___2.

The accounts of Palawan International, a Philippine Company, show P813,000

accounts receivable and P389,000 accounts payable at December 31,2008 before adjusting
entries are made. An analysis of the balances reveals the following:
Accounts Receivable Accounts Payable
Receivable denominated in Philippine peso P285,000 Payable denominated in
Philippine peso P 68,500
Receivable denominated in 200,000 Yen 118,000Payable denominated in 10,000 dollar
76,000
Receivable denominated in 250,000 Baht 410,000Payable denominated in 150,000 Baht
244,500
Total P813,000 Total P389,000
Current exchange rates on December 31,2008 are:
YENP0.66 BAHT P1.65 DOLLAR P7.00
What is the net exchange gain or loss that should be reflected in Palawan’s income statement
for 2008 after the year-end adjustments?
a. P19,500 gain c. P19,000 gain
b. P16,500 loss d. P17,500 loss

___3. On December 12,2007, Davao Import Inc. entered into a forward exchange contract to
purchase 100,000 foreign currencies in 90 days to hedge a purchase of inventory on
November 30,2007 payable in March 2008. The relevant exchange rates are as follows:
Spot Rate Forward Rate for March 12,2008
November 30,2007 P8.70 P8.90
December 12,2007 8.80 9.00
December 31,2007 9.20 9.30
At December 31,2007, what amount of net foreign exchange gain or loss to be presented in
Davao’s Income Statement?
a. P50,000 gain c. P30,000 gain
b. P20,000 loss d. P40,000 loss

___4. On December 31,2008, a foreign subsidiary in Hongkong submitted the following

Statement of Financial Position in foreign currency: Hongkong Dollar
Total Assets $100,000
Total Liabilities 20,000
Common Stock 50,000
Retained Earnings 12/31 30,000
The exchange rates are: Current Rate – P7.40; Historical Rate – P7.10; and Average Rate –
P7.00.
Assuming that the retained earnings of the subsidiary on December 31,2008 translated to
Philippine Peso is P212,000, what amount of cumulative translation adjustment in other
comprehensive income to be presented in the Consolidated Statement of Financial Position
on December 31,2008?
a. P22,000 credit c. P25,000 credit
b. P20,000 debit d. P2,000 debit

___5. On December 31,2008, a branch in Singapore submitted the following financial

statements stated in Singaporean Dollar:
Statement of Financial Position Income Statement and Retained Earnings
Monetary assets $20,000 Sales $27,000
Non-monetary assets 15,000 Expenses (including dep.$1,000) 25,000
Monetary liabilities 18,000 Net income 2,000
Common stock 12,000 Retained earnings, 1/1 3,000
Retained earnings, 12/31 5,000 Retained earnings, 12/31 $ 5,000
The exchange rates are: Current Rate – P37; Historical Rate – P34; and Average Rate – P35
Assuming the Retained Earnings of the Singaporean Branch in Philippine Pesos is P128,100,
what amount of cumulative translation adjustment in other comprehensive income to be
presented in the Consolidated Statement of Financial Position on December 31,2008?
a. P22,900 credit c. P12,000 credit
b. P10,000 debit d. P21,900 debit

___6. The Italy branch of Manila Company reports the following results of its operations for
2008 (in Euro):
Sales 10,000 Euro
Cost of Sale:
Purchases 1,000
Shipment from Manila 5,000
Inventory, end (800) 5,200
Gross profit 4,800
Operating expenses 1,000
Net Income 3,800 Euro
The relevant exchange rates for Euro for 2008 are: Jan. 1 – P69.20; December 31 – P69.95;
and Average Rate – P69.50.
The only shipment from Manila during the year was determined to have a cost to home office
of P346,500. The ending inventory was identified to have come from shipments from Manila.
What is the translated net income of the branch of Italy?
a. P264,940 c. P265,810
b. P264,100 d. P262,960

___7. On September 1,2009, Bain Corporation received an order from a foreign customer for
300,000 local currency units when the peso equivalent was P96,000. Bain shipped the
equipment on October 15,2009, and billed the customer for 300,000 LCU when the peso
equivalent was P100,000. Bain received the customer’s remittance in full on November
16,2009 and sold the 300,000 LCU for P105,000. In its income statement for the year ended
December 31,2009, Bain should report a foreign exchange gain of
a. zero c. P5,000
b. P4,000 d. P9,000

___8. On September 1,2009, Cano & Co. sold merchandise to a foreign firm for 250,000
francs. Terms of the sale require payment in francs on February 1,2010. On September
1,2009, the spot exchange rate was P1.20 per franc. At December 31,2009, Cano’s year-end,
the spot rate was 1.19, but the rate increased to 1.22 by February 1,2010, when payment was
received. How much should Cano report as foreign exchange gain or loss for 2009 and 2010,
respectively?
a. P5,000 gain and P2,500 loss c. P5,000 gain and P5,000 loss
b. P2,500 loss and P7,500 gain d. P7,500 loss and P5,000 gain

___9. Lindy Corp. bought inventory items from a foreign supplier in Japan on November
15,2009 for 100,000 yen, when the spot rate was P0.4295. An Lindy’s December 31,2009,
year-end, the spot rate was P0.4245. On January 15,2010, Lindy bought 100,000 yen at the
spot rate of P0.4345 and paid the invoice. How much should Lindy report in its income
statements for 2009 and 2010, respectively, as foreign exchange gain or loss?
a. P1,500 gain and P1,000 loss c. P500 gain and P1,000 loss
b. P500 loss and P1,500 gain d. P1,000 gain and P500 loss

___10. Craft Corporation sold metal crafts to a US firm for $70,000 and pertinent information
on exchange conversion rates related to this transaction were as follows: November
4:Receipt of Order – P27.40; November 22:Date of Shipmen – P27.50; December 31:Year-
end Date – P27.60; and January 6:Date of Collection – P27.00. What is the amount of sale to
be appropriately recorded by Craft Corporation for the year converted at peso?
a. P1,890,000 c. P1,925,000
b. P1,918,000 d. P1,932,000

___11. On November 15,2009, Celt Inc., a Philippine company located in Baguio City,
ordered merchandise FOB shipping point from a German Company for 200,000 marks. The
merchandise was shipped and invoiced to Celt on December 10,2009. Celt paid the invoice
on January 1,2010. The spot rate for marks on the respective dates are as follows: November
15,2009 – P22.4955; December 10,2009 – P22.4875; December 31,2009 – P22.4675; and
January 10,2010 – P22.4775. What is the net foreign exchange gain or loss to be recognized
by Celt for 2009 and 2010?
a. P1,000 net loss c. P2,000 net loss
b. P1,600 net gain d. P1,000 net gain

___12. Phil Corp. sold to American customer merchandise worth US$10,000. As of Phil’s
balance sheet cut-off date on June 30,2009, the exchange rate was P26.60. On August
15,2009, payment was received in the form of a bank transfer whereby Phil’s account was
credited the amount of P265,400 before any charges. At the time of acceptance of the
merchandise in San Francisco, the exchange rate was P26.75. The appropriate exchange
rate for the recognition of the sale should be:
a. P26.54 c. P26.63
b. P26.60 d. P26.75

___13. Local Corporation imported heavy machine from the US for US$50,000 on October
10,2009. A letter of credit was opened with a Makati branch based on the commercial invoice
for US$50,000, on which Local Corporation made a 100% deposit cover based on the
exchange rate of $1.00 to P27.50. Shipment of the heavy machine was effected on December
30,2009, at which time the exporter collected the proceeds of the letter of credit when the
prevailing exchange rate was $1.00 to P28.00. From the exchange rate fluctuation, Local
Corporation should realize
a. No gain, no loss c. P25,000 gain
b. P5,000 gain d. P25,000 loss

___14. On June 15,2010, Boni Corporation purchased merchandise worth 100,000 Swiss
Francs from its supplier in Switzerland payable within 30 days under an open account
arrangement. Boni issued a 30-day, 6% note payable in Swiss francs. On July 15,2010, Boni
paid the note in full. The following information in spot rates is provided:
Buying Selling
June 15,2010 P24.03 P24.15
July 15,2010 24.10 24.22
What is Boni’s foreign exchange gain or loss for the transaction?
a. P5,040 gain c. P12,075 gain
b. P7,035 loss d. P19,110 loss

___15. On November 30,2008, Tyrola Publishing Company located in Manila executed a

contract with Ernest Blyton, an author from Canada, providing for payment of 10% royalties
on Canadian sales of Blyton’s book. Payment is to be made in Canadian dollars each January
10 for the previous year’s sales. Canadian sales of the book for the year ended December
31,2009 totaled $50,000 Canadian dollars. Tyrola paid Blyton his 2006 royalties on January
10,2010. Tyrola’s 2009 financial statements were issued on February 1,2010. Spot rates for
Canadian dollars were as follows: November 30,2008 – P27.87; January 1,2009 – P27.88 –
December 31,2009 – P27.89; and January 10,2010 – P27.90. How much should Tyrola
accrue for royalties payable at December 31,2009?
a. P139,350 c. P139,450
b. P139,400 d. P139,500

___16. On September 9,2011, Selma Inc. accepted a noncancellable merchandise sales

order from a Japanese firm. The contract price was 10,000 Yens. The merchandise was
delivered on December 14,2011. The invoice was dated December 11,2011, the shipping
date (FOB Shipping point). Full payment was received on January 22,2012. The spot direct
exchange rates for the Japanese Yens on the respective dates are as follows: September
9,2011 – P0.75; December 11,2011 – P0.78; December 14,2011 – P0.77; December 31,2011
– P0.73; and January 22,2012 – P0.725. Determine the following:
Sales for 2011 Forex Gain/Loss for 2011 Accounts Receivable,12/31/2011 Forex
Gain/Loss for 2012
a. P77,000 P1,000 loss P78,000 P500 loss
b. P78,000 P5,000 loss P73,000 P500 loss
c. P75,000 P3,000 loss P78,000 P1,500 loss
d. P77,000 P1,500 loss P72,500 P2,500 gain
___17. An entity purchases a plant from a foreign supplier for P3,000,000 Baht on January
31,2011, when the exchange rate was 2 Baht = P1. At the entity’s year-end of March
31,2011, the amount has not been paid. The closing rate was 1.5 Baht = P1. The entity’s
functional currency is the peso. Which of the following statements is correct?
a. Cost of plant – P2,000,000; exchange loss – P500,000; and trade payable –
P1,500,000.
b. Cost of plant – P1,500,000; exchange loss – P600,000; and trade payable –
P2,000,000
c. Cost of plant – P1,500,000; exchange loss – P500,000; and trade payable –
P2,000,000
d. Cost of plant – P2,000,000; exchange loss – P500,000 and trade payable –
P2,000,000

___1. UST, a private university, had the following cash inflows during the year ended
December 31,2008:
I. P500,000 from students for tuition.
II. P300,000 from a donor who stipulated that the money be invested indefinitely.
III. P100,000 from a donor who stipulated that the money be spent in accordance to the
wishes of UST’s board of
Directors.
On UST’s statement of cash flows for the year ended December 31,2008, what amount of
these cash flows should be reported as operating activities?
a. P900,000 c. P800,000
b. P400,000 d. P600,000

___2. Sta. Clara Hospital, a private nonprofit hospital earned P250,000 revenues from its gift
shop located at the lobby and spent P50,000 on research during the year ended December
31,2008. The P50,000 spent on research was part of a P75,000 contribution received during
December of 2007 from a donor who stipulated that the donation be used for medical
research. Assume none of the gift shop revenues were spent in 2008. For the year ended
December 31,2008, what was the increase in unrestricted net assets from the events that
occurred during 2008?
a. P300,000 c. P250,000
b. P200,000 d. P275,000

___3. San Luis Hospital, non-profit hospital affiliated with a religious group, reported the
following information for the year ended December 31,2008:
Gross patient service revenue at the full rates P980,000
Bad debts expense 10,000
Contractual adjustments, Value added tax 89,090
Allowance for discounts to hospital employees 15,000
On hospital’s statement of activities for the year ended December 31,2008, what amount
should be reported as net patient service revenue?
a. P875,910 c. P855,000
b. P890,910 d. P955,000

___4. San Jose Hospital, a nonprofit hospital affiliated with San Carlos College, had the
following cash receipts for the year ended December 31,2008:
Patient service revenue P750,000
Contribution from donor to be invested indefinitely (endowment fund) 250,000
Tuition fees from nursing school 50,000
Dividends received from permanent investments 80,000
The dividends received are restricted by the donor for hospital building improvements, No
improvements were made during 2008. On the hospital’s statement of cash flows for the year
ended December 31,2008. what amount of these cash receipts would be included in the
amount reported for net cash provided (used) by operating activities?
a. P880,000 c. P1,050,000
b. P800,000 d. P750,000

___5. Santa Rosa College, a private nonprofit college, received the following contributions
during 2008:
I. P5,000,000 from alumni for construction of a new wing on the building to be construed
in 2008.
II. P1,000,000 from a donor who stipulated that the contribution be invested
indefinitely and that the earnings be used for scholarship. As of December 31,2008,
earnings from investments amounted to P50,000.
For the year ended December 31,2008, what amount of these contribution should be reported
as temporarily restricted revenues on the statement of activities?
a. P50,000 c. P5,000,000
b. P5,050,000 d. P6,050,000

___6. On December 30,2008, Saint Peter Hospital, a nonprofit organization, received a

P7,000,000 donation of BW Co. shares of stocks with donor-stipulated requirements as
follows:
- Shares valued at P5,000,000 are to be sold, with the proceeds used to erect a building.
- Shares valued at P2,000,000 are to be retained, with the dividends used to support
current operations.
As a result of the receipt of the BMW shares how much should Saint Peter Hospital report as
temporarily restricted net assets on its 2008 statement of financial position?
a. P-0- c. P5,000,000
b. P2,000,000 d. P7,000,000

___7. Gentle Care Foundation, a non-profit organization, received the following pledges:
Unrestricted P200,000
Restricted for acquisition of equipments 150,000
All pledges are legally enforceable, however, the foundation’s experience indicates that 10%
of all pledges prove to be uncollectible. What amount should the foundation report as pledges
receivable net of any required allowance account?
a. P135,000 c. P315,000
b. P180,000 d. P350,000

___8. The following receipts were among those recorded by Baliwag College, a non-profit
organization during 2008:
Unrestricted gifts P500,000
Restricted current funds (expended for current operating expenses) 200,000
Restricted current funds (not yet expended) 100,000
What amount should be included as revenues and current fund revenue, respectively?
a. P800,000 and P700,000 c. P600,000 and P600,000
b. P700,000 and P800,000 d. P500,000 and P500,000

___9. Christian Hospital, a nonprofit hospital affiliated with a religious group, received the
following cash contributions from donors during the year ended December 31,2008:
Capital acquisitions of hospital equipment P400,000
For permanent endowment 300,000
The cash received for acquisition of hospital equipment will be spent in 2009, while the cash
received for the permanent endowment was used to acquire investments during 2008. What
effect did these cash contributions have on the amount reported for cash flows from investing
activities and cash flows from financing activities on the statement of cash flows for the year
ended December 31,2008?
Cash flows from Investing Activities Cash flows from Financing Activities
a. Decrease P300,000 Increase P400,000
 b. Decrease P700,000 Increase P700,000
c. Decrease P300,000 Increase P300,000
d. Decrease P300,000 Increase P400,000

___10. Miriam Hospital, a nonprofit hospital affiliated with Miriam College, had the following
cash receipts for the year ended December 31,2008:
Collections of Philhealth care receivable P750,000
Contributions from donor to establish a term endowment 250,000
Tuition fee from nursing school 50,000
Dividends received from investments n permanent endowment 80,000
The dividends received are restricted by the donor for hospital building improvements. No
improvements were made during 2008. On the hospital’s statement of cash flows for the year
ended December 31,2008, what amount of these cash receipts would be included in the
amount reported for net cash provided (used) by operating activities?
a. P880,000 c. P1,050,000
b. P800,000 d. P750,000

___11. Out of its total appropriation for 2008, Department EE received its allotments broken
down as follows:
Capital outlay (CO) P20,000,000
Maintenance and Other Operating Expenses (MOOE) 10,000,000
Personal Services 5,000,000
Financial Expenses 1,000,000
Total P36,000,000
Department of Budget and Management issued Notice of Cash Allocation to Department EE
in the amount of P20,000,000.

What is the journal entry of Department EE to record the receipt of Notice of Cash Allocation?
a. Cash – National Treasury – MDS 20,000,000
Subsidy Income from National Government 20,000,000
b. Subsidy Income from National Government 20,000,000
Cash – National Treasury – MDS 20,000,000
c. Notice of Cash Allocation 20,000,000
Subsidy Income from National Government 20,000,000
d. Cash – National Clearing Account 20,000,000
Subsidy Income from National Government 20,000,000