Professional Documents
Culture Documents
Easy Questions
6. What act regulates the practice of accountancy in the Philippines? (R.A. 9298 or the Philippine
Accountancy Act of 2004)
7. What is the last step in the accounting cycle considering the following? (A)
e. Prepare a postclosing trial balance
f. Journalize and post-closing entries
g. Prepare financial statements
h. Journalize and post adjusting entries
Average Questions:
1. July 1, 2018, Weinst Company purchased Eden Company ten-year 8% bonds with a face amount
of P5,000,000 for P4,200,000. The bonds mature on June 30, 2028 and pay interest semiannually
on June 30 and December 31. Using the interest method, the entity recorded bond discount
amortization of P18,000 for the six months ended December 31, 2018. What amount should be
reported as interest income for 2018? (Answer: 218,000)
2. Which statements is not true regarding the presentation of current liabilities in accordance with
IFRS? (A)
a. The noncurrent liabilities follow the current liabilities
b. Current liabilities may be listed in the order of magnitude, in descending order of magnitude
or in the order of liquidity preference
c. Current liabilities are generally recorded at face amount
d. Current liabilities should not be offset against the assets used for liquidation.
What amount should be reported as dividend income for the current year? (Answer: 200,000)
4. How does the standard distinguish between the measurement methods to be used in classifying
financial assets subsequent to initial recognition? (B)
a. By reviewing the business model and the risks and rewards of the transaction.
b. By reviewing the business model and the contractual cash flow characteristics of the
instrument
c. By reviewing the realizability and the contractual cash flow characteristics of the instrument
d. By reviewing the realizability of the instrument and risks and rewards of ownership
The P1,000,000 bank loan was refinanced with a 5-year loan on December 31, 2018.The
financial statements were issued March 1, 2019. What total amount should be reported as
current liabilities on December 31, 2018? (Answer: 7,500,000)
7. At the beginning of the current year, Besao Company received a grant of P10,000,000 from the
Australian government for the construction of a laboratory and research facility with an
estimated cost of P15,000,000 and useful life of 5 years.
The laboratory and research facility was completed and ready for the intended use at the end of
the current year.
What amount of grant income should be included in the income statement for the current year?
(P2,000,000)
Difficult Questions
1. Ariel Company reported operating expenses other than interest expense for the year at 40% of
cost of goods sold but only 20% of sales. Interest expense is 5% of sales. The amount of
purchases if 120% of cost of goods sold. Ending inventory is twice as much as the beginning
inventory. The net income for the year is P2,100,000. The income tax rate is 30%. What is the
amount of purchases? (7,200,000)
3. On January 1, 2017, Fame Company acquired a 10% interest in an investee for P5,000,000. The
investment was accounted for at fair value through other comprehensive income. The fair value
of the investment was P5,500,000 on December 31, 2017 and P6,000,000 on December 31,
2018.
On January 1, 2019, the entity acquired a further 20% interest in the investee for
P11,000,000. On such date, the carrying amount of the net assets of the investee was
P40,000,000.
The fair value of the net assets of the investee is equal to carrying amount, except for an
equipment whose fair value exceeds carrying amount by P5,000,000. The equipment has a
remaining life of 5 years. Answer: 3,500,000
4. Poi Company began operations at the beginning of current year. The following information
pertains to the portfolio of equity securities at year-end:
Trading Nontrading
Aggregate cost 4,000,000 6,000,000
Aggregate market value 3,700,000 5,500,000
Aggregate lower of cost or market value
applied to each security 3,500,000 5,300,000
The nontrading equity securities are designated at fair value through other comprehensive
income.
What amount should be reported as total loss on these securities in the income statement for
the current year? (300,000)