Financial Accounting Easy: 1. Which of the following is usually considered cash? a. Certificate of deposit b. Checking account c. Money market saving certificate d. Postulated Check 2. In preparing the August 31, 2011 bank reconciliation, Apex Company provided the ff. information Balance per bank statement 1,805,000 Deposit in transit 325,000 Return of customer’s check for 60,000 Insufficient fund Outstanding checks 275,000 Bank service change for August 10,000 On Aug 31, 2011, what is the adjusted cash in bank? a. 1, 855, 000 b. 1, 795, 000 c. 1, 785, 000 d. 1, 755, 000 . Credit balances in Accounts Receivable shall be classified as a. Current Liabilities b. Part of Accounts Payable c. Long-term Liabilities d. Reduction from accounts 4. Which of the following is not an acceptable lasts for valuation of inventory? a. Historical Cost b. Current replacement cost c. Prime cost d. Current selling price less cost of disposal 5. Capetown Company began operation on Jan. 1, 2011 Capetown has found that its estimated bad debt expense has been consistently higher than actual bad debts. Management proposes lowering the percentage from 3% of credit sales to 2% .
Credit Sales for 2011 totaled P5,000,000, and accounts written off as uncollectible during 2011 totaled P550,000. What is the bad debt expense for 2011? a. 150,000 b. 100,000 c. 550,000 d. 240,000 6. Where there is a production cycle of more than one for a biological asset, PAS 41 encourages separate disclosure of a. Physical change only b. Price change only c. Total change in value d. Physical change and price change 7. Financial accounting is the area of accounting that emphasizes reporting to a. Management b. Regulatory bodies c. Internal auditors d. Creditors and investors 8.
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An investor purchased a bond as a long term investment on January 1. Annual interest was received in December 31. The investor interest income for the year would be higher if the bond was purchased at a. Par b. Face value c. A discount d. A premium 9. Donated equipment for which for fair value has been determined shall be recorded as a debit to the equipment account and a credit to a. Other comprehensive income b. Retained earnings c. Share Capital d. Income 10. Depreciation is best described as a method of a. Asset valuation b. Current value allocation c. Cost allocation d. Useful life determination Average 1.
The following information is available for Tonette Company for the current year: Net Sales3,600,000 Freight in90,000 Purchases discounts 50,000 Ending inventory240,000 The gross margin is 40% of sales. What is the cost of goods available for sale? a. 1 680 000 b. 1 920 000 c. 2 400 000 d. 2 440 000 2. Raiza Company acquired a financial asset at its market value of P3 200 000. Broker fees of P 209 000 were incurred in relation to the purchase. At what amount should the financial asset initially be recognized respectively if it is classified as at fair value through profit or loss or as a available for sale? a. 3,400,000 and 3,200,000 b. ,200,000 and 3,200,000 c. 3,200,000 and 3,400,000 d. 3,400,000 and 3,400,000 3. On August 1, 2011, Bameo Company purchased a new machine on a defereed payment basis. A down payment of P100,000 was made and 4 monthly installments of P250,000 each are to be made beginning on September 1,2011. The cash equivalent price of the machine was P950,000 . Bameo incurred and paid installation costs amounting to P30,000. What is the amount to be capitalized as cost of the machine? a. 950,000 b. 980,000 c. 1,100,000 d. 1,130,000 4. Jazz Company purchased land with a current market value of P2,400,000. The carrying amount of the land was P1,305,000.
In exchange for the land, Jazz issued 20,000 ordinary shares with par value of P100 and market value of P140 per share. The shares are traded in an established stock exchange . What amount should Jazz record as cost of the land? a. 1,305,000 b. 2,000,000 c. 2,400,000 d. 2,800,000 5. On January 1,2011 Lem Company bought machinery under a contact that required a down payment of P100,000 plus 24 monthly payments of P50,000 each for total cash payments of P1,500,000. The cash price of the machinery was P1,100,000. The machinery has a useful life of 10 years and residual value of P50,000. Lem was straight line depreciation.
What amount should Lem report as depreciation for 2011? a. 105,000 b. 110,000 c. 125,000 d. 130,000 6. Zola Company had the following long term debt: Bonds maturing in installments, secured by machinery1,000,000 Bonds maturing on a single date, secured by reality1,800,000 Collateral trust bonds8,000,000 What is the total amount of debenture bonds? a. 2,000,000 b. 1,000,000 c. 1,800,000 d. 0 7. If the fair value less cost to sell cannot be determined a. The asset is not impaired b. The recoverable amount is the value in use. c. The net realizable value is used. d. The carrying value of the asset remains the same. . Mill Company sells washing machines that carry a three year warranty against manufactures defect. Based on the entity’s experience, warranty costs are estimated at P300 per machine. During the current year, Mill company sold 2,400 washing machines and paid warranty costs of P170,000. In its income statement for the current year, what amount should mill company report as warranty expense? a. 170,000 b. 240,000 c. 550,000 d. 720,000 9. A brand name that was acquired separately shall initially be recognize at a. Recoverable amount b. Either cost or four value at the choice of the acquirer c. Fair value d. Cost 10.
It is an arrangement whereby one party sells a property to another party and then immediately leases the property back from its new owner a. Sale b. Lease back c. Sale and leaseback d. Operating lease Difficult 1. Tobin Company incurred P1,600,000 of research and development costs to develop a product of which a was granted on January 1,2011. Legal fees and other costs associated with registration of the of patent totaled P300,000. On March 31,2011 ,Tobin paid P450,000 for legal fees in a successful defense of the patent. What is the total amount that should be capitalized for the patent through March 31,2011? . 750,000 b. 300,000 c. 2,050,000 d. 2,350,000 2. Which statement is correct if there is inability to determine the fair value of an investment property reliably? I. PAS 40 mandates that the entity shall measure such disposal of the investment property. II. The residual value of such investment property shall be assumed zero under such exceptional circumstance a. I only b. II only c. Both I and II d. Neither I nor II 3. The cash account in the current assets section of the statement of financial position of Tawiran Company consisted of the following Bond sinking fund1,500,000 Checking account in FEBTC3,150,000 P320,000 check is still outstanding per bank statement) Currency and coins awaiting deposit 1,135,000 Deposit in a bank closed by BSP 500,000 Petty cash fund (of which 10,000 is in the form of paid vouchers) Receivables from officers and employers50,000 175,000 6,515,000 What is the amount of cash to be reported under current assets? a. 4,444,000 b. 4,330,000 c. 4,830,000 d. 5,830,000 4. A 90-day 15% interest-bearing note receivable is sold to a bank with recourse after being held for 30 days. The proceeds are calculated using a 12% interest rate. The note receivable has been I. Discounted II. Pledged a. I only b.
II only c. Both I and II d. Neither I nor II 5. The following information applied to Fenn Company for the current year: Merchandise purchased for resale 4,000,000 Freight in100,000 Freight out50,000 Interest in inventory loan200,000 What is the inventoriable cost of the purchase? a. 4,280,000 b. 4,030,000 c. 4,080,000 d. 4,130,000 6. Which statement is true about financial instrument? I. Transaction costs of issuring equality instruments are charged against income. II. The components of a compound financial instrument are classified separately in accordance with their substances. a. I only b. II only c. Both I and II d.
Neither I nor II 7. Which type of expenditure is included in the term “exploration and evaluation” of mineral resources. I. The extraction and processing of mineral resources for transport to market. II. The commercial review of possible areas for mineral extraction before bidding for the legal rights to explore a specific area. a. I only b. II only c. Either I or II d. Neither I nor II 8. On July 1,2011 Bellirose Company purchased P1,000,000 face value 8% bonds for P910,000 plus accrued interest to yield 10% the bonds mature on January 1,2018, pay interest annually on Januaty 1, and are classified as trading securities.
On December 31, 2011 the bonds had a market value of P945,000. On February 13, 2011 Bellirose Company sold the bonds for P920,000. On December 31,2011 what amounts should be reported for short-term investments in trading debt securities? a. 910,000 b. 920,000 c. 945,000 d. 950,000 9. Which of the following would not be included in the cost of work in process inventory? a. Cost of electricity to operate factory equipment b. Maintenance cost of factory equipment c. Depreciation on office equipment in the sales manager’s office. . Depreciation of factory equipment 10. Joan Company provided the following data: Value of biological asset at acquisition 600,000 Cost on December 31,2011 Four valuation surplus on initial700,000 recognition at fair value on Dec 31,2011 Change in fair value to December 31, 2012 due to growth 100,000 And price fluctuation Decrease in fair value due to harvest90,000 What is the carrying amount of the biological asset on December 31, 2012? a. 1,400,000 b. 1,310,000 c. 1,300,000 d. 1,490,000
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