Afar - Icare 1st Preboard

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]
Instruction: Select the best answer from the choices provided.
1. Which of the following is not an indicator of a consignment arrangement?

a. The product is controlled by the entity until a specified event occurs, such as the
sale of the product to a customer of the dealer or until a specified period expires
b. The consignee is required to sell the products and is obliged to pay if the same
are not sold
c. The entity is able to require the return of the product or transfer the product to a
third party
d. The dealer does not have an unconditional obligation to pay for the product
2. When should a consignee recognize revenue form a consignment sale?

a. Upon remittance to the consignor
b. Upon receipt of the consigned goods
c. Upon sale on the consigned goods
d. At the end of the year
3. Consigned goods are recognized as revenue by the

a. Consignee when it makes payment to the consignor for goods sold
b. Consignor when a sale to a third party has occurred
c. Consignor when the merchandise has been shipped to a consignee
d. Consignee when a sale to a third party has occurred.
4. Goods sold on consignment should be included in the inventory of:

a. The consignee
b. The consignor
c. Both the consignee and the consignor
d. Neither the consignor not the consignee
5. In consignment sales, the consignee

a. Records the merchandise as an asset on its books
b. Records a liability for the merchandise held on consignment
c. Recognizes revenue when it ships merchandise to the consignor
d. Prepares an account report for the consignor which shows sales, expenses, and
cash receipts
6. Consignments are a specialized marketing method whereby the

a. The consignee takes possession of merchandise, but the title remains with the
consignor
b. The consignee pays for goods upfront and is paid when merchandise is sold
c. The consignee holds the title to the product
d. The consignee purchases goods for sale and sends payment when goods are sold
7. In accounting for consignment sales, sales revenue and the related costs of goods sold
should be recognized by the:
a. Consignee when cash is received from the customer
No. 125 Brgy. San Sebastian
Mobile : 0927 283 8234
Telephone : (043) 723 8412
b. Consignor when the goods are shipped to the consignee

c. Consignee when the goods are shipped to the third party
d. Consignor when notification is received from the consignee that the latter has
sold the consigned goods
8. Revenue is recognized by the consignor when the:

a. Goods are shipped to the consignee
b. Consignee received the goods
c. Consignor receives an advance from the consignee
d. Consignor receives an account sale from the consignee
9. The role of the consignee in a consignment sales arrangement is to:

a. Arrange for the consignor to provide goods or services to a customer
b. Provide the goods or services for a customer
c. Market the consignor’s goods and services to prospective customers
d. Develop and maintain the goodwill of the principal’s customers
10. How should a consignee recognize revenue from a consignment sales arrangement?
a. Through commission
b. Through markup
c. Through a fee
d. Through commission and/or markup
Used the following information for the next four questions:
Stormy Co. consigned eight heavy machineries to Rainy Co. Each machine costs P
1,000,000 and has a suggested retail price of P 2,200,000. Stormy paid P 200,000 in
transporting the machines to the consignee’s place of business. At the end of the period,
Rainy reported three unsold machines and remitted the collections on sales during the
period, after deducting the following:
Commission (based on sales net of commission) 20%
Finder’s fee (based on commission) 5%
Delivery, installation and testing (on each unit P 50,000

sold)
Materials generated from the testing were sold for P 5,000 and included in the remittance to
Stormy Co.
11. How much is the commission earned by the consignee?

A. 2,100,000
B. 420,000
C. 1,750,000
D. 2,200,000
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Commission = Gross Sales - [Gross sales / (1 + Commission

Rate)]
Commission = 10,500,000 - [10,500,000 / (1 + 20%)]
Commission = 10,500,000 - 8,750,000
Commission = 1,750,000
12. How much profit is earned by the consignor from the sale?
A. 3,287,500
B. 4,500,000
C. 2,287,500
D. 3,000,000
Sales 10,500,000
Less:
Costs 5,000,000
Freight - consignor 125,000
Finder's fee 87,500

Delivery, installation and
testing 250,000
Commission expense 1,750,000
Net income 3,287,500
13. How much was the net remittance to the consignor?

A. 10,500,000
B. 8,000,000
C. 8,412,500
D. 9,000,000
Sales 10,500,000
Less:
Finder's fee 87,500

Delivery, installation and
testing 250,000
Commission expense 1,750,000
Remittance 8,412,500
14. How much is the cost of the unsold machineries?

A. 3,000,000
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Telephone : (043) 723 8412
B. 3,075,000
C. 4,000,000
D. 4,075,000
Costs 3,000,000
Freight 75,000
Ending Inventory 3,075,000
Used the following information for the next four questions:
On January 30, 2023, Pepper Company consigned 90 freezers to Bella Company for sale at
P 1,600 each and paid P 1,200 in transportation costs. A report of sales was received on
February 28, 2023, from Bella reporting the sale of 20 freezers, together with a remittance
that was net of the agreed 15% commission.
15. How much should Pepper recognize as revenue for the month of January?
A. 144,000
B. 142,800
C. 32,000
D. 0
No revenue is to be recognized upon shipment of the consigned goods by the consignor to

the consignee.
16. How much should Pepper recognize as revenue for the month of January?
A. 32,000
B. 27,200
C. 24,000
D. 0
P 1,600 x 20 freezers = P 32,000
17. How much should Bella recognize as commission income for the month of February?
A. 4,800
B. 21,600
C. 3,600
D. 0
P 32,000 x 15% = P 4,800
18. How much is the remittance made by Bella on February 28, 2023?
A. 32,000
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Telephone : (043) 723 8412
B. 24,000
C. 27,200
D. 20,400
P 32,000 – P 4,800 = P 27,200
Used the following information for the next two questions:
Lon Company consigned twelve refrigerators to Graciel Company. The refrigerators cost P
6,000 each and the consignor paid P 720 for freight. The consignee subsequently rendered
account sales for five units sold at P 7,700 each, and deducted the following items from the
selling price:
Commission (based on sales net of 10%

commission)
Marketing expense (based on commission) 15%
Delivery and installation (total) P 150
19. How much was the net profit of the consignor on the five refrigerators sold?
A. 3,815
B. 4,025
C. 4,200
D. 3,395
Commission = Gross Sales - [Gross sales / (1 + Commission

Rate)]
Commission = 38,500 - [38,500 / (1 + 10%)]
Commission = 38,500 - 35,000
Commission = 3,500
Sales 38,500
Less:
Costs 30,000
Freight - consignor 300
Marketing expense 525
Delivery and testing 150
Commission expense 3,500
Net income 4,025
20. How much was the net remittance of the consignee on the five refrigerators sold?
A. 34,500
B. 33,780
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Telephone : (043) 723 8412
C. 34,325
D. 4,200
Sales 38,500
Less:
Marketing expense 525
Delivery and testing 150
Commission expense 3,500
Remittance 34,325
21. Which of the following is not a criterion of a contract under PFRS 15?
A. It is virtually certain that the entity will collect the consideration.
B. The contract has commercial substance.
C. The parties to the contract have approved the contract
D. The entity can identify each party’s rights regarding the goods or services to be
transferred
22. Under IFRS 15, how shall an entity recognise revenue from contract with customers?
A. An entity shall recognise revenue when (or as ) the entity satisfies the
performance obligation by transferring promised good or service( i.e. an asset) to
a customer.
B. An entity shall recognise revenue when it i probable that future economic benefits
will flow to the entity and it can be measured reliably.
C. An entity shall recognise revenue at time of collection of cash.
D. An entity shall recognise revenue at time of signing of contract.
23. How will performance bonuses, incentives and penalties be accounted for under PFRS
15?
A. Such items will be included in the transaction price once the requirements are
met or underlying conditions have occurred.
B. Such items will be included in the transaction price only to the extent that it is
highly probable that a significant reversal in the amount of cumulative revenue
recognized will not occur.
C. Such items will be included in the transaction price only to the extent that it is
likely that a significant reversal in the amount of cumulative revenue recognized
will not occur.
D. Such items are not included in the scope of PFRS 15.
24. Which is not a scenario wherein revenue is recognized over time?

A. The customer simultaneously receives and consumes the benefits by the entity’s
performance.
B. The entity’s performance creates or enhances an asset that will be transferred to
the customer at a future date.
C. The entity’s performance does not create an asset with an alternative use to the
entity and the entity has an enforceable right to payment for performance
completed to date.
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Telephone : (043) 723 8412
D. All of the above are scenarios wherein revenue is recognized over time.
25. Under IFRS 15, which of the following criteria should be considered as satisfaction of
performance obligation or recognition of revenue from contracts with customers over a
period of time?
A. The customer simultaneously receives and consumes all of the benefits provided
by the entity as the entity performs the obligation.
B. The customer has the significant risk and rewards related to the ownership of the
asset at a particular date.
C. The entity has transferred physical possession, control and title of the asset at a
specific time.
D. The customer has accepted the asset at the moment of satisfaction.
26. In accounting for a long-term construction contract wherein the contractor anticipates
profit for the entire project but cannot reliably measure its percentage of completion, the
revenue to be recognized by the contractor will be:
A. zero
B. equal to the cost incurred during the year
C. higher than the cost incurred during the year
D. at least equal to the cost incurred during the year
27. When the outcome of a construction contract cannot be estimated reliably, what
accounting method shall be used by the long-term constructor for the recognition of
construction revenue and construction cost?
A. Percentage of completion method
B. Cost recovery method
C. Installment method
D. Accrual method
28. How shall the long-term constructor account for change in the percentage of completion
of a project?
A. It shall be applied and accounted for prospectively as a change in accounting
estimate.
B. It shall be applied and accounted for retroactively as a change in accounting
policy.
C. It shall be retrospectively restated as correction of prior period error.
D. It shall be retrospectively adjusted in retained earnings
29. When should an anticipated loss on a long-term construction contract be recognized

under the cost-recovery method and the percentage of completion method,
respectively?
A. Immediately, immediately
B. Immediately, over the life of the project
C. At completion of the contract, over the life of the project
D. At completion of the contract, immediately
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Telephone : (043) 723 8412
30. A contractor uses the percentage of completion method to account for a five-year
construction project. Which of the following would be used in the calculation of the
income recognized by the contractor?
Progress Billings Collections from Customers
a. Yes Yes
b. Yes No
c. No Yes
d. No No
31. In determining the percentage of completion using the cost-to-cost method, the costs
incurred during the period should exclude which of the following?
A. Cost of standard materials purchased in advance
B. Depreciation costs of equipment used in construction
C. Cost of customized materials purchased in advance
D. Site supervision costs
32. Construction contract cost shall include the following, except

A. Depreciation of idle plant and equipment that is not used on a particular contract.
B. Costs of moving plant, equipment and materials to and from the contract site.
C. Costs of preparation and processing of construction personnel payroll allocated to
each contract based on normal level of
D. The estimated costs of rectification and guarantee work, including expected
warranty costs
33. If the computed Construction in Progress is higher than the Progress Billings to Date, the
excess is presented as part of:
A. current liabilities
B. non-current assets
C. non-current liabilities
D. current assets
34. If the construction project is not yet complete, the Construction in Progress is equal to:
A. realized gross profit recognized to date
B. cost incurred to date plus realized gross profit recognized to date
C. cost incurred during the year
D. cost incurred to date
35. As a result of the change in the structural design of the long-term construction project
and the contractor assesses that the contract remains a single performance obligation
despite the change, the contract price increases. How shall the change be accounted for?
A. The change shall be applied retroactively in the beginning retained earnings at
the year of change.
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B. The change shall be retrospectively restated in the beginning construction in

progress at the year of change.
C. The change shall be applied prospectively in the current and future years’ profit
or loss.
D. The change shall be treated as correction of error to be treated with cumulative
effect in the statement of changes in equity
36. The following information relates to a construction project started by Blink Company:
Total contract price P12,000,000
Actual construction costs incurred during the year 4,000,000
Estimated costs to complete the project 6,000,000
Progress billings during the year 3,000,000
Collections from customers during the year 1,800,000
Assuming that the outcome of the project can be reliably determined, how much is
the realized gross profit for the year?
A. P800,000
B. P300,000
C. P500,000
D. P0
Contract price 12,000,000.00

Total estimated cost at completion - 10,000,000.00
Total estimated gross profit 2,000,000.00
Multiply: Percentage of completion 40%
Realized gross profit 800,000.00
37. Blackpink Co. has consistently used the cost-to-cost method for accounting for its
construction projects. In 20X1, Blackpink entered into a contract to construct a building
for P9 million. The building was completed in 20X2. Cost data related to the project are
as follows:
As of 12/31/20X1 As of 12/31/20X2
Cumulative construction costs P4,000,000 P7,000,000
Estimated total costs at completion 8,000,000 ?
How much is the realized gross profit to be recognized by Blackpink in 20X2?

A. P500,000
B. P1,500,000
C. P857,143
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Telephone : (043) 723 8412
D. P1,000,000
20X1 20X2
Contract price 9,000,000.00 9,000,000.00
Total estimated cost at completion - 8,000,000.00 - 7,000,000.00
Total estimated gross profit 1,000,000.00 2,000,000.00
Multiply: Percentage of completion 50% 100%
Realized gross profit to date 500,000.00 2,000,000.00
Realized gross profit - prior years - 500,000.00
Realized gross profit - current year 500,000.00 1,500,000.00
38. Jamie Construction Co. has consistently used the input method (cost-to-cost) in
determining the progress of its construction projects for financial reporting purposes. On
January 5, 20X1, Jamie started construction of a P15 million construction contract.
Initially, Jamie expects to incur total construction costs related to the project of
P12,000,000.
The following data were provided related to the contract:

Realized gross profit in 20X1 P1,500,000
Cost incurred from January 5, 20X1 to December 31, 20X2 9,375,000
Estimated costs to complete as of December 31, 20X2 3,125,000
How much is the realized gross profit to be recognized in 20X2?

A. P2,250,000
B. P750,000
C. P1,875,000
D. P375,000

Total estimated gross profit 2,500,000.00
Realized gross profit to date 1,875,000.00
Realized gross profit - prior years - 1,500,000.00
Realized gross profit - current year 375,000.00
39. Lisa Company uses the percentage of completion in recognizing its income from
construction projects. In 20X1, Lisa started work on a P5 million fixed-price construction
contract. Additional details for 20X1 on the project are as follows:
Costs incurred P1,450,000
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Telephone : (043) 723 8412
Estimated cost to complete 4,600,000
Progress billings 1,200,000
Collections 800,000
How much profit (loss) should Lisa recognize in 20X1?

A. (P1,050,000)
B. (P251,653)
C. P126,087
D. P0

Total estimated gross profit - 1,050,000.00
Loss - 1,050,000.00
40. Rose Company was engaged to construct an office building for P5,000,000. Rose
Company uses the percentage of completion method. Information relating to the
contract is as follows:
20X1 20X2
Percentage of completion 25% 70%
Estimated costs at completion P4,000,000 P4,400,000
Cumulative gross profit recognized P 250,000 P 420,000
How much is the construction costs incurred in 30X2?

A. P3,080,000
B. P1,980,000
C. P2,080,000
D. P1,000,000
Contract costs to date - 20X2 3,080,000.00

Contract costs to date - 20X1 - 1,000,000.00
Contract costs in 20X2 2,080,000.00
41. Jennie Company began a construction project with contract price of P6,000,000. The
project was started on 20X1 and the following information on the project is provided
below:
Progress billings P1,750,000
Costs incurred during the year 1,800,000

Mobile : 0927 283 8234
Telephone : (043) 723 8412
Collections from customers 1,400,000
Estimated cost to complete 3,600,000
How much is the contract asset (contract liability) as of December 31, 20X1?
A. P250,000 contract asset
B. P250,000 contract liability
C. P350,000 contract asset
D. P1,750,000 contract liability

Multiply: Pecentage of completion 33%
Construction in progress 2,000,000.00
Progress billings - 1,750,000.00
Contract asset (liability) 250,000.00
42. Jisoo Construction began work on a contract in 20X1 and completed the construction in
20X2. The total contract price is P4,500,000. Information related to the contract for
20X1 and 20X2 is as follows:
20X1 20X2
Costs incurred during the year P 800,000 P3,200,000
Estimated costs to complete 2,200,000 -
Billings during the year 750,000 3,750,000
Collections during the year 600,000 3,900,000
How much is the construction revenue to be recognized in accordance with PFRS 15,
Revenue from Contracts with Customers?
A. P1,200,000
B. P3,300,000
C. P3,900,000
D. P4,500,000
20X1 20X2
Contract price 4,500,000.00 4,500,000.00
Multiply: Percentage of completion 26.67% 100.00%
Cumulative revenue 1,200,000.00 4,500,000.00
Revenue - prior years - 1,200,000.00
Revenue - current year 1,200,000.00 3,300,000.00
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Telephone : (043) 723 8412
43. Squall Company began construction on a three-year project with contract price of P15
million. The records of the company as of December 31, 20X1 provided the following:
Accounts Receivable P1,500,000
Construction in Progress P5,000,000
Less: Progress billings (4,700,000)
Contract Asset 300,000
How much is the cash collections by Squall in 20X1?

A. P13,500,000
B. P3,500,000
C. P3,200,000
D. Cannot be determined
Billings 4,700,000.00
Receivable - 1,500,000.00
Collections 3,200,000.00
44. Cloud Company accounts for construction projects using the percentage of completion.
Information on one of its major construction projects is provided below:
20X1 20X2
Accounts receivable P3,000,000 P 9,000,000
Construction costs incurred during the year 3,150,000 5,750,000
Construction in progress 3,600,000 11,000,000
Partial progress billings, cumulative 3,000,000 12,500,000
How much is the gross profit recognized by Cloud in 20X2?

A. P2,850,000
B. P4,800,000
C. P5,250,000
D. P1,650,000
Construction revenue 7,400,000.00

Construction costs - 5,750,000.00
Gross profit 1,650,000.00
45. During 20X1, Lightning Company had two outstanding construction projects. Lightning is
unable to estimate the percentage of completion reliably for both of the projects. The
following data are provided on the two construction projects:
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Telephone : (043) 723 8412
20X1 20X2
Contract price P4,500,000 P3,000,000
Costs incurred during the year 2,400,000 2,800,000
Estimated cost to complete 1,500,000 700,000
Billings to customer 1,500,000 2,500,000
How much is the revenue to be recognized by Lightning in 20X1?

A. P0
B. (P500,000)
C. P5,200,000
D. P4,700,000
1. D
Project #1 Project #2
Contract price 4,500,000.00 3,000,000.00
Total estimated costs - 3,900,000.00 - 3,500,000.00
Estimated profit 600,000.00 - 500,000.00
Multiply: Percentage 0% 100%
Profit (loss) - - 500,000.00
Revenue (SQUEEZE) 2,400,000.00 2,300,000.00

Cost - 2,400,000.00 - 2,800,000.00
Profit - - 500,000.00
46. In the absence of partnership agreement to the contrary, what is the obligation of the
partners as regards to capital contribution?
a. They shall contribute equally.
b. They shall contribute based on their profit agreement.
c. They shall contribute based on their loss agreement.
d. They shall contribute based on their withdrawal agreement.
47. In the absence of partnership agreement to the contrary, the non-cash assets
contributed by the partners shall be measured initially at
a. Book value
b. Present value of future cash flows
c. Fair value
d. Historical cost
48. How shall the partnership profits or losses be distributed among the partners?
a. Based on original capital contribution ratio
b. Based on profit or loss agreement of partners
c. Based on ending capital contribution ratio
d. Equally
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Telephone : (043) 723 8412
49. In the absence of partnership profit agreement to the contrary, how shall industrial
partner share in partnership’s profit?
a. Equal to the share of the least capitalist partner
b. Equal to the share of the highest capitalist partner
c. Just and equitable share
d. Equal to the average share capitalist partners
50. In the absence of partnership profit agreement to the contrary, how shall the remaining
partnership’s profit be distributed to the capitalist partners after distributing the share of
industrial partner?
a. Based on capital contribution ratio
b. Based on loss agreement ratio
c. Equally
d. Equal to share of industrial partner
51. In the absence of partnership loss agreement to the contrary, how shall industrial
partner share in partnership’s loss?
a. Equal to the share of the least capitalist partner
b. Based on profit agreement ratio
c. Just and equitable share
d. None
52. At the time of liquidation of general partnership, which of the following claims shall be
settled first?
a. Those from capital contribution of partners
b. Those from share in profits of partners
c. Those from advances made by partners to the partners
d. Those from loans made by third persons
53. Banky Corp. has filed for liquidation. The following data is available: the total free assets
at realizable value P1,500,000; fully secured liabilities per book; unsecured liabilities per
books P2,400,000; liquidation expense P60,000; Taxes P30,000 and Salary and wages
P150,000
What is the expected recovery percentage claim of the unsecured creditors?

a. 62.50% c. 56.52%
b. 52.50% d. 58.33%
Answer
1,500,000/2,400,000 = 62.5%
54. Which of the following statements is/are correct?

Statement 1: The expected recovery percentage is relevant in the computation of claims
of fully secured creditors. F
Statement 2: The recovery percentage of fully secured and unsecured liability with priority
is always 100%. F
a. II only c. I and II
b. I only d. none of the choices
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55. On August 1, 20x3, the balance sheet of Mandirigma Company and the profit and loss
ratio of the partners is shown below:
Cash 5,000,000 Liabilities 10,000,000

Non-cash A, capital
assets 12,500,000 (50%) 3,500,000
B. capital
(20%) 2,500,000
C, capital
(30%) 1,500,000
On August 5, 20x3, the partners decided to liquidate the partnership. Partner B is

insolvent. The non-cash assets were sold for P9,000,000; the creditors condone P500,000
of the their claim; liquidation expenses of P1,500,000 were paid the liabilities were also
paid.
What is the total cash received by partner A?

a. P1,250,000 c. P1,500,000
b. P1,000,000 d. P750,000
A B C Total
3,500,000 2,500,000 1,500,000 7,500,000
(2,250,000) (900,000) (1,350,000) (4,500,000)
1,250,000 1,600,000 150,000 3,000,000
Cash 5,000,000
Cash realized 9,000,000
Payment of liabilities (9,500,000)
Payment of liquidation
expense (1,500,000)
Payment to partners 3,000,000
56. Who among these partners will not absorbed the capital deficiency of the other partners?
a. The partner whose total interest balance is negative but solvent.
b. The partner who is insolvent but has a positive total interest balance.
c. The partner whose total interest balance is positive and solvent.
d. The partner who is insolvent and has a negative total interest balance.
57. A construction contract has a fixed price contract for P500,000 to construct a
building of a design that has never before been constructed and using materials that
have never before been used in the construction of building (the project).
The contractor began construction of the building in 20x1 and expects that
construction will take at least five years. In 20x1 the contractor incurred P25,000
contract costs on the project.
At the end of 20x1 the contractor cannot estimate the outcome of the contract with
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sufficient reliability to estimate the project’s percentage of completion (i.e., because of

the uncertainties arising from the new design and new materials the entity cannot
estimate total expected contract costs with sufficient reliability).
It is highly likely that the contract price will be received from the customer. At the end of
20x1 the contractor must recognize revenue of:
a. P25,000 c. P500,000
b. Zero d. Cannot determine
Answer the revue will be equal to the cost incurred under zero profit method
58. XYZ Co, a software developer, enters into a contract to transfer software license. Also,
XYZ promises to provide installation and training services because the software is highly
customized to enable the software to interface with other customized software
applications used by Sharp.
a. 1 c. 3
b. 2 d. cannot be determined
59. AA Computers licenses customer-relationship software to ABS Company. In addition to

providing the software itself, AA Computers promises to provide consulting services by
extensively customizing the software to ABS’s information technology environment, for a
total consideration of P3,456,000. In this case, AA Computers is providing a significant
service by integrating the goods and services (the license and the consulting service)
into one combined item for which ABS has contracted. In addition, the software is
significantly customized by AA Computers in accordance with specifications negotiated by
ABS. How many performance obligations exist in the contract?
a. 0 c. 2
b. 1 d. 3
60. Which of the following statements is/are correct?

I. The permanent withdrawals affects the computation of ending capital and weighted
average capital.
II. The temporary and permanent withdrawals of the partners affects the computation of
simple average capital.
III. The bonus may be given even if there is a net loss.
a. I only c. II only
b. I, II and III d. II and III
61. On March 1, 2024, A and B formed a partnership. The contribution of each partners is
shown below:
A B
Cash 60,000 140,000
Machinery 50,000 150,000
Building 450,000
Furniture 20,000
The building is subject to a mortgage of P180,000, which is to be assumed by the

partnership and the agreement also provides that A and B will have a 3:7 profit and loss
sharing ratio, respectively.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Req. 1: What is the capital interest of B?

a. P610,000 c. P740,000
b. P628,000 d. P560,000
Answer: 740,000 – 180,000 = 560,000
Req. 2: Assuming the partners agree to have 40:60 capital ratio and 30:70 profit and loss
ratio., What is the cash settlement between the partners?
a. A will pay P146,000 to B c. A will pay P77,000 to B
b. B will pay P146,000 to A d. B will pay P77,000 to A
Answer
TCC TAC
A 130,000 30% 207,000 (77,000)
B 560,000 70% 483,000 77,000
690,000 690,000
Req. 3: Using the information in req. 1, assuming on the following day, C was admitted to
the partners by contributing P150,000 for 20% share in capital and 25% share in profits.
The partners agree to revalue the assets. What is the capital of B after admission C as a
new partner?
a. P497,000 c. P322,000
b. P560,000 d. P547,400
TCC TAC
A 130,000 103,000 (27,000)
B 560,000 497,000 (63,000)
690,000 80% 600000 (90,000)
C 150,000 20% 150,000
840,000 750000
62. Lebron and Kobe formed a partnership on February 1, 20x4. Lebron contributed cash of
P750,000 and Kobe contributed Land with carrying amount of P500,000 and agreed
value of P600,000. The land is subject to a mortgage in the amount of P50,000, but it
will be paid personally by Kobe. The partners also agreed that their capital balances
upon formation will be equal. What is the contributed capital of Kobe upon formation?
a. P550,000 c. P650,000
b. P675,000 d. P600,000
Answer: Use the agreed value of the land. The mortgage will not be deducted because it will
paid using the personal assets of Kobe
63. In the absence of valid agreement, who among the following is exempted from sharing
in the partnership loss?
a. Capitalist partner c. Capitalist-industrial partner
b. Limited partner d. Industrial partner
Answer D – the industrial partner will not share in the partnership loss if there is no
agreement.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
64. Under partnership liquidation, the following would affect the balance of total interests of
partners, except:
a. Condonation of liabilities by creditors
b. Cash withheld for possible losses
c. Gain on realization of non-cash assets
d. Payment to partners loan receivables
65. On March 21, 20x3 Flex Inc. was liquidated and the summary of statement of realization
and liquidation for the month of March 20x3 shows the following: Supplementary credits
P650,000; Assets acquired P100,000; Liabilities liquidated P600,000; Assets realized
P1,200,000; Liabilities to be liquidated P1,000,000; Supplementary charges P800,000;
Assets not realized P500,000; Liabilities assumed P120,000 and Liabilities not liquidated
P400,000. For the month of March 20x3 Flex incurred net loss of P430,000.
The estate equity on March 31, 20x3 amounted to P2,620,000. What is the amount of cash
on March 1, 20x3?
a. P190,000 c. P2,250,000
b. P450,000 d. P50,000
G/L
ATR 2,000,000 AR 1,200,000
AA 100,000 ANR 500,000
LL 600,000 LTL 1,000,000
LNL 400,000 LA 120,000
Exp 800,000 Rev 650,000
3,900,000 3,470,000
Net Loss 430,000
Estate equity end 2,620,000

Net loss (430,000)
Estate Equity beg 3,050,000
LTL 1,000,000
Total Assets 2,050,000
ATR 2,000,000
Cash beg 50,000
66. Under PFRS 15, the following are indicators to determine that the entity is an agent,
except:
a. The entity is not exposed to credit risk for the amount receivable from a customer.
b. The entity has discretion in establishing prices for the others party’s goods or
services.
c. The entity’s consideration is in the form of commission
d. Another party is primarily responsible for fulfilling the contract.
67. The following are considered as expenses of consignor in its financial statements,
Mobile : 0927 283 8234
Telephone : (043) 723 8412
except:
a. Commission of the consignee
b. Maintenance cost and repair cost of damage goods to final consumers
c. Remittance to consignor
d. Freight on consigned goods relating to returned units.
68. On December 31, 20x7, the Statement of Financial Position of CAR Partnership shows
the following data with profit or loss sharing of 1:3:6
Cash P5,000,000 Total Liabilities P10,000,000

Noncash Asset 15,000,000 Pablo 5,000,000
Stell 3,000,000
Justin 2,000,000
On January 1, 20x8, Josh is admitted to the new partnership name CARE by purchasing
20% capital interest of Pablo in the amount of P1,200,000. Which of the following
statements is correct?
a. Josh will have capital credit of P200,000 after the dissolution.
b. The old partnership will recognize gain of P200,000 resulting from Josh’s admission.
c. The new partnership will have total capital of P10,200,000.
d. Pablo will have P4,000,000 capital balance after the admission of Josh.
Answer 5M x 80% = 4M
69. On December 31, 2020, the unadjusted Statement of Financial Position of UFC
Partnership shows the following data with profit or loss sharing agreement of 2:3:5:
Total Assets P100,000,000 Total Liabilities P40,000,000
Steve 10,000,000
Bert 20,000,000
John 30,000,000
On December 31, 2020, Steve decided to retire from the partnership. However, before
the distribution of cash to Steve, the following data errors were discovered during the
pre-retirement audit:
 During 2020, the property, plant and equipment has not be subject to revaluation
surplus by P15,000,000.
 The 2020 net income is overstated by P5,000,000.
After the adjustment, Steve received retirement pay of P15,000,000 for his capital
interest. What is the capital balance of Bert after the retirement of Steve?
a. P23,000,000
b. P21,000,000
c. P18,875,000
d. P21,875,000
20% 30% 50%

S B J
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Capital 10,000,000 20,000,000 30,000,000

Revaluation of PPE 15,000,000
Net Income (5,000,000)
2,000,000 3,000,000 5,000,000 10,000,000
12,000,000 23,000,000 35,000,000
3,000,000 (1,125,000) (1,875,000)
15,000,000 21,875,000 33,125,000
70. On January 1, 2016, Maloi, Mikha and Gwen formed a partnership with profit or loss
sharing agreement of 2:3:5.
Maloi contributed a land with assessed value from city assessor in the amount of
P1,000,000. The land is subject to a real estate mortgage which is annotated to the title
of the land in the amount of P800,000 and will be assumed by the partnership. The
appraised value of the land is P2,400,000. Mikha contributed a building with a cost of
P2,000,000 and accumulated depreciation of P1,500,000. The fair value of the building
is P800,000. Gwen contributed investment in trading securities with historical cost of
P6,000,000. The trading securities have quoted price in active market of P3,000,000.
The partners decided to bring their capital balances in accordance with their profit or
loss sharing agreement. The total agreed capitalization of the new partnership is
P10,000,000.
Which of the following statements is correct?

a. The agreed capital of Gwen is P500,000.
b. Maloi should contribute additional capital in the amount of P1,800,000.
c. Mikha should contribute additional capital in the amount of P2,200,000.
d. Gwen is entitled to withdraw in the amount of P1,000,000.
TCC TAC
Maloi (2.4M - 800) 1,600,000 20% 2,000,000 400,000
Mikha (800) 800,000 30% 3,000,000 2,200,000
Gwen (3M) 3,000,000 50% 5,000,000 2,000,000
5,400,000 10,000,000

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No. 125 Brgy.

Instruction: Select the best answer from the choices provided.

1. Which of the following is not an indicator of a consignment arrangement?

2. When should a consignee recognize revenue form a consignment sale?

3. Consigned goods are recognized as revenue by the

4. Goods sold on consignment should be included in the inventory of:

5. In consignment sales, the consignee

6. Consignments are a specialized marketing method whereby the

b. Consignor when the goods are shipped to the consignee

8. Revenue is recognized by the consignor when the:

9. The role of the consignee in a consignment sales arrangement is to:

Used the following information for the next four questions:

Commission (based on sales net of commission) 20%

Finder’s fee (based on commission) 5%

Delivery, installation and testing (on each unit P 50,000

11. How much is the commission earned by the consignee?

Commission = Gross Sales - [Gross sales / (1 + Commission

Finder's fee 87,500

13. How much was the net remittance to the consignor?

Finder's fee 87,500

14. How much is the cost of the unsold machineries?

Used the following information for the next four questions:

No revenue is to be recognized upon shipment of the consigned goods by the consignor to

P 1,600 x 20 freezers = P 32,000

P 32,000 x 15% = P 4,800

P 32,000 – P 4,800 = P 27,200

Used the following information for the next two questions:

Commission (based on sales net of 10%

Marketing expense (based on commission) 15%

Delivery and installation (total) P 150

Commission = Gross Sales - [Gross sales / (1 + Commission

24. Which is not a scenario wherein revenue is recognized over time?

29. When should an anticipated loss on a long-term construction contract be recognized

32. Construction contract cost shall include the following, except

B. The change shall be retrospectively restated in the beginning construction in

Actual construction costs incurred during the year 4,000,000

Estimated costs to complete the project 6,000,000

Progress billings during the year 3,000,000

Collections from customers during the year 1,800,000

Contract price 12,000,000.00

Cumulative construction costs P4,000,000 P7,000,000

Estimated total costs at completion 8,000,000 ?

How much is the realized gross profit to be recognized by Blackpink in 20X2?

The following data were provided related to the contract:

Cost incurred from January 5, 20X1 to December 31, 20X2 9,375,000

Estimated costs to complete as of December 31, 20X2 3,125,000

How much is the realized gross profit to be recognized in 20X2?

Contract price 15,000,000.00

Estimated cost to complete 4,600,000

Progress billings 1,200,000

How much profit (loss) should Lisa recognize in 20X1?

Contract price 5,000,000.00

Percentage of completion 25% 70%

Estimated costs at completion P4,000,000 P4,400,000

Cumulative gross profit recognized P 250,000 P 420,000

How much is the construction costs incurred in 30X2?

Contract costs to date - 20X2 3,080,000.00

Costs incurred during the year 1,800,000

Collections from customers 1,400,000