Professional Documents
Culture Documents
Preliminary Examination
Name: Date:
I – Indicate the proper classification or presentation of the items listed below. Use the following
classifications (write the abbreviation only before the number):
CA – Current Asset CL – Current Liability
NCL – Noncurrent Liability NCA – Noncurrent Asset
E – Equity N – Notes to financial statements
1. Advances to customers 11. Deferred tax liability
2. Advances from customers 12. Retained Earnings
3. Advances to suppliers 13. Additional paid-in capital
4. Advances from suppliers 14. Trademark
5. Advances to subsidiary 15. Income tax payable
6. Accrued expenses 16. Bonds Payable, due 3 years
7. Prepaid expenses 17.Investment in Associate
8. Cash dividend Payable 18. Treasury bill purchased 2 years before maturity
9. Stock dividend Payable 19. Accounts Receivable, average normal collection
period, 18 months
10. Deferred tax asset 20. The entity is a defendant in a lawsuit for a
certain amount. The loss is reasonable possible
3. What is the proper order of presenting the notes according to PA 1, paragraph 114?
A. Statement of compliance with PFRS
B. Summary of significant accounting policies
C. Supporting information or computation for line items presented in the financial statements
D. Other disclosures, such as contingent liabilities, unrecognized contractual commitments and
nonfinancial disclosures
a. A,B,C,D c. B,A,D,C
b. B,A,C,D d. C,A,B,D
6. A party is related to an entity if the party, directly or indirectly through one or more
intermediaries
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Financial Accounting and Reporting III
Preliminary Examination
7. It is the power over the investee or the power to govern the financial and operating policies of
an entity so as to obtain benefits.
a. Control c. Joint Control
b. Significant Influence d. Joint Influence
8. It is the power to participate in the financial and operating policy decision of an entity, but not
control of those policies.
a. Control c. Joint Control
b. Significant Influence d. Joint Influence
13. A complete set of financial statements includes the following components, except
a. Statement of financial Position and Statement of cash flows
b. statement of Comprehensive income and changes in owner’s equity
c. Notes to financial statements
d. Reports and statements such as environmental reports and value added statements
15. Under this principle, the expense is recognized when the revenue is already recognized
a. Cause and effect association
b. Systematic and rational allocation
c. Immediate recognition
d. Matching principle
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Financial Accounting and Reporting III
Preliminary Examination
a. 1,000,000 c. 1,450,000
b. 1,300,000 d. 1,550,000
a. 8,500,000 c. 350,000
b. 8,700,000 d. 8,550,000
18. What amount should be reported as current liability on December 31, 2017?
Jane Company provided the following information on December 31, 2017:
Cash in bank , net of bank overdraft of P500,000 5,000,000
Petty cash, unreplenished petty cash expenses 10,000 50,000
Notes Receivable 4,000,000
Accounts Receivable, net of customers’ accounts with 6,000,000
credit balances of P1,500,000
Inventory 3,000,000
Bond sinking fund 3,000,000
Total current assets 21,050,000
20. What are the adjusting entries required in order to correct the account balances
On December 31, 017, the current assets of Jenny Company revealed cash and cash equivalents of P700,000 ,
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Financial Accounting and Reporting III
Preliminary Examination
Accounts Receivable of 1,200,000 and inventory of P600,000. The examination of accounts receivable disclosed the
following:
Trade accounts 940,000
Allowance for doubtful accounts (30,000)
Claims against shipper for goods lost in transit 30,000
Selling price of unsold goods sent by Jenny on 260,000 (260,000/1.30)
consignment at 130% of cost and not included in ending
inventory
Total Accounts Receivable 1, 200,000
a. Sales 260,000
Accounts Receivable 260,000
Inventory 200,000
Cost of goods sold 200,000
b. Sales 200,000
Accounts Receivable 200,000
Inventory 260,000
Cost of goods sold 260,000
c. Accounts Receivable 260,000
Sales 260,000
Cost of goods sold 200,000
Inventory 200,000
d. Accounts Receivable 260,000
Sales 260,000
Inventory 200,000
Cost of goods sold 200,000
III – Financial Statement Preparation: Prepare in good form a properly classified statement of financial
position in accordance with Philippine financial Reporting Standards. As to the format, use the report
form. (10 points)