1. The debit column of a trial balance amount to 78,000, the credit column also amounts to 78,000.

Which
error may still exist
a. A debit entry to the Accounts Receivable account in the journal is incorrectly posted as a credit
to the Accounts Receivable account in the ledger.
b. A journal entry contains a correct debit amount and an incorrect credit amount
c. The debit portion of a journal entry is posted to the ledger twice
d. A cash payment on account of 2,400 is incorrectly recorded as a cash payment of 4,200

2. A partnership agreement calls for allocation of profits and losses by salary allocation, a bonus
allocation, interest on capital, with the remainder allocated by agreed rations. Which of the following
would be applied if the partnership incurred a loss
a. Any bonus criteria would not be used
b. Any loss would be allocated using the profit and loss ratios only
c. Any loss would be allocated by equally to all partners
d. Any salary allocation criteria would not be used

3. Which of the following statements is false

a. If financial statements will not be prepared, it is useless to prepare a worksheet.
b. Financial statements can be prepared even if there is no worksheet.
c. An accountant cannot prepare a worksheet unless he has completed gathering the data for
adjustments
d. An accountant may omit the preparation of a trial balance if he will prepare a worksheet

4. Which of the following is not an advantage of using special journals

a. It facilitates the preparation of adjusting and closing entries
b. It results in saving time in journalizing and posting
c. It is easier to locate certain information and errors since similar types of transactions are
together in one particular book
d. It allows for the systematic division of work and promotes specialization in the recording
process

5. A customer purchased a product that has a catalog price of 20,000. The term of the purchase was
10%, 15%, 1/10, n/15. The invoice price of the purchase would be computed through which of the
following
a. 20,000 x 75%
b. 20,000 x 90% x 85%
c. 20,000 x 75% x 90%
d. 20,000 x 90% x 85% x 99%

6. Before computing the net income figure for the period, the total of the income statement debit column
of a worksheet is 42,000 and the total of the income statement credit column is 40,000. This indicates
that
a. There was a net loss of 2,000 for the period
b. An error has been made in preparing the worksheet
c. The income and expense summary account will be closed by a debit to that income and
expense summary account
d. There was a net income of 2,000 for the period

7. Which of the following must occur for a new partner to enter the partnership by acquiring an ownership
interest directly from an existing partner
a. The new partner must live in the same state as the other partners
b. Existing partners must know the amount the new partner is paying for the ownership interest
c. Existing partners must approve the admission of the new partner into the partnership
d. The new partner must acquire all of the current partner’s ownership interest

8. On July 1, 2019, Gan and Dara formed a partnership. Gan contributed cash, Dara previously a sole
proprietor, contributed property other than cash, including realty subject to a mortgage, which the
partnership did not assume. Dara’s capital account at July 1, 2019, should be recorded at
a. Fair value of the property at July 1, 2019
b. Book value of the property at July 1, 2019
c. Book value of the property less the mortgage payable at July 1, 2019
d. Fair value of the property less the mortgage payable at July 1, 2019
9. Failure to adjust for the accrued income at the end of the period would result in
a. Understated profit and overstated assets
b. Overstated profit and understated assets
c. Overstated profit and overstated assets
d. Understated profit and understated assets

10. Which of the following statements is false

a. Cash dividends should be recorded as a liability when they are declared by the board of
directors
b. Social security taxes withheld from employees’ payroll checks should never be recorded as a
liability since the employer will eventually remit the amounts withheld to the appropriate taxing
authority
c. Under the cash basis method, warranty costs are charged to expense as they are paid
d. A company may exclude a short-term obligation from current liabilities if it intends to refinance
the obligation on a long-term basis and have an unconditional right to defer settlement of the
liability for at least 12 months

11. The International Accounting Standards Board’s (IASB) conceptual framework includes a materiality
constraint. Which of the following is true regarding this constraint
I. A misstatement of three million pesos in the balance sheet when total assets is five hundred
million pesos while net income is one hundred million pesos
II. A fifty thousand discrepancy in the cash count and per accounting records, which was later on
found was due to fraud. Total cash of the company amounted to one billion pesos while net
assets were one hundred billion pesos
III. A one million pesos misstatement in the financial statements that resulted to a different
decision of a major investor
a. I only
b. II only
c. II and III
d. All are correct

12. The Conceptual Framework

I. Is a summary of terms and concepts that under lie the preparation and presentation of financial
statements for external users
II. Describes the concepts for general purpose financial reporting
III. Is an equivalent to standard that must be followed in preparing the general-purpose financial
reporting
IV. Is always supreme and have preference over any standards or interpretations
a. I, II and III
b. All are correct
c. I, II and IV
d. I and III

13. Mature bearer plant is measured using

a. Either cost model or revaluation model
b. Cost model
c. Revaluation model
d. Either cost model of fair value model

14. Which of the following is true

a. All other choices are correct
b. The Financial Reporting Standards Council (FRSC) establishes and improves accounting
standards that will be generally accepted in the Philippines
c. The IFRS Interpretations Committee is an independent group of experts with an appropriate
mix of recent practical experience in setting accounting standards, in preparing, auditing, or
using financial reports, and in accounting education.
d. The International Accounting Standards Board (IASB) may decide to create an IFRIC
Interpretation of the Standard or recommend a narrow—scope amendment
15. When the effective interest method is used to amortize bond premium or discount, the periodic
amortization will
a. Decrease if the bonds were issued at premium
b. Increase if the bonds were issued at a premium
c. Increase if the bonds were issued at either a discount or a premium
d. Increase if the bonds were issued at a discount

16. How do you call a taxable temporary difference

a. Current tax asset
b. Deferred tax liability
c. Current tax liability
d. Deferred tax asset

17. The Continuing Professional Development (CPD) for a Certified Public Accountant (CPA) of 65 years of
age is required for the following, except?
I. Accreditation for the practice of profession
II. Renewal of professional identification card
a. None are correct
b. Both are correct
c. I only
d. II only

18. Which of the following is/are true concerning the steps in the standard-setting process
I. Agenda Consultation – every five years, the Board conducts a comprehensive review and
consultation to define international standard setting priorities and develop its project work plan
II. Research Program – proposals for a new standard or an amendment to a Standard are
published in an exposure draft for public consultation
III. Standard-setting program – when there is sufficient evidence that an accounting problem
exists, the problem is sufficiently important to warrant changing a standard, the board analyses
feedback and refines proposals before the new standard or an amendment to a standard is
issued.
IV. Maintenance program – this process includes consulting on the implementation of a new or
amended standard to identify any implementation or application problems that may need to be
addressed
a. I and IV
b. II and III
c. III and 1
d. IV and II

19. Under PAS 19, employee benefits are all forms of consideration given by an entity in exchange for
service rendered by employees and include all of the following, except
a. Short-term employee benefits
b. Other long-term benefits, including long-service leave, sabbatical leave and long-term disability
benefits
c. Share-based payments
d. Postemployment benefits, such as pension, defined contribution plans, defined benefit plans,
postemployment insurance and postemployment medical care

20. Under PAS 23, borrowing costs can be capitalized as cost of the asset when
a. The asset is a qualifying asset and it is not probable that the borrowing costs will result in
future economic benefits to the entity
b. The asset is a qualifying asset and it is probable that the borrowing costs will result in the
future economic benefits to the entity and the costs can be measured reliably
c. The asset is a qualifying asset
d. The asset is a qualifying asset and it is probable that the borrowing costs will result in future
economic benefits to the entity but the costs cannot be measured reliably
21. From the following accounts balance as of March 31, 2021 were taken from the records of Dr. Nup, the
proprietor of Nimo Laboratories
Dr. Nup, Capital 250,000
Dr. Nup, Drawing 75,000
Laboratory Equipment 200,750
Furniture and Fixtures 45,000
Small Tools 8,550
Unused Supplies 22,365
Accumulated Depreciation - Lab Equipment 20,075
Accumulated Depreciation - Furniture and Fixtures 9,000
Cash on Hand and In Bank 22,250
Accrued Income 12,500
Notes Receivable 20,000
Notes Payable 75,000
Other prepaid expenses 5,750
Accrued Taxes 3,850
Accrued Utility Expenses 7,525
Other Accrued Expenses 1,390
Profit during the period 45,325

22. Sick, Tony and Sam partnership began the process of liquidation with the following account balances:
Cash 16,000
Non-cash assets 434,000
Liabilities 150,000
Slick, Capital (30%) 80,000
Tony, Capital (20%) 90,000
Sam, Capital (50%) 130,000
Liquidation expenses are expected to be 12,000. After the liquidation expenses of 12,000 had been
paid and the non-cash assets sold, Sam had a deficit of 8,000. Assuming all partners are personally
insolvent, how much is the final settlement to Tony?
a. 34,800
b. 37,200
c. 36,000
d.

23. Cash of 100 received at the time the service was performed was journalized and posted as a debit to
Cash 100 and a credit to Accounts Receivable 100, Assuming the incorrect entry is not reversed, the
correcting entry is
a. Debit Accounts Receivable 100 and Credit Service Revenue 100
b. Debit Accounts Receivable 100 and Credit Cash 100
c. Debit Service Revenue 100 and Credit Accounts Receivable 100
d. Debit Cash 100 and Credit Service Revenue 100

24. The following amounts relate to the Crown Sales Company

Inventory, beg 12,500
Purchases 42,500
Net Sales 45,000
Gross Profit 15,000
How much is the amount of ending inventory
a. 60,000
b. 15,000
c. 10,000
d. 25,000
25. KC and Jojo are considering forming a partnership whereby profits will be allocated through the used of
salaries, interest and bonuses. The following are their capital balance for the current year, 2019:
Date KC, Capital Jojo, Capital
1-Jan 35,000 (cr.) 25,000 (cr.)
1-Mar 10,000 (cr.)
1-Jun 10,000 (cr.)
1-Sep 10,000 (dr.)
1-Oct 5,000 (cr.)
1-Nov 5,000 (dr.)
1-Dec 8,000 (cr.)
It was agreed that a bonus of 10% of partnership profits after bonus is credited to KC. Further a salary
of 35,000 and 20,000 is allocated to Jojo and KC, respectively; a 10% interest on weighted capital is
allocated; and remainder is equally divided. The profit for the year ended amounted to 65,191. How
much is the profit distribution to KC and Jojo respectively? (Round off to nearest peso)
a. A
b. A
c. A
d. A

26. At the beginning of the month, the accounts receivable subsidiary ledger showed balances for Apple
Company 5,000 and Berry Company 7,000. During the month, credit sales were made to Apple 6,000,
Berry 4,500 and Cantaloupe 8,500. Cash was collected on account from Berry 11,500 and Cantaloupe
3,000. At the end of the month, the control account Accounts Receivable in the general ledger should
have a balance of
a. 16,500
b. 12,000
c. 11,000
d. 31,000

27. As of January 2, 2020, Delta Trading has total assets of 4,250,560 and owners’ equity of 2,500,000.
During the year 2020, the total assets of the business decreased by 50,200 and the total liabilities
increased by 125,500. How much was the change during 2020 in total owners’ equity
a. 74,300 increase
b. 175,700 increase
c. 175,700 decrease
d. 75,300 decrease

28. Angelina and Brad entered into a partnership on May 31, 2018, contributing cash of 50,000 and
30,000, respectively, and agreed to divide profits in the ratio of their original investments after allowing
annual salary of 12,000 each. On December 31, the income summary account had a credit balance of
50,000 while drawing account showed debit balance of 15,000 for Angeline and 25,000 for Brad.
The following year, Jennifer was admitted into the firm as a new partner with a 33-1/3% interest for a
capital credit equal to her cash investment of 60,000. Angelina and Brad then effected a personal cash
settlement between themselves to make the capital balances conform to a new profit-sharing ratio of
4:2:3 for Angelina, Brad and Jennifer, respectively, with salary allowances scrapped. The amount of the
cash settlement effected between old partners is
a. 15,750
b. 12,250
c. 5,750
d. 9,750

29. If the purchases total 240,000 and the ending inventory is bigger than the beginning inventory by
10,000 how much if the cost of goods sold during the period
a. The answer cannot be determined due to lack of information
b. 250,000
c. 230,000
d. 240,000
30. Partial balance sheet of Carriedo Enterprises showed the following on January 2, 2020:
Office Equipment 165,000
Accumulated Depreciation 57,750
The asset has already been depreciated for exactly 3½ years. On March 31, 2020, it was sold for
104,125. How much is the gain or loss from the sale of equipment
a. 3,125 loss
b. 1,000 gain
c. 375 loss
d. 2,825 loss

31. Holden admits Jane for partnership interest in his business. The balance sheet accounts of Holden on
December 31, 2019 prior to the admission of Jane are as follows
Cash ?
Accounts Receivable 100,000
Inventory 150,000
Accounts Payable 50,000
Holde, Capital ?
It is agreed that for purposes of establishing Holden’s interest, the following adjustments should be
made:
I. An allowance for doubtful accounts of 5% of accounts receivable is to be established
II. The inventory is to be valued at 160,000
III. Prepaid expense of 5,000 and accrued expense of 4,000 are to be recognized
Jane is to invest 115,000 to give her 1/3 interest in the firm. Total assets of the partnership after the
formation is
a. 399,000
b. X
c. X
d. X

32. An entity provided the following information for the current year:
Accounts receivable - January 1 2,000,000
Credit sales 10,000,000
Collection from customers, excluding recovery of accounts written off 8,000,000
Accounts written off as worthless 100,000
Sales return 500,000
Recovery of accounts written off 50,000
Estimated future sales returns on December 31 150,000
Estimated uncollectible accounts on December 31 per aging 300,000
What is the “amortized cost” of accounts receivable on December 31
a. 2,950,000
b. 2,900,000
c. 3,100,000
d. 3,000,000

33. In packages of the products, Sunday Company included coupons that may be presented at retail stores
to obtain discounts. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of
that amount for handling costs. The entity granted requests for coupon redemption by retailers up to
thee months after the consumer expiration date. The entity estimated that 70% of all coupons issued
will ultimately be redeemed.
Consumer expiration date 31-Dec-20
Total face amount of coupons issued 600,000
Total payment to retailers as of December 31, 2020 220,000
What amount should be reported as liability for unredeemed coupons on December 31, 2020?
a. 0
b. 242,000
c. 200,000
d. 308,000
34. An entity had the following events and transactions during 2020
- Depreciation for 2019 was understated by 500,000
- A litigation settlement resulted in a loss of 2,000,000
- The inventory on December 31, 2018 was overstated by 800,000
- The entity disposed of a recreational division at a loss 1,500,000
- The income tax rate is 30%
What total amount of loss should be included in income from continuing operations for 2020
a. 2,000,000
b. 1,400,000
c. 3,500,000
d. 2,450,000

35. Monday Company provided the following information on December 31, 2020
Notes payable
Trade 2,500,000
Bank loans 4,000,000
Advances from employees 250,000
Accounts payable after deducting debit balances in suppliers accounts of 500,000 5,000,000
Bank overdraft 600,000
Property dividends payable 750,000
Share dividend payable 400,000
Withholding tax payable 200,000
Mortgage payable 2,000,000
Income tax payable 1,000,000
Estimated warranty liability 500,000
Estimated damages payable by reason of breach of contract 650,000
Accrued liabilities 850,000
Estimated premium liabilities 350,000
Claim for increase in wages by employees covered in a pending law suit 2,000,000
Contract entered into for the construction of building 4,000,000
2,000,000 of the Bank loans under Notes payable above is due on June 1, 2021, which was replaced
by a 2-year note for the same amount before the financial statements were issued. The other
2,000,000 of the Bank loans had a due date of April 1, 2022.
How much of the total current liabilities to be presented in statement of financial position as of
December 31, 2020
a. 15,150,000
b. 16,650,000
c. 17,150,000
d. 19,050,000

36. On January 1, 2017, an entity purchased a patent for 4,500,000. The patent is being amortized over
the remaining legal life of 15 years. During 2020, the entity determined that the economic benefits of
the patent would not last longer than twelve years from the date of acquisition. What is the carrying
amount of the patent on December 31, 2020
a. 3,600,000
b. 3,200,000
c. 3,000,000
d. 3,300,000

37. On January 1, 2020, Tuesday Company issued 10% bonds in the face amount of 5,000,000 that
mature on December 31, 2029. The bonds were issued for 4,430,000 to yield 12%, resulting in bond
discount of 570,000. The entity used the interest method. Interest is payable semiannually on June 30
and December 31. What amount should be reported as interest expense for 2020
a. 531,636
b. 500,000
c. 532,548
d. 443,000
38. An entity purchased an equipment on January 1, 2020 for 5,000,000, the equipment has a useful life of
5 years and residual value of 600,000. The policy is to depreciate 5-year asset using the 200% double
declining method for the first 2 years and then switch to straight line. What amount should be reported
as accumulated depreciation on December 31, 2022
a. 3,800,000
b. 3,000,000
c. 3,920,000
d. 3,600,000

39. An entity provided the following data on December 31, 2020:

Checkbook balance 5,000,000
Bank statement balance 4,000,000
Check drawn on entity's account, payable to supplier, dated and recorded
on December 31, 2020 but not mailed until January 31, 2021 1,000,000
Cash in sinking fund 1,500,000
Treasury bills, purchased November 1, 2020 and maturing January 31, 2021 2,500,000
Time deposit, purchased October 1, 2020 and maturing January 31, 2021 2,000,000
What amount should be reported as cash and cash equivalents on December 31, 2020
a. 6,000,000
b. 8,000,000
c. 8,500,000
d. 7,500,000

40. An entity and its divisions reported the following for the current year:
Sales to unaffiliated customers 40,000,000
Intersegment sales of products similar to those sold
to unaffiliated customers 12,000,000
Interest earned on loans to other operating segments 1,000,000
The entity and all of its divisions are engaged solely in manufacturing operations. To qualify as
reportable segment, the segment revenue should at least be what amount
a. 5,300,000
b. 4,000,000
c. 5,200,000
d. 4,100,000

41. An entity provided the following information at year-end:

Trading Nontrading
Aggregate cost 3,600,000 5,500,000
Aggregate fair value 3,200,000 4,500,000
Aggregate lower of cost or
fair value applied individually 3,040,000 4,200,000
The cost of disposal is estimated at 100,000 for trading securities and 150,000 for nontrading
securities. The nontrading securities are designated as measured at FVOCI. What total amount should
be reported as unrealized loss in the income statement for the current year?
a. 500,000
b. 560,000
c. 900,000
d. 400,000
42. An entity provided the following information at year-end:
Retained earning unappropriated, January 1 2,000,000
Over depreciation of 2019 due to
prior period error, net of tax 400,000
Net Income 3,000,000
Retained earnings appropriated for treasury
shares (original balance is 500,000 but reduced
by 200,000 by reason of reissuance of the
treasury shares) 300,000
Retained earnings appropriated for contingencies
(beginning balance of 700,000 but increased by
current appropriation of 100,000 800,000
Cash dividens paid to shareholders 1,000,000
Change in accounting policy from FIFO to
Average-cost, net of tax 300,000
What is the balance of unappropriated retained earnings on December 31, 2020
a. 4,200,000
b. 4,700,000
c. 4,500,000
d. 4,800,000

43. An entity operates in the travel industry and incurs costs unevenly throughout the year. Advertising
costs of 2,000,000 was incurred on March 1, 2020, and staff bonuses are paid at year-end based on
sales.
Staff bonuses are expected to be around 20,000,000 for the year. Of that sum, 3,000,000 would relate
to the period ending March 31, 2020.
What total expense should be included in the quarterly financial report ending March 31, 2020
a. 5,500,000
b. 7,000,000
c. 3,500,000
d. 5,000,000

44. Due to adverse economic circumstances and poor management, Wednesday Company has negotiated
a restructuring of a 9% 6,000,000 note payable to Thursday Bank due on January 1, 2020. There was
no accrued interest on the note on January 1, 2020.
The bank reduced the principal obligation from 6,000,000 to 5,000,000 and extended the maturity to
three years on December 31, 2022. However, the new interest rate is 13% payable annually every
December 31.
The present value of 1 at 9% for three periods is 0.77 and the present value of an ordinary annuity of 1
at 9% for three periods is 2.53
What is the gain on modification of debt to be recognized for 2020
a. 0
b. 300,000
c. 500,000
d. 505,500

45. Saturday Company. The lessor expects a 12% return on net investment. All leases are classified as
direct lease. At the end of the lease term, the equipment will revert to the lessor. At the beginning of the
current year, an equipment is leased to a lessee with the following information:
Cost of equipment to the lessor 5,000,000
Residual value - unguaranteed 600,000
Annual rental payable in advance at the beginning of each year 900,000
Initial direct cost incurred by the lessor 250,000
Useful life and lease term 8 years
Implicit interest rate 12%
What is the total unearned interest income
a. 1,950,000
b. 2,550,000
c. 3,150,000
 d. 1,500,000

46. The following information related to the activities of AAAA Company.

Net cash flows from operating activities 720,000
Decrease in trade payables 23,000
Decrease in financial asset through profit or losss 11,500
Increase in trade receivables 24,600
Cash proceeds from sale of plant (book value of 25,000) 14,000
Increase in allowance for doubtful accounts 1,000
Income tax is ignored.
What is the profit for the period
a. 698,100
b. 767,100
c. 730,100
d. 744,100

47. Friday Company provided the following information for the current year:
Current service cost 500,000
Interest expense on PBO 600,000
Interest income on plan assets 350,000
Loss on plan settlement before normal retirement date 250,000
Present value of benefit obligation settled in advance 950,000
Past service cost during the year 300,000
Actual return on plan assets 850,000
Actuarial loss on PBO during the year 200,000
Contribution to the plan 1,500,000
Benefits paid to retirees 1,000,000
Discount rate 10%
What amount should be reported as accrued benefit cost at year-end
a. 0
b. 1,750,000
c. 1,500,000
d. 2,000,000