Professional Documents
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II. At year-end, the Cisco partnership has the following capital balances:
Montana, capital P130,000
Rice, capital 110,000
Craig, capital 80,000
Taylor, capital 70,000
Profits and losses are split on a 3:3:2:2 basis, respectively. Craig
decides to leave the partnership and is paid P90,000 from the business
based on the original contractual agreement. If the goodwill method is to
be applied, what is the balance of Montana’s capital account after Craig
withdraws?
a. P133,000 b. P137,500 c. P140,000 d. P145,000
A. I – a; II – d C. I – b; II – d
B. I – b; II – c D. None of the above
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II. A partnership has the following balance sheet just before the final
liquidation is to begin:
Cash P26,000 Liabilities P 50,000
Inventory 31,000 Art, capital (40%) 18,000
Other assets 62,000 Raymond, capital (30%) 25,000
________ Darby, capital (30%) 26,000
Total P119,000 Total P119,000
Liquidation expenses are estimated to be P12,000. The other assets are
sold for P40,000. What distribution can be made to the partners?
a. P-0- to Art, P1,500 to Raymond, P2,500 to Darby.
b. P1,333 to Art, P1,333 to Raymond, P1,334 to Darby.
c. P-0- to Art, P1,200 to Raymond, P2,800 to Darby.
d. P600 to Art, P1,200 to Raymond, P2,200 to Darby.
A. I – b; II – b C. I – b; II – a
B. I – c; II – a D. None of the above
6. Under PFRS 11, joint arrangements that are joint ventures (which were ‘jointly controlled entities’
under the PAS 31) are accounted for under
a. Cost method in accordance with PAS 39
b. Equity method in accordance with PAS 28
c. Fair value method in accordance with PFRS 9
d. Proportionate consolidation method in accordance with PAS 31
7. Under PFRS 10, when a parent loses control of a subsidiary, it must recognize any investment
retained in the former subsidiary at
a. Carrying amount
b. Fair value, with any gain or loss recognized in profit or loss
c. Fair value, with any gain or loss recognized in other comprehensive
income
d. Original acquisition cost, adjusted for any dividend received from
the subsidiary
8. A chemical company manufactures joint products Pep and Vim, and a by-
product. Zest. Costs are assigned to the joint products by the market value
method, which considers further processing costs in subsequent operations. For
allocating joint costs to the by-product, the market value or reversal cost
method is used. The total manufacturing costs for 10,000 units were P172,000
during the quarter. Production and cost data follow:
Pep Vim Zest
Units produced 5,000 4,000 1,000
Sales price per unit P50 P40 P 5
Further processing cost per unit 10 5 -
Selling and administrative expense per unit 2
Operating profit per unit 1
I. The value of Zest to be deducted from the joint costs is:
a. P5,000 b. P3,000 c. P2,000 d. Zero
II. Compute the gross profit for Pep:
a. P 0 b. P70,000 c. P 80,000 d. P100,000
A. I – c; II – a C. I – c; II – d
B. I – d; II – d D. None of the above
10. The modified accrual basis in accounting for government transactions means
a. Income is recognized when received while expenses are recognized
when incurred
b. Income is recognized when earned while expenses are recognized when
paid
c. Income is recognized when received while expenses are recognized
when paid, except for transactions that are required by law to be
accounted for under another basis
d. Income is recognized when earned while expenses are recognized when
incurred, except for transactions that are required by law to be
accounted for under cash or another basis
11. To be highly effective, the actual results of the hedge must be within a range of
a. 100% - 150%
b. 100% - 125%
c. 80% - 100%
d. 80% - 125%
12. Under PFRS 4, it refers to a party that has a right to receive compensation under an insurance
contract if an insured event occurs.
a. Cedant
b. Insurer
c. Reinsurer
d. Policyholder
13. Hartwell Company distributes the service department overhead costs to
producing departments and the following information for the month of January
is presented as follows:
Maintenance Utilities
Overhead costs incurred P18,700 P 9,000
Services provided to:
Maintenance department - 10%
Utilities department 20% -
Producing department A 40% 30%
Producing department B 40% 60%
Hartwell Company distributes service department overhead costs based on the
reciprocal method, what would be the formula to determine the total
maintenance costs?
A. M = P18,700 + .10U C. M = P18,700 + .30U +.40A + .40B
B. M = P 9,000 + .20U D. M = P27,700 + .40A + .40B
14. Financial statement of not-for-profit organization focuses on
a. Basic information for the organization as a whole
b. Standardization of funds nomenclature
c. Inherent differences of not-for-profit organization that impact
reporting presentations
d. Distinctions between current fund and noncurrent fund
Partnership net profit at December 31, 2012 before salaries, interests and
partners’ share on the remainder was:
A. P199,750 C. P211,625
B. P207,750 D. P222,750
17. The following statements are based on PFRS 3 (Business Combinations):
Statement I: An entity shall account for each business combination by
applying the acquisition method.
Statement II:The acquirer shall measure the identifiable assets acquired
and the liabilities assumed at their acquisition date fair values.
Statement III:For each business combination, the acquirer shall measure any non-
controlling interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s identifiable net assets.
a. All of the statements are true
b. Only statement I is true
c. Only statement II is false
d. Only statement III is false
23. Under PAS 11, when it is probable that total contract costs on a fixed price construction
contract will exceed total contract revenue, the expected loss should be
a. Set off against profit of other construction contract where
available
b. Recognized as an expense immediately, unless revenue to date exceeds
costs to date
c. Apportioned to the years of the contract according to the percentage
of completion method
d. Recognized as an expense immediately
24. Lucille Inc. manufactures a product that gives rise to a by-product called
"Robon." The only costs associated with Robon are additional processing costs
of P1.00 for each unit. Lucille accounts for "Robon" sales first by deducting
its separable costs from such sales and then by deducting this net amount from
the cost of sales of the major product. For the past year 2,000 units of Robon
were produced which were sold for P3.00 each.
Sales revenue and cost of goods sold from the main product were P500,000 and
P400,000 respectively. Compute the gross margin after considering the by-
product sales and costs.
If Lucille changes its method of accounting for Robon sales by showing the net
amount as "Other Income," the effect on the gross margin would be:
A. P 0 C. P4,000
B. P2,000 D. P6,000
61. Which models are allowed to be used by the private operator for build-
operate-transfer (BOT) schemes under IFRIC 12?
I – Financial Asset model II – Intangible Asset model
III – Property, Plant & Equipment model
a. I and II
b. I and III
c. II and III
d. I, II and III
62. If shares are issued as part of the consideration paid, transactions costs
such as brokerage fees may be incurred. According to PFRS 3 Business
Combinations the appropriate accounting treatment for such costs in the
records of the acquirer is a debit to:
a. Cash
b. Investments
c. Share capital
d. Acquisition expenses
66. Assume that the FC (foreign currency) is the subsidiary’s functional currency.
What balances does a consolidated balance sheet report as of December
31,20x4?
a. Marketable equity securities = P16,000 and Inventory = P16,000.
b. Marketable equity securities = P17,000 and Inventory = P17,000.
c. Marketable equity securities P19,000 and Inventory = P16,000.
d. Marketable equity securities P19,000 and Inventory P19,000.
67. Assume that the peso is the subsidiary’s functional currency. What balances
does a consolidated balance sheet report as of December 31, 20x4?
a. Marketable equity securities = P16,000 and Inventory = P16,000.
b. Marketable equity securities = P17,000 and Inventory = P17,000.
c. Marketable equity securities P19,000 and Inventory = P16,000.
d. Marketable equity securities P19,000 and Inventory P19,000.
68. Under PFRS 10, which is NOT one of the three (3) elements of control?
a. power over the investee
b. holding majority voting rights
c. exposure, or rights, to variable returns from involvement with the
investee
d. the ability to use power over the investee to affect the amount of
the investor’s returns
69. The test indicating that an intra-group business transaction has been
realized is:
a. the generation of profit from the transaction
70. Under NGAS, it is an authorization issued by the DBM to government agencies to withdraw cash from
the National Treasury through the issuance of Modified Disbursement System checks.
a. Allotment
b. Obligation
c. Appropriation
d. Notice of Cash Allocation