Professional Documents
Culture Documents
The power to acquire private property upon payment of just compensation for public purpose
a. Power of taxation c. Power of imminent domain
b. Police power d. Power of recall
2. Which tax principle is described in the statement " the more income earned by the taxpayer, the more
tax he has to pay."
a. Fiscal Adequacy c. Administrative feasibility
b. Theoretical justice d. Inherent in sovereignty
3. It is a source of a civil obligation that refers to a juridical relation which arises from certain lawful,
voluntary and unilateral act, to the end that no one may be unjustly enriched or benefited at the expense
of another.
a. Quasi-delict c. Contract
b. Quasi-contract d. Delict
4. What is the term for the delay on the part of the debtor?
a. Mora solvendi c. Compensatio morae
b. Mora accipiendi d. Mora obligor
5. B and S orally entered into a contract of sale of specific cellphone at a price of P500 with delivery of
cellphone to be made after two years from the date of oral agreement. At the time of perfection of
contract of sale, B paid P100 arras money to S with the balance to be made at the date of delivery of
cellphone. What is the status of the contract of sale of cellphone?
a. Valid and binding c. Unenforceable
b. Voidable d. Void
6. It is a partnership where no period or no specific purpose is fixed by the parties for its duration.
a. Partnership at will c. Partnership for a particular undertaking
b. Partnership with a fixed term d. Partnership by prescription
7. Which of the following statements is incorrect as to distribution of partnership profits to the partners of
the partnership?
a. Profit shall be distributed in accordance with the valid profit agreement of the partners.
b. In the absence of profit agreement, profit shall be distributed on the basis of loss agreement of the
partners.
c. In the absence of profit agreement, the industrial partners shall receive just and equitable share in
the partnership profits.
d. In the absence of profit agreement, the capitalist partners shall receive in accordance with their
capital contribution ratio after distribution to the industrial partners of their just and equitable share.
8. ABC Incorporated has authorized capital stock of P100,000 and actual subscribed capital stock of
P30,000. What is the minimum subscribed capital stock and paid up capital, respectively?
a. P30,000 and P5,000 c. P30,000 and P7,500
b. P25,000 and P6,250 d. P25,000 and P7,500
9. It refers to a type of novation which involves transfer of all the rights of the creditor to a third person,
who substitute him in all his rights.
a. Delegacion c. Subrogation
b. Expromission d. Dacion en Pago
10. The following cost data pertain to HAHABOL-HABOL COMPANY for the month of June, 2020:
Other information
Direct labor cost P120,000
Factory overhead applied 108,000
Cost of goods sold 378,000
11. Office supplies were P9,000 at the end of January and P11,400 at the end of February. During
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February, Office supplies expense equaled P3,000. How much cash was paid for office supplies during
February.
a. P2,400
b. P14,400
c. P17,400
d. P5,400
12. A successful JIT system is based upon which of the following concepts?
a. A small number of suppliers make frequent deliveries of specific quantities thus avoiding the buildup
of large inventories of materials on hand.
b. The company must rely upon a large number of suppliers to ensure frequent deliveries of small lots.
c. The company should always choose those suppliers offering the lowest prices.
d. The company should avoid long-term contracts with suppliers so as to exert pressure on suppliers to
make prompt and frequent deliveries.
14. The terms direct cost and indirect cost are commonly used in accounting. A particular cost might be
considered a direct cost of a manufacturing department but an indirect cost of the product produced in
the manufacturing department. Classifying a cost as either direct or indirect depends upon
a. The behavior of the cost in response to volume changes.
b. Whether the cost is expensed in the period in which it is incurred.
c. The cost object to which the cost is being related.
d. Whether an expenditure is unavoidable because it cannot be changed regardless of any action
taken.
16. The type of risk that is not diversifiable and affects the value of a portfolio is
a. Purchasing-power risk. c. Market risk.
b. Non market risk. d. Interest-rate risk.
17. A minimum checking account balance that a firm must maintain with a commercial bank is a
a. Transactions balance. c. Compensating balance.
b. Precautionary balance. d. Speculative balance.
18. What valuation model should an entity use to measure property, plant and equipment?
a. The revaluation model or the fair value model
b. The cost model or the revaluation model
c. The cost model or the fair value through profit or loss model
d. The cost model or the fair value model
20. At year-end, Myra Company reported cash and cash equivalents which comprised the following:
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21. On April 1, 2019, Ben Company purchased 40% of the outstanding ordinary shares of Clarke Company
for P10,000,000. On that date, Clarke’s net assets were P20,000,000 and Bend cannot attribute the
excess of the cost of its investment in Clarke over its equity in Clarke’s net assets to any particular
factor. The investee’s net income for 2019 is P5,000,000.
23. Which of the following is presented under the investing activities section of a statement of cash flows?
a. Collection of accounts receivable c. Purchase of equipment through cash
b. Cash purchases of inventories d. Issuance of share capital through cash
24. On January 1, 20x1, Entity A acquires 25% interest in Entity B for ₱800,000. Entity B reports profit of
₱1,000,000 and declares dividends of ₱100,000 in 20x1. How much is the carrying amount of the
investment in associate on December 31, 20x1?
a. 800,000 c. 1,000,000
b. 1,250,000 d. 1,025,000
27. A, B, and C are partners in an accounting firm. Their capital account balances at year-end were A
P90,000; B P110,000; C P50,000. They share profits and losses on a 4:4:2 ratio, after the following
special terms:
Assuming a net income of P44,000 for the year, the total profit share of Partner C was:
a. P7,800
b. P16,800
c. P19,400
d. Answer not given
28. Which of the following transactions will not affect the total equity of the partnership?
a. Recognition of impairment loss in case of admission of a new partner
b. Withdrawal of a partner
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c. Admission of a new partner by purchase of existing partner's interest below its book value
d. Retirement of an existing partner with payment of above the book value of such interest
30. On January 1, 2017, Sunflower Company purchased for P240,000 a machine with a useful life of ten
years and no salvage value. The machine was depreciated by the double-declining balance method
and the carrying amount of the machine was P153,600 on December 31, 2018. Sunflower changed to
the straight-line method on January 1, 2019. Sunflower can justify the change. What should be the
depreciation expense on this machine for the year ended December 31, 2019?
a. P15,360
b. P19,200
c. P24,000
d. P30,720
31. Failure to record the unexpired portion of insurance premium paid would
a. understate expense
b. understate profit
c. overstate owner's equity
d. overstate total liabilities
32. First statement: The first step in the accounting cycle is the journalizing of transactions and selected
other events.
Second statement: Basic steps in the recording process include transferring the journal information to
the appropriate account in the statement of financial position.
a. True, True
b. True, False
c. False, True
d. False, False
33. First statement: Each adjusting entry affects one statement of financial position account and one
income statement account.
Second statement: The accrual basis recognizes revenue when earned and expenses in the period
when cash is paid.
a. True, True
b. True, False
c. False, True
d. False, False
34. There are many sellers of blue jeans. Each blue jean seller makes their product slightly different to set it
apart from others. There is free entry and exit into the blue jean market. Which market structure does
this describe?
a. Perfect Competition c. Monopoly
b. Oligopoly d. Monopolistic Competition
35. Work in process of Alonzo Corporation on July 1, 2020 (per general ledger) is P 22,800.
Factory overhead is applied to production based on direct labor cost. Jobs 101 and 103 are completed
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during the month.
37. At the end of 2019, Tayum Company made four adjusting entries for the following items:
1. Depreciation expense, P25,000.
2. Expired insurance, P2,200 (originally recorded as prepaid insurance).
3. Interest payable, P6,000.
4. Rental revenue receivable, P10,000.
In the normal situation, to facilitate subsequent entries, the adjusting entry or entries that may be
reversed is (are)
a. Entry No. 3. c. Entries No. 3 and No. 4.
b. Entry No. 4. d. Entries No. 2, No. 3, and No. 4.
38. SUNSHINE COMPANY had total assets of P8,000,000 and shareholder's equity of P4,160,000 at the
beginning of the year. During the year, assets increased by P1,040,000 and liabilities decreased by
P1,640,000.
40. SAM has a break-even point of 200,000 units and earns a P100,000 profit at sales of 250,000 units.
Which of the following is true?
a. Fixed costs are P100,000.
b. Selling price per unit is P2.
c. Profit at sales of 300,000 units is P120,000.
d. Total contribution margin at 200,000 units is P400,000.
43. Which of the following properties meets the definition of investment property?
I. Land held for long-term capital appreciation
II. Property occupied by an employee paying rent at market rate
III. Property being constructed on behalf of third parties
IV. A building owned by an entity and leased out under an operating lease
a. I and II c. II and IV
b. I and IV d. II, III and IV
44. Entity A’s inventories on December 31, 20x1 have a cost of ₱100,000 and a net realizable value of
₱80,000. Accordingly, Entity A recognized a write-down of inventories of ₱20,000. Shortly after
December 31, 20x1, but before the financial statements were authorized for issue, the inventories were
sold for a net sale proceeds of ₱70,000. The correct amount of inventory write-down to be reported in
Entity A’s December 31, 20x1 financial statements is
a. 20,000 c. 30,000
b. 0 d. any of these
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45. Entity A, a trading entity, buys and sells Product Z. Movements in the inventory of Product Z during the
period are as follows:
Unit Total
Date Transaction Units
cost cost
Feb. 1 Beginning inventory 100 ₱15 ₱1,500
7 Purchase 300 18 5,400
12 Sale 320
21 Purchase 200 21 4,200
How much is the ending inventory under the Weighted Average cost formula? (The average is
calculated on a periodic basis.)
a. 5,180 c. 5,460
b. 5,290 d. 5,920
46. The primary users of financial statements under the Conceptual Framework include
I. Existing and potential investors VI. Governments and their agencies
II. Employees VII. Public
III. Lenders and other creditors VIII. Professional accountants, including
IV. Suppliers and other trade creditors auditors
V. Customers
47. Faith Company provided the following information relating to current operations:
48. On July 1, 2019, East Company purchased as a long-term investment P5,000,000 face amount, 8%
bonds of Rand Company for P4,615,000 to yield 10% per year. The bonds pay interest semiannually on
January 1 and July 1.
49. During the current year, Longhorn Company incurred P5,000,000 in exploration cost for each of 20 oil
wells drilled in the current year, in West Mindanao. Of the 20 wells drilled, 14 were dry holes. The entity
used the successful effort method of accounting. None of the oil found is depleted in the current year.
What oil exploration expense should be reported in the current year?
a. 50,000,000 c. 70,000,000
b. 30,000,000 d. 0
50. Forester Company provided the following assets in a forest plantation and farm:
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c. 8,400,000
d. 9,200,000
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