QUIZ 5

MULTIPLE CHOICE:
On July 1,2019, an entity decided to discontinue its Electronics Division, a separately identifiable
component of business. On December 31,2019, the division has not been completely sold. However,
negotiations for the final and complete sale are progressing in a positive manner and it is probable that
the disposal will be completed within a year. Analysis of the records for the year disclosed the following
data relative to the Electronics Division:

Operating loss for 2019 8,000,000

Loss on disposal of some Electronics Division assets during 2019 . 500,000

Expected gain in 2020 on disposal of division . 2,000,000

Expected operating loss in 2020 preceding final disposal 1,000,000

Income tax rate 30%

What amount should be reported as -loss from discontinued operation in 2019?

5,950,000

(1 pt)

5,600,000

6,650,000

(1 pt)

5,250,000

(1 pt)
2. MULTIPLE CHOICE:
An entity had two operating divisions, one manufactures machinery and the other breeds and sells
horses. Both divisions are considered separate components. The horse division has been
unprofitable and on November 15, 2019, the entity adopted a formal plan to sell the division. At
December 31, 2019, the component-was considered held for sale.

On December 31, 2019, the carrying amount of the assets of the horse division was P5,000,000.
On that date, the fair value of the assets less cost of disposal was P4,000,000. The before-tax
operating loss of the horse division for the year was P1,500,000.

The after-tax income from continuing operations of the entity for 2019 was P8,000,000. The
income tax rate is 30%.

What amount should be reported as loss from discontinued operation for 2019?

1,750,000

(1 pt)

2,500,000

(1 pt)

1,050,000

(1 pt)

2,050,000
3. MULTIPLE CHOICE:
An entity had two operating divisions, one manufactures machinery and the other breeds and sells
horses. Both divisions are considered separate components. The horse division has been
unprofitable and on November 15, 2019, the entity adopted a formal plan to sell the division. At
December 31, 2019, the component-was considered held for sale.

On December 31, 2019, the carrying amount of the assets of the horse division was P5,000,000.
On that date, the fair value of the assets less cost of disposal was P4,000,000. The before-tax
operating loss of the horse division for the year was P1,500,000.

The after-tax income from continuing operations of the entity for 2019 was P8,000,000. The
income tax rate is 30%.

What amount should be reported as net income for 2019?

6,250,000

4,500,000

(1 pt)

3,850,000

(1 pt)

5,600,000

(1 pt)
4. MULTIPLE CHOICE:
An entity is diversified with nationwide interest in commercial real estate development, banking,
mining and food distribution. The food distribution division was deemed to be inconsistent with the
long-term direction of the entity. On October 1 2019, the board of directors voted to approve the
disposal of this division. The sale is expected to occur in August 2020. .

The food distribution had the following revenue and expenses in 2019: January 1 to September
30,

revenue of P35 000,000 and expenses of P25,000.OOO; October 1 to December 31, revenue of
PI0 000 000 and expenses of P 12,000,000. The carrying amount of the division assets on
December 31 , 2019 was P50,000,000 , and the recoverable amount was estimated to be P48
000 000. The sale contract required the entity to terminate certain employees incurring an
expected termination cost of Pl,OOO,000 to be paid on December 15 , 2020. The income tax rate
is 30%. What amount should be reported as income from discontinued operation?

3,500,000

5,000,000

(1 pt)

4,200,000

(1 pt)

5,600,000

(1 pt)

5.
 MULTIPLE CHOICE:
A noncurrent asset or disposal group shall be classified as held for sale when

The sale is highly probable and the asset is available for immediate sale in the present condition

(1 pt)

The sale is highly probable.

The asset is available for immediate sale in the present condition.

(1 pt)

The sale is probable and the asset is available for sale in the present condition.

(1 pt)

6. MULTIPLE CHOICE:
An entity shall classify a noncurrent asset or disposal group as "held for sale" when

The carrying amount or the asset or disposal group is recovered through a sale.

The carrying amount or the asset or disposal group is recovered through continuing use.

(1 pt)

The noncurrent asset or disposal group is to be abandoned.

(1 pt)

The noncurrent asset or disposal group is idle or retired from active use.

(1 pt)
7. MULTIPLE CHOICE:
How should the assets and liabilities' of a disposal group held for sale be reported?

The assets of disposal group should be reported separately as current assets and the liabilities
should be shown as current liabilities separately.

The assets and liabilities should be offset and presented as a single amount.

(1 pt)

The assets and liabilities should offset and presented as a deduction from equity.

(1 pt)

There should be no separate disclosure of assets and liabilities of the disposal group.

(1 pt)

8. MULTIPLE CHOICE:
An entity shall recognize any subsequent increase in fair value less cost of disposal of a
noncurrent asset or disposal group classified as held for sale as

Gain to be included in profit or loss but not in excess of the cumulative impairment loss previously
recognized

Deferred gain as component of equity

(1 pt)

Deferred gain as component of liability

(1 pt)
 Gain entirely to be included in profit or loss

(1 pt)

9. MULTIPLE CHOICE:
Which is not a criterion for an operation to be classified as discontinued?

The operation must be sold within three months of the year end

The operation should represent a separate major line of business or geographical area.

(1 pt)

The operation is part of a single plan to dispose of a separate major line of business or
geographical area.

(1 pt)

The operation is a subsidiary acquired exclusively with a view to resale

(1 pt)

10. MULTIPLE CHOICE:

Which is not a criterion for the sale of a noncurrent asset held for sale to be highly probable.

The sale should be expected to qualify for recognition as a completed sale within one year from
the end of reporting period.

(1 pt)

Management must be committed to a plan to sell the asset.

(1 pt)
 An active program to locate a buyer and complete the plan must have been initiated.

The asset must be actively marketed for sale at a reasonable price.

(1 pt)

11. MULTIPLE CHOICE:

Interim financial reports shall be published

Whenever the entity wishes.

Once a year at any time in that year .

(1 pt)

Within a month of the half year-end.

(1 pt)

On a quarterly basis.

(1 pt)

12. MULTIPLE CHOICE:

Interim financial reports should include as a minimum

A condensed set of financial statements and selected notes

A complete set of financial statements.

(1 pt)
 A condensed statement of financial position and a condensed income statement.

(1 pt)

A condensed statement of financial position and a condensed statement of cash flows.

(1 pt)

13. MULTIPLE CHOICE:

Interim financial reporting should be viewed

As reporting for an integral part of an annual period.

As a special type of reporting that need not follow PFRS

(1 pt)

As useful only if activity is evenly spread throughout the year.

(1 pt)

As reporting for a separate accounting period.

(1 pt)

14.
 MULTIPLE CHOICE:
The accounting profession indicates that

The same PFRS used for the annual report should be employed for interim reports.

All entities that issue an annual report should issue interim financial reports.

(1 pt)

The integral view is the more appropriate approach for interim financial reports.

(1 pt)

A complete set of financial statements must be presented for an interim period.

(1 pt)

15. MULTIPLE CHOICE:

Which statement is true regarding interim reporting?

Each statement must be mark unaudited

Comprehensive income is not reported

(1 pt)

Interim in reporting is required under PFRS

(1 pt)
 Temporary inventory decline should not be recorded in the interim period incurred

(1 pt)

16. MULTIPLE CHOICE:

Which of the following entities are required under PAS 34 to prepare and present interim financial
reports?

All of the choices

(1 pt)

financial institution

(1 pt)

listed entities

(1 pt)

None of the choices

17. MULTIPLE CHOICE:

PAS 34 shall be applied by

All of the choices

those who choose to provide interim financial reports

(1 pt)

entities which are required by the government or other entities to provide interim financial reports

(1 pt)
 None of the choices

(1 pt)

18. MULTIPLE CHOICE:

An entity operates in the travel industry and incurs costs unevenly throughout the year. Advertising
cost of P2,000,000 was incurred on March 1, 2019, and staff bonuses are paid at year-end based
on sales.

Staff bonuses are expected to be around P20,000,000 for the year. Of that sum, P3,000,000 would
relate to the period ending March 31, 2019.

What total amount of expenses should be included in the quarterly financial report ending March
31, 2019?

5,000,000

(1 pt)

7,000,000

5,500,000

(1 pt)

3,500.000

(1 pt)
19. MULTIPLE CHOICE:
An entity reported P950,000 net income for the quarter ended September 30, 2019 which
included the following after-tax items.

A P600,000 expropriation gain realized in May 2019 was allocated equally to the second, third and
fourth quarter of 2019.

A P150,000 cumulative effect loss resulting from a change in inventory valuation method was
recognized on August 31, 2019.

In addition, the entity paid P480,000 on February 1, 2019, for 2019 calendar-year real property
tax. Of this amount, P120,000 was allocated in the third quarter of 2019.

What is the net income for the quarter ended September 30, 2019?

900,000

1,150,000

(1 pt)

1,100,000

(1 pt)

500,000

(1 pt)

20. MULTIPLE CHOICE:

According to PAS 34, income tax expenses in interim periods are computed using

a weighted average annual income tax rate.

a substantially enacted future tax rate.(1 pt)

a uniform tax rate for all periods presented, including comparatives.(1 pt)
 an imputed tax rate.(1 pt)

QUIZ 6

MULTIPLE CHOICE:
An entity provided the following data for the current year:

January 1 December 31

Accounts Receivable 1,200,000 1,350,000

Accounts Payable 1,500,000 1,850,000

During the current year, accounts written off amounted to P100,000. Sales returns totaled 250,000 of
which 50,000 was paid to customers. Purchase returns amounted to 400,000, of which 100,000 was
received from suppliers. Cash receipts from customers after 500,000 discounts totaled 8,000,000 while
cash payments to trade creditors after discounts of 200,000 amounted to 5,000,000.

What is the amount of gross sales under accrual basis?

8,950,000

5,850,000

(1 pt)

9,600,000

(1 pt)

5,850,000

(1 pt)
2. MULTIPLE CHOICE:
An entity provided the following data for the current year:

January 1 December 31

Accounts Receivable 1,200,000 1,350,000

Accounts Payable 1,500,000 1,850,000

During the current year, accounts written off amounted to P100,000. Sales returns totaled 250,000
of which 50,000 was paid to customers. Purchase returns amounted to 400,000, of which 100,000
was received from suppliers. Cash receipts from customers after 500,000 discounts totaled
8,000,000 while cash payments to trade creditors after discounts of 200,000 amounted to
5,000,000.

What is the amount of gross purchases under accrual basis?

5,850,000

(1 pt)

5,850,000

(1 pt)

9,600,000

(1 pt)

8,950,000

3.
 MULTIPLE CHOICE:
Under the cash basis of accounting, revenue is recorded

When realized

When earned(1 pt)

When realized and earned(1 pt)

When realizable and earned(1 pt)

4. MULTIPLE CHOICE:
Accrual accounting is used because

It provides a better indication of ability to generate cash flows than the cash basis

Cash flows are considered less important(1 pt)

It is simple to apply(1 pt)

It recognizes revenue when cash is received and expenses when cash is paid.(1 pt)

5. MULTIPLE CHOICE:
When converting from cash to accrual basis, which of the following adjustments should be made to
cash receipts from customers to determine accrual basis revenue

Add ending accounts receivable

Subtract ending accounts receivable(1 pt)

Add cash sales(1 pt)

 Subtract beginning unearned service revenue(1 pt)

6. MULTIPLE CHOICE:
An entity provided the following data for the current year:

January 1 December 31

Inventory 2,600,000 2,900,000

Accounts Payable 750,000 500,000

During the current year, the entity paid suppliers 4,900,000.

What amount should be reported as cost of goods sold in the income statement for current year?

5,450,000

4,350,000

(1 pt)

4,950,000

(1 pt)

4,850,000

(1 pt)

7. MULTIPLE CHOICE:
When converting from cash to accrual basis, which of the following adjustments should be made to
cash paid for operating expenses to determine accrual basis operating expenses

Subtract ending prepaid expense

 Subtract beginning prepaid expense(1 pt)

Subtract interest expense(1 pt)

Subtract beginning accrued liabilities(1 pt)

8. MULTIPLE CHOICE:
The liquidation basis of accounting is used when liquidation is

Imminent

Remote(1 pt)

Probable(1 pt)

Forthcoming(1 pt)

9. MULTIPLE CHOICE:
An entity provided the following data for the current year:

January 1 December 31

Accounts receivable 1,000,000 1,300,000

Allowance for doubtful accounts 60,000 110,000

Advances from customers 200,000 300,000

During the current year, the entity reported sales revenue of 4,600,000. The entity wrote off
uncollectible accounts totaling 50,000 during the current year.

Under cash basis, what amount should be reported as sales in the income statement for current
year?
 4,350,000

(1 pt)

5,450,000

4,900,000

(1 pt)

4,600,000

(1 pt)

10. MULTIPLE CHOICE:

An entity provided the following data for the current year:

January 1 December 31

Accounts receivable 2,000,000 4,000,000

Accounts payable 3,000,000 1,500,000

During the current year, the entity reported cash basis net income of 6,000,000.

Under accrual basis, what amount should be reported as net income in the income statement for
current year?

9,500,000

6,500,000

(1 pt)
 5,500,000

(1 pt)

2,500,000

(1 pt)

QUIZ 7

1. An entity reported shareholders' equity of P8,000,000 on December 31. The entity revealed
the following transactions during the current year:
An adjustment of retained earnings for prior year under depreciation *Gain on sale of treasury
shares 500,000
*Dividend declared, of which P500,000 was paid 1,500,000
*Net income for current year
The share capital balance of P5,000,000 remained unchanged during the year. What is the
balance of retained earnings on January 1.
O 7,000,000
O2,500,000
O 1,700,000
1,300,000

2. payable
During the current year, the entity issued 10,000 ordinary shares of P100 par value for 150 per
share. Dividend of P4,000,000 was paid cash during the year. Equipment with fair value of
500,000 was donated by a shareholder during the year.
The entity borrowed P3,000,000 from the bank and made interest payment of P200,000. The
bank loan is unpaid at year end and the interest payable at year end was P100,000. There is no
interest payable at the beginning of the year.
What is the net income for the current year?
O 4,000,000
O2,000,000
6,000,000
4,500,000

3. A system of record keeping that records maintained are represented by so called bare
essentials
O Singleblessedness
Single Entry
Triple Entry
Double Entry
4. Under IFRS, interest received ans dividend received may be classified as
Operating or investing
O Operating
Operating or financing
Financing or investing

5. Under IFRS, interest rpaid may be classified as

Operating
Operating or investing
Financing or investing
Operating or financing

6. Failure to record a purchase of merchandise on account even though the goods are properly
included in the physical inventory results in
An understatment of liability and an overstatement of equity
An understatement of COGS and lilability and overstatement of asset
An understatement of asset and net income
An overstatement of asset

7. Under indirect method, cash flows from operating activities

Are always equal to accrual accounting income
Are calculated as the difference between revenue and expenses
Can be calculated by appropriately adding or deducting from net income those items in the
income statement that affect cash.
Can be calculated by appropriately adding or deducting from net income those items in the
income statement that do not affect cash.

8. Under IFRS, interest rpaid may be classified as

Operating
Operating or investing
Financing or investing
Operating or financing

9. Which should not be disclosed in the statement of cashflows using the indirect method?
Cash flow per share
Income taxes paid
O Dividends paid on preference
shares
Interest paid, net of amount capitalized

10. account balances that occurred during the current year:

Assets 9,000,000
Liabilities 3,000,000
Share Capital 5,000,000
Share Premium 500,000
Except for a P2,000,000 dividend payment, the year's earnings and a P200,000 prior period
error from understatement of ending inventory, there were no other changes in retained
earnings for the year. What is the net income for the current year?
O 2,700,000
O 2,500,000
2,300,000
6000000
QUIZ 8
1.An entity had 200,000 P50 par value ordinary shares outstanding on January 1, 2019. In
addition, on January 1, 2019, the entity had issued 30,000 convertible cumulative 10%
preference shares with P100 par. These preference shares were converted on September 1,
2019.
Each preference share was converted into 5 ordinary shares. The preference dividends for the
entire year were paid in full before the conversion. The entity had no other potentially dilutive
securities. Net income for the current year was P5,000,000.
What amount should be reported as diluted earnings per share?
O 20.00
O10.00
18.80
14.29
2. An entity had 200,000 ordinary shares outstanding on January 1, 2019. On January 1, 2019,
the entity had issued
convertible 10% bonds with face amount of P5,000,000.00. The bond as were converted on
October 1, 2019 and 40 ordinary shares were issued in exchange for every P1,000 bond. Net
income for the current year was P6,000,000. The income tax rate is 30%
What amount should be reported as diluted earnings per share?
13.75
O15.66
13.44
15.94
3. An entity had 200,000 ordinary shares outstanding on January 1, 2019. On January 1, 2019,
the entity had issued convertible 10% bonds with face amount of P5,000,000.00.
The bond as were converted on October 1, 2019 and 40 ordinary shares were issued in
exchange for every P1,000 bond Net income for the current year was P6,000,000. The income
tax rate is 30%
What amount should be reported as basic earnings per share?
O24.00
O 15.00
O30.00
17.14
4. An entity reported the following information on December 31, 2019: Ordinary share capital
110,000 shares
Convertible noncumulative preference share capital
20,000 shares
10% convertible bonds payable
P2,000,000
Share options to purchase 60,000 shares at P15 were outstanding. Market price of ordinary
share was P25 on December 31, 2019 and averaged P20 during the year. No value was
assigned to the share options. The entity paid preference dividends of P5 per share. The
preference shares are convertible into 40,000 ordinary shares. The 10% bonds are convertible
into 30,000 ordinary shares. The net income for 2019 is P650,000. The tax rate is 30%
What amount should be reported as basic earnings per share?
O 5.91
4.36
4.40
5.00
5. An entity reported a net loss of P3,000,000 for the current year. The entity had share capital
outstanding as follows: Ordinary share capital, P100 par, 50,000 shares 5,000,000
Preference share capital, P100 par, 10% cumulative, 2 years in arrears 2,000,000
20,000 share convertible into 20m000 ordinary shares What amount should be reported as
diluted loss per share?
O 42.86
O60.00
O 64.00
O 45.71
6. An entity reported a net loss of P3,000,000 for the current year. The entity had share capital
outstanding as follows: Ordinary share capital, P100 par, 50,000 shares
Preference share capital, P100 par, 10% cumulative, 2 years in arrears 2,000,000
20,000 share convertible into 20m000 ordinary shares
What amount should be reported as basic loss per share?
64.00
O 56.00
O 60.00
O 68.00
7. An entinty has 200,000 ordinary shares issued and outstanding on January 1, 2019.
Unexercised share options to purchase 50,000 ordinary shares at 20 per share were
outstanding at the beginning and end of 2019.
The average market price of ordinary share was P25 during 2019. Net income for the year was
P5,000,000.
What amount should be reported as basic earnings per share?
O12.50
25.00
O 50.00
O30.00
8. An entity reported the following information on December 31, 2019: Ordinary share capital
110,000 shares
Convertible noncumulative preference share capital
20,000 shares
10% convertible bonds payable
P2,000,000
Share options to purchase 60,000 shares at P15 were outstanding. Market price of ordinary
share was P25 on December 31, 2019 and averaged P20 during the year. No value was
assigned to the share options. The entity paid preference dividends of P5 per share. The
preference shares are convertible into 40,000 ordinary shares. The 10% bonds are convertible
into 30,000 ordinary shares. The net income for 2019 is P650,000. The tax rate is 30%
What amount should be reported as diluted earnings per share?
O3.94
O 4.40
4.05
5.00
9. An entinty has 200,000 ordinary shares issued and outstanding on January 1, 2019.
Unexercised share options to purchase 50,000 ordinary shares at 20 per share were
outstanding at the beginning an end of 2019.
The average market price of ordinary share was P25 during 2019. Net income for the year was
P5,000,000.
What amount should be reported as diluted earnings per share?
O 23.81
25.00
O16.67
O 20.00
10. An entity had 200,000 P50 par value ordinary shares outstanding on January 1, 2019. In
addition, on January 1, 2019, the entity had issued 30,000 convertible cumulative 10%
preference shares with P100 par. These preference shares were converted on September 1,
2019.
Each preference share was converted into 5 ordinary shares. The preference dividends for the
entire year were paid in full before the conversion. The entity had no other potentially dilutive
securities. Net income for the current year was P5,000,000.
What amount should be reported as basic earnings per share?
18.80
13.43
23.50
25.00