FAR-Qualifying Exam Review

1/26/22, 8:51 AM FAR-QUALIFYING EXAMINATION
FAR-QUALIFYING EXAMINATION
maryjune.mortez@lsu.edu.ph Switch account
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On June 1, 2020, Pitt Corporation sold merchandise with a list price of 1 point
₱5,000,000 to Burr on account. Pitt allowed trade discounts of 30% and

20%. Credit terms were 2/10, n/30 and the sale was made FOB shipping
point. Pitt prepaid ₱200,000 of delivery costs for Burr as an
accommodation. On June 11, 2020, Pitt received from Burr a remittance in
full payment amounting to *
₱2,940,000
₱3,140,000
₱2,744,000
₱2,944,000
Partnership capital and drawings accounts are similar to the corporate * 1 point
Paid in capital, retained earnings, and dividends accounts
Paid in capital and retained earnings accounts
Retained earnings accounts

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Preferred and common stock accounts
For the year 2020, the gross margin of Jumbo Co. was P96,000; the cost 1 point
of goods manufactured was P340,000; the beginning inventories of work
in process and finished goods were P28,000 and P45,000, respectively;
and the ending inventories of work in process and finished goods were
P38,000 and P52,000, respectively. The sales of Jumbo Co. for 2020, must
have been *
399,000
450,000
430,000
429,000
If the cash account has a debit balance of P72,000 as of December 31, 1 point
2019 with a debit posting of P148,000 and credit positing of P172,400,
what is its beginning balance? *
96,400
47, 600
73,600
24,400
* 1 point
Which of the following is not a characteristic of the proprietary theory that 1 point
influences accounting for partnerships? *
A partnership is not viewed as separate entity, distinct, taxable entity
Changes in the ownership structure of a partnership result in the dissolution of the

partnership
Partner’s salaries are viewed as a distribution of income rather than a component of

net income
net income.
A partnership is characterized by limited liability’
Goods in transit which are shipped FOB shipping point should be * 1 point
Included in the inventory of the seller
None of these
Included in the inventory of the shipping company
Included in the inventory of the buyer
I- When a new partner is admitted in an existing partnership, automatically 1 point

the previous partnership contract that has been executed by the existing
partners is dissolved. II- When a new partner is admitted in an existing
partnership, it is always with the common knowledge and consent of a
majority of the existing partners. *
TRUE, TRUE
FALSE, FALSE
TRUE, FALSE
FALSE, TRUE
For the month of March 2020, cost of goods manufactured was * 1 point
236,000
244,000
250,000
285,000
Which of the following costs is not a component of manufacturing 1 point
overhead? *
Indirect labor.
Factory equipment.
Indirect materials.
Factory utilities.
Property taxes on the manufacturing plant.
Which of the following expressions is not related to value received and 1 point
value given-up model? *
1=1
Cost and benefit criterion
Assets equal liabilities and equity
What goes up goes down
As current technology changes manufacturing processes, it is likely that 1 point
direct *
labor will decrease
labor will increase
material will decrease
materials will increase
The following statements refer to the account. Select the correct 1 point
statement. *
The left side of an account is known as a debit or increase
An account is an individual accounting record of increases and decreases in specific

asset, liabilities and equity.
In its simplest form, an account is composed of two parts.

There are separate, individual accounts for specific assets and liabilities but only one
account for equity items
Which of the following is not among the basic rights of a shareholder? * 1 point
to vote in the election of directors
to share in corporate earnings
to subscribe for additional share issues
to represent himself in the name of the corporation
If a new partner acquires a partnership interest directly from the partners 1 point
rather that from the partnership itself. *
The partnership has undergone quasi-reorganization
The existing partners’ capital accounts should be reduced and the new partner’s
account increased.
The Partnership assets should be revalued
No entry is required
Under liquidation by installment, the partner who receives cash when there 1 point
is cash available is the one- *
who has a negligible amount of liability
who can sell the biggest portion of the assets
who can absorbed the share of theoretical or possible loss
none of these
For the month of March 2020, conversion cost was * 1 point
60,000
150,000
144,000
140,000
As of December 31, 2020, the balance of equipment in the general ledger 1 point
is P600,000 with a related Accumulated depreciation account of
P290,000 for the past 5 years on a straight-line method. The residual value
of the Equipment was estimated to be P20,000. How many years was the
original life of the equipment? *
5 years
7 years
10 years
8 years
The Notes receivable account of April Company shows a balance of 1 point

P200,000 made up of an 18%, P130,000 received October 20, 2019 and
15%, P70,000 received November 4, 2020. The interest earned on its Notes
receivable as of December 31, 2020 is *
33,900
6,154.67
6,436.67
6,342.50
How much is the additional cash to be invested by Eden? * 1 point
₱2,587,000
₱687,000
₱2,687,500
₱688,000
The following are business forms, except: * 1 point
Invoice
Contracts
Voucher
Receipts
* 1 point
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* 1 point
75,500
70,800
80,000
63,200
This refers to optional journal entries that are intended to make recording 1 point
transactions easier in the next accounting period. *
Simple entries
Reversing entries
Multiple entries
Compound entries
If the amount of “Cost of goods manufactured” during a period exceeds 1 point
the amount of the “Total manufacturing costs” for the period, then *
Ending work in process is less than the amount of the beginning work in process
inventory
Ending work in process inventory is greater than or equal to the amount of the
beginning work in process inventory
Ending work in process is equal to the cost of goods manufactured
Ending work in process is greater than the amount of the beginning work in process
inventory
If supplies account has a debit balance of P36,000 as of December 31, 1 point

2020, with a debit posting of 74,000 and credit posting of P86,200, what is
the beginning balance? *
12,200
48,200
23,800
36,800
The following are business transactions, except: * 1 point
Owner’s drawing against profit
Payment of rental for the use of office space
I i th t t i d b th t
Increase in the tax rate imposed by the government
Purchase of equipment on account
What are the accounting elements affected when an employee does not 1 point
report for work? *
Debit, Asset; Credit, equity
Debit expenses; credit, liability
None of the given
Debit, expenses; credit, equity
Under liquidation by installment, the partner who receives cash when there 1 point
is cash available is the one- *
who has a negligible amount of liability
none of these
who can sell the biggest portion of the assets
who can absorbed the share of theoretical or possible loss
Lamp Industries reported the following data for the year just ended: sales 1 point
revenue, P950,000; cost of goods sold, P420,000; cost of goods
manufactured, P330,000; and selling and administrative expenses,
P170,000. Lamp's gross margin would be: *
P30,000.
P530,000.
P200,000.
P360,000.
P620,000.
The par value of an ordinary share represents * 1 point
the amount received by the corporation when the share was originally issued
the legal nominal value assigned to the share
the book value of the share
the liquidation value of the share
* 1 point
Which of the following best presents the effect of performing services on 1 point
credit? *
Increase in assets and decrease in equity
Increase in assets and increase in equity
Increase in liabilities and increase in equity
Increase in assets and increase in liabilities
What is the capital account balance of Flora on June 30, 2020? * 1 point
₱3,837,500
₱4,000,000
₱3,500,000
₱3,937,500
Property dividends are recorded * 1 point
As dividend income at fair value of the property
By means of memorandum only
As return of investment and therefore credited to investment account
As dividend income at carrying amount of the property
On May 1, 2020, Cobb and Mott formed a partnership and agreed to share 1 point
profits and losses in the ratio 3:7, respectively, Cobb contributed a parcel
of land that cost him P10,000. Mott contributed P40,000 cash. The land
was sold for P18,000 on May 1, 2020, immediately after formation of the
partnership. What amount should be recorded in Cobb’s capital account on
formation of the partnership? *
17,400
18,000
15,000
10,000
Assuming that net purchases was ₱900,000 during the year and that 1 point
ending merchandise inventory was ₱20,000 more than the beginning
merchandise inventory of ₱250,000, how much was cost of goods sold? *
₱ 880,000
₱920,000
₱1,130,000
₱1,170,000
I- A partner who is declared solvent, his capital deficiency will be absorbed 1 point
by the remaining partners with credit balances based on profit and loss
sharing ratio. II- In liquidation by installment, the distribution of cash could
not be a problem if said cash will be distributed as it becomes available but
has to wait until the whole liquidation process is through. *
FALSE, FALSE
TRUE, TRUE
TRUE, FALSE
FALSE, TRUE
For the month of March 2020, prime cost was * 1 point
114,000
144,000
150,000
120,000
* 1 point
P550,000
P500,000
P450,000
P400,000
Partner Ae first contributed P50,000 of capital into existing partnership on

March 1, 2020, said partner contributed another P20,000. On September 1,
2020, he withdrew P15,000 from the partnership. Withdrawal in excess of
P10,000 are charged to the partner’s capital accounts. What is the annual
weighted average capital balance of Partner Ae? *
P32,500
48, 333
51,667
60 000
60,000
Which of the following statements is incorrect? * 1 point
Freight-in is added to net invoice price to get the net purchase cost
Purchase discounts are deducted from the invoice price to determine the net invoice
cost
Cost of Sales and ending merchandise inventory are total goods available for sale
The sum of beginning inventory and cost of sales is total goods available for sale
Which of the following is not an example of an adjusting item? * 1 point
Overstatement of sales
Unrecorded expenses
Unrecorded ending inventory
Accrued income
How many persons are required to form a corporation? * 1 point
none of the given
less than 5 persons only
more than five persons but not to exceed 15 persons
not less than five but not more than fifteen
Right of the corporation to continue as a juridical entity for the term stated 1 point
in the articles of incorporation despite the death of any stockholder. *
Juridical personality
Right of existence
Right of succession
Pre-emptive right
A company using a periodic inventory system neglected to record a 1 point

purchase of merchandise on account at year end. This merchandise was
omitted from the year end physical count. How will these errors affect
inventory at year end and cost of goods sold for the year, respectively? *
No effect, understate
Understate, understate
No effect, overstate
Understate, no effect
These are persons who sign the Articles of Incorporation, who may or may 1 point
not be subscribers of shares *
Directors
Incorporators
Promoters
Promoters
Trustees
Accrual basis of accounting * 1 point
Leads to the reporting of more complete information than does cash-basis

accounting.
Is not acceptable under GAAP
Results in higher income than cash-basis accounting
Omits adjusting entries at the end of the period
Which of the following is not one of the basic shareholder rights? * 1 point
The right to participate in earnings
The right to inspect the accounting records of the corporation
The right to maintain one's proportional interest in the corporation
The right to participate in the proceeds of the sale of corporate assets upon
liquidation of the corporation
From the point of view of the company receiving the cash, an item that 1 point
represents services that have been paid for by the customer, but have not
been provided to the customer by the firm which received the cash, is
called: *
A prepaid expense
An unearned revenue
d
An accrued revenue
An accrued expense
Which of the following items would be recorded in the purchases journal? * 1 point
Equipment purchased on account
Supplies purchased on account
All of the above
Merchandise purchased on account
Fox, Greg and howe are partners with average capital balances during 1 point
2006 of p120,000, P60,000 and P40,000, respectively. Partners receive
10% interest on their average capital balances. After deducting salaries of
P30,000 to Fox and P20,000 to Howe, the residual profit and loss is
divided equally. In 2020, the partnership sustained a P33,000 loss before
interest and salaries to partners.By what amount should Fox’s capital
account change? *
7,000 increase
42,000 increase
11,000 decrease
35,000 decrease
Dean Sportswear regularly buys sweaters from Mill Company and is 1 point
allowed trade discounts of 20% and 10% from the list price. Dean made a
purchase on March 20, 2020, and received an invoice with a list price of
₱600,000, a freight charge of ₱15,000 and payment terms of 2/10, n/30.
Dean should record the purchase at *
₱438,360
₱435,000
₱432,000
₱447,000
* 1 point
A
A partner’s loss absorption balance is calculated by * 1 point
dividing the partner’s capital balance by his percentage interest in capital
multiplying the partner’s total interests by his profit and loss sharing percentage
multiplying distributable assets by the partner’s profit sharing percentage
dividing the partner’s total interest by his profit and loss sharing percentage
The purpose of post-closing trial balance is to * 1 point
Provide the account balances for the preparation of the Statement of Financial
Position
Ensure that the ledger is in balance for completion of the worksheet
Aid the journalizing and posting of the closing entries
Ensure that the ledger is in balance for the start of the next period.
Right which the existing stockholders of corporation cannot be deprived 1 point
without the consent is their right to subscribe or to purchase new stock

issued by the corporation; or unissued original stock, in proportion to their
holdings before it can be offered to others: *
Right to purchase
Pre-emptive right
Right of redemption
None of them
Assuming a company is profitable in the current period, the total of the 1 point
Statement of Financial Position credit column in the worksheet will be *
Larger than the Statement of Profit or Loss debit column
Smaller than the Statement of Financial Position debit column
Larger than the Statement of Financial Position debit column
Larger than the Statement of Profit or Loss credit column
Which of the following is not considered a legitimate expense of a 1 point

partnership? *
Salaries for management hired to run the business
Interest paid to partners based on the amount of invested capital
Depreciation on assets contributed to the partnership by partners
Supplies used in the partners’ offices.
Which of the following would not be classified as a product cost? * 1 point
Direct materials.
Indirect materials.
Direct labor.
Insurance on the manufacturing plant.
Sales commissions.
* 1 point
Juridical personality of a corporation begins: * 1 point
From the date of the issuance of certificate of incorporation

By agreement of the parties
None of them
Acknowledgement before a notary public
* 1 point
Which of the following financial statements is concerned with the 1 point
enterprise at a point in time? *
Statement of Changes in Equity
Statement of cash Flows
Statement of Financial Position
Statement of Profit or Loss
An advantage of the partnership as a form of business organization would 1 point
be *
Partners do not pay income taxes on their share in partnership income
A partnership is bound by the act of the partners
A partnership is created by mere agreements of the partners
A partnership may be terminated by the death or withdrawal of a partner
Which of the following statements is false? * 1 point
Historical cost is identified as the current selling price.
Communicating is the process of preparing and distributing accounting reports to

potential users of accounting information.
An event is accountable or quantifiable when it has an effect on assets, liabilities and

equity.
Only economic activities are emphasized and recognized in financial accounting.
I- Admission by purchase of interest is a personal transaction between the 1 point
selling partner and buying partner yet there is an increase in the

capitalization of the new partnership. II- When whole interest in the
partnership is being sold to one person, this transaction tantamount to
conversion of a partnership into sole proprietorship. *
FALSE, TRUE
TRUE, TRUE
TRUE, TRUE
FALSE, FALSE
TRUE, FALSE
Which of the following statement is false? * 1 point
From the seller’s point of view, the terms “cash discount” and “sales discount” are the
same
Cash discounts are used to encourage customers to make prompt discount payments
Cash discounts are a convenient means of reducing prices to invoice prices
Cash discounts may be offered in conjunction with trade discounts
In merchandising operations, the Sales account will be recorded if the 1 point
seller sells *
Goods or merchandise with discount
Assets that the company owns
Goods or merchandise only
Goods or merchandise on cash basis
Under the perpetual inventory system, in addition to making the entry to 1 point
record a sales return, a company would *
Debit cost of goods sold and credit Merchandise inventory
Debit Merchandise inventory and credit cost of goods sold
Debit cost of goods sold and credit purchases
Make no additional entry until the end of the month

Make no additional entry until the end of the month
Five years ago, Adrian Company purchase land for P800,000. The land is 1 point
now worth P1,400,000; it is expected that the land will be worth about
P2,000,000 within the next 2 years. At what amount should Adrian
Company report the land on its balance sheet? *
P600,000
P1,400,000
P800,000
P2,000,000
A copy of your responses will be emailed to maryjune.mortez@lsu.edu.ph.
Submit Clear form
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1/26/22, 8:51 AM FAR-QUALIFYING EXAMINATION

Your email will be recorded when you submit this form

₱5,000,000 to Burr on account. Pitt allowed trade discounts of 30% and

Paid in capital, retained earnings, and dividends accounts

Paid in capital and retained earnings accounts

Retained earnings accounts

Preferred and common stock accounts

A partnership is not viewed as separate entity, distinct, taxable entity

Changes in the ownership structure of a partnership result in the dissolution of the

Partner’s salaries are viewed as a distribution of income rather than a component of

A partnership is characterized by limited liability’

Included in the inventory of the seller

Included in the inventory of the shipping company

Included in the inventory of the buyer

I- When a new partner is admitted in an existing partnership, automatically 1 point

Which of the following costs is not a component of manufacturing 1 point

Property taxes on the manufacturing plant.

Cost and benefit criterion

Assets equal liabilities and equity

What goes up goes down

As current technology changes manufacturing processes, it is likely that 1 point

labor will decrease

labor will increase

material will decrease

materials will increase

The left side of an account is known as a debit or increase

An account is an individual accounting record of increases and decreases in specific

In its simplest form, an account is composed of two parts.

to vote in the election of directors

to share in corporate earnings

to subscribe for additional share issues

to represent himself in the name of the corporation

The partnership has undergone quasi-reorganization

The Partnership assets should be revalued

who has a negligible amount of liability

who can sell the biggest portion of the assets

who can absorbed the share of theoretical or possible loss

For the month of March 2020, conversion cost was * 1 point

The Notes receivable account of April Company shows a balance of 1 point

How much is the additional cash to be invested by Eden? * 1 point

The following are business forms, except: * 1 point

transactions easier in the next accounting period. *

If the amount of “Cost of goods manufactured” during a period exceeds 1 point

Ending work in process is equal to the cost of goods manufactured

If supplies account has a debit balance of P36,000 as of December 31, 1 point

The following are business transactions, except: * 1 point

Owner’s drawing against profit

Payment of rental for the use of office space

Purchase of equipment on account

Debit, Asset; Credit, equity

Debit expenses; credit, liability

None of the given

Debit, expenses; credit, equity

who has a negligible amount of liability

who can sell the biggest portion of the assets

who can absorbed the share of theoretical or possible loss

The par value of an ordinary share represents * 1 point

the legal nominal value assigned to the share

the book value of the share

the liquidation value of the share

Increase in assets and decrease in equity

Increase in assets and increase in equity

Increase in liabilities and increase in equity