 1, 2020. It was estimated that the machine would
have a useful life of 5 years, and a residual value of P800,000. Engineering estimates
 indicated that the useful life in productive units was 200,000. Units actually produced during
the first two years were 30,000 in 2020 and 48,000 in 2021. Cody Company decided to use
the productive output method of depreciation. What is the depreciation of the machine for
2021?

a. 1,560,000
b. 720,000
c. 960,000
d. 600,000

❖ Mandriru Corp. estimates bad debt expense at ½% of credit sales. The company reported
accounts receivable and allowance for uncollectible accounts of P471,000 and P1,650
respectively, at December 31, 2018. During 2019, Mandriru's credit sales and collections
were P315,000 and P319,000, respectively, and P1,720 in accounts receivable were written
off. The company's accounts receivable at December 31, 2019, are:

a. 467,000
b. 473,280
c. 465,280
d. 469,280

❖ YZ Inc. owns a fleet of over 100 cars and 20 ships. It operates in a capital intensive industry
and thus has significant other property plant and equipment that it carries in its books. It
decided to revalue its property, plant and equipment. The company's accountant suggested
the alternatives that follow. Which one should XYZ follow in order to be in line with the
provisions of PAS 16?

a. revalue only one half of each class of property, plant and equipment as that method is less
cumbersome and easy compared to revaluating all assets together.
b. revalue one ship at a time as it is easier than revaluing all ships together.
c. revalue an entire class of property, plant and equipment.
d. since assets are being revalued regularly, there is no need to depreciate.

❖ The fair value of debt securities not regularly traded can be most reasonably approximated
by:

a. determining the value using similar securities in the NASDAQ market

b. using the relative fair value method
c. calling a licensed and registered stockbrocker
d. calculating the discounted present value of the principal and interest payments

❖ Which of the following is true about fair value model in accounting for investment in
associate of a small and medium entity?

a. investment should be carried at the balance sheet date at fair value less cost to sell
b. impairment loss shall be recognized if recoverable value is lower than carrying amount
c. transaction cost should be expensed outright at initial recognition
d. dividend received is considered a deduction from investment account

❖ Prawal Company purchased a machine on January 2, 2015, for P500,000. The machine
has an estimated useful life of eight years and a salvage value of P50,000. Depreciation
was computed by the 200% declining-balance method. During December 2018, Prawal
determined that there had been a significant decrease in market value of its machine. At
December 31, 2018, Prawal compiled the following information regarding the machine.
Expected undiscounted net future cash inflows from the continued use and eventual
disposal P160,000. Expected discounted net future cash inflows from the continued use and
eventual disposal 120,000. Fair value less costs of disposal 130,000. What is the
impairment loss that should be recognized in 2018 profit or loss?

a. 80,938
b. 38,203
c. 28,203
d. Nil

❖ Canva Dealers has an investment in Moodle Corporation that Canva accounts for as a
trading security. Moodle Corporation shares are publicly traded on the Stock Exchange, and
the prevailing price on that exchange indicates that Canva's investment is worth
P20,000. However, Canva management believes that the stock market is generally
overvalued, and their analysis of the Moodle investment suggests to them that it is worth
P18,000. Canva should carry the Moodle investment on its statement of financial position
at:

a. P20,000.
b. P18,000.
c. either P18,000 or P20,000, as either are defensible valuations.
d. P19,000, the midpoint of Canvas range of reasonably likely valuations of Moodle.

❖ Costs directly attributable to bringing the asset to the location and condition necessary for it
to be capable of operating in the manner intended by the management exclude

a. costs of employee benefits arising directly from the item of property, plant and equipment
b. costs of site preparation
c. initial delivery and handling costs
d. administration and general overhead costs