Past CPA Board on MAS

PART I. Basic Consideration in MAS and Consulting Practice
1. Which of the following statement is True? a. Adequate training and experience in both the analytical approach and process in the particular undertaking are requisites for the CPA to be involved in a management service engagement. b. A CPA with MBA and Ph D Degrees is automatically qualified to render management services. c. Competence as a standard in the rendition of management services by a CPA may be equated to having excellent scholarly preparation to include the usual baccalaureate degree, an MBA and other post graduate studies. d. A CPA by virtue of having the necessary academic preparation and by hurdling the licensure examinations required to have a CPA license can readily render management services to the public. 2. Which of the following statement is False? a. CPAs provide management services to go around the ethical constraints as mandated by the accountancy act. b. Businesses hire management consultants to help define specific problems and develop solutions. c. Included in the practice of consulting is the provision of confidential service in which the identity of the client is concealed. d. CPAs performing management services may be considered to be in the practice of management consulting. 3. Mr. Rey Carlos, a CPA firm’s partner in-charge of quality assurance and review is arguing with Mr. Rueben Fortuna, the consulting partner regarding the question on independence as Mr. Fortuna is presently rendering consulting services to T. Ang & Nga Company, an audit client of the firm. Related to this issue of independence, all of the following statements are not valid except: a. Independence is not sacrifice for as long as the auditor/consultant is correct in his decisions for the client. b. A CPA who renders both audit and consulting services to a client, by virtue of his competence/expertise and extensive knowledge of the client’s business is in the best position to render decisions for the client and should do so.

c. The client is the ultimate decision maker and the auditor and/or consultant should not make decisions for the client. d. It is up to professional judgment and discretion of the auditor/consultant to render decision for the client for as long as his professional fees are commensurate to the benefits that the client will derive from the engagement.

4. A Certified Public Accountant’s scope of management services is broad and covers all of the following except: a. Change management engagement b. Computerization engagements c. Audit engagements d. Re-engineering jobs 5. Which of the following statements is not acceptable? a. A CPA represents 3 major players in the industry in rationalizing the industry’s incentives before the government public hearings. b. A CPA shares with a new and substantial client information regarding another client belonging to the same industry. c. A CPA provides consulting services to an existing audit client. d. A CPA offers and provides consulting services to 2 major competing clients. 6. The following characterize management advisory services except a. Involve decision for the future b. Broader in scope and varied in nature c. Utilize more junior staff than senior member of the firm d. Relate to specific problems expert help is required 7. These statements relate to MAS practice standards: 1. A practitioner is to notify the client of any reservation he has regarding anticipated benefits. 2. Throughout the engagement, there ought to be a systematic critical review of accomplishments and work should be done within the framework of the code of ethics and other professional standards.

9. acting as an employee of the client.3. A Certified Public Accountant by virtue of having the necessary academic preparation and by hurdling the licensure examinations required to have a CPA license can readily render management services to the public. The CPA performs decision-making services for his client. All statements c. Statements 1. 3 and 4 only 8. and inform the client on significant matters related to the engagement. should there be significant changes between cost and anticipated benefits. A CPA with MBA Ph D degrees is automatically qualified to render management services. 4. c. the practitioner must make arrangements with. The CPA loses his objectivity and acts in a manner as if he is advocating fir the interest of his client. d. Statement 1 only d. . and MBA and other post graduate studies. Competence as a standard in the rendition of management services by a CPA may be equated to having excellent scholarly preparation to include the usual baccalaureate degree. Before the engagements. the client should be informed. Which of the following will not impair the independence of a CPA in the rendition of Management Services? a. Which of the following statements is true? a. Of these statements. Statements 1 and 3 only b. During the engagement. which pertains to the practice standard on client benefit? a. The CPA perform services wherein he is in effect. in writing. b. c. b. Adequate training and experience in both the analytical approach and process in the particular undertaking are requisites for the CPA to be involved in a management service engagement.

feed forward and preventive are important types of control systems and procedures for accounting information systems. Cost accounting variances. and memory b. 13. b. c. feed forward and preventive control systems? a. Systems survey 11. Software. cash budgeting and organizational independence. Document flowcharting c. Accounting Information System 10. An AIS maybe either manual or computer-based and MIS is computer-based. register and primary memory d. An AIS is controlled oriented and MIS is used exclusively for planning. The main components of the Central Processing Unit (CPU) of a computer include only a. The CPA does not extend his services beyond the presentation of recommendation or giving of advice. File record layout b. Which of the following is in the correct order of feedback. separation of duties and cash planning. Cost accounting variances. An AIS deals with financial information and MIS handles all other information. Specification of format and content of report d. Memory. c. processing and register 12. Inventory control. d. d. Control. An AIS is a subsystem within an MIS. capital budgeting and cash budgeting. . capital budgeting and hiring qualified employees. Feedback.d. Cash budgeting. b. How is an Accounting Information System (AIS) distinguished from a management Information System (MIS)? a. Input. arithmetic and logic. An activity that is not considered part of the systems design phase is a. PART II. processing and output c.

Which one of the following is in the correct order of feedback. This type of conversion is called a a. Hard disk 16. Inventory control. Cash budgeting. d. cash budgeting and organizational independence. Any and all changes in application programs have been authorization and approval of management. Cost accounting variances. c. Disk d. cost accounting variances and separation of duties. with each region performing its data processing in a region data center. Provisions exist to ensure the accuracy and integrity of computer processing of all files and reports. feed forward and preventive control systems? a. Pilot conversion d.14. VERBATIM. b. . The design and implementation is performed in accordance with management’s specific authorization. separation of duties and cash planning.g. Bench Corp. a. capital budgeting and cash budgeting. Cost accounting variances. The corporate Management Information System staff has developed a database management system to handle customer service and billing. A floppy disk (e. Direct conversion MAY 2009 CPA Board 15. feed forward and preventive. The Director of MIS recommended that the new system be implemented in the Region 4 to ascertain if the system operates in a satisfactory manner. Which one of the following represents a lack of internal control in a computer-based information systems? a. MAXELL). Crash conversion b. c. Cassette tape c. 17.. operates in several regions. b. Diskette b. Important types of control systems and procedures for accounting information systems are feedback. Parallel conversion c.

. It can be used on computers of all sizes. It is likely to be one of the most widely used and the largest of the information subsystems in a business organization. 18. For a manufacturing concern like fruit processors. It provides top executives with immediate and easy access to information in ahighly interactive format. The concept of timeliness of data availability is most relevant to a. Both computer operators and programmers have unlimited access to the programs and data files. Controllership has attained special recognition in corporate management as business expand in complexity and reach and as the controller exerts influence for to take organization’s goals. receiving reports and supplier’s invoices. Purchase requisitions. receiving reports and suppliers invoices. An Executive Information System (EIS) focuses on long-range objectives and gives immediate information about an organization’s critical success factors. To control purchasing and accounts payable. Purchase requisitions. It provides information in a highly aggregated form. b. 19. It is commonly used by all executives at the highest levels within the organization. Microsystems 20. Purchase orders.. receiving reports and inventory reports of goods needed. MANAGEMENT ACCOUNTING CONCEPTS AND RESPONSIBILITY ACCOUNTING 21.d. d. inventory reports of goods needed and supplier’s invoices. Computerized system b. Inc. purchase orders. these documents should include a. On-line systems d. All of the following statements apply to EIS except: a. c. Controllership and treasurership constitute corporate finance. c. These are among corporate finance’s traditional functions. Packaged software c. d. It helps executives monitor business conditions in general and assist in strategic planning to control and operate the entity. an information system must include certain source documents. b. III. Purchase orders. purchase orders.

Reporting to government regulatory agencies 6. Deciding and implementing corrective actions 3. 7 and 8 only 22.1. 3. Determining standard of performance 4. Items 1. Items 2. Risk management 7. b. 5. Items 1. Planning for control Which of the following are the functions of the controller? a. 3. Financial accounting can be regarded as the process while management accounting can be regarded as the product of that process. Comparing actual performance versus standards and analyzing results. Measurement of actual performance 2. 2. 7 and 8 only d. Financial accounting is bound by Generally Accepted Accounting Principles (GAAP). To distinguish between management accounting and financial accounting. 23. c. Tax management 2. Finance reporting and interpretation 3. 5. Management accounting output must be released on time so as not to erode its usefulness. . 2. 5. All eight items b. 7 and 8 only c. 4. Economic appraisal 8. and management accounting need not be in conformity with GAAP. The activities in a management system’s control can be grouped into four 1. d. Financial accounting output can still be useful even when delayed. Management accounting in view of its various integrated recipients should have a separate data recording and retrieval system from financial accounting. Sourcing and investing funds 5. the following statements are correct except: a. Credit management 4.

P16. 000. P12. 1 b. the effect in the next period would be to a. a. FINANCIAL STATEMENT ANALYSIS 24. Increase the current ratio and decrease inventory turn-over d. 2. 2 d. How are dividends per share for common stock used in the calculation of the following? . P6.000 shares of P10 par value preferred stock were outstanding. P8. 000. Belle’s book value per share of common stock as of December 31. Increase both the current ratio and inventory turn-over b. a company changed its inventory measurement method from FIFO to LIFO. 400. Decrease both the current ratio and inventory turn-over c. 19x0 the Balance Sheet of Belle Co. 3. 000. The retained earnings account indicated a deficit balance of P2.00 b.000 and long-term debt of P2. Decrease the current ratio and increase inventory turn-over 25. 4. The balance sheet amount should be converted to an average for the year. 19x0 is a. d. Both amounts should be converted to market value. 26. 3.000 shares. 2 IV. The income statement amount should be converted to an average for the year. If. c. 4. On December 31. 4. 000. When a balance sheet amount is related to an income statement amount in computing a ratio.The above steps must done in this sequence a. 1. 3.20 27. 1. 500.20 d. Comparisons with industry ratios are not meaningful.000. while 100. b. 4.20 c. just prior to a period of rising prices. 1. Common stock outstanding amounted to 500. disclosed total assets of P8. current liabilities of P1. 3. 2 c.

800. COST-VOLUME-PROFIT ANALYSIS The following data apply to items 29-33 Lara Company produces a single product. 000 Variable Costs P375.50 per unit in the coming year. 000 Net Income before taxes 100. 000 units last year with the following results: Sales P625. . Lara is considering replacing a component part in its product that has a cost of P2. Numerator Numerator 28. 19x5 was P360. 000 of inventory. 5.50 with a new and better part costing P4.0 b. 920. Reuel Company purchased P1. The machine would cost P18. The company uses straight line depreciation on all plant assets. The cost of goods sold for 19x5 was P1. 000 Net Income P 55. Denominator denominator b. What was the inventory turn-over for 19x5? a. 6. 000 In an attempt to improve its product. It sold 25. 000 Income Taxes (45%) 45. Denominator Not used c. 000 and the ending invenotyr at December 31. Numerator Not used d. 000. 6.4 V.Dividend per-share Earnings Payout ratio per share a. 5. 000 Fixed Costs 150.3 c. 000 with a useful life of 6 years and no salvage value. A new machine would also be needed to increase plant capacity.0 d. During 19x5. 000 525.

Young Company has budgeted its cash receipts at P125. If Lara Company holds the sales price constant and makes the suggested changes. 18. How many units of product would Lara Company have had to sell in the last year to earn P77. 21.29. b. 6. P8. 300 33. 000 d. 15. 300 31. 18. 000 in net income after taxes? a. P12. STANDARD COSTS AND PERFORMANCE EVALUATION 35. 29. P32. 000 b. P25.00 c. If Lara Company holds the sales price constant and makes the suggested changes. 000 c. how many units of the product will the company have to sell to make the same net income after taxes as last year? a. 29. 000 VII. 000 c. 625 b. 000 d. 22. 000. 31. For May 19x1. 23. 33. 000. What was Lara Company’s break-even point in number of units last year? a. then how much cash must the company borrow during the month (before considering any interest payments)? a. how many units of product must be sold in the coming year to break-even? a. Which of the following factors is not likely to be considered by management in determining whether a variance should be regarded as an exception? a. 31. 500 d. 15. 000. 000 b. what selling price per unit of product must it charge next year to cover the increased material costs? a. 000 32. The company’s cash balance on May 1 is P17. 000 b.00 b. P28. Ability to control the item related to the variance. 300 b. Consistency of occurrence over time. 250 c. . If the desired May 31 cash balance is P20. COMPREHENSIVE BUDGETING 34.33 VI. 000 30. 19. 125 d. 700 d. P27. 21.50 d. 25. If Lara Company wishes to maintain the same contribution margin ratio. P4. 750 c. 000 and its cash disbursements at P138. P16. 000 c.

P8. b. c. P280. 000 b. The accountant for the Dover Company forgot to make an adjusting entry to record depreciation for the current year. The effect of this error would be: a. P320.c. 000 and a contribution margin ratio of 40%. Nature of the item related to the variance. During 19x2. 000 X. Store R had variable costs of P84. 000 and a contribution margin ratio of 30%. Costing Approaches: Absorption Costing/Variable Costing 36. IX. 000 d. The common fixed expenses in the company were P40. d. 000. 000 c. P360. An overstatements of assets offset by an understatement of owner’s equity. Store P had a contribution margin of P24. The contribution margin ration in K during 19x2 was 40%. P58. An overstatement of assets and of net income and an understatement of owner’s equity. 000 and the company’s net income for the year was P18. 000 c. USING COST DATA FOR DECISION MAKING . During 19x8. P26. Costing method used to calculate the variance. net income and owner’s equity. the contribution margin in J was P30. 000 which represented 70% of sales in the store. 000 and its segment margin was P32. 000. P440. VIII. 000 d. its sales were P125. An overstatement of assets. Khi Company has two divisions J and K. An overstatement of net income and an understatement of assets. Beta Market has 3 stores: P. d. P32. DECENTRALIZED OPERATIONS AND TRANSFER PRICING 37. For 19x8. 000. Store Q had variable costs of P48. Q and R. The segment margin for Division J for 19x2 was a. 000 b. Star Market’s total sales were a. 000 38.

000 advantaged. Picnic should a. P20 b. c. P18 d. d. 000 units. Produce the freezable ice bag due to P25. A small company makes only two products with the following two production constraints representing two machines and their maximum availability: 2 X + 3 Y < 18 2 X + Y < 10 Where: X = the units of the first product Where: Y = the units of the second product If the profit equation is Z = P4 X + P2 Y. For an annual volume of 10. 000 advantaged. Picnic Items. Produce the freezable ice bag due to P225. 000 are incurred. P24 . fixed manufacturing costs of P500. XI.39. Inc. b. Considering Bags Corporation offer. manufactures coolers that contain a freezable ice bag. the maximum possible profit is a. Buy the freezable ice bag due to P150. 000 advantaged. Variable costs per unit amounts are: Direct materials P80 Direct Labor 15 Variable Factory Overhead 20 Bags Corporation offered to supply the assembled ice bag for P40 with a minimum order of 5. 000 units. QUANTITATIVE METHODS 40. If picnic accepts the offer it will be able to reduce variable labor and overhead costs by 50%. Buy the freezable ice bag due to P50. 000 advantaged. The direct materials for the freezable ice bag will cost Picnic P20 if it will produce it. P21 c.

offers terms of 1 ½ / 15. 492. Low current assets relative to sales and low current liabilities relative to total assets. 000 c. would have to borrow from a bank at an annual rate of 12% in order to take any cash discounts. P1. The Manila Commercial Bank and Rap Corp. Purchase from West Co. b. d. North Corp. Which of the following characteristics are generally associated with a “conservative” financial policy? a. net 60.? (Assume 360 days a year). P1. Which one of the following would be the most attractive for Ma Corp. South Inc. 000. .. 219. c. East Corp. High current assets relative to sales and low current liabilities relative to total assets. Purchase from West Co. 42. Three suppliers of East Corporation offer different credit terms. 537 d. a. 471 b. net 30. West Co..XII. b. and b. P1. Stated interest rate of 18% on a one-year discounted loan. a. 15% compensating non-interest bearing checking account balance to be maintained by Rap with Manila Commercial Bank. Net 30. 176. offers terms of 2/10. 512 MAY 2009 CPA BOARD 43. Low current assets relative to sales and high current liabilities relative to total assets. pay in 15 days and borrow any money needed from the bank. The principal amount of the loan was a. WORKING CAPITAL MANAGEMENT 41. offers terms of 1/10. The net proceeds of the loan was P1 million. signed a loan agreement subject to the following terms. pay in 30 days and borrow any money needed from the bank. High current assets relative to sales and high current liabilities relative to total assets. P1.

Increase the average collection period and reduce sales c. pay in 60 days and borrow any money needed from the bank. and pay in 30 days. 000.c. 36% the second month. 000 for August and P198. 880 d. Collection experience indicates that 60% of the budgeted sales will be collected the amount after the sale. net/60 to 2/10. Ken Lumber Company obtained short term bank loan for P1. 13. P211. XIII. net/30 will generally a. P194.00 in its checking account. d. Reduce the average collection period and reduce sales.50% d. RECEIVABLES MANAGEMENT 46. 000. P169. 000 for July. Changing a firm’s credit terms from 2/20.00 in its checking account for transactional purposes. Ken would otherwise maintain only P100. Reduce the average collection period and increase sales d.. 760 XIV. Fabella Company budgeted sales on account of P120.00 at an annual interest rate of 12%. 12. 000. As a condition of the loan Ken is required to maintain a compensating balance of P200. P147. Increase the average collection period and increase sales b.67% MAY 2009 CPA Board Exam 45. 960 c. P197. 000. 000 for September. . and 4% will be uncollectible. 12% b. Purchase from South Inc. 14% c. 800 b. Ken’s effective interest cost of the loan is a. The checking account earns interest at an annual rate of 6%. CASH AND SHORT TERM INVESTMENT MANAGEMENT 44. Purchase from North Corp. The cash receipts from accounts receivable that should be budgeted for September would be a.

12. If a firm’s credit terms require payment within 45 days but allow a discount of 2% if paid within 15 days (using a 360-day year). 14. INVENTORY MANAGEMENT 50. based on a 360-day year. b. is a. The rapidity with which the inventory position will turn over. 48% d.5% c. 2% b. The size of safety stocks for inventory is important for most firms. The level of uncertainty with respect to an out-of-stock condition that management is willing to accept. The amount of idle cash management believes it has to invest in safety stock. When a company offers credit terms of 2/10. 36. the issue can often be reduced to a single factor. If a firm purchases raw materials from its supplier on a 2/10. the equivalent annual interest rate (using a 360-day year) of foregoing the cash discount and making payment on the 60 th day is a.7% XV. d.3% d. The level of production the firm’s bank is willing to finance. .0% b. 35.5% c.47. Though several factors can be cited as contributing to the determination of the size of safety stocks that a firm should carry. 73. c. 16% c. Which one of the following statements best summarizes the factor that affects the level of safety stock that a firm will carry? a. the approximate cost/benefit of the trade credit terms is a. 24. net/30. 24% 49. net/60 cash discount basis. the annual interest cost. 24.7% b. Some amount other than those given above 48.2% d.

P90. CAPITAL BUDGETING Questions 52 and 53 are based on the following data: Allo foundation. The company uses a 50-week year in all calculations. The net present value of the project is a. 1. P36. 3. Allo’s desired rate of return is 12%. 100 units d. P34. 300 units Lead Time 4 weeks The reorder point is a. 52. 000. 400 c. 000 . The following information regarding inventory policy was assembled by the JRJ Corporation. 000 units per year Order Quantity 2. 000 units Safety Stocks 1. 000 in a fiveyear project at the beginning of 19x5. 325 b. 2. 000 of assets will be depreciated over their five-year life on the straight line basis. 300 units b. The P200. 300 units XVI. On investments of this type. Sales 10. Allo estimates that the annual cash savings from this project will amount to P65.51. a tax exempt organization. 100 units c. invested P200.

Allo’s time-adjusted rate of return on this project is a. Less than 12% b. 000 in the second year. P125. but more than 14% d. P283. but more than 12% c. P208. Less than 14%. P249. Hurdle rate of return c. Rano should be willing to invest immediately a maximum of a. Cost of capital b. net of income taxes. it is assumed that cash flows are reinvested at the a. Rano Co. 900 c. Less than 16%. 100 d. Under the time-adjusted rate of return capital budgeting technique. There is no assumption about reinvestment of cash flows 55. Rano has a cost of capital of 20%. of P100. 300 b. 000 MAY 2009 CPA Board Exam 53. More than 16% 54. For this project. 200 MAY 2009 CPA Board Exam 56.d. The net present value capital budgeting technique can be used when cash flows from period to period are: Uniform Uneven . P222. 000 in the first year and P200. Rate earned by the investment d. has the opportunity to invest in a two-year project which is expected to produce cash flow from operation.

No No d. Excluded Included c. Included Included 59. Yes No c. No Yes c. It is assumed that cash flows are reinvested at the rate actually earned by the investment in which of the following capital budgeting techniques? Time-adjusted rate of return Net present value a. Yes Yes d. Yes Yes b. Excluded Excluded b. how is straight line depreciation expense used in the following capital budgeting techniques? Time-adjusted rate of return Net present value a. No No b. No Yes b. Yes No . If income tax considerations are ignored. The payback capital budgeting technique considers: Income over entire Time value Life of project of money a. No Yes 58. No No c. Yes Yes 57. Included Excluded d. Yes No d.a.

Questions 60 and 61 are based on the following Consideration is being given to the possible purchase of a P30. which is expected to result in a decrease of P12. 4. the payback period for the new machine would be a. 30% d.17 years d. 60. 1. 2. If income taxes are ignore. For the new machine.67 years b. 20% c.00 years XVII. FINANCING DECISIONS . (Ignore income taxes). 40% MAY 2009 CPA Board Exam 61. which has no residual value. This machine. the simple rate of return based on initial investment would be a. 12% b.50 years c. 000 per year in cash operating expenses. has an estimated useful life of five years and will be depreciated on a straight-line basis. 5. 000 machine for Alo.

Among the following major parts of a project feasibility study.70 b. net income after tax increased by 42%. Activity based accounting of the endeavor leading to a conclusion b. 4. Technical. Formulation of recommendation 64. Collection of data c. For 19x9. which grouping is considered critical? a. 5. 2. Economic benefits.62. financial and social returns b. Which of the following is not an activity covered by feasibility study? a. engineering or technical and financial 65.47 d. Marketing. management. financial d.20 c. 1. During the same period. Any change which can materially alter the assumptions used in the preparation of the forecast will render it useless b. Evaluation and analysis of data collected d. PROJECT FEASIBILITY STUDY 63. The degree of financial leverage that existed during 19x9 is a. Management. It also covers the social desirability aspects of a proposed undertaking . Financial and environmental aspects c.90 XVIII. The statements below about project feasibility studies are the true except: a. Nelson Industries increased earnings before interest and taxes by 17%. It is important for government agencies in order to determine entitlement to government incentives c.

C 5. A . D 47. C 7. C 56. A 46. D 57. A 16. D 51. A 9. D 50. B 13. In a project feasibility study.d. D 54. D 49. A 59. (a) and (b) d. D 45. A 48. C 55. A 2. D 10. C 15. Since data gathering is a basic step in its preparation. all the necessary and required information will always be available. The study is not affected by any significant change in actual business conditions as compared to the assumptions used in making the forecast b. 66. The study is based on available information and opinions of the party involved in the preparation of the study. B 58. B 6. D 14. None of the above ANSWER KEY 1. B 52. A 8. which of the following is true? a. c. A 3. D 11. C 4. A 12. A 53. B 44.

A 64. A 31. B 30. C 29. B 22. D 36. D 25. A 19. C 20. C 28. C 43. B . D 65. D 66. A 23. C 63.17. A 60. D 38. D 34. C 40. C 37. B 61. A 33. A 39. D 35. B 27. A 21. D 18. A 26. B 24. C 32. B 42. A 41. B 62.

we will realize that God is enough. Lot of people say “mahirap maging CPA”… but always bear in mind that “walang mahirap kay God”…. When at times you feel you wanted to give up. make a rest but never stop pursuing your dreams. KAYA NATIN YAN… I believe. When we left nothing but God.We must prepare for every fight that we’re going to face. I hope mapasadahan nyo kahit saglit lang ito. Every point is important …Good luck to all!!! Kairus . merong lalabas ulit sa mga compilation na ito sa October Board Exam kase nasa test bank na ng examiner ang mga yan. Every winning is worthy when we strive hard to achieve it.

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