ACC 111 | Accounting for Government and Non-Profit Organizations

P2 EXAM

Name: _________________________________________________________________
Section: _________________ Date: ________________ Student No:__________

Multiple Choice. Write the letter of the best answer.

_________ 1. No gain or loss shall arise from transfer of investment property, except when the transferred asset
is impaired?
a. True
b. False

_________ 2. The cost of an investment does not include the following except.
a. Operating losses incurred before the investment property achieves the planned level of
occupancy.
b. Start-up costs, unless they are necessary to bring the property to the condition necessary for it
to be capable of operating in the manner intended by management
c. Abnormal amounts wasted materials, labor or other resources incurred in constructing or
developing the property.
d. Cost of opening new facility.

_________ 3. For government entities, the capitalization threshold for PPE is

a. P 15,000 or more
b. more than P 15,000
c. not less than P 25,000
d. at least P 5,000

_________ 4. According to the GAM for NGAs, cash discounts not taken on purchases of items of PPE are
a. included in the cost of PPE
b. recognized as “Other Losses”
c. ignored
d. debited to Purchase Discount Lost account

_________ 5. Which of the following is not an investment property?

a. Land held for a currently undetermined future use
b. A building that is vacant but held for to be leased out under one or more operating leases on a
commercial basis to external parties.
c. A building owned by the entity and leased out under one or more operating leases on a
commercial basis.
d. Land held for short-term capital appreciation rather than long term sale in the ordinary course
of business operation.

_________ 6. Infrastructure assets have the following characteristics, except?

a. Movable
b. Part of the system or network
c. Specialized in nature and do not have alternative uses
d. May be subject to constraints on disposal

_________ 7. According to the GAM for NGAs, a government entity shall, at each reporting date, determine the
recoverable amount of an investment property and compare it with its carrying amount.
a. True
b. False

This document is the property of PHINMA EDUCATION

 ACC 111 | Accounting for Government and Non-Profit Organizations
P2 EXAM

Name: _________________________________________________________________
Section: _________________ Date: ________________ Student No:__________

_________ 8. If an asset’s recoverable amount exceeds its carrying amount, the asset is impaired.
a. True
b. False

_________ 9. Investment property acquired through donation is initially measured

a. equal to the carrying amount in the donor’s books
b. at cost to the donor
c. equal to the costs incurred in transferring title of the investment property to the entity
d. at fair value on acquisition date

_________ 10. An entity acquires investment property in exchange for the long-term non-interest-bearing note.
Assuming all of the following are determinable with the sufficient reliability but differ in amounts, which of them is
most likely to be used in the initial measurement of the investment property?
a. cash price equivalent of the investment property
b. cash price equivalent to note payable
c. present value of future cash flows on the note payable discounted at the current market rate
d. face amount of note which is equal to the installment price

_________ 11. Entity A, a government entity, receives a final billing from the contractor. To record a billing, Entity
A would most likely debit the (an)
a. Cash account c. Expense account
b. Liability account d. PPE account

_________ 12. Entity A, a government entity, requires a performance bond from a contractor. To recognize the
deposit of performance bonds, Entity A would most likely debit the (an)
a. Cash-Treasury/ Agency deposit, Trust
b. Cash – Collecting Officers
c. Advances to Contractors
d. Accounts Payable

_________ 13. It refers to the costs of dismantling or uninstalling a PPE at the end of its useful life.
a. Purchase price
b. Direct costs
c. Restoration costs
d. Decommissioning costs

_________ 14. Under this approach, value in use is equal to the asset’s depreciated replacement cost and
depreciated reproduction cost (whichever is lower) minus estimated restoration cost.
a. Service Units Approach c. Depreciated Replacement Cost Approach
b. Restoration Cost Approach d. Replacement Costs Approach

_________ 15. Entity A acquires an item of PPE from an inter-agency transfer. Entity A will not recognize any
gains or loss from the transaction,
a. True
b. False

This document is the property of PHINMA EDUCATION

 ACC 111 | Accounting for Government and Non-Profit Organizations
P2 EXAM

Name: _________________________________________________________________
Section: _________________ Date: ________________ Student No:__________

_________ 16. Which of the following assets would most likely not to be assigned a residual value by a
government entity?
a. A major part of an equipment
b. Infrastructure Asset
c. A major tool
d. A building held as investment property

_________ 17. Which of the following assets of a government entity is not subject for impairment?
a. Infrastructure Assets
b. Restoration Projects
c. Heritage Assets
d. None of these

_________ 18. Which of the following is considered a heritage assets?

a. museum
b. forest
c. bridge
d. roads

_________ 19. Which of the following assets is generally not subject to depreciation?
a. Infrastructure Assets
b. Restoration Projects
c. Heritage Assets
d. None of these

_________ 20. Government entity normally assign items of PPE a residual value of 15% of cost
a. True
b. False

_________ 21. What does the term "national debt" refer to?
a. Individual debt
b. Corporate debt
c. Government debt
d. Foreign debt

_________ 22. What primarily constitutes the Philippine national debt?

a. Debt held by foreign governments
b. Debt held by Philippine banks
c. Debt held by the PH public
d. Debt held by corporations

_________ 23. Why is the debt-to-GDP ratio considered important when discussing the national debt?
a. It determines the interest rates on government bonds.
b. It reflects the country's tax base growth.
c. It indicates the total debt held by foreign governments.
d. It measures the annual budget deficit.

This document is the property of PHINMA EDUCATION

 ACC 111 | Accounting for Government and Non-Profit Organizations
P2 EXAM

Name: _________________________________________________________________
Section: _________________ Date: ________________ Student No:__________

_________ 24. What causes the federal government's annual budget deficit?
a. Increased tax revenue
b. Decreased government spending
c. Excess government revenue
d. Excessive government spending

_________ 25. Infrastructure assets have the following characteristics, except.

a. Movable
b. Part of the system or network
c. Specialized in nature and do not have alternative uses
d. May be subject to constraints on disposal

_________ 26. An entity acquires investment property in exchange for the long-term non-interest-bearing note.
Assuming all the following are determinable with the sufficient reliability but differ in amounts, which of them is
most likely to be used in the initial measurement of the investment property?
a. cash price equivalent of the investment property
b. cash price equivalent to note payable
c. present value of future cash flows on the note payable discounted at the current market rate
d. face amount of note which is equal to the installment price

_________ 27. The cost on an investment does not include the following except.
a. Operating losses incurred before the investment property achieves the planned level of occupancy.
b. Start-up costs, unless they are necessary to bring the property to the condition necessary for it to be capable of
operating in the manner intended by management.
c. Abnormal amounts wasted materials, labor or other resources incurred in constructing or developing the property.
d. Cost of opening new facility.
_________ 28. Entity A, a government entity, requires a performance bond from a contractor. To recognize the
deposit of performance bonds, Entity A would most likely debit the (an)
a. Cash – Collecting Officers
b. Cash-Treasury/ Agency deposit, Trust
c. Advances to Contractors
d. Accounts Payable

_________ 29. Inventories are initially measured at cost which compromises the following:
a. Purchase cost, excluding trade discounts, rebates, and other similar deductions in purchase price.
b. Direct costs incurred in bringing the asset to its intended location and condition.
c. Both a and b
d. None of these

_________ 30. It is property held (by the owner or by the lessee under a finance lease) for use in the production
or supply of goods or services or for administrative purposes.
A. Investment Property
B. Property, Plant and Equipment
C. Semi-Expendable Property
D. Owner-occupied property

This document is the property of PHINMA EDUCATION

 ACC 111 | Accounting for Government and Non-Profit Organizations
P2 EXAM

Name: _________________________________________________________________
Section: _________________ Date: ________________ Student No:__________

_________ 31. [Statement 1] Land held for a currently undetermined future use is an example of Owner-
occupied Property; [Statement 2] Property that is leased to another entity under a finance lease is considered as
Investment Property.
A. Both Statements are true.
B. Both Statements are false.
C. Only the first statement is true.
D. Only the Second statement is true.

_________ 32. It is the present value of the estimated future cash flows expected to be derived from the
continuing use of an asset and from its disposal at the end of its useful life.
A. Entity-specific Value
B. Time Value of Money
C. Value in use of a cash generating asset
D. Value in use of a cash generating asset

_________ 33. The capitalization threshold of _______ represents the minimum cost of an individual asset
recognized as a PPE on the Statement of Financial Position.
A. P10,000
B. P15,000
C. P20,000
D. P25,000

_________ 34. PPE that qualifies for recognition as an asset shall be measured at
A. Fair Value
B. Cost
C. Amortized Cost
D. Current Replacement Cost

_________ 35. The cost of an item of PPE comprises the following, except for
A. Purchase price, including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates.
B. Any costs directly attributable to bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management.
C. The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is
located.
D. Costs of introducing a new product or service (including costs of advertising and promotional
activities)

_________ 36. Intangible assets are governed by

A. PPSAS 31
B. PPSAS 17
C. PPSAS 11
D. PPSAS 2

This document is the property of PHINMA EDUCATION

 ACC 111 | Accounting for Government and Non-Profit Organizations
P2 EXAM

Name: _________________________________________________________________
Section: _________________ Date: ________________ Student No:__________

_________ 37. It is the systematic allocation of the depreciable amount of an intangible asset over its useful life.
A. Depreciation
B. Amortization
C. Discounting the intangible asset
D. All of the above

_________ 38. These are contracts under which neither party has performed any of its obligations, or both
parties have partially performed their obligations to an equal extent.
A. Nominate Contracts
B. Consensual Contracts
C. Executory Contracts
D. Innominate Contracts

_________ 39. Legal Obligation is an obligation that derives from

A. Contracts
B. Legislation
C. Other operation of law
D. All of the above

_________ 40. This is an event that creates a legal or constructive obligation that results in an entity having no
realistic alternative to settling that obligation.
A. Adjusting Event
B. Obligating Event
C. Non-adjusting Event
D. None of the above

This document is the property of PHINMA EDUCATION