Prelim Quiz 1 - Financial Accounting and Reporting

Question 1
Which of the following statements about accounting standards is true?

a. The BIR is able to enforce its standards by prohibiting the listing of companies
which do not comply on stock exchanges.

b. An accounting standards board was established with the purpose of narrowing

the range of divergence in accounting standards throughout the world.

c. Accounting professionals should not comply with standards

d. Conceptual framework will override accounting standards.

Question 2
Which will not require an adjusting entry on the depositor's books?

a. NSF check from customer

b. Check in payment of account payable amounting to P50,000 is recorded by the

depositor as P5,000

c. Deposit of another company is credited to the account of our enterprise

d. Bank service charge

Question 3
Who is responsible, at all times, for the amount of the petty cash fund?

a. The general cashier

b. The petty cash custodian

c. The president of the company.

d. The general office manager

Question 4
If a transfer of receivables with recourse is not classified as a sale, and the proceeds
received are less than the net receivables, the difference shall be treated as a

a. Discount on transferred receivables that is to be amortized to interest expense

over the borrowing period.

b. Ordinary gain allocated over the borrowing period.

c. Ordinary loss recognized in the current period.

d. Extraordinary loss recognized in the current period.

Question 5
Assuming that the ideal measure of short-term receivable in the balance sheet is the
discounted value of the cash to be received in the future, failure to follow this practice
usually does not make the balance sheet misleading because

a. The amount of discount is not material

b. Most short term receivables are not interest bearing

c. The allowance for uncollectible accounts includes a discount element

d. Most receivables can be sold to a bank or factor

Question 6
The following statements are based on the Conceptual Framework of Accounting:
I The Conceptual Framework is a reporting standard.
II In cases of conflict, the requirements of the Conceptual Framework prevail over those
of the PFRS.
III The Conceptual Framework states that transaction must be accounted for according
to their legal form.

a. Statement I is true; statements II and III are false

b. All of the statements are true

c. Statements I and III are true, statement II is false

d. All of the statements are false

Question 7
Well Corp. has outstanding accounts receivable totaling P2.54 million as of December
31 and sales on credit during the year of P12.8 million. There is also a debit balance of
P6,000 in the allowance for doubtful accounts. If the company estimates that 1% of its
net credit sales will be uncollectible, what will be the balance in the allowance for
doubtful accounts after the year-end adjustment to record bad debt expense?
Question 7Select one:

a. 25,400.

b. 134,000.

c. 31,400.

d. 122,000.

Question 8
What is the preferable presentation of accounts receivable from officers, employees, or
affiliated companies on a statement of financial position

a. As assets but separately from other receivables.

b. As trade notes and accounts receivable if they otherwise qualify as current

assets

c. As offsets to equity.

d. By means of footnotes only.

Question 9
Philip Company had the following account balances on December 31, 2016

a. 8,700,000

b. Cash in bank-current account 5,000,000

Cash in bank-payroll account 1,000,000
Cash on hand 500,000
Cash in bank-restricted account for building construction expected to be finished
in 2013 3,000,000
Time deposit purchased on December 15, 2016 and due on March 15, 2017
2,000,000
 The cash on hand includes a P200,000 check payable to Philip, dated January
15, 2017. What amount should be reported as cash and cash equivalents on
December 31, 2016? {

c. 6,500,000

d. 8,300,000

e. 6,300,000

Question 10
When the stated rate is less than the market rate, the note is at (a)

a. Cannot be determined

b. Discount

c. Premium

d. Face Value