1.

The process of bringing together of seperate entities or businessess into one reporting entity
is
a. Business combination c. Corporate readjustment
b. Business takeover d. Corporate spin off
2. It is combining entity that obtains control of the other combining entities or businessess.
a. Acquirer c. Investor
b. Acquiree d. Investee
3. Two or more organizations combine into a single entity that is in turn taken over by the
surviving entity known as the acquirer.
a. Statutory merger c. Stock acquisition
b. Statutory consolidation d. All of these
4. Which of these equations best describes statutory consolidation?
a. Bona Co. + Neo Co. = Bona Co c. Pappy Co. + Son Co. = Pappy Co. &
Son Co.
b. Bong Co. + Cris Co. = Cris Co. d. Conra Co. + Daya Co. = Sweet
Couple Co.
5. A business combination that gives rise to a ‘parent and subsidiary relationship’ is
a. Statutory merger c. Stock acquisition
b. Statutory consolidation d. All of these
6. It is that part of the profit or loss and net assets of a subsidiary attributable equity interests
that are not owned, directly or indirectly through subsidiaries, by the parent.
a. Residual interest c. Controlling interest
b. Minority interest d. Bond interest
7. Under PFRS 3, all business combinations must be accounted for using the
a. Pooling of interest method c. Proportionate consolidation
b. Equity method d. Purchase method
8. The purchase method of accounting for business combination involves all of the following
steps except
a. Identifying an acquirer c. Allocating the cost of business
combination to the assets acquired
and liabilities and contingent liabilities
assumed
b. Measuring the cost of the business d. Measuring goodwill and
combination systematically allocating it over its
useful life
9. The cost of business combination shall not include
a. Fair value of assets given up by the c. Any costs directly attributable to the
acquirer to gain control of the acquiree business combination
b. fair value of equity instrument issues d. General exepenses related to
by the acquirer to gain control of the business combination
acquiree

10. Costs directly attributable to a business combination include

a. Cost of issuing equity instruments c. General administrative costs
b. cost of arranging and issuing financial d. Professional fees paid to facilitate
liabilities business combination

11. At the date of acquisition, the acquirer shall allocate the cost of a business combination by
recognizing the acquiree’s identifiable assets, liabilities and contingent liabilities at their
a. Historical costs c. Carrying amounts
b. Fair values d. Recoverable amounts
12. Which among the following is an incorrect way of allocating cost of business combination to
acquired assets?
a. Receivables at present value of c. Finacial instruments traded in active
amounts to be received less allowance market at current market value
for uncollectible
b. Raw materials at current replacement d. Plant and equipment at the carrying
cost amount in the books of acquiree

13. An acquirer should at the acquisition date recognize goodwill acquired in a business
combination as an asset. Goodwill should be accounted for as follows:
a. Recognize as an intangible assets and c. Recognize as an intangible asset and
amortize over its useful life test for impairment when trigger event
occurs
b. Write off against retained earnings d. Recognize as an intangible asset
and test regularly for impairment
14. When two or more venturers combine their operations, resources and expertise to
manufacture, market and distribute jointly a particular product such as aircraft is an example
of
a. Joint venture
b. Jointly controlled operation
c. Jointly controlled asset
d. Jointly controlled entity
15. A feature of government accounting that provides for the ceiling or maximum amount an
agency can spend or incur in the performance of its functions is known as
a. Budgetary accounting
b. Responsibility accounting
c. Obligation accounting
d. Fund accounting
16. A statement of financial position reports unrestricted, temporarily restricted and permanently
restricted net assets is required for which of the following?
I. A public university
II. A private, nonprofit hospital
a. Both I and II
b. I only
c. Neither I nor II
d. II only

17. Activity based costing first assigns cost to

A. Departments
B. Activities
C. Products
D. Overheads

18. Which of the following is among those listed under PAS 29 as indicators of hyperinflation?
A. People prefer to keep their wealth in monetary assets
B. People prefer to keep their wealth in relatively stable foreign currency
C. Interest rates, wages and prices are not linked to a price index
D. The cumulative inflation rate over five years exceeds or is approaching 100%

19. When preparing consolidated financial statements, adjustments for pre-acquisition equity and
inter-equity transactions are recorded
A. In the accounting records of reporting entity
B. In the accounting records of the parent entity
C. In the accounting records of the subsidiary
D. In the consolidation worksheet

20. The most common treatment of under- and over-applied overhead costs is to close it out to
A. Finished goods
B. Cost of goods sold
C. Work in process
D. Retained earnings

21. Which of the following statements is true in relation to hyperinflationary economies?

A. Gain or loss on purchasing power arise from non-monetary assets
B. Gain or loss on purchasing power arise from non-monetary liabilities
C. Gain or loss on net monetary position is included in profit or loss
D. All accounts must be restated into the measuring unit currency at balance sheet by
applying the consumer price index

22. A voluntary health and welfare organization is required to prepare a

A. Statement of management responsibility
B. Statement of functional expenses
C. Statement of changes in equity
D. Statement of comprehensive income

23. Direct material costs are

A. Prime and conversion costs
B. Prime and manufacturing cost
C. Conversion and manufacturing cost
D. Prime, conversion and manufacturing cost

24. Under NGAS, it is the allotment by the Central office to the Regional Office
A. Regular allotment
 B. Ordinary allotment
C. Suballotment
D. Secondary allotment

25. In construction contracts, the effect of a change in the estimate of contract revenue and
contract cost is accounted for as
A. Prior period error
B. Component of equity
C. Change in accounting policy
D. Change in accounting estimate

26. Which of the following companies is most likely to use process costing in accounting for
production costs?
A. Road builder
B. Electric contractor
C. Newspaper publisher
D. Automobile repair shop

27. The contractual adjustment of a non-profit hospital is a (an)

A. Expense account
B. Contra-revenue account
C. Loss account
D. Asset account

28. Which of the following components of production are allocable as joint costs when a single
manufacturing process produces several salable products?
A. Materials and labor
B. Labor and overhead
C. Materials and overhead
D. Materials, labor and overhead

29. Under a BOT scheme covered by IFRIC 2and borrowing costs incurred by the private
operator for infrastructure projects shall be
A. Expensed (Financial Asset Model); Capitalized (Intangible Asset Model)
B. Expensed (Financial Asset Model); Expensed (Intangible Asset Model)
C. Capitalized (Financial Asset Model); Expensed (Intangible Asset Model)
D. Capitalized (Financial Asset Model); Capitalized (Intangible Asset Model)

30. Under NGAS allotments by DBM are recorded in the registries

A. Quarterly
B. Monthly
C. At the beginning of the period
D. At the end of the period

31. For which of the following businesses would the job order cost system be appropriate
A. Auto repair shop
B. Crude all refinery
C. Paint manufacturer
D. Beer distillery

32. Horizontal business combination occur when an entity purchased which of the following?
A. Supplier
B. Customer
C. Competitor
D. Prospective customer

33. Under PFRS 15, franchise fee is recognized

A. On the date of the contract was signed
B. On the date the franchise is open for business
C. On the date the franchise fee is aid to the franchisor
D. When performance obligations are satisfied

34. In standard costing, an unfavorable price variance occur because of

A. Price increases on raw materials
B. Price decreases on raw materials
C. Less than the anticipated levels of waste in the manufacturing process
D. More than the anticipated levels of waste in the manufacturing process
35. Control over an acquiree can be obtained through which on the following
A. Acquisition of the acquirer stock
B. Acquisition of the acquiree stock
C. Either acquisition of the acquire asset or stock
D. Neither acquisition of the acquire asset or stock

36. What is the accounting option for a trustee in a bankruptcy proceeding?

A. Assets equal accountability
B. Assets equal liabilities plus owners equity
C. Assets equal liabilities minus estate deficit
D. Assets minus liabilities equals accountability
37. A spot rate may be defined as
A. The US dollar value of a foreign currency
B. The forecasted future value of a finance currency
C. The price foreign currency can be purchased or sold today
D. The price today at which a foreign currency
38. On April 30, 1993, Algee, Belger, and Ceda formed a partnership by combining their separate
business proprietorships. Algee contributed cash of P50,000, Belger contributed property
with a P36,000 carrying amount, a P40,000 original cost, and P80,000 fair value. The
partnership accepted responsibility for the P35,000 mortgage attached to the property. Ceda
contributed equipment with a P30,000 carrying amount, a P75,000 original cost, and P55,000
fair value. The partnership agreement specifies that profits and losses are to be shared
equally but is silent regarding capital contributions. Which partner has the largest April 30,
1993, capital account balance?
a. Algee. c. Ceda.
b. Belger. d. All capital account balance are equal.

39. A partnership records a partner’s investment of assets in the business at

a. The market value of the assets invested.
b. A special value set by the partners.
c. The partner’s book value of the assets invested.
d. Any of the above, depending upon the partnership agreement.

40. When property other than cash is invested in a partnership, at what amount should the
noncash property be credited to the contributing partner’s capital account?
a. Fair value at the date of recognition.
b. Contributing partner’s original cost.
c. Assessed valuation for property tax purposes.
d. Contributing partner’s tax basis.

41. In the Adel-Brick partnership, Adel and Brick had a capital ratio of 3:1 and a profit and loss
ratio of 2:1, respectively. The bonus method was used to record Colter’s admittance as a
new partner. What ratio would be used to allocate, to Adel and Brick, the excess of Colter’s
contribution over the amount credited to Colter’s capital account?
a. Adel and Brick’s new relative capital ratio.
b. Adel and Brick’s new relative profit and loss ratio.
c. Adel and Brick’s old capital ratio.
d. Adel and Brick’s old profit and loss ratio.

42. Before the withdrawal of Alice from their partnership, the partners agreed to adjust assets to
their fair values. Accordingly, the appraisal increase was credited to (M)

a. Income Summary. c. Appraisal Capital.

b. Deferred Credit. d. Partners’ Capital Accounts.

43. The final cash distribution to the partners in a partnership in liquidation should be made in
accordance with
a. Balances of the partners’ capital accounts.
b. Partners’ profit and loss sharing ratio.
c. Ratio of capital contributions made by the partners.

d. Ratio of capital contributions less withdrawals made by the partners

44. In a partnership liquidation, the final cash distribution to the partners should be made in
accordance with the
a. Partners’ profit and loss sharing ratio.
 b. Balances of the partners’ capital accounts.

c. Ratio of capital contributions made by the partners.

d. Ratio of capital contributions less withdrawals made by the partners.

45. Occasionally a franchise agreement grants the franchisee the right to make future bargain
purchases of equipment or supplies. When recording the initial franchise fee, the franchisor
should
a. increase revenue recognized from the initial franchise fee by the amount of the expected
future purchases.
b. record a portion of the initial franchise fee as unearned revenue which will
increase the selling price when the franchisee subsequently makes the bargain
purchases.
c. defer recognition of any revenue from the initial franchise fee until the bargain purchases
are made.
d. None of these.

46. A franchise agreement grants the franchisor an option to purchase the franchisee's business.
It is probable that the option will be exercised. When recording the initial franchise fee, the
franchisor should
a. record the entire initial franchise fee as a deferred credit which will reduce the
franchisor's investment in the purchased outlet when the option is exercised.
b. record the entire initial franchise fee as unearned revenue which will reduce the amount
of cash paid when the option is exercised.
c. record the portion of the initial franchise fee which is attributable to the bargain purchase
option as a reduction of the future amounts receivable from the franchisee.
d. None of these.

47. Continuing franchise fees should be recorded by the franchisor

a. as revenue when earned and receivable from the franchisee.

b. as revenue when received.
c. in accordance with the accounting procedures specified in the franchise agreement.
d. as revenue only after the balance of the initial franchise fee has been collected.

48. Some of the initial franchise fee may be allocated to

a. continuing franchise fees.

b. interest revenue on the future installments.
c. options to purchase the franchisee's business.
d. all of these may reduce the amount of the initial franchise fee that is recognized as
revenue.

49. An enterprise uses a branch accounting system in which it establishes separate formal
accounting systems for its home office operations and its branch office operations. Which of
the following statements about this arrangement is false?

A. The home office account on the books of a branch office represents the equity interest of
the home office in the net assets of the branch.

B. The branch office account on the books of the hoe office represents the equity
interest of the branch office in the net assets of the home office.

C. The home office and branch office accounts are reciprocal accounts that must be
eliminated in the preparation of the enterprise’s financial statements that are presented
in accordance with GAAP.

D. Unrealized profit from internal transfers between the home office and a branch must be
eliminated in the preparation of the enterprise’s financial statements that are presented
in accordance with GAAP.
50. VERDI, Inc. has several branches. Goods costing P10,000 were transferred by the head
office to Cebu Branch with the latter paying P600 for freight cost. Subsequently, the head
office authorized Cebu Branch to transfer the goods to Davao Branch for which the latter was
billed for the P10,000 cost of the goods and freight charge of P200 for the transfer. If the
head office had shipped the goods directly to Davao Branch, the freight charge would have
been P700. The P100 difference in freight cost would be disposed of as follows:

a. Considered as savings. c. Charged to Davao Branch.

b. Charged to Cebu Branch. d. Charged to the Head Office.

51. Which represents the proper journal entry for a periodic inventory system that should be
made on the books of the branch when goods that cost the home office P100,000 to
manufacture are shipped to the branch at a price of P125,000?

A. Shipments from home office P100,000

Home office P100,000

B. Shipments from home office P125,000

Home office P125,000

C. Shipments from home office P125,000

Unrealized profit P 25,000
Home office 100,000

D. Shipments to branch P100,000

Unrealized profit 25,000
Shipments from home office P125,000

52. In selecting an accounting method for a newly contracted long-term construction project, the
principal factor to be considered should be
a. the terms of payment in the contract.
b. the degree to which a reliable estimate of the costs to complete and extent of
progress toward completion is practicable.
c. the method commonly used by the contractor to account for other long-term construction
contracts.
d. the inherent nature of the contractor's technical facilities used in construction.

53. The use of the percentage of completion method of accounting for long term construction
contracts is a measurement of revenue under the
a. Cost principle. c. Objectivity principle.
b. Realization principle. d. Monetary principle.

54. Which of the following is not an element identified by the AICPA as being necessary in order
to use percentage-of-completion accounting?

a. The construction period can be reasonably estimated.

b. The buyer can be expected to satisfy obligations under the contract.
c. Dependable estimates can be made of the extent of progress toward completion.
d. Dependable estimates can be made of contract costs.

55. The profession requires that the percentage-of-completion method be used when certain
conditions exist. Which of the following is not one of those necessary conditions?
a. Estimates of progress toward completion, revenues, and costs are reasonably
dependable.
b. The contractor can be expected to perform the contractual obligation.
c. The buyer can be expected to satisfy some of the obligations under the contract.
d. The contract clearly specifies the enforceable rights of the parties, the consideration to
be exchanged, and the manner and terms of settlement.

56. The rationale for adoption of the percentage-of-completion method is that:

A. Results are more conservative.
 B. It provides a measure of periodic accomplishment.
C. It is a better match with legal ownership.
D. It results in a lower income tax.

57. The percentage-of-completion method of inventory valuation of long-term contracts

a. Recognizes income upon completion of work.
b. Recognizes income based on collected billings.
c. Recognizes income based on the progress of work.
d. Does not recognize income at the balance sheet date.

58. The accounting method that recognizes revenue prior to the point of sale based on either an
input or an output measure of the earning process is known as the

a. Deposit method. c. Installment sales method.

b. Cost recovery method. d. Percentage-of-completion method

59. .The principal disadvantage of using the percentage-of-completion method of recognizing

revenue from long-term contracts is that it
a. is unacceptable for income tax purposes.
b. gives results based upon estimates which may be subject to considerable
uncertainty.
c. is likely to assign a small amount of revenue to a period during which much revenue was
actually earned.
d. none of these.

60. The price an investor is willing to pay for a business is dependent on many factors. Which of
the following is not such a factor?

A. Economic conditions.
B. Market prices.
C. Future anticipated earnings.

D. Book values of assets being acquired.

61. Consolidated financial statements are prepared when one company has:
A. Accounted for the investment using the equity method.

B. Accounted for the investment using the cost method.

C. A controlling financial interest in another company.

D. Significant influence over another company.

62. A controlling company having subsidiaries which activities were confined primarily to their
management is
a. An affiliate. c. A majority interest.

b.A subsidiary. d. A holding company.

63. From the viewpoint of consolidated financial statements this is a company in whose voting
stocks an interest is held by another company.
a. Parent company. c. Affiliate
b. Subsidiary company. d. Related party.

64. The statements present, primarily for the benefit of the stockholders and creditors of the
parent company, the results of operations, the financial position and the statement of changes
in financial position of a parent company and its subsidiaries essentially as if the group were a
single enterprise with one or more branches or divisions.
a. Income statement. c. Balance sheet.
b. Balance sheet and income statement. d. Consolidated financial statements.
65. When a parent-subsidiary relationship exists, consolidated financial statements are prepared
in recognition of the accounting concept of
a. Reliability. c. Legal entity.
b. Materiality. d. Economic entity.

66. Penn, Inc., a manufacturing company, owns 75% of the common stock of Sell, Inc., an
investment company. Sell owns 60% of the common stock of Vane, Inc. an insurance
company. In Penn’s consolidated financial statements, should consolidation accounting or
equity method of account be used for Sell and Vane?
a. Consolidation used for Sell and equity method for Vane.
b. Consolidation used for both Sell and Vane.
c. Equity method used for Sell and consolidation used for Vane.
d. Equity method used for both Sell and Vane.

67. The rationale for revenue and expenses of the affiliated companies to be combined in a
consolidated income statement is
a. On the assumption that the results of operations for a single economic entity are
being measured.
b. To encourage corporate enterprises to operate through subsidiaries rather than through
a single entity.

c. For the information of the minority interest or stockholders or creditors of the subsidiary
company.
d. To determine the arms-length transactions between the parent and subsidiary
companies.

68. Assuming there have been no intercompany transactions, which of the following is an
incorrect statement concerning the financial statement or statements of a parent and its 60%
owned subsidiary?
a. Net income of the parent would be the same whether or not consolidated statements
were prepared.
b. Consolidated financial statements would include 100% of the assets and liabilities of the
subsidiary.
c. The minority interest in net assets would not be shown on the consolidated
balance sheet.
d. If the parent does not prepare consolidated financial statements, it must use the equity
method of accounting.

69. Perez, Inc. owns 80% of Senior, Inc. During 1992, Perez sold goods with a 40% gross profit
to Senior. Senior sold all of these goods in 1992. For 1992 consolidated financial
statements, how should the summation of Perez and Senior income statement items be
adjusted?
a. Sales and cost of goods sold should be reduced by the intercompany sales.
b. Sales and cost of goods sold should be reduced by 80% of the intercompany sales.

c. Net income should be reduced by 80% of the gross profit on intercompany sales.
d. No adjustment is necessary.

70. Gould owns 54% of Gwin Company’s outstanding stock. What percentage of Gwin’s net
assets will Gould include on its consolidated balance sheet?

A. 100% C. 46%
B. 54% D. 4%.

71. The notes to the consolidated financial statements of a parent company need not disclose
a. Restriction on consolidated retained earnings.
b. Consolidated policy being followed.
c. Short-term debt of subsidiaries.
d. Changes in the entities included and the reasons and effect on income thereof.

72. The exchange rate of one currency for another for immediate delivery is the
a. forward rate c. spot rate
b. hedging rate d. immediate rate
73. On February 1, Classic Imports, a U.S. company, received an order worth 50,000 British
pounds, to be received in 60 days. If the dollar weakened against the British pound
throughout February and March, the British firm would have a(n)
a. exchange gain c. no gain or loss
b. exchange loss d. advance pricing agreement

74. Ferguson, Inc. purchased production equipment from a German company, agreeing to pay
100,000 Deutsche marks in one month. If the dollar weakened relative to the Deutsche mark
before payment was made, Ferguson would have a(n)
a. exchange gain c. no gain or loss
b. exchange loss d. advance pricing agreement

75. On October 1, 2001, Velec Co., a U.S. company, contracted to purchase foreign goods
requiring payment in local currency units (LCUs) 1 month after the receipt of the goods at
Velec’s factory. Title to the goods passed on December 15, 2001. The goods were still in
transit on December 31, 2001. Exchange rates were one dollar to 22 LCUs, 20 LCUs, and 21
LCUs on October 1, December 15, and December 31, 2001, respectively, Velec should
account for the exchange rate fluctuation in 2001 as
A. A loss included in net income before extraordinary items.
B. A gain included in net income before extraordinary items.
C. An extraordinary gain.
D. An extraordinary loss.

76. Fogg Co., a U.S. company, contracted to purchase foreign goods. Payment in foreign
currency was due one month after the goods were received at Fogg’s warehouse. Between
the receipt of goods and the time of payment, the exchange rates changed in Fogg’s favor.
The resulting gain should be included in Fogg’s financial statements as a(n)
A. Component of income from continuing operations.
B. Extraordinary item.
C. Deferred credit.
D. Item of other comprehensive income.

77. According to SFAS 52, foreign currency transaction gains and losses should usually be
included in income

A. For the period in which the exchange rate changes.

B. For the period in which the transaction originated.

C. For foreign currency transactions that are designated as economic hedges of a net
investment in a foreign entity.
D. For intercompany foreign currency transactions that are of a long-term investment
nature.

78. At December 15, 1999 purchase of goods was in a currency other than the entity’s functional
currency. The transaction resulted in a payable that was fixed in terms of the amount of
foreign currency, and was paid on the settlement date, January 20, 2000. The exchange rate
between the functional currency and the currency in which the transaction was denominated
changed between the transaction date and December 31, 1999, and again between
December 31, 1999 and January 20, 2000. Both exchange rate changes resulted in gains.
The amount of the gain that should be included in the 2000 financial statements is
A. The gain from December 31, 1999 to January 20, 2000.
B. The gain from December 15, 1999 to January 20, 2000.
C. The gain from December 15, 1999 to December 31, 1999.
D. Zero.

79. Franchise fees are properly recognized as revenue

a. when received in cash.

b. when a contractual agreement has been signed.
c. after the franchise business has begun operations.
d. after the franchiser has substantially performed its service.

80. Slick's Used Cars sells pre-owned cars on the installment basis and carries its own notes
because its customers typically cannot qualify for a bank loan. Default rates tend to be high or
 unpredictable. However, in the event of nonpayment, Slick's can usually repossess the cars
without loss. The revenue method Slick would use is the:
A. Installment sales method. C. Cost recovery method.
B. Point of sales method. D. Completed contract method.

81. When using the installment sales method,

a. gross profit is deferred until all cash is received, but revenues and costs are recognized
in proportion to the cash collected from the sale.
b. gross profit is recognized only after the amount of cash collected exceeds the cost of the
item sold.
c. revenue, costs, and gross profit are recognized proportionally as the cash is received
from the sale of product.
d. total revenues and costs are recognized at the point of sale, but gross profit is
deferred in proportion to the cash that is uncollected from the sale.

82. The method most commonly used to report defaults and repossessions is:
a. provide no basis for the repossessed asset thereby recognizing a loss.
b. record the repossessed merchandise at fair value, recording a gain or loss if
appropriate.
c. record the repossessed merchandise at book value, recording no gain or loss.
d. none of these.

83. Alton, Inc. is a retailer of home appliances and offers a service contract on each appliance
sold. Alton sells appliances on installment contracts, but all service contracts must be paid in
full at the time of sale. Collections received for service contracts should be recorded as an
increase in a
a. deferred revenue account.
b. sales contracts receivable valuation account.
c. stockholders' valuation account.
d. service revenue account.

84. Under the installment sales method,

a. revenue, costs, and gross profit are recognized proportionate to the cash that is received
from the sale of the product.
b. gross profit is deferred proportionate to cash uncollected from sale of the
product, but total revenues and costs are recognized at the point of sale.
c. gross profit is not recognized until the amount of cash received exceeds the cost of the
item sold.
d. revenues and costs are recognized proportionate to the cash received from the sale of
the product, but gross profit is deferred until all cash is received.

85. According to the installment method of accounting, gross profit on an installment sale is
recognized in income
a. on the date of sale.
b. on the date the final cash collection is received.
c. in proportion to the cash collection.
d. after cash collections equal to the cost of sales have been received

86. When assets that have been sold and accounted for by the installment method are
subsequently repossessed and returned to inventory, they should be recorded on the books
at
a. Selling price.
b. The amount of the installment receivable less associated deferred gross profit.
c. Net realizable value.
d. Net realizable value minus normal profit.

87. Goods on consignment should be included in the inventory of

a. the consignor but not the consignee. c. the consignee but not the consignor.
b. both the consignor and the consignee. d. neither the consignor nor the consignee.
88. Consignor Co. paid the in-transit insurance premium for consignment goods shipped to
Consignee Co. In addition, Consignor advanced part of the commissions that will be due
when Consignee sells the goods. Should Consignor include the in-transit insurance premium,
and the advanced commissions in inventory costs?
a. b. c. d.
Insurance Premium Yes No Yes No
Advanced Commissions Yes No No Yes
89. Revenue is recognized by the consignor when the

a. goods are shipped to the consignee.

b. consignee receives the goods.
c. consignor receives an advance from the consignee.
d. consignor receives an account sales from the consignee.

90. When goods are consigned out, profits should be recognized by the consignor when the
a. Goods are sold by the consignee.
b. Goods are received by the consignee.
c. Consignee agrees to the terms of the consignment.
d. Goods are shipped by the consignor.

91. Financial reporting by non-profit organizations should provide information useful in

a. Making resource allocation decisions.
b. Assessing services and the ability to continue to provide services.
c. Assessing management stewardship and performance.
d. All of the answers are correct.

92. SFAS 117, Financial Statements of Not-for-Profit Organizations, establishes standards for
general-purpose external financial statements issued by not-for-profit organizations. A
complete set of financial statements should include
a. Statements of financial position as of the beginning and end of the reporting period, a
statement of cash flows, and a statement of activities.
b. A statement of financial position as of the end of the reporting period, a statement of
cash flows prepared on the direct basis, and a statement of activities.
c. A statement of financial position as of the end of the reporting period, a statement
of cash flows, and a statement of activities.
d. Statements of financial position as of the beginning and end of the reporting period,
comparative statements of cash flows, and comparative statements of activities.

93. In a statement of financial position, a not-for-profit organization should report amounts for
which of the following classes of net assets?
I. Unrestricted.
II. Temporarily restricted.
III. Permanently restricted.
a. I, II, and III. c. I and III only.

b. I and II only. d. II and III only.

94. In its statement of activities, a not-for-profit organization may report expenses as decreases in
which of the following classes of net assets?
a. b. c. d.
Unrestricted Yes Yes Yes Yes
Permanently Restricted Yes No No Yes
Temporarily Restricted No Yes No Yes
95. For which of the following assets held by a religious organization should depreciation be
recognized in the organization’s general-purpose external financial statements?
a. The house of worship. c. A nationally recognized historical treasure.

b. A priceless painting. d. Land used for a building site.

96. The approved appropriation of department U for 2008 was P18,000,000. Eighty five of this
appropriation was allotted by the Department of budget and Management (DBM)
accompanied with Notice of Cash Allocation (80%) of the allotment. During the year, the
amount of obligation incurred was equivalent to ninety percent of the NCA but only seventy
percent of these obligations were paid by checks. Determine which of the following is
incorrect.
a department U records the receipt of NCA by deleting to Cash-NT-MDS an amount equivalent to
. P12,240,000
 b The receipt of the allotment is recorded by means of a memorandum entry
.
c. At the end of the year, to adjust the unused NCA, Subsidy Income from National government
would be debited by P4,528,800
At the
d end of the year, to adjust the unused NCA, Cash-NT-MDS would be credited by P7,711,200
.
97. Bank charges per bank statement, P7,500; Interest expense upon receipt of bill, P9,000.
Based on the given information, which of the following is not correct?
a. Entry to record the bank charges in c. Payment of interest expense would
the regular agency books would include a credit Cash-NT-MDS
include a credit to Cash-NT-MDS
b. Receipt of bill for interest is entered in d. Agency enters the obligation for bank
the RAOFE charges in the RAOFE
98. Which of the following would be included an entry to record the remittance of income taxes to
the Bureau of Treasury (BTR) collected by the Bureau of Internal Revenue (BIR)? The BIR
has no authority to use the collections.
a. Debit to Cash- Collecting officer c. Credit to Cash- Collecting Officer
b. Debit to Cash- NT-MDS d. Credit to Cash- NT-MDS
99. Agency V collected cash of P50,000 for services rendered. The collection was deposited to
the Bank of the Philippine Islands (BPI). What is the entry to record the deposit?
a. Debit, Cash in bank - LCCA and c. Debit, Cash in Bank - LCCA and
Credit, Cash - Disbursing officer for Credit, Cash Collecting officer for
P50,000 P50,000
b. Debit, Cash - NT-MDS and Credit, d. Debit, Cash - NT- MDS and Credit,
Cash - Collecting officer for P50,000 Cash - Disbursing officer for P50,000

100. Collection of P645,000 representing motor vehicles registration fees was recorded by
Land Transportation Office as P654,000. What is the correcting entry under the NGAS?
a. Cash-Disbursing Officer 9,000 c. Registration Fees 9,000
Registration Fees 9,000 Cash NT-MDS 9,000
b. Cash-Collecting Officer 9,000 d. Registration Fees 9,000
Registration Fees 9,000 Cash-Collecting Officer 9,000
ANSWER KEY

1. A 48. D
2. A 49. B
3. A 50. D
4. D 51. B
5. C 52. B
6. B 53. B
7. D 54. A
8. D 55. C
9. D 56. B
10. D 57. C
11. A 58. D
12. D 59. B
13. D 60. D
14. B 61. C
15. C 62. D
16. D 63. B
17. B 64. D
18. B 65. D
19. D 66. B
20. B 67. A
21. C 68. C
22. B 69. A
23. B 70. A
24. C 71. C
25. D 72. C
26. C 73. A
27. B 74. B
28. D 75. B
29. A 76. A
30. A 77. A
31. A 78. A
32. C 79. D
33. D 80. A
34. A 81. D
35. C 82. B
36. A 83. A
37. C 84. B
38. C 85. C
39. D 86. D
40. A 87. A
41. D 88. C
42. D 89. D
43. A 90. A
44. B 91. D
45. B 92. C
46. A 93. A
47. A 94. C
95. A 98. C
96. D 99. C
97. A 100. B