Professional Documents
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SHERWINPOGI Company has a cost card in relation to an item of goods manufactured as follows:
Php 760
Php 760
Php 880
Php 880
Php 940
Php 940
Php 980
Php 980
02Multiple Choice
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Which of the following statements is incorrect regarding the use of cost formuals?
PAS 2 requires the use of specific identification of costs for inventories that are not ordinarily
interchangeable.
PAS 2 requires the use of specific identification of costs for inventories that are not ordinarily
interchangeable.
Only one formula shall be used for all inventories regardless of differences in their nature and use.
Only one formula shall be used for all inventories regardless of differences in their nature and use.
Different cost formulas may be used for each class of inventory with dissimilar nature and use.
Different cost formulas may be used for each class of inventory with dissimilar nature and use.
Entities may choose between the FIFO and the Weighted Average cost formulas for inventories that
are ordinarily interchangeable
Entities may choose between the FIFO and the Weighted Average cost formulas for inventories that
are ordinarily interchangeable
03Multiple Choice
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In 20x1, Entity A proposes an environmental clean-up project for a river. The government supports
this project and gives Entity A a ₱1M monetary grant conditioned that the money will only be spent
on the proposed project. The proposed project is expected to take about 2 years to complete. Entity
A starts the clean-up project in 20x2. How should Entity A recognize income from the government
grant?
04Multiple Choice
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Entity A, a financial institution, received cash dividends from its investments in marketable securities
during the year. How will the dividends be presented in Entity A’s statement of cash flows?
As operating activity
As operating activity
As investing activity
As investing activity
As financing activity
As financing activity
05Multiple Choice
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White farm supply's records for the first 3 months of its existence show purchases of Commodity A
as follows.
The inventory of Commodity A at the end of October using FIFO is valued at Php 363,900
Assuming that none of Commodity A was sold during August and September, What value would be
shown at the end of October if Average Cost was assumed?
Php 365,855
Php 365,855
Php 358,662
Php 358,662
Php 351,962
Php 351,962
Php 416,812
Php 416,812
Php 353,855
Php 353,855
06Multiple Choice
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How should trade discounts be dealt with when valuing inventories at the lower of cost and net
realisable value (NRV) according to PAS 2?
Ignored
Ignored
Added to cost
Added to cost
07Multiple Choice
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Which of the following is not considered a government grant under PAS 20?
Financial aid
Financial aid
Forgivable loans
Forgivable loans
Tax breaks
Tax breaks
08Multiple Choice
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Entity A, a trading entity, buys and sells Product Z. Movements in the inventory of Product Z during the period are as
follows:
How much is the ending inventory under the Weighted Average cost formula? (The average is calculated as each
additional purchase is made, i.e., ‘moving average’.)
Php 5,680
Php 5,680
Php 5,380
Php 5,380
Php 5,860
Php 5,860
Php 5,580
Php 5,580
09Multiple Choice
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S1: Depreciation does not cease when the asset becomes idle or is retired from active use.
S2: Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration
given to acquire an asset at the time of its acquisition or construction or where applicable, the
amount attributed to that asset when initially recognized in accordance with the specific
requirements of other PFRSs.
S3: Permanent differences are those that do not have future tax consequences
S4: Current tax expense are measured using enacted or substantially enacted tax rates that are
applicable to the periods of their expected reversals
10Multiple Choice
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Deferred tax assets and deferred tax liabilities do not alter the tax to be paid in the current period.
However, they cause tax payments to either increase or decrease when they reverse in a future
period. The reversal of which of the following will cause an increase in tax payment?
11Multiple Choice
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This type of difference will give rise to deferred tax asset
No difference
No difference
Permanent difference
Permanent difference
12Multiple Choice
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Which of the following is an example of a non-adjusting event?
Bankruptcy of a customer after the reporting period that indicates that the carrying amount of a trade
receivable at the end of the reporting period is impaired.
Bankruptcy of a customer after the reporting period that indicates that the carrying amount of a trade
receivable at the end of the reporting period is impaired.
Evidence indicating that an asset is impaired as at the end of the reporting period.
Evidence indicating that an asset is impaired as at the end of the reporting period.
Legal proceedings after the reporting period for an incident that occurred before the end of the
reporting period.
Legal proceedings after the reporting period for an incident that occurred before the end of the
reporting period.
Significant decline in foreign exchnage rates after the reporting period resulting to massive losses on
recognized foreign currency denominated instruments
Significant decline in foreign exchnage rates after the reporting period resulting to massive losses on
recognized foreign currency denominated instruments
13Multiple Choice
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S1: A voluntary change in accounting policy is accounted for by the retrospective application.
S2: Early application of a PFRS is not a voluntary change in accounting policy.
S3: An accounting policy shall be changed only when it is required by PFRS.
S4: Investing activities include transactions that affect non current assets and other non-operating
assets.
14Multiple Choice
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The following information is available for Color Me Company for year 2020
Php 2,400,000
Php 2,400,000
Php 1,680,000
Php 1,680,000
Php 1,920,000
Php 1,920,000
Php 2,440,000
Php 2,440,000
Php 2,160,000
Php 2,160,000
15Multiple Choice
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S1: Change from the cost model to the revaluation model of measuring property, plant, and
equipment is an example of a change in accounting policy.
S2: When taxable temporary difference reverses in the future period, it results in higher tax payment.
S3: Retrospective application means adjusting the opening balance of each affected component of
the asset account for the earliest prior period.
S4: According to PAS 7, the indirect method of presenting cash flows relating to operating activities
shows each major class of gross receipts and gross cash payments.
16Multiple Choice
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Which of the following events after the reporting period are treated as adjusting events
A litigation arising from an accident that occurred after the reporting period.
A litigation arising from an accident that occurred after the reporting period.
17Multiple Choice
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During the period, deferred tax assets increase by ₱400 while deferred tax liabilities increase by
₱500. The net change of ₱100 is a
18Multiple Choice
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Which of the following is considered a government grant under PAS 20?
Public Improvements
Public Improvements
19Multiple Choice
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S1: Reversals of inventory write downs may exceed the amount of the original writedown previously
recognized.
S2. The cost of factory management is included in the cost of inventory.
S3: The maintenance costs of a machine used in the manufacturing process are not included in the
cost of Inventory
S4: The maintenance costs of a machine used in the manufacturing process are not included in the
cost of PPE
20Multiple Choice
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AA Company had the following consignment transactions during December 2020.
What amount of consigned inventory should be included in AA 's December 31, 2020 Balance
sheet?
Php 36,000
Php 36,000
Php 24,000
Php 24,000
Php 61,800
Php 61,800
Php 25,000
Php 25,000
Php 37,800
Php 37,800
21Multiple Choice
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The closing raw materials inventory of Webster Manufacturing Company amounted to Php 345,000
at December 31, 2020. This total includes an item of raw material (Material Zip) with a cost of Php
100,000 with an estimated net realizable value of Php 80,000. Immediately after the balance sheet
date, Material Zip was applied to production and the cost of the finished product where material zip
was applied revealed that its net selling price exceeds the cost of producing the finished goods.
Php 325,000
Php 325,000
Php 265,000
Php 265,000
Php 445,000
Php 445,000
Php 345,000
Php 345,000
Php 245,000
Php 245,000
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