ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD

STATEMENT OF COMPREHENSIVE INCOME QUIZ

NAME: ____________________________________________ SCORE:____________________

SECTION: _________________________________________ DATE: ____________________

GENERAL INSTRUCTIONS:
A. TEST PAPER, PENS/PENCIL, CALCULATOR AND DRINKING WATER ARE ONLY ALLOWED
TO BE USED DURING THE TEST. ALL OTHER THINGS MUST BE PLACED IN FRONT OF
THE ROOM.
B. WRITE YOUR ANSWER ON THE SPACE BEFORE EACH NUMBER.
C. STRICTLY NO ERASURES, SUPERIMPOSITIONS, CUTTING OF PAPER, OR ANY OTHER
MEANS IN ALTERING YOUR ANSWER.
D. USE BLACK OR BLUE INK IN WRITING YOUR FINAL ANSWER. ERASABLE INKS ARE
PROHIBITED.
E. NON-COMPLIANCE FOR INSTRUCTIONS A-D WILL GIVE THE STUDENT CORRESPONDING
DEDUCTIONS.
F. TIME ALLOTMENT: 50 MINUTES
G. POINTING SYSTEM: PART I – 1 POINT EACH; PART II – 2 POINTS EACH.

PART I: THEORIES. TRUE/FALSE

________1. The Statement of comprehensive income shows information on an

entity’s financial position during the period.
________2. Revenue includes both income and gains.
________3. The revenue earned by a merchandising business from its sales of
goods is commonly referred to as sales.
________4. If income is greater than expenses, the difference is loss.
________5. A statement of comprehensive income that shows expenses by their
function is said to have been prepared using the multi-step approach.
________6. The revenue earned by a service business from rendering services is
commonly referred to as service fees.
________7. Expenses decrease equity.
________8. If total income is ₱100 while total expenses is ₱80, loss is ₱20.
________9. The Statement of profit or loss and other comprehensive income is
the same with the Income statement.
________10. A statement of comprehensive income that presents separately an
entity’s cost of sales is said to have been prepared using the single-step
method.
________11. The Statement of profit or loss and other comprehensive income is
different from the income statement.
________12. The Statement of comprehensive income shows profit or loss only.
________13. An entity can present an income statement alone in lieu of the
statement of comprehensive income.
________14. The elements of the statement of comprehensive income are income
and expenses.
________15. Income increases equity.
________16. The residual category of expenses under the function of expense
method is “Distribution costs.”
________17. Losses incurred on sales of noncurrent assets are presented under
“Administrative expenses.”
________18. Distribution costs (or Selling expenses) are costs attributable to
selling activities.
________19. The categories of expenses under the function of expense method
include “Cost of sales,” “Distribution costs,” and “Administrative expenses”
only.
________20. If profit is ₱100 while other comprehensive income is ₱80, total
comprehensive income is ₱20.

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

PART II: PROBLEMS

Use the following information for the next two questions:

The following items were presented for the purpose of determining
comprehensive income.
Profit for the year 2,000
Increase in revaluation surplus 1,000
Remeasurements of the net defined benefit liability (asset) – loss (200)
Net change in translation of foreign operation (400)
Dividends declared (100)
Stock rights 300

1. How much is the other comprehensive income?

a. 400
b. 600
c. 800
d. 2,000

2. How much is the total comprehensive income?

a. 1,800
b. 2,200
c. 2,400
d. 2,800

Use the following information for the next two questions:

The records of Afternoon Sun Co. show the following information:

Interest expense ₱24,000

Cost of inventories sold 600,000
Insurance expense 100,000
Advertising expense 20,000
Freight-out 10,000
Freight-in 4,000
Loss on sale of equipment 2,000
Legal and other professional fees 12,000
Rent expense (one-half occupied by sales department) 8,000
Sales commission expense 14,000
Doubtful accounts expense 16,000

3. How much is the total distribution (selling) costs?

a. 48,000
b. 56,000
c. 64,000
d. 108,000

4. How much is the total administrative expenses?

a. 24,000
b. 132,000
c. 226,000
d. 668,000

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

5. The records of SOIREE EVENING PARTY Co. showed the following information:

Increase in accounts receivable 100,000

Collections on accounts 800,000
Cash sales 120,000
Increase in inventory 40,000
Freight-in 14,000
Freight-out 13,000
Decrease in accounts payable 60,000
Disbursements for purchases 480,000
Purchase discounts 4,000

How much is the gross profit for the year?

a. 662,000
b. 656,000
c. 648,000
d. 626,000

6. The records of BRACKISH SALTY Co. showed the following information:

Accounts receivable, net, Jan. 1, 20x1 40,000
Accounts receivable, net, Dec. 31, 20x1 160,000
Accounts receivable turnover 4:1
Inventory, Jan. 1, 20x1 120,000
Inventory, Dec. 31, 20x1 60,000
Inventory turnover 3:1

How much is the gross profit for the year?

a. 120,000
b. 130,000
c. 132,000
d. 146,000

7. The records of SURLY BAD TEMPERED Co. showed the following information:
Decrease in accounts payable 60,000
Disbursements for purchases 440,000
Increase in raw materials 100,000
Direct labor is 50% of raw materials used in production
Manufacturing overhead is 20% of prime costs
Increase in work-in-process inventory 40,000
Decrease in finished goods inventory 50,000

How much is the cost of goods sold?

a. 380,000
b. 464,000
c. 514,000
d. 546,000

8. PRENTICE A LEARNER Co. reported profit after tax of ₱210,000. PRENTICE’s

income tax rate is 30%. Operating expenses for the year is 15% of sales
and 25% of cost of sales. Other expenses were 10% of sales. How much is
the total sales?
a. 1,800,000
b. 2,000,000

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

c. 2,200,000
d. 2,240,000

9. The records of HACK TO CHOP Co. on December 31, 20x1 showed the following
information:
2,000,00
Sales 0
Sales discounts 20,000
Cost of sales 800,000
Distribution costs 96,000
Administrative costs 240,000
Casualty loss on typhoon 40,000
Dividends received from investments in FVPL 24,000
Dividends received from investment in associate 48,000
Share in the profit of an associate 72,000
Dividends declared and paid 28,000
Interest expense 44,000
Unrealized gain on investments in FVPL 30,000
Unrealized gain on investments in FVOCI 38,000
Income tax expense 300,000
Loss on revaluation 26,000
Remeasurements of the net defined benefit liability (asset) –
gain 22,000
Correction of understatement in depreciation in prior year 32,000
Translation adjustment of foreign operation – loss 8,000

How much is the profit for the year?

a. 886,000
b. 586,000
c. 612,000
d. 626,000

10. WASHY PALE Co. has the following information on December 31, 20x1:
- Cost of sales is ₱260,000.
- Operating expenses are 13% of sales and 20% of cost of sales.
- Interest expense is 5% of sales.
- Income tax rate is 30%. There were no temporary differences during the
year.

How much is the profit for the year?

a. 65,000
b. 140,000
c. 38,600
d. 47,600

-NOTHING FOLLOWS-

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

ANSWERS TO QUIZ 1:
1. FALSE – financial performance
2. FALSE – income includes both revenue and gains
3. TRUE
4. FALSE
5. TRUE
6. TRUE
7. TRUE
8. FALSE – profit of ₱20
9. FALSE - different
10. FALSE – multi-step
11. TRUE
12. FALSE – profit or loss and other comprehensive income
13. FALSE – a statement showing other comprehensive income must also be
presented
14. TRUE
15. TRUE
16. FALSE – Administrative expenses
17. FALSE – losses are included in the “Other expenses” category. If material,
losses are presented separately.
18. TRUE
19. FALSE – finance costs, income tax expense, and if applicable, other
expenses are also categories of expenses under the function of expense method
20. FALSE - ₱180 (100 + 80)

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

SOLUTIONS TO QUIZ 2
1. A

Profit for the year 2,000

Other comprehensive income:

Revaluation gain 1,000

Remeasurements of the net
defined benefit
liability (asset) (200)
Translation loss on foreign
operation (400)
Total other comprehensive
income (a) 400

Total comprehensive income (b) 2,400

2. C (see solution above)

3. A

Selling expenses Administrative expenses

Advertising expense Insurance expense
P20K P100K
Freight-out 10 Legal and other professional
Rent expense (one half) fees 12
4 Rent expense (one half)
Sales commission expense 4
14 Doubtful accounts expense
Total selling expenses 16
P48K Total administrative expenses
P132K

4. B (see solution above)

5. D

Sales on account are computed as follows:

Accounts receivable

A/R, beg. -
Sales on account Collections on
(squeeze) 900,000 800,000 accounts

100,000 A/R, end

Cost of sales is computed as follows:

Accounts
payable

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

Purchase discounts 4,000 60,000 A/P, beg

Disbursements for Gross purchases
purchases 480,000 424,000 (squeeze)

A/P, end -

Inventory
Inventory, beg. -
Gross purchases 424,000 4,000 Purchase discounts
Freight in 14,000 394,000 Cost of sales (squeeze)
40,000 Inventory, end

Gross profit is computed as follows:

Cash sales 120,000
Credit sales 900,000
Total sales 1,020,000
Cost of sales (394,000)
Gross profit 626,000

6. B Solution:

Net credit sales

Accounts receivable turnover =
Average accounts receivable

Where:
A/R, beg. + A/R, end.
Average accounts receivable =
2

40,000 + 160,000
Average accounts receivable =
2
Average accounts receivable = 100,000

Net credit sales

Accounts receivable turnover =
Average accounts receivable

Net credit sales

4 =
100,000
Net credit sales = 400,000

Cost of sales
Inventory turnover =
Average inventory
Where:
Inventory, beg. + Inventory, end.
Average inventory =
2

Using the formulas given above, cost of sales is computed as follows:

120,000 + 60,000
Average inventory =
2
Average inventory = 90,000

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

Cost of sales
Inventory turnover =
Average inventory

Cost of sales
3 =
90,000
Cost of sales = 270,000

Gross profit is computed as follows:

Net credit sales 400,000
Cost of sales (270,000)
Gross profit 130,000

7. C Solution:

Accounts payable
60,000 A/P, beg.
Disbursements for
purchases 440,000 380,000 Purchases (squeeze)

A/P, end -

Raw materials
inventory
RM Invty, Raw materials used
beg. - in
production
Purchases 380,000 280,000 (squeeze)

100,000 RM Invty, end.

Work-in-process
inventory
WIP, beg. -
Cost of goods
RM used in production 280,000 manufactured
Direct labor (50% of RM) 140,000 464,000 (squeeze)
Production overhead* 84,000
40,000 WIP, end.

Total goods put into process 504,000 504,000

*Prime cost = Direct materials + Direct labor

Prime cost = 280,000 + 140,000 = 420,000
Production overhead = 20% x 420,000 = 84,000

Finished goods inventory

FG, beg. 50,000

Cost of goods
Cost of goods manufactured 464,000 514,000 sold (squeeze)

- FG, end

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

Total goods avail. for sale 514,000 514,000

8. B Solution:

Sales 100%
Cost of sales (15% / 25%) (60%)
Gross profit 40%
Operating expenses (15% of 100%) or (25% of 60%) (15%)
Other expenses (10% of 100%) (10%)
Profit before tax 15%

The profit after tax given in the problem is translated to profit before tax
as shown below:
Profit after tax (given) 210,000
Divide by: (100% less 30% tax rate) 70%
Profit before tax 300,000

Sales (300,000 Profit before tax ÷ 15%) 2,000,000

9. B Solution:

HACK TO CHOP Co.

Statement of profit or loss and other comprehensive income
For the year ended December 31, 20x1
Sales 2,000,000

Sales discounts (20,000)

Net sales 1,980,000
Cost of sales (800,000)
Gross profit 1,180,000

Distribution costs (96,000)

Administrative costs (240,000)

Dividends received from investments in FVPL 24,000

Share in the profit of an associate 72,000

Unrealized gain on investments in FVPL 30,000

Casualty loss on typhoon (40,000)

Interest expense (44,000)

Profit before tax 886,000
Income tax expense (300,000)
Profit for the year 586,000
Other comprehensive income:
Items that will not be reclassified subsequently to profit
or loss:

Loss on revaluation (26,000)

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ACC 109: INTERMEDIATE ACCOUNTING, PART 4 2ND GRADING PERIOD
STATEMENT OF COMPREHENSIVE INCOME QUIZ

Unrealized gain on investments in FVOCI 38,000

Remeasurements of defined benefit pension plans 22,000

34,000
Items that may be reclassified subsequently to profit or
loss:

Loss on translation of foreign operation (8,000)

Other comprehensive income for the year 26,000

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 612,000

10. D Solution:

Cost ratio is derived from the percentages of operating expenses over sales
and cost of sales as follows:
Cost ratio = 13% / 20% = 65%

Amount

Sales 400,000 (260,000 COS ÷ 65%)

Cost of sales (260,000) (start)

Gross profit 140,000

Operating (400,000 x 13%) or (260,000
expenses (52,000) x 20%)

Interest expense (20,000) (400,000 x 5%)

Profit before tax 68,000

Income tax
expense (20,400) (40,000 x 30%)

Profit after tax 47,600

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