1. Which of the following statement is provided d.

Offsetting
by general-purpose financial statements?
I. an enterprise’s financial position as of a 5. Financial statements should be prepared at
given date least
II. an enterprise’s performance for a specific a. annually
period of time b. semi-annually
III. an enterprise’s cash flows for a specific c. quarterly
period of time d. monthly
IV. an enterprise’s economic decision made
during a specific period of time 6. Offsetting assets and liabilities is
a. allowed, unless not permitted by PFRS
a. I and II b. allowed in all cases
b. II and III c. not allowed, unless permitted or required by
c. I, II, and III PFRS
d. I, II, III, and IV d. not allowed in all cases

2. Which of the following are components of a 7. Which of the following statements is true, and
complete set of financial statements? which is false?
I. Manufacturing schedule I. Financial statements should present fairly
II. Statement of Comprehensive Income the financial position, performance and
III. Statement of Cash Flows cash flows of an enterprise
IV. Statement of Financial Position II. Accounting policies are the specific
principles, bases conventions, rules and
a. I, II, III, and IV practices adopted by an enterprise in
b. II, III, and IV presenting financial statements
c. I, II, and IV III. When preparing financial statements,
d. I, III, and IV management should assume a liquidation of
an enterprise
3. This basic feature supports the presentation of IV. In the absence of specific requirement on
each material item separately in the financial policies, management should develop
statements. Likewise, immaterial amounts of policies to ensure that the financial
similar nature are grouped and reported as statements provide relevant and reliable
single item in the financial statements. information
a. All statements are true
a. Materiality and aggregation b. True, True, False, False
b. Offsetting c. True, True, False, True
c. Consistency of Presentation d. All statements are false
d. Fair Presentation

8. Which of the following is a non-current liability on

4. When the entity changes the presentation of December 31, 2017 statement of financial position?
financial statements or reclassifies items in the
a. Bonds payable maturing on March 31, 2018, which
financial statements to achieve the feature of
a. comparability were refinanced by issuing a 5-year bonds payable in
2018 before issuance of the 2017 financial statements
b. compliance with IFRS
c. Consistency
b. Mortgage note payable due March 15, 2018, which
was rolled over in 2017 after the issuance of the 2017
financial statements
c. Mortgage note payable due March 15, 2018, which
was converted into ordinary shares of the company in
2018 before the issuance of the 2017 financial
statements
d. Mortgage note payable due March 15,2018, in which
the entity as of December 31, 2017 has the discretion
and intention to roll over for a period of at least 24
months from the original maturity date.
9. The net assets of a business are equal to
a. Current assets minus current liabilities
b. Total assets plus total liabilities
c. Total assets minus total liabilities
d. Total assets minus shareholder’s equity
10. Which form of the statement of financial position
lists current liabilities after current assets, emphasizing
the working capital of the enterprise?
a. Account form
b. Report form
c. financial position form
d. Horizontal form
11. An analysis of an enterprise's financial position is
useful in assessing a firm's solvency, which is the
ability to
a. satisfy short term obligations
b. meet all obligations as they come due
c. maintain IAS levels of preference and ordinary
dividends
d. survive a major economic downturn
12. The operating cycle
a. cannot exceed one year
b. refers to seasonal variations experienced by business
enterprises
c. should be used to classify assets and liabilities as
current if it is less than one year
D. allows trade receivables and inventories to be
classified as current assets even if they would not be
realized in cash within twelve months from the end of
reporting period
13. For a manufacturer of motorcycle units, the
operating cycle represents the period of time
a. between selling the product on credit and collecting
cash from customers.
b. between producing the product, selling it on credit,
and collecting cash from the customers
c. required to purchase raw materials, produce the
product, sell it on credit and collect cash from
customers
d. required to purchase raw materials, produce the
product and sell it on credit
14. Which of the following is a current asset?
a. Cash surrender value of a life insurance policy of
which the company is beneficiary.
b. Investment in marketable securities for the purpose
of controlling the issuing company.
c. Cash designated for the purchase of tangible fixed
assets.
d. Trade instalment receivables normally collectible in
18 months.
15. Which of the following would be reported in the
shareholder's equity section of the statement of
financial position?
I. Retained earnings appropriated for the plant
expansion
II. Cash dividends declared but not yet paid on
preference shares
III. Share premium
IV. Accumulated actuarial gains or losses on
remeasurement of defined benefit asset or liability.
a. I, II, III and IV
b. I, II and III
c. I, III and IV
d. II, III and IV
16. Which of the following should be reported as a
shareholder's equity account?
a. Discount on convertible bonds
b. Premium on convertible bonds
c. Cumulative foreign exchange translation loss
d. Organization cost
17. Which of the following statements is correct?
a. A company may exclude a maturing long-term
obligation under current liabilities if the firm intends to
refinance the obligation on a long-term basis
b. A company may exclude a maturing long-term
obligation from current liabilities if the firm can
demonstrate an ability to consummate refinancing on a
long-term basis
c. A company shall classify its financial liability as non-
current if the entity has the discretion to refinance or
roll over an obligation for at least twelve months after
the reporting period under an existing loan facility, even
if the obligation would otherwise be due within a
shorter period.
d. A company should continue to classify its long-term
liabilities as non-current, even when they are due to be
settled within one year, if based on the financial status
of the company, refinancing is considered inevitable.
18. Which of the following non-adjusting events after
the reporting period will require disclosure?
a. Retirement of company president
b. Settlement of litigation when the event that give rise
to the litigation occured prior to reporting date
c. Employee strikes
d. Issue of a large amount of share capital
19. Which of the following information should be
disclosed in the summary of significant accounting
policies?
a. Criteria for determining which investments are
treated as cash equivalents
b. Guarantee of indebtedness of others
c. Business combination after the end of the reporting
period
d. Refinancing of debt subsequent to the end of
reporting period
20. The notes to financial statements should not be
used to
a. present disclosures required by generally accepted
accounting principles
b. describe in the accounting policies adopted by
enterprise
c. correct an improper financial statement presentation
d. describe the basis for resolving uncertainties in the
financial statements
21. Which of the following is NOT a negative element
under the PPE classification?
a. Accumulated depletion of mineral-bearing property
b. Accumulated depreciation of paved parking lot
c. Accumulated depreciation of buildings
d. Reserve for plant expansion
22. When assets and liabilities on the statement of
financial position are not presented into current and
non-current classification, they should be presented
broadly
a. In the order of maturity
b. In the order of liquidity
c. Alphabetically
d. In the order of magnitude
23. Events that occur after the reporting period but
prior to the issuance of financial statement are called
a. Prior events
 b. Post-closing events
c. Events after the reporting period
d. Unaudited events
24. The components of the financial statements
include
I. Statement of financial position
II. Statement of comprehensive income
III. Statement of cash flow
IV. Statement of changes in equity
V. Environmental reports and value added
statements
VI. Summary of accounting policies and
explanatory notes
a. I, II, III, IV, V and VI
b. I, II, III, IV, and V
c. I, II, III, and IV
d. I, II, III, IV and VI
25. IAS 1 Presentation of Financial Statements suggests
a normal order for the presentation of the notes in
financial statements. What is this normal order?
1.) Statement of measurement basis and
accounting policies applied
2.) Supporting information or computation for
line items presented and aggregated in the
financial statements
3.) Statement of compliance with the
Philippine Financial Reporting Standards
4.) Commitments, contingencies and other
required financial and non-financial
disclosures
a. 1, 2 ,3, 4
b. 3, 1, 4, 2
c. 3, 1, 2, 4
d. 3, 2, 1, 4
26. The refinancing of a currently maturing, long term
debt on a long term basis completed on or before the
reporting date requires that such debt be classified as
a. Current liability
b. Non-current liability
c. Current liability or non-current liability, at
the option of the debtor
d. Non-adjusting event shall be disclosed in
the notes to the financial statements
27. On December 31, 2017, a company lawyer
determines that it is probable that the company will
lose a legal case fi led by its suppliers and
estimates that the loss would be between P6 million
and 10 million. On January 10, 2018, a settlement was
made and the company paid P9 million. How should
this be reported in the company financial statements
for the year ended December 31, 2017, which were
issued on March 10, 2018?
a. As a loss of 10 million in the income
statement
b. As a provision of 8 million in the statement
of financial position statements
c. As a provision of 9 million in the statement
of financial position
d. As a footnote only
28. The following dat a are made available for the
purpose of stating the financial position of Say, Inc. on
December 31, 2017
Cash, including sinking fund of P50,000 200,000
with trustee
Notes receivable (including 20,000 of 120,000
notes pledged with ABC Bank)
Accounts receivable, net of allowance 79,000
for uncollectible accounts
Inventory, including 60,000 cost of 280,000
goods in transit purchased FOB
destination and 50,000 cost of goods in
transit purchased FOB shipping point.
Both goods were received January 3,
2018
How much current assets should be shown in the
statement of financial position at December 31, 2017:
a. 569, 000
b. 589, 000
c. 619, 000
d. 679, 000
29. For purposes of stating the working capital of Jay
Trading for December 31, 2017, the following data are
submitted:
Cash on hand and in bank, net of P560,000
50,000 bank overdraft
Petty cash (unreplenished petty cash 10
expenses,4000)
Notes receivable 500,000 up by company. P9,000)
Accounts receivable, net of accounts 1,100,000 Total P322,000
with credit balance of 100,000
Merchandise inventory, including 1,480,000
goods held on consignment of 180,000 Cash on hand including customer’s DAIF check for P12,000
Prepaid expenses 90,000 Allowance for bad debts
TOTAL CURRENT ASSETS P3,740,000 Selling price of goods invoiced at 150% of cost on December 27, 2
on January 10, 2018
Accounts payable, net of accounts with P600,000 Total
debit balance of P50,000
Notes payable (due annually at 2,000,000 What is the correct amount of current assets at
1,000,000 payable every May 31) December 31, 2017?
Accrued Expenses 80,000
TOTAL CURRENT LIABILITIES P 2,680,000 a. P4,070,000
b. P4,014,000
How much total current assets should be c. P3,955,000
presented on the statement of financial position of Jay d. P3,855,000
Trading on December 31, 2017?
32. The accounts below were taken from the
unadjusted trial balance of May Company at December
a. 3,740,000
31, 2017:
b. 3,756,000
c. 3,706,000 Cash P124,000
d. 3,606,000 Equity investments at fair value
through profit or loss (at cost) 87,000
30. Use the same info given in MC29. How much is the Notes Receivable 92,000
total current liabilities should Jay Trading present in its Trade accounts receivable 122,000
statement of financial position on December 31, 2017? Allowance for uncollectible accounts 6,000
Employees income tax withheld 4,000
Notes payable 150,000
a. 2,680,000 Trade accounts payable 75,000
b. 1,880,000 Merchandise inventory 136,000
c. 1830,000 Bonds payable 250,000
d. 1,780,000 Share dividends distributable 15,000
Income tax payable 28,000
31. The current asset section of the statement of
financial positions prepared by the accountant of Day
An analysis taken of the above accounts disclosed the
Company as of December 31, 2017 follows:
following:
Cash P 332,000
Accounts Receivable 2,087,000 a. Bank overdraft of P13,000 was deducted from
Financial assets at fair value 355,000 cash balance.
through profit or loss b. Trade accounts receivable was net of customers’
Inventory (taken by physical count 1,240,000 deposit of P7,000
on December 31, 2017) c. Merchandise worth P15,000 received December
30, 2017 was included in the inventory but was
An examination of the accounts showed the following: not recorded as a purchase.
d. Accounts payable was net of accounts with debit
Cash on hand including customer’s DAIF balance of P12,000.
check for P12,000 P 47,000 e. A bank loan of P30,000 due December 31, 2020
Cash in bank (reconciliation shows bank 285,000 was included in the notes payable balance.
charges in December 2017 not yet taken f. Bonds payable that was issued in 2017 will
 mature in five annual installment beginning June Mortgage payable due in equal
1, 2018 annual installments until October
g. The fair value of the equity investment at 31, 2022 750,000
December 31, 2017 was P90,000 Share dividends declared but not 300,000
yet issued
How much is the total current assets should be Claims for the unclaimed wages by
reported in the statement of financial position at employees of the company covered
December 31, 2017? in a pending lawsuit (not
considered to be probable) 250,000
a. P572,000
b. P587,000 How Much is the total current liabilities of Ray
c. P590,000
Company to be shown on its December 31, 2017
d. P602,000
statement of financial position?
33. Use the same information given in MC 32. How
a. P1,272,000
much total current liabilities be reported on the
b. P1,722,000
statement of financial position as of December 31, c. P2,022,000
2017? d. P2,207,000

a. P339,000
b. P324,000 36. Way Company’s adjusted trial balance at
c. P304,000 December 31, 2017, includes the following:
d. P234,000
Ordinary share capital, P5 par P360,000
34. Hay company was incorporated on July 1, 2017, Share premium 480,000
with P2,000,000 form the issuance of shares borrowed Treasury shares, at cost 30,000
funds of P300,000. During the remainder of 2017, the Net unrealized loss on equity
company’s profit was P100,000. On December 15, Hay securities at fair value through other
Company paid P8,000 cash dividends. No additional comprehensive income 12,000
activities affected owner’s equity in 2017. At Retained appropriated for
December 31, 2017, Hay Company’s liabilities had contingencies 90,000
increased to P376,000. Unappropriated retained earnings 120,000

In Hay’s December 31, 2017 statement of financial What amount should Way report as total
position, total assets should be reported at shareholders’ equity in its December 31, 2017
statement of financial position?
a. P2,392,000
b. P2,400,000 a. P1,008,000
c. P2,468,000 b. P1,032,000
d. P2,768,000 c. P1,068,000
d. P1,092,000

35. Ray Company had the following liabilities at

December 31, 2017:

Trade accounts payable, net of

debit balances totaling P65,000 in
supplier’s accounts P1,125,000
Accrued expenses 136,000
Interest payable 96,000
Income tax payable 150,000
37. Bay Corporation trial balance included the b. P1,088,000
following account balances at December 31, 2017: c. P1,808,000
d. P7,208,000
Accounts payable P450,000
Bonds payable, due December 31, 750,000 40. Gay corporation’s trial balance reflected the
2018 following account balances at December 31, 2017:
Discount on bonds payable 90,000
Dividends payable on January 31, Accounts receivable (net) P160,000
Debt securities at fair value through 50,000
2018 240,000
Notes payable due January 31, 2021 600,000 profit or loss
Accumulated depreciation – 150,000
How much is included in the current liabilities section equipment
of Bay Corporation’s December 31, 2017 statement of Cash 110,000
financial position? Merchandise inventory 300,000
Equipment 250,000
a. P1,350,000 Prepaid expenses 10,000
b. P1,530,000 Land held for future business site 180,000
c. P1,950,000
d. P2,340,000 In Gay’s December 31, 2017 statement of financial
position, the current assets total is
38. Shown below are selected accounts and their
balances for the Zoey Company as of December 31, a. P810,000
b. P730,000
2017:
c. P670,000
Accounts payable P980,000 d. P630,000
Accounts receivable 2,160,000
Allowance for bad debts 250,000
41 Pay Company had the following assets at December
Cash 224,000
Wages payable 108,000 31, 2017:
Trademarks 450,000
Long-term advances to officers 1,500,000  (Cash of which P25,000 is earmarked for
Inventory 830,000 the acqquistion of equipment)
Income taxes payable 720,000 P490,000
Notes receivable (short-term) 970,000  Investment in equity securities held for
Bond redemption fund 1,800,000 immediate trading (including P200,000
Bonds payable 5,000,000 fair value of shares of Pay Company
Premium on bonds payable 400,000 intended to be sold in 2017, purchased
Treasury shares 576,000 for P190,000) 380,000
 Accounts receivable, net (including
How much were the total current assets at December P500,000 due from an officer, no due
31, 2017? date specified) 1,250,000
 Non-trade notes receivable (due in
a. P3,934,000
equal semi-annual installments of
b. P3,943,000
P50,000 every March 1 and September
c. P5,434,000
d. P4,510,000 1) 300,000
 Merchandise inventory 900,000
 Prepaid expenses 80,000
39. Using the same information given in MC 38, how  Plants and equipment, net 3,750,000
much were the total current liabilities at December 31,
How much is Pay Company's total current assets?
2017?
a. P2,475,000
a. P 980,000
 b. P2,425,000 b. P2,455,000
C. P3,400,000
d. P2,745,000 C. P2,579,000

d. 2,649,000
42. Use the same information given in MC41. How
much is Pay Company's total non-current assets? 45. Using the information given in MC 43. The retained
earning balance in Kay's December 31, 2017 statement
a. P4,475,000 of financial position is
b. P4,675,000
C. P4,725,000 a. P4,401,000
d. P4,750,000 b. P4,486,000
C. P4,876,000
d. P4,767,000
43. The trial balance of Kay Company shown on the (AICPA Adapted)
next page at December 31, 2017 has been adjusted 46. An alphabetical list of account balances from the
except for income tax expense: books of Lay Company on December 31, 2017 is presented
below:XAccounts payable
Other data for the year ended December 31, 2017 is as Cash surrender value of life insurance
follows: Ordinary share capital, P100 par
Dividends declared
Included in accounts receivable is P1,000,000 due from Mortgage payable (including P200,000 due in six months)
a customer from sale of land and building previously Notes payable, 10% (due January 1, 2021)
owned by the company and payable in quarterly Share premium- ordinary
installments of P125,000. The last payment is due Preference share capital, P200 par
December 30, 2019. Premium on notes payable
Profit and loss summary, credit balance
The balance in deferred income tax liability pertains to a Retained earnings, January 1, 2017
temporary difference that arose in a prior year, of which Unearned rent income
P15,000 is a reverse in 2018. is Exp
DEBIT CREDIT
Cash 675,000
During the year, tax payments of P475,000 were
Accounts Receivable 26,950,000
charged to increase tax expense. The income tax rate on Inventory 21,850,000
all types of income is 30% Property, plant & equipment (nes 7,366,000
Trade and other payables 1,801,000
Trial Balance Income tax payable 654,000
December 31, 2017 Deferred income tax liability 85,000
The total current assets in Kay's December 31, 2017 Ordinary share 2,300,000
Additional paid-in capital 3,680,000
statement of financial position is
Retained earnings, Jan. 1, 2017 3,350,000
a. P6,030,000 Net sales and other revenues 13,360,000
Costs and expense 11,180,000
b. P5,555,000
Income tax expense 1,129,000
C. P5,530,000 25,230,000 25,230,000
d. P5,055,000

44 Using the information given in MC 43, the total

current liabilities in Kay's December 31, 2017 How much was Jay Company's total current liabilities
statement of financial position is at December 31, 2017?

a. P1,980,000 a. P1,000,000
 b P2,525,000 d. P3,270,000
C. P2,550,000
d. P2,725,000
49. Use the same information given in MC 48. How
much should Ken Corporation report as total current
47. Use the same information given in MC47. What is Iiabilities on December 31, 2017?
the total shareholders' equity at December 31, 2017?
a. P1,309,500
a. P1,700,000 b. P1,317,500
b. P1,725,000 C. P1,261,500
C P2,500,000 d. P1,371,500
d. P2,525,000

50. At the beginning of the year, a corporation had

48. The following selected accounts and additional total assets P4,000,000, total liabilities of P2,000,000
information are taken from Ken Corporation at and total share capital of P800,000. During the year,
December 31, 2017: the corporation earned profit of P5,000,000 and paid
cash dividends of P1,000,000. At the end of the year,
Cash - P150,000; Accounts receivable P2,100,000; the company had total assets of P8,700,000 and its
Inventories-P1,600,000; Accounts payable-P550,000; total share capital remained at P800,000.
12% Notes payable-P800,000; Employees' income taxes
payable - P6,500. What is the amount of the total liabilities at the end of
the year?
Additional information:
a. P2,000,000
 The P2,100,000 balance in accounts receivable b. P2,100,000
represents the entire amount owed to the
c. P2,700,000
company; of this amount P500,00 represents a
d. P6,000,000
long-term advance to its president. The
remaining amount is from trade customers and
5% of that amount is estimated to be
uncollectible
 Inventories (taken by physical count) include 51. The accounts and balances shown below were
include P200,000 of supplies of goods held on gathered from Den Company’s adjusted trial balance.
consignment. Office supplies on hand of
P50,000 are also included in the balance. Wages payable 250,000
 The accounts payable balance includes
supplier's invoice for P95,000 received through Cash 175,000
facsimile message representing goods shipped
Bonds payable 600,000
FOB destination and are still in transit at year-
end Dividends payable 140,000
 The 12% interest-bearing note is dated June 1
2017 and matures May 31, 2018. Accrued Prepaid expenses 136,000
intereston the note has not been recorded.
Inventory 820,000
How much should Ken Corporation report as total
current asset at December 31, 2017? Long-term funds 525,000

a. P3,020,000 Financial assets at FVPL 153,000

b. P3,070,000
C. P3,165,000 Accumulated depreciation- PPE 400,000
Financial assets at fair value through OCI 300,000  On December 31,2017, Pen declared a cash
dividend of P2.50 per share to shareholders of
Discount on bonds payable 48,000
record on December 31. The dividend is payable
Investment in associates 1,020,000 on January 15, 2018. Pen gas issued 1,000,000
ordinary shares ,of which 50,000 shares are
Taxes payable 228,000 held in treasury.
 Also, on December 31, Pen declared a 10%
Accounts payable 248,000
bonus issue to shareholders of record on
Accounts receivable 366,000 January 15, 2018. The dividends will be
distributed on January 31,2018. Pen’s ordinary
PPE 1,200,000 shares have a par value of P10 per share and a
fair value of P38 per share.
Goodwill 450,000
 At December 31, bonds payable of P10 million
Advances from affiliated companies 900,000 are outstanding. The bonds pay 12% interest
every September 30 and mature in installments
Den company should report total current assets of of P2,500,000 every September 30, beginning
September 30,2018.
a. 1,950,000
 At December 31, 2017, customer advances
b. 1,650,000
were P12 million. During 2017, Pen collected
c. 1,560,000
P30 million of customer advances and advances
d. 830,000
of P25 million were earned.
52. Use the same information given in MC 51. Den  At December 31, 2017, retained earnings
company should report total current liabilities of appropriated for future inventory
lossesamounted to P1.5 million.
a. 866,000

b. 726,000 a. P10,175,000
b. P22,175,000
c. 686,000 c. P22,300,000
d. P58,275,000
d. 638,000

53. Use the same information given in MC 51. Den

company should report total non-current assets of 55. A draft of the condensed statement of
financial position for BFF Company as of Decmber
a. 3,995,000
31, 2017 contains the following selected list of
b. 3,950,000 assets and their balances:

c. 3,095,000 Accounts receivable P247,000

d. 2,795,000 Cash 98,000

Deffered tax asset 85,000

54. Pen company is preparing it’s December 31,2017 PPE (net of P550,000 A.D) 3,200,000
statement of financial position. The following items
Prepayments 130,000
may be reported as either current or noncurrent
liability. Inventories (based on physical count)220,000
 The following information has been obtained:

 The accounts receivable balance included

P60,000 sales price of goods in transit to
customers at December 31, 2017, P40,000
of which were shipped FOB destination. The
company maintains a uniform mark up on
sales at 25%.
 Towards the end of the year, the company
sent out goods to a consignee costing
P80,000. This transaction with the
consignee was recorded allowing a markup
of 25% on cost. An account sale submitted
by the consignee on December 31, 2017
indicated that goods costing P22,000 are
still unsold
 Included in prepayments is cash surrender
value of officer’s life insurance policy of
P15,000
 Included in property, plant and equipment
are:
- Land acquired in 2017 intended as a
future plant site costing P800,000
- Equipment costing P200,000 that is fully
depreciated, but still being used by the
entity.
- P1,200,000 purchase price of land with
an undetermined future use.

What are the correct amounts of Accounts Receivable,

Inventory and PPE respectively, at December 31, 2017?

a. P179,500; P272,000; P1,200,000

b. P179,500; P272,000; P2,000,000
c. P207,000; P250,000; P2,000,000
d. P279,500; 228,000; 1,800,000