Question 1

All of the following OCI items may not be reclassified to profit or loss, except

a) Unrealized loss on debt investment at FVOCI

b) Unrealized loss on equity investment at FVOCI
c) Remeasurement loss on defined benefit plans
d) Revaluation surplus

Question 2

Revenue may result from

a) A decrease in an asset form primary operation

b) An increase in an asset from incidental transaction
c) An increase in a liability from incidental transaction
d) A decrease in a liability from primary operation

Question 3

Which one of the following bases of income and expense recognition is acceptable for Financial
reporting under current GAAP?

a) Cash basis
b) Modified cash basis
c) Accrual basis
d) All of these

Question 4

Under the cash basis, expenses are recognized when

a) They are paid by the entity

b) The costs expire or as assets are used
c) The revenue are recognized that the expenses helped to produce
d) Cash is received from revenues that the expenses helped to produce

Question 5

Which of the following transactions will not be recognized in cash basis accounting?

a) Unsold inventory at the end of the period

b) Collection of account sales
c) Payment of utilities
d) Purchase of equity shares in Dogs Corporation
Use the following information for the next two (2) questions:

The following are among the expenses incurred by Boykin Company during the year.

Interest expense - 48,000

Cost of inventories sold - 1,200,000

Insurance expense - 200,000

Advertising expense - 40,000

Freight-out - 20,000

Freight-in - 8,000

Loss on sale of equipment - 4,000

Legal and other professional fees - 24,000

Rent expense (one-half occupied by sales department) - 16,000

Sales commission expense - 28,000

Doubtful accounts expense - 32,000

Question 6

How much are the distribution costs or selling expenses?

a) 316,000
b) 232,000
c) 128,000
d) 96,000

Question 7

How much are the administrative expenses?

a) 361,000
b) 316,000
c) 264,000
d) 232,000

Use the following information for the next two (2) questions:

Bluetick Company’s trial balance reflected the following account balances on December 31, 2021:

Auditing and Accounting fees - 300,000

Advertising - 500,000

Delivery expense - 300,000

Interest - 125,000

Loss on sale of long-term investment - 110,000

Officer’s salaries - 625,000

Rent for office space - 500,000

Insurance - 200,000

Sales commissions - 1,075,000

Loss on sale of equipment - 75,000

Depreciation on factory machine - 12,500

Depreciation on office equipment - 15,000

Depreciation on delivery truck - 14,000

One-half of the rented premises is occupied by the sales department.

Question 8

What amount should be reported as total distribution costs?

a) 2,389,000
b) 2,375,000
c) 2,139,000
d) 2,014,000

Question 91 pts

What amount should be reported as general and administrative expenses?

a) 1,527,500
b) 1,440,000
c) 1,390,000
d) 1,352,500

Question 10

Border Company’s trial balance reflected the following account balances on December 31, 2021:

Net sales - 4,000,000

Share of profit of associate - 125,000

Cost of goods sold - 2,500,000

Interest income - 30,000

Loss on sale of equipment - 50,000

Revaluation surplus during the year - 300,000

Finance cost - 35,000

Distribution cost - 60,000

Administrative expense - 120,000

Translation gain - 50,000

Income tax expense - 408,000

Unrealized gain on FVTOCI securities - 200,000

Income from discontinued operations - 100,000

How much is the comprehensive income for the year 2021?

a) 1,655,000
b) 1,632,000
c) 1,390,000
d) 1,082,000

Question 11

Vegetta Company reported the following information for the current year:

Unrealized loss on futures contract designated as cash flow hedge - 500,000

Revaluation surplus during the year - 350,000

Unrealized gain on equity securities at FVTOCI - 150,000

Remeasurement gain on employee benefits - 120,000

Gain on translation of financial statements of a foreign operation - 150,000

Loss from change in fair value attributable to credit risk of a financial liability designated at FVTPL -
200,000

In the statement of comprehensive income, what net amount should be reported as component of
other comprehensive income that may not be recycled to profit or loss?

a) 820,000
b) 620,000
c) 420,000
d) 350,000
Question 12

The December 31 balances of selected accounts of Gemini Company and pertinent information are
shown below:

Inventory – January 1 - 2,000,000

Purchases - 7,500,000

Purchases returns and allowances - 500,000

Sales returns and allowances - 750,000

Inventory at December 31 - 2,800,000

Gross profit rate on net sales - 20%

Gross sales for the current year amount to

a) 9,125,000
b) 8,500,000
c) 7,750,000
d) 7,000,000

Question 13

The following information for 2017 is provided by Parallax Company:

Sales - 20,000,000

Cost of goods sold - 12,000,000

Selling expenses - 1,200,000

General and administrative expenses - 1,800,000

Interest expense - 1,500,000

Gain on early extinguishment of long-term debt - 500,000

Correction of inventory error, net of income tax – credit - 800,000

Investment income – equity method - 600,000

Gain on sale of investment - 2,000,000

Income tax expense - 2,100,000

Dividends declared - 2,500,000

What was the 2017 income from continuing operations?

a) 7,000,000
b) 6,600,000
c) 4,900,000
d) 4,500,000

Question 14

Riptide Corporation reports operating expenses in two categories: (1) selling, (2) general and
administrative. The adjusted trial balance included the following expense and loss accounts:

Accounting and legal fees - 120,000

Advertising - 150,000

Freight-out - 80,000

Interest - 70,000

Loss on sale of long-term investment - 30,000

Officers’ salaries - 225,000

Rent for office space - 220,000

Sales salaries and commissions - 140,000

On half of the rented premises is occupied by the sales department. Riptide’s total selling expenses
are

a) 480,000
b) 400,000
c) 370,000
d) 360,000

Question 15

Flint Beastwood Company’s accounting records for the current year included the following
information:

Work in process inventory increase - 100,000

Finished goods inventory increase - 70,000

Raw materials purchased - 860,000

Raw materials inventory decrease - 30,000

Freight-out - 90,000

Direct labor - 400,000

Manufacturing overhead - 600,000

Cost of goods sold is

a) 2,000,000
b) 1,810,000
c) 1,790,000
d) 1,720,000

Question 16

The following information is available for Glacuis Company for 2017:

Disbursements for purchases - 1,050,000

Increase in trade accounts payable - 75,000

Decrease in merchandise inventory - 30,000

Cost of goods sold for 2017 under accrual basis is

a) 1,155,000
b) 1,095,000
c) 1,005,000
d) 945,000

Question 17

Oogie Company owns an office building and leases the office under a one-year rental agreement. Not
all tenants make timely payments of their rent. Oogie Company’s balance sheet contained the
following data:

Rental receivable

9,600 (2015) 12,400 (2016)

Unearned rentals

32,000 (2015) 24,000 (2016)

In 2016, Oogie Company received P80,000 from tenants. Rent revenue for 2016 is

a) 90,800
b) 85,200
c) 74,800
d) 69,200
Use the following information for the next two (2) questions:

Cagindangan Company presented to you the following income statement.

Cagindangan Company

Income Statement

For the Year Ended December 31, 2019

Sales 10,350,000

Cost of Goods Sold 7,050,000

Gross profit 3,300,000

Operating expenses:

Selling 675,000

Administrative 1,050,000 1,725,000

Net income 1,575,000

Additional information:

Accounts receivable decreased P540,000 during the year.

Prepaid expenses increased P255,000 during the year.

Accounts payable to suppliers of merchandise decreased P412,500 during the year.

Accrued expenses payable decreased P150,000 during the year.

Administrative expenses include depreciation expense of P90,000.

Inventories decreased by P450,000.

Question 18

What is the total amount of cash received from customers during the year?

a) 10,980,000
b) 10,477,500
c) 10,350,000
d) 9,810,000

Question 19

What is the total amount of cash paid to suppliers during the year?

a) 7,912,500
b) 7,012,500
c) 6,600,000
d) 6,187,500
Question 20

Gayagoy Company reported sales from customers of P6,000,000 and purchases of P4,000,000 for the
year ended December 31, 2014. Additional information follows:

Accounts receivable

2,000,000 - (January 1) 3,000,000 – (December 31)

Allowance for uncollectible accounts

(150,000) - (January 1) (200,000) - (December 31)

Accounts payable

1,500,000 - (January 1) 2,400,000 - (December 31)

Inventory

2,300,000 - (January 1) 2,600,000 - (December 31)

Gayagoy wrote off uncollectible accounts totaling P500,000 during 2014. Under cash basis, what is the
gross profit?

a) 3,200,000
b) 2,300,000
c) 2,200,000
d) 1,700,000

Question 21

Under the accrual basis, rental income of Goten Company for the calendar year 2011 is P1,200,000.
The company had a balance of P100,000 in its Unearned Rental Income at the beginning of the year
and P150,000 at the end of the year. It also had a balance of P60,000 in its Accrued Rental Income at
the beginning of the year and P80,000 at the end. What is the rental income under the cash basis of
accounting?

a) 1,310,000
b) 1,250,000
c) 1,230,000
d) 1,170,000

Use the following information for the next three (3) questions:

Martyr Company paid or collected during 2016 the following items:

Interest revenue - 75,500

Insurance expense - 9,600

Salaries expense - 65,000

The following balances were from Martyr Company’s balance sheets:

Interest receivable

7,500 (December 31, 2016) 9,100 (December 31, 2015)

Salaries payable

4,200 (December 31, 2016) 8,900 (December 31, 2015)

Prepaid insurance

1,500 (December 31, 2016) 1,100 (December 31, 2015)

Question 22

The cash received for interest during 2016 was

a) 77,100
b) 75,500
c) 73,900
d) 66,400

Question 23

The cash paid for salaries during 2016 was

a) 73,900
b) 69,700
c) 60,800
d) 60,300

Question 24

The cash paid for insurance premiums during 2016 was

a) 10,000
b) 9,200
c) 8,500
d) 8,100
Question 25

Noche Company acquires patent rights from other enterprises and pays advance royalties in some
cases, and in others, royalties are paid within 90 days after year-end. During 2011 Noche remitted
royalties of P900,000. The following data are included in Noche’s December 31, balance sheets:

Prepaid royalties

165,000 (January 1) 135,000 (December 31)

Royalties payable

240,000 (January 1) 225,000 (December 31)

In its income statement for the year ended December 31, 2011, Noche should report royalty expense
of

a) 990,000
b) 930,000
c) 915,000
d) 885,000