Polytechnic University of the Philippines

COLLEGE OF ACCOUNTANCY

Special Qualifying Examination for Freshmen

Fundamental Accounting, Parts 1 and 2
April 15, 2011

Multiple Choice Theories. Choose the letter of the correct answer. Each item is credited at a point each.

1 The Statement of Financial Position is another name for the

A Statement of Owners Equity C Income Statement
B Statement of Cash Flows D Balance Sheet

2 Equities are legal and economic claims to the assets of a business. The owners claims on the business assets are also
known as
A Accounts Payable C Liabilities
B Outsider Claims D Capital

3 The statement which presents the entitys operations during a specific period of time is the
A Statement of Owners Equity C Income Statement
B Statement of Cash Flows D Balance Sheet

4 The purchase of office equipment on account will

A increase an asset and increase owners equity C increase an asset and increase a liability
B increase one asset and decrease another asset D increase an asset and decrease a liability

5 The performance of service for a customer or client and immediate receipt of cash will
A increase one asset and decrease another asset C decrease an asset and decrease a liability
B increase an asset and increase owners equity D increase an asset and increase a liability

6 The payment of an accounts payable will

A decrease an asset and decrease owners equity C decrease an asset and decrease a liability
B increase one asset and decrease another asset D increase an asset and increase a liability

7 A debit entry to the Cash account indicates

A the payment of an expense
B the borrowing of money from a bank
C the billing of a client for services, payment subsequent to invoicing
D the withdrawal of funds from the business by the owner

8 The trial balance is necessary in order to

A post to the ledger
B prepare the source documents
C record entries into the journal
D check the posting accuracy, that total debits equal total credits

9 If the Income Summary account has a P 4,000 credit balance before it is closed to the capital account, you know that
A revenues exceeded expenses by P 2,000
B the company had a net loss for the year of P 4,000
C the owner invested an additional P 4,000 in the business
D the company had a profit for the year of P 4,000

10 The post closing trial balance is prepared as the next step in the accounting cycle after
A combining the trial balance and adjustment figures
B preparing the trial balance
C journalizing and posting the closing entries
D none of these

11 A debit column total greater than the credit column total under the Income Statement portion of the worksheet
would mean
A mistakes were made in the preparation of the adjusted trial balance
B the company had a profitable year
C the Income Summary account will have a credit balance after the nominal accounts are closed
D the company had a loss this year
Special Qualifying Examination for First Year | 1
12 The following accounts were closed to the Income Summary account: Salary Expense, P 500 debit; Telephone
Expense, P 800 debit; Utilities Expense, P 250 debit; Service Revenue, P 1,200 credit. The amount and entry to close
Income Summary to the Capital account would be
A P 350 credit to the Income Summary account
B P 350 debit to the Income Summary account
C P 1,200 debit to the Income Summary account
D P 2,050 credit to the Income Summary account

13 Market Consulting bought P 9,000 of furniture. Accumulated Depreciation had a balance of P 3,000 prior to the
recording of this years depreciation. Depreciation Expense at the end of the year is P 2,000. What is the book value of
the furniture at the end of the year?
A P 4,000 C P 11,000
B P 6,000 D P 3,000

14 The Balance Sheet reflects

A Assets + Liabilities = Owners Equity
B Beginning owners equity + Revenues = Expenses
C Revenues - Expenses
D Assets = Liabilities + (Beginning Owners Equity + Revenues - Expenses - Withdrawals)

15 An asset account with a P 600 beginning balance, no deductions, and a P 1,000 ending balance, would have the
following amount recorded in it.
A P 600 credit entry C P 600 debit entry
B P 400 debit entry D P 400 credit entry

16 Failing to post the transaction of purchasing P 600 of office supplies on account would have what effect on the trial
balance?
A debit total would equal the credit total
B debit total would be P 600 greater than the credit total
C debit total would be P 1,200 greater than the credit total
D debit total would be P 600 less than the credit total

17 Peter Pan Child Care Center paid P 9,000 for three months of rent in advance. The Prepaid Rent account had a
remaining balance of P 3,000 at the end of the accounting period. The adjusting entry to reflect this must have been
A debit Rent Expense and credit Prepaid Rent for P 3,000
B debit Rent Expense and credit Prepaid Rent for P 6,000
C debit Prepaid Rent and credit Rent Expense for P 12,000
D debit Prepaid Rent and credit Cash for P 9,000

18 Regarding one purchase of merchandise, the following entries were made by Z Company.

Purchases 17,000
Accounts Payable - Supplier 17,000

Transportation - in 1,900
Accounts Payable - Supplier 1,900

What are the shipping terms regarding this transaction?

A FOB destination, freight prepaid C FOB destination, freight collect
B FOB shipping point, freight prepaid D FOB shipping point, freight collect

19 The collection of a P 4,000 account within the 2% discount period would result it
A debit to Sales Discount for P 80 C credit to Cash for P 3,920
B debit to Accounts Receivable for P 3,920 D credit to Accounts Receivable for P 3,920

20 Dissolution will arise

whenever a new partner is admitted through purchase of interest or through investment of cash or non-cash
A
assets
B upon termination of the definite term or particular undertaking specified in the agreement
C in case of civil interdiction of any partner
D all of the above

Special Qualifying Examination for First Year | 2

21 The following income and loss allocation method recognized the services rendered by the partners in terms of time
and skill as well as the contribution made by each partner, except
A interest allowance to partners, balance in agreed ratio
B salary allowance to partners, balance in agreed ratio
C bonus allowance to partners, balance in agreed ratio
D equally

22 In the absence of agreement, the share of each partner in the profits and losses shall be
A equally C according to average capital contribution
B according to original capital contribution D all of the above

23 The following will cause total retained earnings to decrease , except

A purchase of treasury stock C declaration of bonus issue
B appropriation of retained earnings for plant acquisition D A and B only

24 Which of the following would not be considered a characteristic of a corporation?

A right of succession C unlimited liability
B separate legal entity D created by operation of law

25 Which of the following will not decrease retained earnings?

A declaration of scrip dividends
B declaration of property dividends
C declaration of liquidating dividends
D retirement of share capital at more than the original issue price

26 Earnings per share is

net income minus annual dividends on undeclared non-cumulative preference shares divided by the weighted
A
average number of outstanding ordinary shares
B net income divided by weighted average number of outstanding ordinary shares
net income minus annual dividends on cumulative preference shares divided by the weighted average number
C
of outstanding ordinary shares
D B and C but not A

27 A capital deficiency is eliminated in any of the following ways except

A by contributing cash to the partnership
B by distributing it as additional loss to the other partners
C by declaring bankruptcy
D by contributing non-cash assets

28 When there is no bidder for delinquent subscription, the subscribed shares

A will be issued in the name of the board of directors
B will be reverted back to unsubscribed shares
C will be issued in the name of the corporation
D will be issued to the delinquent subscriber

29 On June 1, authorized ordinary share capital was sold on a subscription basis at a price in excess of par value, and 40%
of the subscription price was collected. On October 1, the remaining 60% of the subscription price was collected.
Ordinary Share Premium account will be credited on
June 1 October 1
A Yes No
B No No
C Yes Yes
D No Yes

30 The issuance of shares of ordinary share capital to shareholders

A decreases ordinary share capital authorized
B decreases ordinary share capital outstanding
C increases ordinary share capital outstanding
D increases ordinary share capital authorized

Special Qualifying Examination for First Year | 3

Multiple Choice Problems. Choose the letter of the correct amount. Each item is credited at 2.5 points each.

31 The accountant was not able to adjust the following: P 200 of service revenue was not accrued; P 300 of unearned
revenue had been earned, but no entry was made. What should be the amount of net income if the incorrect net
income was P 19,000?
A P 19,250 C P 19,500 add both amounts.
B P 19,410 D P 18,300

32 A trial balance has debit and credit totals of P 7,000. The purchase of P 4,000 of office supplies on account was
omitted from the original journal entries. After recording and posting this transaction, the new debit and credit totals
for the trial balance would be
A P 11,000 add P 4,000. C P 9,000
B P 7,000 D P 3,000

33 From this list of account balances, calculate the total credit column for the post-closing trial balance: Cash, P 15,000;
Accounts Receivable, P 3,000; Prepaid Rent, P 2,000; Building, P 30,000; Accumulated Depreciation, P 13,000;
Accounts Payable, P 6,000; Unearned Revenue, P 1,000; Jiyeon Park, Capital, P 30,000.
A P 69,000 C P 45,000
B P 50,000 add all underlined. D P 20,000

34 The Balance Sheet of You Are My World Company shows that capital is P 540,000 that is equal to 1/3 of its total
assets. How much are the total liabilities?
A P 180,000 C P 1,080,000 divide 540 by 1/3 then subtract 540.
B P 720,000 D P 1,620,000

35 The assets of Sharmaine Company amounted to P 810,000 on December 31, 2008, but increased to P 1,305,000 by
December 31, 2009. During the same period, liabilities increased by P 270,000. Owners equity on December 31, 2008
amounted to P 495,000. What was the amount of the Owners Equity on December 31, 2009?
A P 585,000 C P 1,035,000
B P 720,000 get the beg. liab first, add 270, then ALC. D P 1,080,000

36 Hillsong Company has P 60,000 in revenues, P 132,000 in expenses, P 36,000 in owner investment, P 9,000 in owners
withdrawals, and P 45,000 in liabilities paid off. Owners equity changes by
A + P 48,000 C + P 36,000
B - P 45,000 add, sub, add, sub. D - P 3,000

37 LPCA Company purchased P 1,450,000 of land with a P 500,000 cash down payment and the balance taken as a note
payable. How much did the total assets change?
A + P 1,450,000 C - P 930,000
B + P 950,000 1,450 less 500. D + P 500,000

38 Coleen Garcia joined a partnership by contributing the following: cash, P 20,000; accounts receivable, P 4,000; land, P
240,000 at cost and P 400,000 at fair value; and accounts payable, P 16,000. What will be the initial amount recorded
in Coleens capital account?
A P 408,000 add assets, subtract liabilities C P 424,000
B P 248,000 D P 20,000

39 Troy and Lana are combining their separate businesses to form a partnership. Cash and non-cash assets are to be
contributed for a total capital of P 600,000. The non-cash assets to be contributed and the liabilities to be assumed
are as follows.
Troy Lana
Book Value Fair Market Value Book Value Fair Market Value
Accounts Receivable P 40,000 P 40,000
Merchandise Inventory 60,000 100,000 P 40,000 P 50,000
Equipment 120,000 90,000 80,000 100,000
Accounts Payable 30,000 30,000 20,000 20,000
The partners capital accounts are to be equal after all the contributions of assets and the assumption of liabilities.
The amount of cash to be contributed by Troy is
A P 200,000 C P 100,000 300thou, add AP, subtract all assets
B P 300,000 D P 210,000

40 Using the information in item 39, the total assets of the partnership is
A P 630,000 C P 360,000
B P 650,000 get all cash contrib., then add all assets. D P 340,000
Special Qualifying Examination for First Year | 4
41 Sunny and Jessica are partners who share profits equally and losses in a 2:1 ratio. If they have beginning capital
balances of P 120,000 and P 118,000 respectively, made no additional investments nor withdrawals, and suffered an
unprofitable year with a loss of P 48,000, their capital balances will be
Sunny Jessica
A P 40,000 P 30,000
B 120,000 118,000
C 88,000 102,000 get the losses; subtract it to the beginning capital balances.
D 152,000 134,000

42 Bucao, Basco, and Blanco share profits and losses in the ratio of 2:3:5 respectively. Their partnership realized a profit
of P 1,800,000 during the year. Bucao, with a beginning capital balance of P 1,000,000, withdrew P 200,000 during the
year. Bucaos ending capital balance is
A P 1,000,000 C P 560,000
B P 1,160,000 get the share, then INC STAT approach. D P 1,400,000

43 Darlene Zschechs interest in the partnership is P 110,000. Joel Houston buys Darlenes interest for P 120,000. How
much is the capital balance of Joel after the purchase?
A P 140,000 C P 110,000 personal loss only for Joel for 10,000.
B P 120,000 D P 130,000

44 CM and CB formed a partnership and have capital balances of P 100,000 and P 200,000 respectively. If they agreed to
admit CJ into the partnership, how much will CJ have to invest to have a 1/4 interest?
A P 75,000 C P 200,000
B P 50,000 D P 100,000 divide OPC by 3/4, then subtract OPC.

45 Daza, Diaz, and Ditas are partners with capital balances of P 80,000, P 120,000, and P 160,000 respectively. They
share profits and losses in the ratio of 30:40:30. Diaz decides to withdraw from the partnership. Diaz receives P
160,000 in the settlement of his interest. If the bonus method is used, what is the capital balance of Ditas
immediately after the retirement of Diaz?
A P 140,000 debit entry of 20,000 to Ditas and Daza. C P 180,000
B P 160,000 D P 200,000

46 Using the information in item 45, and assuming bonus method is used, what is the total partnership capital
immediately after the retirement if Diaz?
A P 280,000 C P 200,000 80,000 + 120,000.
B P 240,000 D P 320,000

47 A partner retired from a partnership and received an amount which exceeds his capital interest by P 40,000. The
remaining partners have profit and loss ratio of 3:2. Under the bonus method, the excess payment will be shared by
the remaining partners as
A P 48,000 and P 32,000 C P 36,000 and P 24,000
B P 12,000 and P 8,000 D P 24,000 and P 16,000 multiply 40,000 by the ratios

48 Kim, Coleen, and Sue are partners who share profits and losses in the ratio of 2:3:5. The partners have decided to
liquidate the partnership. Their capital accounts show the following balances: Kim, P 60,000 credit; Coleen, P 90,000
credit; and Sue, P 30,000 debit after the sale of non-cash assets and the payment of liabilities. What is the amount of
cash available for distribution?
A P 120,000 add, add, subtract. C P 160,000
B P 180,000 D P 150,000

49 Hunger Games Corporation was organized on January 1, 2009 with authorized capital of 100,000 ordinary shares, P 20
par value. During 2009, Hunger Games Corporation had the following transactions affecting the shareholders equity:
January 10, issued 25,000 shares at P 22 per share; March 25, issued 1,000 shares for legal services when the fair
value was P 24 per share; September 30, issued 5,000 shares for an equipment when the value was P 26 per share.
How much is the balance of the Ordinary Share Capital account as of September 30?
A P 700,000 C P 634,000
B P 620,000 multiply the shares to par value. D P 704,000

50 Using the information in item 49, what amount should be reported as Premium on Ordinary Shares?
A P 84,000 multiply shares to the excess of par value. C P 50,000
B P 54,000 D P 34,000

Special Qualifying Examination for First Year | 5

 51 Dream High Corporation has the following classes of share capital outstanding as of December 31, 2009: Ordinary
Share Capital, P 20 par value, 20,000 shares outstanding; 6% Preference Share Capital, P 100 par value, cumulative,
2,000 shares outstanding. No dividends were paid on preference shares for 2007 and 2008. On December 31, 2009, a
total cash dividend of P 200,000 was declared. How much dividends would be received by ordinary shareholders?
A P 0 C P 176,000
B P 188,000 D P 164,000 subtract 200 to arrears and current div.

52 Using the information in item 51, how much dividends will be received by preference shareholders?
A P 200,000 C P 12,000
B P 24,000 D P 36,000 add div/arrears and current dividends.

53 On April 8, 2009, Simsimi Corporation declared and issued 25% ordinary share capital dividend. Prior to this date,
Simsimi Corporation had 20,000 shares of P 2 par value ordinary share that were both issued and outstanding. The
carrying value of each share of stock is P 20 at the time of declaration of the dividend. As a result of the stock
dividend, how much will be debited to Retained Earnings?
A P 40,000 C P 100,000
B P 10,000 large bonus issue, at par only. D P 75,000

54 Red Corporation and Yellow Corporation have Preference Share Capital outstanding. Red Corporation has issued 3,000
shares of 5% Preference Share Capital, par value P 100. Yellow Corporation has issued 5,000 shares of 10% Preference
Share Capital, par value P 120. What is the dividend per share for the Preference Share Capital for the two
corporations?
A P 5 for Red, P12 for Yellow current div / shares. C P 5 for Red, P 10 for Yellow
B P 100 for Red, P 120 for Yellow D P 5 for Red, P 120 for Yellow

55 White Rock Resort Corporation has 400 shares of 6% preference share capital outstanding, par value is P 50 per share
and market value is P 80 per share. The amount of cash dividends for the year on this share capital would be
A P 1,200 6% multiplied by 400 multiplied by 50. C P 2,400
B P 12 D P 1,920

56 Club Manila East Corporation has 6,000 shares of P 8 non-cumulative preference shares outstanding and 12,000
ordinary shares outstanding. At the end of the year, cash dividends of P 180,000 were declared. How much dividends
were paid on both classes of share capital?
A P 48,000 and P 132,000 PS current, balance to OS. C P 90,000 and P 90,000
B P 60,000 and P 120,000 D none of the given

57 Using the information in item 56, what is the dividend per share on both classes of share capital?
A P 10 and P 10 C P 15 and P 2.50
B P 8 and P 11 divide to outstanding shares. D none of the given

58 Park Min-Young Corporation was organized on January 1, 2009 with authorized capital of 100,000 shares of P 10 par
value ordinary share capital. During 2009, Park Min-Young Corporation had the following transactions affecting
shareholders equity: January 7, issued 40,000 shares at 12 per share; December 2, purchased 6,000 treasury shares
at P 13 per share. Profit for the year amounted to P 300,000. What is the amount of shareholders equity as of
December 31, 2009?
A P 702,000 add issued, less treasury, add profit. C P 640,000
B P 720,000 D P 708,000

I can do all things through Christ who strengthens me.

Philippians 4:13

Note: This was the qualifying exam taken by students last April 15, 2011. This was only re-typed and only the names of
companies were changed. No amounts were changed in each problem.

/ktmc mr.coa2012 :))

Polytechnic University of the Philippines

Special Qualifying Examination for First Year | 6

 COLLEGE OF ACCOUNTANCY

Special Qualifying Examination for First Year

May 8, 2007

CHOOSE THE BEST ANSWER ( ITEMS 1-40 = 1 point each )

1 It occurs when the order of the digits is charged mistakenly

A Slide C Transposition
B Credit memorandum D Debit memorandum

2 It is a small amount set aside to be used for paying relatively small amounts
A Trival amount C Petty cash
B Cash on hand D Cash in bank

3 A partner with a debit balance in his capital account after receiving his share on the loss on realization
A Insolvent partner C Delinquent partner
B Deficient partner D Defaulting partner

4 Walkways , to and around the building, as well as paved parking lots are
A Land improvements C Included in the cost of land
B Included in the cost of building D Expensed

5 Each subsidiary ledger is represented in the general ledger by summarizing account called a
A Sundry account C Controlling account
B Dominant account D Subsidy account

6 It is a written document signed by the depositor, ordering the bank to pay a sum of money to an individual or entity
A Promissory note C Subpoena
B Check D Letter of demand

7 It would mean the seller delivers the merchandise to the buyers final destination, free of transportation charges to
the buyer
A FOB Destination C Cash on delivery
B FOB Shipping point D Free delivery

8 If the effect of the debit portion of a specific adjusting entry is to increase an asset account, the credit portion of the
entry would be to
A Decrease an asset account C Decrease in a liability account
B Increase in a liability account D Decrease in expense account

9 Deferred expenses expected to benefit a relatively short period of time are listed on the balance sheet under what
account?
A Asset C Revenue
B Liability D Expense

10 Entitles the holder to an equal or pro-rata division of profits without any preference or advantage over any class of
shares
A Preference share C Treasury shares
B Donated share D Ordinary share

11 An accrued expense can be best described as an amount

A Paid and matched with earnings with the current period
B Paid and not matched with earnings with the current period
C Not paid and matched with earnings with the current period
D Not paid and not matched with earnings with the current period

12 The basis for recording a partners contribution in form of non-cash asset

A Face value C Agreed value
B Appraised value D Market value

Special Qualifying Examination for First Year | 7

13 These are money advanced by the partners to the partnership in the form of a loan when the business is in need of
additional funds
A Due from partners C Loans receivable
B Due to partners D Advances to partners

14 These are customer checks with inadequate financing

A No-sustainable fund checks C Inadequate fund checks
B No-sufficient fund checks D Deficient fund checks

15 Holders of this type of preference share capital are entitled to receive dividend in arrears
A Convertible C participating
B Cumulative D accumulative

16 Vandalism, damages during unpacking and installing of the asset and uninsured theft should be
A Expensed C Included in the asset cost
B overlooked D Deducted from the asset cost

17 This refers to the termination of the business activities carried on by the partnership and their doing up of partnership
affairs preparatory to going out of the business
A Dissolution C Liquidation
B Commencement D Closing

18 The term means negative balance in retained earnings

A Debit earnings C Contra asset account
B Deficit D Negative earnings

19 The cost of organizing a corporation that is expensed in the year of organization

A Post-operating expense C Neither a nor b
B Organization Cost D Either a or b

20 These represent increase or decrease in equity other than contributions by and distributions to owners and which are
not included in the calculations of net income
A Retained earnings C Subscribed share capital
B Additional paid-in capital D Capital maintenance adjustment

21 It facilitate the preparation of financial statements

A T-accounts C Reversing entries
B Worksheet D Pencil footing

22 The statement of changes in stockholders equity shows the following except

A Gains and losses that are reported directly in equity
B Cumulative effect of change in accounting policy
C Comparative analysis of assets and liabilities
D The net income or loss for the period

23 If the treasury share is sold at a price greater that its cost, the excess is recorded as
A Gain on sale of treasury stock C Gain on realization
B Retained earnings D Paid in capital from sale of treasury stock

24 It is a bank charge notifying the bank that a note has been dishonoured (??)
A Protest fee C Dishonoured note
B Disapproval fee D Dishonoured

25 It is the difference in net sales and the cost of merchandise sold

A Net income C Gross profit
B Gross sales D Net income from.

26 A debit mat signify

A A decrease in a liability account C An increase in liability account
B Decrease in asset account D An increase in capital account

27 The following are all true, except

A Failure to recognize the consumption of prepaid expense will overstate the net income
B Failure to recognize accrual of liabilities overstates net income

Special Qualifying Examination for First Year | 8

 C Failure to recognize accrual of assets overstate asset
D Failure to recognize earnings previously unearned revenue overstates liabilities

28 An internal control where a specific employee is responsible for safeguarding an asset while other person maintains
the accounting records
A Separate employee function C Rotation of job assignments
B Segregation of employee duties D Separate employee functions

29 These are ground rules that provide the general framework in determining the information to be included in financial
statements, and how to present this information
A Articles of incorporation C Generally Accepted Accounting Principles
B Board of accountancy D Accounting cycle

30 These are accounts with balances that are not carried forward from year to year because they are reported only for a
period of time
A Real accounts C Balance sheet accounts
B Permanent accounts D Nominal accounts

31 The process of analysing the accounts receivable and classifying them according to various age groups, with the date
being the base point for determining age
A Allowance method C Aging the receivables
B Direct write-off method D Number of days sales in receivables

32 A document that serves as evidence of authority to pay

A Voucher (?) C Outstanding check
B Promissory note D Credit memorandum

33 A. A dividend in arrears are only referred to preference share capital

B. Ordinary share capital is considered the residual equity of a corporation
A Only A statement is true C Both statement are true
B Only B statement is true D Both statement are false

34 When a 15% stock dividend is declared, retained earnings would be debited for an amount equal to
A The FMV of the stock on the date of record C The FMV of the stock on the date of distribution
B The par value of the stock D The FMV of the stock on the date of declaration

35 The acceptable method in accounting for treasury stock

A Cost method C Memorandum entry method
B Par value method D Journal entry method

36 Which of the following discount has no account of its own and requires no special account entry
A Cash discount C Purchase discount
B Trade discount D Senior citizen discount

37 These are costs incurred to produce revenue

A Assets C Expense
B income D Organization costs

38 An economic event or condition that directly changes an entitys financial condition or directly affects its results of
operation
A Accounting C Bookkeeping
B Business transaction D Journalizing

39 The principle that clarifies the limits for the economic data in the accounting system be related to the activities of the
business
A Business entity concept C Objectivity concept
B Matching principle D Unit of measurement concept

40 An organization in w/c basic resources, such as materials, labour are assembled and processed to provide goods or
services to customers, and its primary objective is to maximize profits
A Government C Business
B state D FAmily

Special Qualifying Examination for First Year | 9

PROBLEM SOLVING ( ITEMS 41-70 = 2 point)

41 On December 10,2004 Mel B. Corp. declared a 5 for 1 stock split when the market value of stock was P200 per share.
Prior to the split they had 100,000 shares of P20 per value ordinary share issued and outstanding. After the split. The
par value of the stock will be
A 20 C 40
B 100 D 4

42 Nora, Vilma and Gloria are partners sharing profits and loses 5:3:2. Beginning capital amounted to P250,000,
P100,000, P50,000 respectively while withdrawals during the year were P5,000 each. Net income for the year was P
60,000. Gloria decided to withdraw from the partnership at the end of the year and was paid P55,000. Assuming the
bonus method was used , Noras capital balance after Glorias withdrawal would be
A 230,000 C 276,250
B 273,750 D 3,250

43 The prepaid rent account shows a balance of P46,350 representing 9-month rent pain on July 31, 2003. Adjusting
entry on Dec 31, 2003 would be
A Dr. Prepaid rent 27,073.50 cr. Rent expense 27,073.50
B Dr. Rent expense 19,312.50 cr. Prepaid rent 19,312.50
C Dr. Prepaid rent 25,750.00 cr. Rent expense 25,750.00
D Dr. Rent expense 25,750.00 cr. Prepaid rent 25,750.00

44 Blahblah purchased 7,000 shares of ordinary shares par value P50 @ P75 each. She gave a down payment of 30%,
then an additional partial payment of 50% of the blance. If Blahblah was unable to pay for the remaining balance,
how much would be debited to receivable from highest bidder if she were to be declared as delinquent?
A P183,750 C P105,000
B P122,500 D P70,000

45 Rasziel Corp was organized with an authorized capital stock of P1,200,000 consisting of 8,000 shares at P150 par value
ordinary share. Subsequently, the incorporators subscribed 2,000 share at P160 per share. How much should be paid
upon subscription to comply with the requirement of SEC?
A 300,000 C 75,000
B 60,000 D 80,000 E. none of the above

46 The bank statement of Nightingale Co reveal that among the cancelled checks shows payment of payable amounting
to P9,857 but was erroneously recorded by the bookkeeper as P8,957, while collection made by the bank in the name
of the company amounted to P13,000. These transactions will be shown in the bank reconciliation statement as :

Bal. per books-add Bal. per books-less Bal. per Bank state.- add Bal. per Bank state.- less
A P900 P0 P0 P0
B P0 P900 P0 P13,000
C P13,000 P900 P0 P0
D P13,900 P0 P0 P0

47 The partners Avon, Sarah and triumph have capital amounting to P100,000, P150,000 and P125,000 respectively and
share profits and loss 4:3:3. How much should the new partner, Soen, invest to have an 1/4 interest in the partnership
A P93,750 C P500,000
B P125,000 D P225,000 E. none of the above

48 Maimai, Inc.has the following data as of Dec 31,2004

Ordinary share, 30,600 shares authorized, P40 par value P 1,200,000
Net income for the year P 165,000
How much will be the earnings per share?
A P5.39 C P13.75
B P5.50 D P40

49 Partners Flav, Rene and Cesar have capitals P250,000, P230,000, P220,000 respectively with divisions of profits and
loss at 3:4:3. Arman is to be admitted by investing P250,000 for interest in the new partnership . How much will be
the new partnership capital assuming the bonus method is used?
A P950,000 C P1,000,000
B P750,000 D P933,333

Special Qualifying Examination for First Year | 10

50 Mulawin of the Thundebird, LTD is to receive 8% bonus on Net Income after bonus. Net income for the year
amounted to P85,000. How much will be the bonus?
A P6,800 C P68,000
B P8,600 D P6,296

51 The following data were taken from the point-point Fast-food

Assets, beg. P 435,000
Assets, end. 501,000
Liabilities, beg. 100,500
Liabilities, end. 95,000
Withdrawal for the year was 25,000
How much was the net income for the period?
A P46,500 C P66,000
B P96500 D P71500 E.5,500

52 How much will be the depreciation expense at the end of 2000?

A 10,000 C 240,000
B 9,600 D 24,000 E.8,800

53 How much will be the accumulated depreciation at the end of 2007?

A P10,000 C P76,800
B P9,600 D P66,400 E.P76,000

54 Hiyas and Pedro invested P200,000 each into the partnership and divides profits equally. Rounin is to be admitted in
the partnership by purchasing interest paying the partnership P125,000. After his admission Rounin would have a
capital of
A P100,00 C P300,000
B P125,000 D P250,000

55 Kristala trading received a 6% 60-day promissory note from Dama amounting to P90,000 on May 27,2003. Forty-three
days later, Kristala trading discounted the note to the Lugi bank at a rate of 6.5%. How much proceeds would Kristala
receive from Lugi bank?
A P 90,717 C P 90,194
B P 90,000 D P 90,621

The following data were given for the month ended Dec. 31; sales P200,000, sales returns and allowances P12,500,
Sales discount P2,500, Accounts Receivable P750,000, Allowance for doubtful accounts P6,500

56 On Dec. 31 Allowance for doubtful accounts would be credited with this amount, assuming uncollectible was
estimated to be 8% of Net sales
A P60,000 C P16,000
B P14,800 D P15,000

57 Assuming uncollectibles were estimated to be 10% of the Accounts Receivable, after adjustment, the valance of
allowance for doubtful accounts and Net realizable value would be
A 7,500 and 675,000 C 1,000 and 742,000
B 75,000 and 742,000 D 75,000 and 675,000

Sugar purchased a delivery equipment on January 1 ,1990 costing P580,000 and a salvage value of P P30,000. Its
estimated useful life is 20 years

58 Using the sum-of-the0years method, the rate of depreciation for Dec 31,1990 would be
A 1/20 C 20/20
B 20/210 D 10% E.5%

59 Using SYD method, what would be the depreciation expense for the year 1994?
A 41,905 C 44,190
B 44,524 D 27,500 E.52,381

60 If the declining balance method was used, the depreciation expense on December 31, 1990 will be (??)
A 58,000 C 29,000
B 55,000 D 30,000 E.580,000

Special Qualifying Examination for First Year | 11

61 Elayne, Inc. has outstanding ordinary share of 30,000 shares at P25 par value. The corporation declared a 30% stock
dividend. On the date of the declaration, the stocks sell at P35/share abd P37 on the date of the payment. Retained
earnings will be debited
A 210,000 C 222,000
B 150,000 D 60,000

62 The following data regarding the capita; of Astasha were taken from the AMC, LTD books. Jan.1 beg Capital P55,000;
May 1, investment P3,000, July 31, withdrawal, P5,000. What would be the average capital on Dec. 31?
A 53,000 C 54,917
B 21,167 D 59,000 E. none of the above

The following transactions are found in the books of Vivien Merchandising

Beg. Balance 24 units @ 12.00 = 2,892
March 6 123 units @ 13.00 = 1,599
July 5 105 units @ 14.00 = 1,470
Nov. 15 234 units @ 14.50 = 3,393
Dec.7 85 units @ 15.00 = 1,275

Inventory on hand as of Dec. 31 totals to 895 units

63 Using the LIFO method, the merchandise Inventory in Dec.31 would be (??)
A 5,732 C 5,705
B 4,897 D 4,925

64 Using the FIFO method, the cost of goods sold on dec. 31 would be (??)
A 4,897 C 4,925
B 5,732 D 5,705

65 Using the weighted average method, the merchandise inventory on Dec. 31 would be(??)
A 5,301 C 5,382
B 5,732 D 10,629

66 Joey, Jojo and Janno were partners sharing profits and loss in the ratio of 5:3:2. Jaime is to be admitted by investing
P50,000 in the partnership and is to receive30% in profit or loss. The new partnership profit and loss ratio respectively
will be(??)
A 33%, 21%, 14%, 30% C 15%, 9%, 6% 30%
B 50%, 30%, 20%, 30% D 5:3:2:3

Lawiswis, a beauty consultant company received an 8%, 60-day promissory note amounting to P75,000 on May 25, 2004

67 Note would be payable on

A July 23, 2004 C July 25,2004
B July 24,2004 D July 26, 2004

68 The value of the note upon maturity would be

A 74,000 C 175,986
B 75,000 D 76,000

69 The SaMax Corp. has 232,000 shares of common stock outstanding, 270,000 shares authorized and 244,000 shares
issued. How many shares of treasury stock did it have?
A 38,000 C 24,867
B 26,000 D 12,000

70 Shamrock purchased merchandise from periwinkle Co. costing P50,000 FOB shipping point, 2/10 n/30. How much
should Shamrock pay to periwinkle assuming the seller paid for the transportation cost of P900 and payment was
made within 10 days
A 49,000 C 9,882
B 49,900 D 50,000

Special Qualifying Examination for First Year | 12

 Polytechnic University of the Philippines
COLLEGE OF ACCOUNTANCY
Special Qualifying Examination (SQE)
INCOMING SECOND YEAR
APRIL 29, 2012

TEST I: THEORY (1 point each)

1. A merchandising company should include the following in its ending inventory

a. Goods sold FOB shipping point, still in transit
b. Goods purchased FOB destination. Still in transit
c. Goods purchased FOB shipping point, still in transit
d. Goods held on consignment

2. Gross margin is calculated as

a. Gross sales less sales returns and discounts less merchandise inventory at the end
b. Net sales less goods available for sale
c. Net sales less ( purchases+ freight-in + purchase returns and discount merchandise inventory, end)
d. Net sales less ( goods available for sale merchandise inventory, end)

3. An entry debiting Cost of Sales and Crediting Merchandise inventory would be made when
a. Merchandise is sold and the periodic inventory method is used
b. Merchandise is returned and perpetual inventory method is used
c. Merchandise is purchased and the perpetual inventory method is used
d. Merchandise is sold and the perpetual inventory method is used

4. Which of the following is incorrect regarding Periodic inventory system?

a. Purchases of office supplies is debited to purchases account instead of merchandise inventory
b. Purchase returns and allowances is credited for returns to suppliers
c. Transportation cost is debited to Freight-in account instead of merchandise inventory
d. Purchase discount is credited for cash discounts granted instead of merchandise inventory account.

5. The last cycle in the accounting cycle is to

a. Prepare a pot closing trial balance
b. Journalize and post the closing entries
c. Prepare financial statements
d. Journalize and post adjusting entries

6. Which of the following would typically be considered a source document

a. Chart of accounts
b. General ledger
c. General journal
d. Invoice received from seller

7. Which is false concerning use of special journals?

a. Only sales of merchandise on account are recorded in the sales journal. Cash sales are recorded in the
cash receipts journal
b. Purchases of any items on account are recorded in the purchase journal. Acquisitions of any items for
cash are recorded in the cash disbursements journal
c. Transactions that cannot be appropriately recorded in a special journal are recorded in the general
journal
d. Only cash purchases are recorded in the cash disbursement journal

8. An unadjusted trial balance

a. Provides information that is helpful in making adjusting entries
b. Proves that no errors have been made in the accounting records
c. Usually contains the account balances that should appear in the financial statements
d. Is a summary taken directly from the general journal

Special Qualifying Examination for First Year | 13

9. Which of the following items LEAST resembles a typical adjusting entry?
a. Debit and asset and credit a revenue
b. Debit an expense and credit a liability
c. Debit revenue and credit liability
d. Debit an asset and credit liability

10. If revenues are greater than expenses, the income summary account will be closed by
a. Crediting Income summary and debiting capital account
b. Debiting income summary and crediting capital account
c. Debiting cash and crediting income summary
d. Debiting income summary and crediting cash

11. The balancing figure in the worksheet is NETLOSS if

a. The total of the credits exceeds the total of the debits in the income statement columns
b. In the statement of financial position columns, the total of the debits exceed the total of the credits
c. The total of the credits is the same as the total of the debits in the income statement columns
d. In the statement of financial position columns, the total of the credits exceeds the total of the
debits

12. After performing the bank reconciliation for the month ended April 30, 2012, the companys accountant made
the following entry in the companys financial record:
Miscellaneous Expense...1,000
Cash in bank ...1,000

The above entry signifies that

a. There is a deposit in transit amounting to P1,000 at the end of the month
b. The companys account was debited for bank service charge amounting to P1,000
c. There is a disbursement per book amounting to P1,000 not yet recognized in the bank
d. The bank collected a companys note receivable which includes interest amounting to P1,000

13. Statement 1: trades discounts are recorded in the book as a reduction from list price or catalog price of goods
to arrive at invoice price.
Statement 2: Freight-in is the cost of transportation incurred in the acquisition of merchandise which forms
part of the total cost of good purchased
Statement 3: FOB destination means that the goods are shipped without any charges of freight to the buyer
a. All of the above is true
b. Statements 1 and 2 are correct
c. Statements 1 and 3 are correct
d. Statements 2 and 3 are correct

14. An example of nominal account and contra account is

a. Sales return
b. Accumulated depreciation
c. Freight out
d. Freight in

15. Which of the following is an example of adjusting entry

a. Recording the purchase of supplies on account
b. Recording the billing of customers for services rendered
c. Recording the depreciation of computer equipment
d. Recording the payment of employees salaries for the period

16. Which of the following is ALWAYS correct regarding bank reconciliation

a. Deposit in transit- bank reconciling item-addition
b. Book error- book reconciling item-addition
c. Bank service charge- bank reconciling item-deduction
d. Bank error-book reconciling item-addition

17. The bookkeeper of Wakowako Company recorded the payment of a credit customer as a debut to cash and
credit to accounts payable. This erroneous recording transaction would result to:
a. Understatement of Accounts receivable and accounts payable
b. Overstatement of Accounts receivable and understatement accounts payable
c. Understatement of Accounts receivable and overstatement accounts payable
d. Overstatement of Accounts receivable and accounts payable

Special Qualifying Examination for First Year | 14

18. When property other than cash is invested in a partnership, at what amount should the non-cash property be
credited to the contributing partners capital account?
a. A. contributing partners original cost
b. Book value/ carrying value at the time of contribution
c. Fair value at the date of the contribution
d. Assessed valuation for property tax purposes

19. Statement 1: A partner mar be excluded in the participation in the partnership profit if the same is stipulated
in the partnership contract and agreed upon buy all the partners.
Statement 2: A bonus to the remaining partners will result when the cash paid to a retiring partner more than
the retiring partners capital balance
a. Statement 1 :True Statement 2: False
b. Statement 1 :False Statement 2: True
c. Statement 1 :True Statement 2: True
d. Statement 1 :False Statement 2: False

20. Which of the following best describes the nature of allowances for salaries and interest in a partnership profit
and loss sharing agreement?
a. A means of determining reasonable monthly withdrawals by each partner
b. A means of distributing profit in relation to services rendered and capital invested by partners
c. Expenses by the business that should be deducted from revenue in determining profit
d. The amount upon which each partner will have to pay personal income tax

21. C admitted in the partnership of A and B. C invest P15,000 for an interest equal to P17,000. This transaction
would result to:
a. A decrease in the capital balances of A and B
b. A decrease in P3,000 in the total partnership asset
c. An increase in capital balances of A and B
d. Recognition of goodwill by the partnership

22. If a partner withdraws during an accounting period, any undistributed net profit or loss up to the time of
retirement is distributed in accordance with the
a. New profit or loss ratio
b. Existing profit and loss among all partners
c. Existing profit and loss ratio among the remaining partners only
d. Voluntary agreement among the remaining partners

23. The final partnership liquidation transaction remaining cash is allocated to

a. Partners based on profit-loss sharing ratios
b. Partners based on capital balance
c. Partners based on original capital ratio
d. Partner with lowest capital balance

24. The order of the partnership liquidation process is

a. Pay liabilities, sell assets, distribute cash to partners
b. Distribute cash to partners, sell assets, pat liabilities
c. Sell assets, pay liabilities, distribute cash to partners
d. Sell assets, distribute cash to partners, pay liabilities

25. The shareholders or members indicated in the articles of incorporation. Originally forming and composing the
corporation, and who are signatories thereof, are called
a. Corporators
b. Subscribers
c. Promoters
d. Incorporators
26. When share is sold on subscription basis and the entire subscription price has been subsequently collected,
the issuance of the share certificate is recorded by
a. A debit to cash and credit to share capital
b. A debit to subscription receivable and credit to subscribed share capital
c. A credit to share capital and credit to subscription receivable
d. A debit to subscribed share capital and credit to share capital

Special Qualifying Examination for First Year | 15

27. On April 2, 2012, authorized ordinary shares was sold on a subscription basis at a price in excess of par value,
25% of the subscription price was collected. On June 2, 2012, the remaining 75% of the subscription price was
collected Share premium (APIC), would increase on

April 2 , 2012 June 2, 2012

A Yes No
B No Yes
C Yes Yes
D No No

28. Which of the following will decrease the retained earnings?

a. Payment of cash dividend
b. Declaration of bonus issue
c. Net income for the period
d. Issuance of a share dividend

29. Jeaneth Company has not declared or paid dividends on its cumulative preference shares in the last two years.
How would this information be presented in the financial statement?
a. In a note to the financial statements
b. The dividends would be presented as current liability
c. The dividends would be presented as non-current liability
d. The dividends would be presented as a restriction on retained earnings

30. Treasury shares were acquired for cash at a price in excess of its par value. Treasury shares were subsequently
reissued for cash at a price in excess of their acquisition cost. Assume that the cost method of accounting is
used, what is the effect of retained earnings of (a) the acquisition, (b) the resale of treasury sales,
respectively?
a. Increase, No effect
b. No effect ,increase
c. No effect, no effect
d. Increase, decrease
31. BSA, JPIA and COA are partners. Their contribution are as follows: BSA, P600,000; JPIA, P400,000 and COA,
services.. The partners did not agree how to divide profits and losses. If there is a loss of P100,000., how
should the loss be shared by the partners?
a. BSA, P35,000; JPIA, P35,000; COA, P30,000
b. BSA, P50,000; JPIA, P50,000; COA, nothing
c. BSA, P33,333; JPIA, P33,333; COA, P33,334
d. BSA, P60,000; JPIA, P40,000; COA, Nothing

32. Mac Cardona, a partner in PBA Partnership, has a 30% participation in partnership profits and losses. Macs
capital account has a net decrease oh P60,000 during the calendar year 2012. During 2012, Mac withdrew
P130,000 ( charged against his capital account) and contributed property valued at P25,000 to the partnership.
The net income of partnership for 2012 is
a. 150,000
b. 95,000
c. 120,000
d. 45,000

33. Love, an active partner in happiness Partnership, receive an annual bonus of 25% of the partnership income
after deducting bonus. For the year ended, December 31,2012, partnership income before bonus amounted to
P240,000. The bonus of Love for the year 2012 is
a. 48,000
b. 60,000
c. 45,000
d. 80,000

34. Rayap, Makambong, and Habagatan form a partnership on May 1, 2012. They agree that Rayap will contribute
office equipment with a fair value ofP40,000. Makambong will contribute delivery equipment with fair value
of P80,000 and Habagatan will contribute cash. If Habagatan wants a 1/3 interest in the capital and profits, he
should contribute a cash of
a. 120,000
b. 180,000
c. 60,000
d. 40,000

Special Qualifying Examination for First Year | 16

35. On March 1,2012 James and Wade formed a partnership with each contributing the following
James WADE
Cash P30,000 P70,000
Machinery and equipment 25,000 75,000
Building --- 225,000
Furniture and Fixtures 10,000 ---

The building is subject to a mortgage loan of P80,000, which is to be assumed by the partnership. The
partnership agreement provides that James and Wade share profits and losses 30% and 70% respectively. On
March 1, 2012 the balance of Wade capital account should be
a. 108,500
b. 290,000
c. 65,000
d. 304,500

36. Using the information in # 35, how much is the total assets of the newly formed partnership?
a. 355,000
b. 435,000
c. 515,000
d. 450,000

37. Marco wishes to purchase interest in the capital and profits in the partnership of Mar, Melvin and Amiel.
The three partners agree to sell of their respective capital and profit and loss interest for a total payment of
P400,000. The capital accounts and the respective percentage interest in the profit and losses immediately
before the sale to Marco follow:

Capital Interest
Mar P 800,000 40%
Melvin 400,000 30%
Amiel 200,000 30%
Immediately after the admission of Marco what should be the capital balances of Mar, Melvin, Amiel and
Marco, respectively?
a. 600,000; 300,000; 150,000; 350,000
b. 480,000; 360,000; 360,000; 400,000
c. 420,000; 315,000; 315,000; 350,000
d. 640,000; 330,000; 180,000; 250,000

38. On April 16,2012, the Statement of financial position for the partnership of Jayson, Kiel and Lance together
with their respective profit and loss ratio were as follows:
Assets, at cost P 180,000

Jayson, Loan P9,000

Jayson, Capital (20%) P42,000
Kiel, Capital (20%) P39,000
Lance, Capital (60%) P90,000
P180,000

Jayson withdrew and his interest in the partnership is to be settled. By mutual agreement, the assets are to be
adjusted to their fair market value of P216,000 at April 6,2012. It was agreed that the partnership would pay
Jayson P61,200 cash for his interest plus his loan to the partnership, which is to be paid in full.
After settlement to Jayson, what would be the respective capital balance of Kiel and Lance?
a. 46,200 and 111,600 respectively
b. 40,950 and 104,850 respectively
c. 36,000 and 81,000 respectively
d. 43,200 and 102,600 respectively

39. Capital Balances and profits sharing percentages for the partnership of Charlene, April and Raven on Jan. 1,
2012 are as follows:
Charlene (36%) P280,000
April (24%) P200,000
Raven (40%) P320,000

Special Qualifying Examination for First Year | 17

 On Jan. 5, 2012 the partners agreed to admit Angel into the partnership for a 25% interest in sapital and
earnings for her investment of P240,000. The partnership assets are not to be revalued. The capital balance
and new profit and loss sharing ratio of Charlene after the admission of Angel is _____ and _____ respectively
a. 260,000; 27%
b. 251,200; 36%
c. 251,200; 27%
d. 272,800; 27%

40. As of December 31,2012, the books of JPB Partnership showed capital balances of J- P40,000; P- P25,000; B-
P5,000. The partners profit and loss ratio was 3:2:1, respectively. The partners decided to liquidate and they
sold non-cash assets for P37,000. After settlement,of all liabilities amounting to P12,000, they still have cash
of P28,000 left fir distribution. Assuming that any debit balance in capital is uncollectible, the share of J in the
distribution of P28,000 cash would be:
a. 19,000
b. 17,800
c. 18,200
d. 18,000

41. Global sign company exchanges a piece of equipment for P5,000 shares of Golden Corporations ordinary
share capital that has P100 par value. The equipment cost Global sign 750,000 when purchased 5 years ago,
and currently has a fair value of P550,000. The equipment has recorded accumulated depreciation of
P150,000 in the books of global sign. What is the amount to share premium- Ordinary as a result of the
exchange?
a. 50,000
b. 75,000
c. 100,000
d. 250,000

42. On June 30, 2012, Balbarino Corporation declared a 10% bonus issue on its 300,000 p10 par ordinary share
capital outstanding. The shares are distributable on Aug.15,2012 to shareholders of record as of the close of
business on July 15,2012.

The shareholders were selling at P18 per share on June 30,2012, at P19 on July 15,2012 and P21 on Aug. 15,
2012. What amount should be charged to retained earnings as a result of the above dividends?
a. 300,000
b. 570,000
c. 540,000
d. 630,000

43. Orfiano, Inc prepared this journal entry on May 31,2012:

Cash 140,000
Ordinary share capital 130,000
Share Premium Ordinary 10,000
Issued shares at P14 per share

What is the par value of shares and how many share were issued?
a. P14 par value; 10,000 shares
b. P14 par value; 14,000 shares
c. P13 par value; 10,000 shares
d. P13 par value; 13,000 shares

44. Doquenia Corporation was incorporated on January 2,2012. The following information pertaining to her
ordinary share transaction:
01/02/2012 Number of share authorized 80,000
02/01/2012 Number of shares issued 60,000
08/01/2012 Number of shares reacquired (treasury) 5,000
12/01/2012 Two-for-one share split

What is the number of Doquenia Corporations ordinary share outstanding at Dec. 31, 2012?
a. 150,000 shares
b. 120,000 shares
c. 115,000 shares
d. 110,000 shares

Special Qualifying Examination for First Year | 18

45. On June 1, 2012, Espimo Corporation declared a bonus issue entitling its shareholders to one additional share
for each shares held. At the time the dividend was declared, the market value of each share was P10 and the
par value was P5 per share. On this date, Espino Corporation had 500,000 of ordinary shares outstanding.
What entry should the company make to record this transaction?
a. Retained Earnings 5,000,000
Share dividends Distributable 2,500,000
Share Premium 2,500,000

b. Retained Earnings 5,000,000

Share dividend distributable 5,000,000

c. Retained Earnings 2,500,000

Share dividend distributable 2,500,000

d. Share Dividends payable 5,000,000

Share dividends Distributable 2,500,000
Share Premium 2,500,000

46. The Fonte Corporation had the following classes of share outstanding as of December 31,2012:

6% Cumulative Preference Share Capital, P100 par

2,000 shares outstanding P 200,000
Ordinary Share Capital, P20 par, 20,000 shares outstanding 400,000

No dividends were paid during 2010 and 2011. On Dec 31, 2012, P200,000 cash dividends were declared.
What is the total amount of the dividends payable to ordinary shareholders?
a. 164,000
b. 188,000
c. 109,333
d. 117,333

47. The following information pertains to ABC corporation at Dec. 31, 2012:
12% Preference share, P100 par, 10,000 shares issued and outstanding P1,000,000
Ordinary share , P50 par, 40,000 shares issued and outstanding 2,000,000

The ABC corporation declared and paid cash dividends for the years 2010 through 2012 as follows:
2010-100,000; 2011-400,000; 2012-600,000

Assuming that the preference share is cumulative and fully participating and there are no umpaid dividends at
the beginning of 2010, calculate the dividend per share for both share capital at the end of 2012.
a. Preference 10.00; Ordinary none
b. Preference 14.47; Ordinary 6.63
c. Preference 14.47; Ordinary 8.57
d. Preference 17.14; Ordinary 8.57

48. Honey Corporations Statement of financial position shows total Shareholders equity of P1,705,000 as of dec.
31, 2012. What is the book value per ordinary share assuming that the company has two classes of share
capital outstanding, consisting of 5,000 shares, P100 par value preference share with liquidation value of P120
per share and 50,000 of P10 par value ordinary share capital?
a. P24.10
b. P22.10
c. P9.50
d. P11.50

49. The account of Review Company made the following adjusting entry on Dec. 31, 2012:
Prepaid Rent 1,800
Rent expense 1,800

If annual rent is paid in advance every October 1, the original transaction entry made was
a. Debit prepaid rent and Credit cash. P1,800
b. Debit rent expense and Credit cash. P1,800
c. Debit rent expense and Credit cash. P2,400
d. Debit rent expense and Credit cash. P7,200

Special Qualifying Examination for First Year | 19

50. The accountant of battleship company made the following adjusting entry on Dec 31, 2012
Rent Income 900
Unearned rent income 900

If annual rent is received in advanced every March 1, the original transaction entry made was
a. Debit cash and Credit unearned rent income. P900
b. Debit cash and Credit rent income. P1,080
c. Debit cash and Credit rent income. P5,400
d. Debit rent income and Credit cash. P5,400

51. The supplies on hand account balance at the beginning of the period was P6,600. Supplies totaling P12,825
were purchased during the period and debited to supplies on hand. A physical count shows P3,825 of supplies
on hand at the end of the period. The proper journal entry at the end of the period is
a. Debit Supplies on hand and credit Supplies expense for P9,000
b. Debit Supplies expense and Credit Supplies on hand for P12,825
c. Debit Supplies on hand and credit Supplies expense for P 15,600
d. Debit supplies expense and credit supplies on hand for P15,600

52. The lucky one Company represent the following information regardingits fixed asset as of dec 31,2012
i. Furniture and fixtures; purchased for P120,000 on aug. 1.2011 estimated useful life of six (6) years
with no residual value.
ii. Company vehicle; depreciable cost of P250,000, salvage value of P30,000 with8 years estimated
useful life. The vehicle was purchased by the company on May.31,2012.
The company has a calendar-year accounting period and elects to use straight-line method of depreciation to
all of its fixed assets. The company starts its commercial operation on June 1,2011.

How much is the total depreciation expense to be reported by the company as of Dec. 31, 2012?
a. 38,229
b. 26,562
c. 36,042
d. 47,500

53. Avenger Company received P9,600 on April 1,2012 for one years rent in advance and recorded the
transaction with a credit to a nominal account. The dec. 31,2012 adjusting entry is
a. Debit Rent Income and credit Unearned income for P 2,400
b. Debit Rent Income and credit Unearned income for P 7,200
c. Debit Unearned income and credit Rent Income for P 2,400
d. Debit Unearned income and credit Rent Income for P 7,200

54. A 3-year insurance policy was purchased on Oct. 1,2012 for P6,000, and prepaid insurance was debited.
Assuming a Dec. 31, year-end, what is the reversing entry at the beginning of the next accounting period
(jan.1,2013)
a. None
b. Prepaid insurance 6,500
Insurance expense 6,500
c. Insurance expense 500
Prepaid insurance 500
d. Prepaid Insurance 500
Insurance expense 500

55. SQE company bought P52,500 of furniture. Accumulated deprecistion has a balance of P15,000 prior to
recording of current years depreciation. Depreciation expense at the end of the year is P3,500. What is the
book value of the furniture at the end of the year?
a. 49,000
b. 41,000
c. 37,500
d. 34,000

56. The beginning of the year total capital for a firm was P40,000. During the year, the owner invested additional
P20,000,earned, P20,000 net income and withdrew P5,000 for personal use. If ending total liabilities are
P100,000, how much is the ending total assets?
a. 165,000
b. 45,000
c. 175,000
d. 100,000
Special Qualifying Examination for First Year | 20
57. Just before adjusting entries are made, CPA companys accounts receivable balance is P503,000 and allowance
for doubtful accounts has a credit balance of P14,000. An aging of accounts receivable results in a P56,000
estimate of uncollectible. Using the aging of A/R method, the doubtful account expense for the year is
a. 14,000
b. 70,000
c. 56,000
d. 42,000

58. The following data are available for the months of April and May of the current year:

April May
Merchandise inventory, beg. P7,000 ?
Merchandise, end. 6,500 7,500
Net purchases 19,500 18,500
Net sales 36,000 38,500
Operating Expenses 12,200 14,900

How much is the gross profit for the month of April?

a. 17,000
b. 16,000
c. 4,800
d. 17,500

59. The cost of goods sold for the month of May is

a. 13,000
b. 18,000
c. 17,500
d. 18,500

60. Assume the following account balances for Puerto Princesa Company for the year 2012:

Merchandise inventory, beg. P50,000

Purchases ?
Purchase discounts 7,500
Purchase returns and allowances 5,000
Freight-out 3,000
Net sales 422,000

After taking a physical count, the company determines that the merchandise inventory at year-end is P17,500.
If the gross profit for the year is P139,500 , calculate the Purchases for the period.
a. 312,500
b. 300,000
c. 309,500
d. 359,500

61. The cost of goods sold is P552,000. The gross margin is P220,000 and sales is P825,000. If net purchases and
operating expenses are P450,000 and P325,000, respectively, the net income or loss is
a. 52,000 loss
b. 52,000 income
c. 105,000 loss
d. 105,000 income

Special Qualifying Examination for First Year | 21