ACC 109 - Intermediate Accounting 4 Mock PHINMA Exam 2S1920 PDF

INTERMEDIATE ACCOUNTING 4 MOCK PHINMA EXAM
BSA/BSMA/BSAIS SET - A
Name: Date:
Instructor: Rating:
G E N E R A L D I R E C T I O N S
READ THIS PAGE BEFORE STARTING THE ASSESSMENT
This is a nineteen (19) paged test composed of only one (1)

section and has a total score of one hundred (100) points. You
have Three (3) Hours to finish this assessment. The composition is
as follows:
(1) Multiple-choices question Section. LEARNING OBJECTIVE:

The questions in this section is with
four-five answer choices. The test is This assessment measures
the competence of the
composed of one hundred (100) questions student in terms of his/her
and is rated as one (1) point each. application of knowledge
and skills in the following
All things unnecessary for the test topics:
must be put in front of the testing area. a. Shareholders’
Use BLACK or BLUE ink ballpen only. Write Equity
all your answers on the designated answer
b. Presentation of
sheet. Further, erasures are strictly NOT
allowed and will invalidate your answers. Financial
Statements
You may NOT use smart phones or c. Revenue from
reference materials during the testing Contracts
session. Only the allowed calculators d. Non-current
should be used.
assets held for
Try to answer all questions. In sale
general, if you have some knowledge about e. Interim
a question, it is better to try to answer reporting
it. You will not be penalized for f. Segment
guessing.
reporting
Be sure to allocate your time carefully g. Cash and Accrual
so you can complete the entire test within h. Small and
the exam session. You may go back and Medium-Sized
review your answers at any time during Entities/Micro
the exam session. Enterprises
Those who are caught cheating or doing
acts not allowed during the exam shall be
instructed to surrender their test papers and shall leave the
testing room immediately. Subsequently, their papers shall be
rated as ZERO.
This concludes the instruction page.
You may now begin answering.
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Test I. Multiple Choices: Select the best answer from the choices.
1. According to PAS 1, dividends declared by an entity are disclosed in the

a. Statement of financial position d. Notes
b. Statement of profit or loss and OCI e. Any of these
c. Statement of changes in equity f. c or d
2. Which of the following shows a correct effect on equity?

Transaction Effect on equity
a. Issuance of shares Decrease
b. Retirement of shares Increase
c. Profit Decrease
d. Loss Decrease
3. The amount of profit or loss appears in which of the following financial statements?
a. Statement of financial position
b. Statement of comprehensive income
c. Statement of changes in equity
d. b and c
4. The statement of changes in equity is dated

a. as of a point in time. c. after some time.
b. for a period of time. d. Not dated
5. The first line in the Statement of changes in owner’s equity is

a. Profit or loss c. Additional contributions
b. Beginning capital d. Drawings
6. The ledger of WOLVERINE Co. in 20x1 includes the following:

Share capital 200,000
Share premium 40,000
Retained earnings, appropriated 36,000
Retained earnings, unappropriated 84,000
Revaluation surplus 60,000
Remeasurements of the net defined benefit liability (asset) - gain 30,000
Cumulative net unrealized gain on fair value changes of investment
in FVOCI 46,000
Effective portion of losses on hedging instruments in a cash
flow hedge 20,000
Cumulative translation loss on foreign operation 10,000
Treasury shares, at cost 26,000
How much is the total shareholders’ equity?

a. 460,000
b. 440,000
c. 420,000
d. 390,000
7. Spider-Man Co. was incorporated on January 1, 20x1. The following were the transactions during the
year:
- Total consideration from share issuances amounted to ₱2,000,000.
- A land and building were acquired through a lump sum payment of ₱400,000. A mortgage
amounting to ₱100,000 was assumed on the land and building.
- Total payments of ₱80,000 were made during the year on the mortgage assumed on the land and
building, The payments are inclusive of interest amounting to ₱10,000.
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- Additional capital of ₱200,000 was obtained through bank loans. None of the bank loans were paid
during the year. Half of the bank loans required a secondary mortgage on the land and building.
- There is no accrued interest as of year-end.
- Dividends declared during the year but remained unpaid amounted to ₱60,000.
- No other transactions during the year affected liabilities.
- Retained earnings as of December 31, 20x1 is ₱120,000.
8. How much is the profit for the year?

a. 120,000
b. 160,000
c. 180,000
d. 220,000
9. The ledger of THOR Co. in 20x1 includes the following:

Cash 200,000
Accounts receivable 400,000
Inventory 1,000,000
Accounts payable 300,000
Note payable 100,000
During the audit of THOR’s 20x1 financial statements, the following were noted by the auditor:
- Cash sales in 20x2 amounting to ₱20,000 were inadvertently included as sales in 20x1. THOR
recognized gross profit of ₱6,000 on the sales.
- A collection of a ₱40,000 accounts receivable in 20x2 was recorded as collection in 20x1. A cash
discount of ₱2,000 was given to the customer.
- During January 20x2, a short-term bank loan of ₱50,000 obtained in 20x1 was paid together with
₱5,000 interest accruing in January 20x2. The payment transaction in 20x2 was inadvertently
included as 20x1 transaction.
How much is the adjusted working capital as of December 31, 20x1?

a. 1,651,000
b. 1,014,000
c. 1,450,000
d. 1,201,000
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
10. How much is the other comprehensive income?
a. 400
b. 600
c. 800
d. 2,000
11. How much is the total comprehensive income?

a. 1,800
b. 2,200
c. 2,400
d. 2,800
The records of Iron Man Co. show the following information:
Interest expense ₱24,000
Cost of inventories sold 600,000
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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
12. How much is the total distribution (selling) costs?
a. 48,000
b. 56,000
c. 64,000
d. 108,000
13. How much is the total administrative expenses?

a. 24,000
b. 132,000
c. 226,000
d. 668,000
14. The records of Hulk 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
15. The records of Captain America 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
16. The records of Daredevil 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
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How much is the cost of goods sold?
a. 380,000
b. 464,000
c. 514,000
d. 546,000
17. Punisher Co. reported profit after tax of ₱210,000. Punisher’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
c. 2,200,000
d. 2,240,000
18. The records of Deadpool Co. on December 31, 20x1 showed the following information:
Sales 2,000,000
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
19. SILVER SURFER 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

Gambit Inc.’s accounts show the following balances:
Cost of goods sold ₱320,000
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Freight-out 30,000
Loss on sale of equipment 7,000
Rent expense (one-half pertains sales department) 80,000
Salaries expense (1/4 pertains to non-sales personnel) 150,000
Sales commission expense 10,000
Bad debts expense 5,000
20. How much is the total distribution costs (selling expenses)?
a. 198,000
b. 210,500
c. 217,500
d. 221,500
21. How much is the total administrative expenses?

a. 157,500
b. 156,500
c. 147,500
d. 175,500
22. Cyclops Co. has the following information:

Inventory, beg. 80,000
Inventory, end. 128,000
Purchases 320,000
Freight-in 16,000
Purchase returns 8,000
How much is Cyclops’ cost of sales?
a. 286,800
b. 292,800
c. 288,600
d. 268,800
23. Expenses are presented in the statement of comprehensive income using

a. nature of expense method.
b. function of expense method.
c. single or two-statement method.
d. a or b
24. Under this presentation method, expenses are presented in the statement of comprehensive income
without distinctions as to their functions within the entity.
a. nature of expense method
b. function of expense method
c. single-statement presentation
d. two-statement presentation
Use the following information for the next five questions:

The nominal accounts of Mr. Fantastic Corp. on December 31, 20x1 have the following balances:
Accounts Dr. Cr.
Sales ₱739,000
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Interest income 45,000
Gains 15,000
Inventory, beg. ₱65,000
Purchases 180,000
Freight-in 10,000
Purchase returns 5,000
Freight-out 30,000
Sales commission 45,000
Salaries expense 240,000
Rent expense 30,000
Depreciation expense 50,000
Utilities expense 25,000
Supplies expense 15,000
Transportation and travel expense 15,000
Taxes and licenses 60,000
Miscellaneous expense 3,000
Loss on the sale of equipment 5,000
Additional information:
a. Ending inventory is ₱90,000.
b. One-fourth of the salaries, rent, and depreciation expenses pertain to the non-sales department. The
sales department does not share in the other expenses.
25. How much is the cost of goods sold?
a. ₱151,000 c. ₱169,000
b. ₱95,000 d. ₱127,000
26. How much is the total selling expense?

a. ₱420,000 c. ₱180,000
b. ₱260,000 d. ₱340,000
27. The standard that addresses the accounting for revenues is

a. PFRS 16.
b. PFRS 18.
c. PFRS 5.
d. PFRS 15.
28. The objective of PAS 1 Presentation of Financial Statements is

a. to provide the basic principles in the presentation of general purpose financial statements to
improve comparability.
b. to provide the basic principles in the presentation of general and special purpose financial
statements to improve comparability.
c. to provide the basic principles in the presentation of general purpose financial statements to
improve consistency.
d. all of these
29. The heading of a financial statement most likely will not include
a. the name of the reporting entity.
b. the title of the financial statement.
c. the date of the financial statement.
d. the name(s) of the business owner(s).
Use the following information for the next three questions:
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The ledger of NIGHTCRAWLER Co. in 20x1 includes the following:
Jan. 1, 20x1 Dec. 31, 20x1
Current assets 1,200,000 ?
Noncurrent assets 4,000,000 ?
Current liabilities 900,000 1,000,000
Noncurrent liabilities ? 3,000,000
- NIGHTCRAWLER working capital as of December 31, 20x1 is twice as much as the working capital as
of January 1, 20x1.
- Total equity as of January 1, 20x1 is ₱1,700,000. Profit for the year is ₱2,400,000 while dividends
declared amounted to ₱1,000,000. There were no other changes in equity during the year.
30. How much is the total noncurrent liabilities as of January 1, 20x1?
a. 2,600,000
b. 2,800,000
c. 3,200,000
d. 3,400,000
31. How much is the total current assets as of December 31, 20x1?
a. 1,600,000
b. 800,000
c. 300,000
d. 2,200,000
32. How much is the total noncurrent assets as of December 31, 20x1?
a. 4,500,000
b. 6,500,000
c. 5,800,000
d. 5,500,000
33. NICK FURY Co. had the following information for 20x1:
Total assets turnover 2:1
Average receivables during the year ₱400,000
Total assets, January 1, 20x1 800,000
How much is the total assets as of December 31, 20x1?
a. 4,000,000
b. 3,800,000
c. 3,200,000
d. 2,800,000

Jan. 1, 20x1 Dec. 31, 20x1
of January 1, 20x1.

a. 2,600,000
b. 2,800,000
c. 3,200,000
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d. 3,400,000
a. 1,600,000
b. 800,000
c. 300,000
d. 2,200,000
36. How much is the total noncurrent assets as of December 31, 20x1?
e. 4,500,000
a. 6,500,000
b. 5,800,000
c. 5,500,000
a. 4,000,000
b. 3,800,000
c. 3,200,000
d. 2,800,000
38. The ledger of HUMAN TORCH Co. as of December 31, 20x1 includes the following:
10% Note payable 80,000
12% Note payable 120,000
14% Mortgage note payable 60,000
Interest payable -
- HUMAN TORCH Co.’s financial statements were authorized for issue on April 15, 20x2.
- The 10% note payable is due on July 1, 20x2 and pays semi-annual interest every July 1 and December
31. On January 28, 20x2, HUMAN TORCH Co. entered into a refinancing agreement with a bank to
refinance the entire note by issuing a long-term obligation.
- The 12% note payable is due on March 31, 20x2 and pays annual interest every March 31. On January
31, 20x2, HUMAN TORCH Co. extended the maturity of the note to March 31, 20x3 under the existing
loan agreement. The extension of maturity date is at the option of HUMAN TORCH.
- The 14% mortgage note is due on December 31, 20x9. Per agreement with the creditor, HUMAN TORCH
is to pay quarterly interests on the note, failure to do so will render the note payable on demand.
HUMAN TORCH failed to pay the 3rd and 4th quarterly interests on the note during 20x1.
How much is the total current liabilities?
a. 119,000
b. 155,000
c. 172,000
d. 189,000

Jan. 1, 20x1 Dec. 31, 20x1
of January 1, 20x1.
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a. 2,600,000
b. 2,800,000
c. 3,200,000
d. 3,400,000
a. 1,600,000
b. 800,000
c. 300,000
d. 2,200,000
a. 4,000,000
b. 3,800,000
c. 3,200,000
d. 2,800,000
42. ABC Co., a seller of concrete aggregates, enters into the following contracts:
i. A contract with Delta Co. to deliver goods. Payment is due one month after delivery.
ii. A contract with Echo Co. for the sale of 300 units of each of Products X and Y. The contract states
that the price of Product Y will be retrospectively reduced by 50% if Echo Co. makes a cumulative
purchase of at least 1,000 units of Product X within 6 months.
iii. A contract with Fafa Co. to deliver goods. At contract inception, Fafa Co. is broke. ABC Co. expects
that it can only collect 50% of the consideration.
iv. A contract with Gamma Co., an entity which is also engaged in the concrete aggregates business,
to exchange inventory to facilitate sales to customers in different geographical areas of
operations.
Identify the contracts to which PFRS 15 Revenue from Contract with Customers may not be applied.
a. Delta and Echo c. Fafa
b. Fafa and Gamma d. Gamma
43. ABC Co. enters into a contract with XYZ, Inc. to deliver 2 apples, 3 mangoes, and 5 potatoes for a total
consideration of ₱100. In accounting for the contract, which of the following is probably not true?
a. ABC Co. identifies three performance obligations in the contract.
b. ABC Co. allocates the ₱100 transaction price over the promises to deliver the apples, mangoes
and potatoes on the basis of relative stand-alone selling prices of those goods.
c. The allocation of the transaction price may result to the identification of a discount.
d. No revenue is recognized until all of the 2 apples, 3 mangoes and 5 potatoes are delivered even
though the 2 apples were delivered first before the mangoes and potatoes.
44. ABC Co., a manufacturer and dealer of printing machines, had the following transactions during the
period:
I. ABC Co. receives an order for the manufacture of a customized machine for a customer. The
customer pays half of the consideration at contract inception. The manufacturing lead time is 1
year. ABC Co. subcontracts a portion of the manufacturing to XYZ, Inc., another manufacturer.
II. ABC Co. receives an order for a standard machine. Payment is due only after ABC Co. has delivered
and installed the machine. Additionally, the contract requires ABC Co. to perform free
maintenance services over a 3-month period after the machine is installed. ABC Co. completes
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the delivery and installation by the end of the reporting period; however, the maintenance period
is not yet over.
III. ABC Co. receives an order for 2 machines. The first machine is delivered at contract inception but
the second machine will be delivered after two months. Payment is due only after both machines
are delivered. By the end of the reporting period, the second machine is not yet delivered and the
consideration is not yet collected.
Identify the contracts to which PFRS 15 Revenue from Contract with Customers may be applied.
a. Contract 1 c. Contracts 1, 2 and 3
b. Contract 3 d. None of these
45. It is an agreement between two or more parties that creates enforceable rights and obligations.
a. obligation c. revenue
b. contract d. any of these
46. On 1 July 20X7, The Iceman Company, a manufacturer of office furniture, supplied goods to The
Natiso Company for ₱120,000 on condition that this amount was paid in full on 1 July 20X8. Natiso
had earlier rejected an alternative offer from Iceman whereby they could have bought the same
goods by paying cash of ₱108,000 on 1 July 20X7. Under PFRS 15, how much relating to this
transaction should Iceman recognize in profit or loss in respect of revenue and interest income for
the year ended 30 June 20X8?
Revenue Interest income
a. 108,000 12,000
b. 120,000 Nil
c. 108,000 Nil
d. 120,000 12,000
47. On 1 July 20X7 The Professor X Company handed over to a client a new computer system. The contract
price for the supply of the system and after sales support for 12 months was ₱800,000. Professor X
estimates the cost of the after-sales support at ₱120,000 and it normally marks up such costs by 50%
when tendering for support contracts. Under PFRS 15, the revenue Professor X should recognize in its
financial year ended 31 December 20X7 is
a. 620,000 b. 800,000 c. 710,000 d. Nil
48. On October 1, 20x3, Acme Fuel Co. sold 100,000 gallons of heating oil to Karn Co. at ₱3 per gallon.
Fifty thousand gallons were delivered on December 15, 20x3, and the remaining 50,000 gallons were
delivered on January 15, 20x4. Payment terms were: 50% due on October 1, 20x3, 25% due on first
delivery, and the remaining 25% due on second delivery. What amount of revenue should Acme
recognize from this sale during 20x3?
a. 75,000 b. 150,000 c. 225,000 d. 300,000
49. A noncurrent asset classified as held for sale in accordance with PFRS 5 has not been sold after a
year. The asset shall continue to be presented as held for sale under PFRS 5 if
a. the delay is due to events beyond the entity’s control
b. the entity remains committed to its plan to sell the asset
c. the noncurrent asset is actually sold after the reporting period but before the financial statements
were authorized for issue.
d. a and b
50. Which of the following statements is true regarding the accounting treatment of costs to sell under
PFRS 5?
a. Costs to sell are added to the fair value when determining the measurement basis for an asset
held for sale
b. Costs to sell are never discounted because held for sale assets should be sold within one year
c. Costs to sell are discounted if it is expected that the sale will be made beyond one year.
d. a and c
51. According to PFRS 5, gains and losses on remeasurement of assets held for sale are
a. recognized in profit or loss
b. recognized in other comprehensive income
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c. recognized only for impairment losses
d. not recognized

COLOSSUS Co. is committed to a plan to sell its headquarters building and has initiated actions to
locate a buyer. As of this date, the building has a carrying amount of ₱5,000,000, a fair value of
₱6,000,000 and estimated costs to sell of ₱200,000.
52. COLOSSUS Co. has an intention to transfer ownership of a building to a buyer after it vacates the
building. How should COLOSSUS Co. classify the headquarters building?
a. Included under property, plant and equipment at ₱5,000,000.
b. Included under property, plant and equipment at ₱5,800,000.
c. Classified as held for sale at ₱5,000,000
d. Classified as held for sale at ₱5,800,000
53. COLOSSUS Co. will continue to use the building until the construction of a new headquarters is
completed. How should COLOSSUS Co. classify the headquarters building?
a. Included under property, plant and equipment at ₱5,000,000.
b. Included under property, plant and equipment at ₱5,800,000.
c. Classified as held for sale at ₱5,000,000
d. Classified as held for sale at ₱5,800,000
54. BUCKY BARNES Co. is a commercial leasing and finance company. As of year-end, BUCKY BARNES holds
equipment that is available either for sale or lease. BUCKY BARNES is not yet decided whether to sell
or to lease the equipment. The equipment has a carrying amount of ₱1,000,000, fair value of
₱1,200,000 and costs to sell of ₱50,000. How should BUCKY BARNES Co. classify the equipment?
a. Inventory, ₱1,000,000 c. Held for sale, ₱1,150,000
b. Investment property, ₱1,250,000 d. Held for sale, ₱1,000,000
55. Entity A changes its inventory cost formula from FIFO to weighted average. How should Entity A
account for this change?
a. by retrospective restatement, as a change in accounting policy
b. by prospective application, as a change in accounting estimate
c. by retrospective application, as a change in accounting policy
d. as a correction of prior period error
56. According to PAS 24, related party disclosures are necessary

a. because related party transactions may have resulted to assets and liabilities that were
recognized in the financial statements of the reporting entity.
b. to notify users of financial statements of the fact that related party transactions may not have
been made on arm’s length basis.
c. to indicate the possibility that an entity’s financial position and performance might have been
affected by the existence of such relationship.
d. in order to eliminate or minimize the effects of related party transactions on the financial
statements of the reporting entity.
57. Which of the following is an example of a non-adjusting event?

a. Bankruptcy of a customer after the reporting period that indicates that the carrying amount of a
trade receivable at the end of reporting period is impaired.
b. Evidence indicating that an asset is impaired as at the end of the reporting period.
c. Legal proceedings after the reporting period for an incident that occurred before the end of the
reporting period.
d. Significant decline in foreign exchange rates after the reporting period resulting to massive losses
on recognized foreign currency denominated financial instruments.
58. What is overriding consideration when determining the existence of a related party relationship?
a. The ability of one party to affect decisions of another party regarding relevant activities through
the existence of control, joint control or significant influence.
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b. The presence of relationship either by consanguinity or affinity.
c. The presence of a significant interest by one party over the other.
d. The presence of significant business transactions and economic dependence between the parties.
59. Interim financial reports prepared in accordance with PAS 34 shall, at a minimum, include
a. semi-annual interim financial statements.
b. complete set of financial statements.
c. condensed set of financial statements.
d. a statement of financial position and an income statement.
60. Entity A publishes quarterly interim financial reports. Entity A’s annual depreciation for items of PPE
is ₱120,000. At the end of the first quarter, Entity A’s inventories have a cost of ₱600,000 and a net
realizable value of ₱510,000. Entity A expects that the total employee bonuses (13th month pay) that
will be paid at year-end will amount to ₱60,000. How much is the total amount of expense to be
recognized from the items described above in Entity A’s first quarter statement of profit or loss?
a. 120,000 c. 30,000
b. 135,000 d. 270,000
61. Entity A wants to publish quarterly interim financial reports. Which of the following standards may
Entity A apply in preparing and presenting its interim financial reports?
a. PAS 1 c. PFRS 1
b. PAS 34 d. a or b
62. If an entity does not prepare interim financial reports,

a. its annual financial statements would not conform to the PFRSs.
b. its annual financial statements should not be described to have been prepared in accordance with
PFRSs
c. the conformance of its annual financial statements with the PFRSs is not affected.
d. a and b
63. Doctor Strange Co. is engaged in business process outsourcing. Doctor Strange subcategorizes its
main services into four: Information Technology, After-sales Support, Accounting, and Offsite Data
Management. Doctor Strange operates in five major geographical areas: Southeast Asia, North
America, South America, Australia and Europe. Internal reports are based on these five geographical
areas. What is the most appropriate basis of segment reporting for Doctor Strange?
a. On the basis of the main services provided.
b. On the basis of the geographical areas of operations.
c. On the basis of the domicile country of Doctor Strange and the rest of the world.
d. Any of these.
64. Segment A qualifies under the 10% test of total revenues but not on the profit or loss and total
assets tests. Segment A
a. is not a reportable segment.
b. is nonetheless included in the “all others” segment.
c. may be reported as a separate segment.
d. all of these
65. Information on an entity’s operating segments is shown below:

Operating segments Total revenue Profit Identifiable assets
A 1,000,000 200,000 4,000,000
B 500,000 120,000 1,000,000
C 300,000 30,000 800,000
D 500,000 50,000 1,700,000
E 200,000 60,000 800,000
F 900,000 400,000 1,000,000
Totals 3,400,000 860,000 9,300,000
The reportable segments are
a. A, B and F c. A, B, C, D and F
b. A, B, D and F d. All segments
13
66. Entity A wants to publish quarterly interim financial reports. Which of the following standards may
Entity A apply in preparing and presenting its interim financial reports?
c. PAS 1 c. PFRS 1
d. PAS 34 d. a or b
67. Under the cash basis of accounting, revenues are recorded

a. when they are earned and realized.
b. when they are earned and realizable.
c. when they are earned.
d. when they are collected.
68. Storm Co. wants to convert its 2003 financial statements from the accrual basis of accounting to the
cash basis. Both supplies inventory and office salaries payable increased between January 1, 2003 and
December 31, 2003. To obtain the 2003 cash basis net income, how should these increases be added
to or deducted from accrual-basis net income?
Supplies inventory Office salaries payable
a. Deducted Deducted
b. Deducted Added
c. Added Deducted
d. Added Added
69. An analysis of Jean Grey Corp.’s unadjusted prepaid expense account at December 31, 20x3,
revealed the following:
 An opening balance of ₱1,500 for Jean Grey’s comprehensive insurance policy. Jean Grey had paid
an annual premium of ₱3,000 on July 1, 20x2.
 A ₱3,200 annual insurance premium payment made July 1, 20x3.
 A ₱2,000 advance rental payment for a warehouse
Jean Grey leased for one year beginning January 1, 2004. In its December 31, 20x3 balance sheet,
what amount should Jean Grey report as prepaid expenses?
a. 5,200 b. 3,600 c. 2,000 d. 1,600
70. The balance in retained earnings at December 31, 2003 was ₱810,000 and at December 31, 2004 was
₱654,000. Net income for 2004 was ₱563,000. A stock dividend was declared and distributed which
increased common stock ₱225,000 and paid-in capital ₱125,000. A cash dividend was declared and
paid. The amount of the cash dividend was
a. ₱279,000. c. ₱494,000.
b. ₱369,000. d. ₱719,000.
71. On April 1, 2008, Rogue began operating a service proprietorship with an initial cash investment of
₱1,000. The proprietorship provided ₱3,200 of services in April and received full payment in May. The
proprietorship incurred expenses of ₱1,500 in April which were paid in June. During May, Rogue drew
₱500 against her capital account. What was the proprietorship's income for the two months ended
May 31, 2008, under the following methods of accounting?
Cash basis Accrual basis
a. 1,200 1,200
b. 1,700 1,700
c. 2,700 1,200
d. 3,200 1,700
72. Entity Co. uses the cash basis of accounting and reported income of ₱87,000 in 20x1. The following
items were considered in the computation of the cash basis net income.
Inventory, beginning 12,000
Inventory, ending 18,000
Receivables, beginning 40,000
Receivables, ending 38,000
Payables, beginning 19,000
Payables, ending 25,000
14
The accrual basis income is
a. 97,000 b. 73,000 c. 89,000 d. 85,000
73. Information on an entity’s accounts is shown below:

Current tax payable, beg. 150,000
Current tax payable, end. 400,000
Increase in deferred tax
liability 60,000
Increase in deferred tax asset 20,000
Income tax paid 280,000
How much is the income tax expense for the period?
a. 530,000 b. 540,000 c. 570,000 d. 610,000
74. Insurance payments P150,000

Prepaid insurance, Jan. 1 65,000
Prepaid insurance, Dec. 31 85,000
Accrued insurance payable decreased by 35,000
How much is the insurance expense under accrual basis accounting?
a. 205,000
b. 65,000
c. 130,000
d. 95,000
75. Unearned rent, Jan. 1 P170,000

Unearned rent, Dec. 31 85,000
Accrued rent income, Jan. 1 180,000
Accrued rent income, Dec. 31 200,000
Rental payments received 560,000
How much is the Rent income under the accrual basis accounting?
a. 455,000
b. 625,000
c. 665,000
d. 645,000
76. Payments made for income taxes P760,000

Income tax payable increased by 200,000
Deferred tax liability, Jan. 1 360,000
Deferred tax liability, Dec. 31 470,000
Deferred tax asset, Jan. 1 85,000
Deferred tax asset, Dec. 31 65,000
Income tax expense under accrual basis accounting is
a. 1,090,000
b. 960,000
c. 850,000
d. 830,000
77. All of the following may not qualify as “small and medium-sized entity” (SME) except
a. banks c. investment house
b. insurance company d. cooperative
78. Which of the following most likely would not qualify as a “small and medium-sized entity” (SME)?
a. A cooperative with total assets of ₱3M and liabilities of ₱2M.
b. A real estate company with total assets of ₱350M and liabilities of ₱250M.
c. A finance corporation with total assets of ₱2M and liabilities of ₱1M.
d. All of these entities qualify as SMEs.
79. Generally, non-financial liabilities of SMEs are measured at

a. the present value of future cash flows on the obligation
15
b. the best estimate of the amount that would be required to settle the obligation at the reporting
date
c. the mid-point value of the obligation
d. fair value
80. Which of the following is incorrect regarding the application and compliance with the PFRS for SMEs?
a. The application of the PFRS for SMEs, with additional disclosure when necessary, is presumed to
result in financial statements that achieve a fair presentation of the financial position, financial
performance and cash flows of SMEs.
b. The application of the PFRS for SME by an entity with public accountability does not result in a
fair presentation even when a local legislation permits entities with public accountability to use
the PFRS for SMEs.
c. An entity whose financial statements comply with the PFRS for SMEs shall make an explicit and
unreserved statement of such compliance in the notes and on the face of each component of a
complete set of financial statements as provided under the PFRS for SME.
d. Financial statements shall not be described as complying with the PFRS for SMEs unless they
comply with all the requirements of the PFRS for SMEs.
81. According to the PFRS for SMEs, in assessing whether the going concern assumption is appropriate,
management takes into account all available information about the future, which is at least, but is
not limited to,
a. 12 months from the reporting date.
b. two years from the reporting date.
c. 3 months from the reporting date
d. it depends on professional judgment
82. Under the PFRS for SMEs, investments in equity instruments that are not publicly traded and do not
give the entity significant influence, control, or joint control over the investee, shall be measured at
a. cost less impairment
b. amortized cost
c. fair value unless fair value cannot be measured reliably, in which case , at cost less impairment
d. fair value with changes in fair value recognized in other comprehensive income
83. An SME shall measure its investment in associate using

a. Fair value model
b. Cost model
c. Equity method
d. any of these
84. Under the PFRS for SMEs, relationships between a parent and its subsidiaries shall be disclosed
a. only when there have been related party transactions.
b. irrespective of whether there have been related party transactions.
c. even when control is lost
d. any of these
85. The ceiling of the threshold for total assets of an SME qualifier is
a. 400M b. 3M c. 350M d. 250M
86. (Use the PFRS for SMEs) On 15 March 20X1 the entity authorized for issue its annual financial
statements for the year ended 31 December 20X0. On 10 March 20X1 the entity’s factory and several
items of equipment were damaged in an earthquake. The event (quake damage):
a. is an adjusting event after the end of the 31 December 20X0 reporting period.
b. is a non-adjusting event after the end of the 31 December 20X0 reporting period.
c. is neither an adjusting event after the end of the 31 December 20X0 reporting period nor a non-
adjusting event after the end of the 31 December 20X0 reporting period.
d. None of these
87. (Use the PFRS for SMEs) Which of the following is a non-adjusting event after the end of the reporting
period that an entity should disclose in its financial statements for 20X5? In each case, the financial
statements for 20X5 have not yet been authorized for issue.
16
a. An entity has a portfolio of shares with quoted market prices. These are measured at fair value
through profit or loss in accordance with Section 11 of the PFRS for SMEs. After the end of the
reporting period, there was a substantial decline in the stock market. The fair value of the entity’s
portfolio of shares declined significantly.
b. At 31 December 20X5 one individual owned 100 per cent of the entity’s outstanding shares. In
February 20X6 that individual sold 80 per cent of her holding to another party.
c. All of the above.
d. None of these
88. (Use the PFRS for SMEs) The goods or services received or acquired in a share-based payment
transaction are recognized as
a. assets
b. expenses
c. income
d. a or b
89. (Use the PFRS for SMEs) Notes to the financial statements:
a. contain only information required to be disclosed by the PFRS for SMEs that was not presented in
the statement of financial position, statement of comprehensive income, statement of changes
in equity or cash flow statement.
b. contain information required by Section 8 Notes to the Financial Statements without reference to
the other sections of the PFRS for SMEs.
c. contain the information required to be disclosed by the PFRS for SMEs that was not presented in
the statement of financial position, statement of comprehensive income, statement of changes
in equity or statement of cash flows and additional information relevant to an understanding of
the financial statements.
d. None, an SME is not required to present notes.
90. (Use the PFRS for SMEs) The cross-reference between each line item in the financial statements and
any related information disclosed in the notes to the financial statements:
a. is voluntary.
b. is mandatory.
c. depends on the industry.
d. any of these
91. (Use the PFRS for SMEs) The presentation of the notes to the financial statements in a systematic
manner:
a. is voluntary.
b. is mandatory.
c. is mandatory, as far as is practicable
d. any of these
92. (Use the PFRS for SMEs) An entity normally presents the notes in the following order:
a. First, a statement that the financial statements have been prepared in compliance with the PFRS
for SMEs. Second, a summary of significant accounting policies applied. Third, supporting
information for items presented in the financial statements, in the sequence in which each
statement and each line item is presented. Last, any other disclosures.
b. First, supporting information for items presented in the financial statements, in the sequence in
which each statement and each line item is presented. Second, a statement that the financial
statements have been prepared in compliance with the PFRS for SMEs. Third, a summary of
significant accounting policies applied. Last, any other disclosures.
c. First, supporting information for items presented in the financial statements, in the sequence in
which each statement and each line item is presented. Second, a summary of significant
accounting policies applied. Third, a statement that the financial statements have been
prepared in compliance with the PFRS for SMEs. Last, any other disclosures.
93. (Use the PFRS for SMEs) An entity shall disclose in the summary of significant accounting policies:
a. the measurement basis (or bases) used in preparing the financial statements.
17
b. all the measurement bases specified in the PFRS for SMEs irrespective of whether they were
used by the entity in preparing its financial statements.
c. the measurement basis (or bases) used in preparing the financial statements and the accounting
policies used that are relevant to an understanding of the financial statements.
d. all of the measurement bases and the accounting policy choices available to the entity (i.e.,
specified in the PFRS for SMEs) irrespective of whether they were used by the entity in
preparing its financial statements.
94. (Use the PFRS for SMEs) Disclosure of information about key sources of estimation uncertainty:
a. is voluntary.
b. is mandatory.
c. is not required.
d. a and c
95. (Use the PFRS for SMEs) Disclosure of information about judgments, apart from those involving
estimations, that management has made in the process of applying the entity’s accounting policies
and that have the most significant effect on the amounts recognized in the financial statements:
a. is voluntary.
b. is mandatory.
c. is not required.
d. a and c
96. (Use the PFRS for SMEs) On 1 January 20X1 an entity acquired goods for sale in the ordinary course of
business for ₱100,000, including ₱5,000 refundable purchase taxes. The supplier usually sells goods
on 30 days’ interest-free credit. However, as a special promotion, the purchase agreement for these
goods provided for payment to be made in full on 31 December 20X1. In acquiring the goods transport
charges of ₱2,000 were incurred: these were due on 1 January 20X1. An appropriate discount rate is
10 per cent per year. The entity shall measure the cost of inventories at:
a. ₱102,000 b. ₱97,000 c. ₱88,364 d. ₱107,000
97. (Use the PFRS for SMEs) On 31 December 20X1 entity A acquired 30 per cent of the ordinary shares
that carry voting rights of entity B for ₱100,000. Entity A incurred transaction costs of ₱1,000 in
acquiring these shares. Entity A has significant influence over entity B. Entity A uses the cost model to
account for its investments in associates. In January 20X2 entity B declared and paid a dividend of
₱20,000 out of profits earned in 20X1. No further dividends were paid in 20X2, 20X3 or 20X4. A
published price quotation does not exist for entity B. At 31 December 20X1, 20X2 and 20X3, in
accordance with Section 27 Impairment of Assets, management assessed the fair values of its
investment in entity B as ₱102,000, ₱110,000 and ₱90,000 respectively. Costs to sell are estimated at
₱4,000 throughout. Entity A measures its investment in entity B on 31 December 20X1, 20X2 and 20X3
respectively at:
a. ₱100,000, ₱100,000, ₱100,000.
b. ₱95,000, ₱95,000, ₱86,000.
c. ₱98,000, ₱106,000, ₱86,000.
d. ₱98,000, ₱101,000, ₱86,000.
e. ₱102,000, ₱110,000, ₱90,000.
98. (Use the PFRS for SMEs) The facts are the same as in the immediately preceding question. However,
in this example, a published price quotation exists for entity B. Entity A measures its investment in
entity B on 31 December 20X1, 20X2 and 20X3 respectively at:
a. ₱100,000, ₱100,000, ₱100,000.
b. ₱95,000, ₱95,000, ₱86,000.
c. ₱98,000, ₱106,000, ₱86,000.
d. ₱98,000, ₱101,000, ₱86,000.
e. ₱102,000, ₱110,000, ₱90,000.
99. (Use the PFRS for SMEs) On 1 January 20X1 Gerard, a handsome youtuber, acquired a building for
₱95,000, including ₱5,000 non-refundable purchase taxes. The purchase agreement provided for
payment to be made in full on 31 December 20X1. Legal fees of ₱2,000 were incurred in acquiring the
18
building and paid on 1 January 20X1. The building is held to earn lease rentals and for capital
appreciation. An appropriate discount rate is 10 per cent per year. The entity shall measure the initial
cost of the building at:
a. ₱88,364
b. ₱97,000
c. ₱102,000
d. ₱107,000
100. (Use the PFRS for SMEs) A manufacturer gives warranties at the time of sale to purchasers of its
product. Under the terms of the contract for sale the manufacturer undertakes to make good, by
repair or replacement, manufacturing defects that become apparent within one year from the date
of sale. On the basis of experience, it is probable (i.e., more likely than not) that there will be some
claims under the warranties. Sales of ₱10 million were made evenly throughout 20X1. At 31 December
20X1 the expenditures for warranty repairs and replacements for the product sold in 20X1 are
expected to be made 50 per cent in 20X1 and 50 per cent in 20X2. Assume for simplicity that all the
20X2 outflows of economic benefits related to the warranty repairs and replacements take place on
30 June 20X2. Experience indicates that 95 per cent of products sold require no warranty repairs; 3
per cent of products sold require minor repairs costing 10 per cent of the sale price; and 2 per cent of
products sold require major repairs or replacement costing 90 per cent of sale price. The entity has
no reason to believe future warranty claims will be different from its experience. At 31 December
20X1 the appropriate discount factor for cash flows expected to occur on 30 June 20X2 is 0.95238.
Furthermore, an appropriate risk adjustment factor to reflect the uncertainties in the cash flow
estimates is an increment of 6 per cent to the probability-weighted expected cash flows. At 31
December 20X1 the entity recognizes a warranty provision measured at:
a. ₱0.
b. ₱210,000.
c. ₱222,600.
d. ₱113,300.
e. ₱106,000.
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INTERMEDIATE ACCOUNTING 4 MOCK PHINMA EXAM

This is a nineteen (19) paged test composed of only one (1)

(1) Multiple-choices question Section. LEARNING OBJECTIVE:

This concludes the instruction page.

You may now begin answering.

1. According to PAS 1, dividends declared by an entity are disclosed in the

2. Which of the following shows a correct effect on equity?

4. The statement of changes in equity is dated

5. The first line in the Statement of changes in owner’s equity is

6. The ledger of WOLVERINE Co. in 20x1 includes the following:

How much is the total shareholders’ equity?

8. How much is the profit for the year?

9. The ledger of THOR Co. in 20x1 includes the following:

How much is the adjusted working capital as of December 31, 20x1?

Use the following information for the next two questions:

11. How much is the total comprehensive income?

13. How much is the total administrative expenses?

14. The records of Hulk Co. showed the following information:

16. The records of Daredevil Co. showed the following information:

Use the following information for the next two questions:

21. How much is the total administrative expenses?

22. Cyclops Co. has the following information:

23. Expenses are presented in the statement of comprehensive income using

Use the following information for the next five questions:

26. How much is the total selling expense?

27. The standard that addresses the accounting for revenues is

28. The objective of PAS 1 Presentation of Financial Statements is

Use the following information for the next three questions:

Use the following information for the next three questions:

34. How much is the total noncurrent liabilities as of January 1, 20x1?

Use the following information for the next three questions:

39. How much is the total noncurrent liabilities as of January 1, 20x1?

Use the following information for the next two questions:

56. According to PAS 24, related party disclosures are necessary

57. Which of the following is an example of a non-adjusting event?

62. If an entity does not prepare interim financial reports,

65. Information on an entity’s operating segments is shown below:

67. Under the cash basis of accounting, revenues are recorded

73. Information on an entity’s accounts is shown below:

74. Insurance payments P150,000

75. Unearned rent, Jan. 1 P170,000

76. Payments made for income taxes P760,000

79. Generally, non-financial liabilities of SMEs are measured at

83. An SME shall measure its investment in associate using

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