Name: Date:

Course/Yr and Sec: Score:

LONG QUIZ /MONTHLY EXAM

Instruction: Provide the correct answer for each question. Any form of erasure will invalidate your answer. USE BLACK BALLOPEN ONLY.

1. This accounting objective emphasize the importance of the income statement as it geared toward proper income or performance determination of
the enterprise.
a. Entity theory c. Residual equity theory
b. Proprietary theory d. Fund theory

2. Revenue is normally recognized

a. When the title to the good changes

b. When the customer’s order is received
c. When the customer’s is accompanied by a check
d. When the transaction results to recording an account receivable

3. The matching principle is best demonstrated by:

a. Allocating advertising expense to several reporting periods

b. Recognizing rent as revenue when the cash was collected
c. Not recognizing any expense unless some revenue is recognized
d. Associating effort (cost) with accomplishment (revenue)

3. ABC Corporation classifies expenses by logistics quality control, manufacturing, plant engineering, sales and marketing, research and development,
finance and administration. The basis of classification is by
a. Nature of expense
b. Object of expenditure
c. Function performed
d. Area of responsibility
4. When an entity opts to present the income statement classifying expenses by function, which of the following is not required to be disclosed as
“additional information”
a. Depreciation expense
b. Employee benefits expense
c. Director’s remuneration
d. Amortization expense

5. This is the practice of opening the books of accounts beyond the close of the reporting period for the purpose of showing a better financial position
and performance
a. kiting c. lapping
b. window dressing d. hypothecation

6. Which of the following statements is incorrect?

a. the accounting function should be separated from the custodianship of assets
b. certain clerical personnel should be rotated among various jobs
c. the responsibility for receiving merchandise and paying for it should usually be given to one person
d. an entity’s personnel should be given well-defined responsibilities

7. Which of the following statements is correct concerning ‘cash short or over account’?
a. is debited when the petty cash fund proves out over
b. is debited when the petty cash fund proves out short
c. a contra account to cash
d. a temporary or suspense account which was always closed out to a nominal account

8. The internal control specific to petty cash is

a. segregation of function c. proper authorization
b. assignment of duties and responsibilities d. imprest system

9. if there is evidence that an impairment loss on loan receivable has been incurred, the amount of the loss is equal to the
a. excess of the Carrying amount of the loan receivable over the present value of the Cash flows related to the loan
1
 b. excess of the present value of Cash flows related to the loan over the Carrying amount of the loan receivable
c. excess of the Carrying amount of the loan over the principal amount of the loan
d. excess of the principal amount of the loan over its Carrying amount

10. which of the following statements is incorrect regarding how the impairment assessment is to be performed on receivables?
a. receivables that are individually significant should be Considered for impairment separately or individually
b. receivables that are not individually significant should be collectively assessed for impairment
c. any receivable individually assessed as impaired should be included with the other receivables that are not individually significant and
collectively assessed
d. any receivable individually assessed as not impaired should be included with the other receivables that are not individually significant and
collectively assessed

11. The current year-end physical inventory appropriately included merchandise purchased on account that was not recorded in purchases until next
year. What effect will this error have on the current year-end, assets, liabilities, retained earnings, and earnings for the year ended, respectively?

a. Understate, no effect, overstate, overstate

b. No effect, overstate, understate, understate
c. No effect, understate, overstate, overstate
d. No effect, understate, understate, overstate

12. Which of the following is not accepted presentation of the statement of financial position?

a. Assets are presented in order of liquidity;

b. Non-controlling interests presented within equity;
c. Provision presented as part of the liability section;
d. Deferred tax liabilities presented as part of current liabilities

13. What is the purpose of information presented in notes to FS?

a. To present management’s responses to auditor comments

b. To correct improper presentation in the FS
c. To provide disclosures required by GAAP
d. To provide recognition of amounts not included in the total of the financial statement.

14. Cash comprises

a. Cash on hand and demand deposits

b. Cash on hand, demand deposits and cash equivalents

c. Cash on hand and cash equivalents

d. Demand deposits and cash equivalents

15. On October 1, 2012, Rachelleen Company sold 100,000 gallons of heating oil to Kaye Company at P30 per gallon. Fifty thousand gallons were
delivered on December 15, 2012, and the remaining 50,000 gallons were delivered on January 15, 2013. Payment terms were: 50% due on
October 1, 2012, 25% on the first delivery, and the remaining 25% due on the second delivery. What amount of revenue should be recognized
from the sale during 2012?
a. P3,000,000 b. P1,500,000 c. P2,250,000 d. P750,000

16. Why are inventories included in the computation of net income?

a. To determine cost of goods sold c. To determine merchandise returns
b. To determine sale revenue d. Inventories are not included in the computation of net income

17. The income statement reveals

a. Resources and equities of an entity at a point in time. c. Resources and equities for a period of time.
b. Net earnings an entity at a point in time d. Net earnings an entity for a period of time.

18. Which method of income measurement is used in the preparation of the income statement?
a. Capital maintenance approach c. Cash flow approach
b. Transaction approach d. Income components approach

2
19. Which of the following is not an acceptable way of displaying the components of other comprehensive income?
I. Combined statement of retained earnings
II. Separate income statement
III. Combined statement of comprehensive income
a. I and II only b. II and III only c. I only d. II only

20. Which of the following statements is not correct?

a. Demand deposits are not defined in IFRS. However, in order to qualify as cash, the related balance needs to have the same liquidity as cash
itself, and so funds on ‘demand deposit’ need to be capable of being withdrawn at any time without penalty.

b. In almost all cases, investments in equity instruments are excluded from being classified as cash and cash equivalents, because they
typically have no maturity and are subject to significant potential changes in value.

c. In a group situation, there may be restrictions on the transfer of monies from a foreign subsidiary to the parent because of exchange
control restrictions. This restriction would not prevent classification as cash or cash equivalent in the consolidated financial statements,
provided it meets the definition as such in the subsidiary

d. None. All of the above statements are correct.

21. Which of the following does not belong to the group?

a. Completeness c. Free from error

b. Free from bias d. Faithful Representation

22. All of the following are purposes of Conceptual Framework, except

a. to assist the standard-setting body in its review and adoption of international standards
b. to assist the auditors in forming an opinion as to whether FS conform with the Philippine standards
c. to assist preparers of FS in applying accounting standards and in dealing issues not yet covered by standards.
d. to assist standard-setting body in defining standard for any particular measurement or disclosure issue.

23. Which of the following is not an important characteristic of the financial statements that accountants currently prepare?
a. the information in FS is expressed in units of money adjusted for changing purchasing power
b. FS articulate with one another because measuring financial position is related to measuring changes in financial position
c. the information in financial statements is summarized and classified to help meet users' needs.
d. FS can be justified only if the benefits exceed the costs

24. When an entity in bankruptcy reports financial results, what basic assumption may not be followed?
a. economic entity c. periodicity
b. going concern assumption d. monetary unit assumption

Genesis Company’s trial balance reflected the following account balances on December 31, 2016

Cash in Bank – RCBC P 200,000

Accounts Receivable P 750,000
Inventory P 600,000
Prepaid Insurance P 120,000
Prepaid Rent ( P 120,000 per year for the next three years) P 360,000
Financial Assets at fair value through profit or loss P 150,000
Financial Assets at fair value through OCI P 300,000
Financial Assets at amortized costs P 500,000
Deferred Tax Asset P 75,000
Bank Overdraft – RCBC P 125,000
Machinery P 400,000
Accumulated Depreciation P 100,000
Noncurrent Assets held for sale – Land P 325,000
Building used as a plant site P 460,000

25. How much is the total current assets for the year ended December 31, 2016?

a. P 1,875,000 c. P 2,140,000
b. P 2,110,000 d. P 1,560,000

3
26. How much is the total current assets for the year ended December 31, 2016?

a. P 1,875,000 c. P 2,140,000
b. P 2,110,000 d. P 1,560,000

You were able to gather the following from the December 31, 2008 trial balance of RHEA INC. in connection with your audit of the company:

Petty cash fund 50,000

Cash on hand 1,500,000
Cash in bank - Metrobank current 4,000,000
Cash in bank - BDO acct no. 1 3,160,000
Cash in bank - BDO acct no. 2 (160,000)
Cash in bank - Coco bank savings 4,500,000
Time deposits – BPI 2,000,000

The petty cash fund consisted of the following items as of December 31, 2008:

Currency and coins P10,000

Employees' vales 8,000
Currency in an envelope marked "collections for charity" with names attached 6,000
Unreplenished petty cash vouchers 6,500
Check drawn by RHEA, payable to the petty cashier 20,000
Unused postage stamps 1,500
P52 000

Cash on hand represents undeposited collections as of December 31, 2008 and includes the following items:

a. Customer's check for P160,000 returned by bank on December 26, 2008 due to insufficient fund but subsequently redeposited and cleared by
the bank on January 3, 2009
b. Customer's check for P80,000 dated January 2, 2008, received on December 29, 2008.
c. A customer check for P90,000 dated June 1, 2008 received on the same date and yet to be deposited since the same has been missing.
d. Postal money orders received from customers, P100,000.

Included among the checks drawn by RHEA against the Metrobank current account and recorded in December 2008 are the following:

a. Check written on December 29, 2008 dated January 2, 2009, delivered to payee on December 29, 2008, P160,000.
b. Check written and dated December 29, 2008 and delivered to payee on January 2, 2009, P200,000.

The credit balance in the BDO current account no. 2 represents checks drawn in excess of the deposit balance. These checks were still outstanding at
December 31, 2008.
The savings account deposit in Coco Bank has been set by the board of directors for acquisition of new computers. This account is expected to be
disbursed in the next 3 months from the balance sheet date.
The time deposit with BPI was purchased on November 1, 2008 and shall mature on November 1, 2009.
Based on the information above, determine the balances of the following:

27. Petty cash fund

28. Petty cash shortage/overage

29. Cash on Hand

30. Cash in Bank – Metrobank Current

In your audit of Jose Inc.’s cash account as of December 31, 2013, you ascertained the following information: The book keeper’s bank reconciliation on
November 30, 2013, is as follows:
Bank balance per bank statement, November 30 24,298
Add: Deposit in transit 3,648
Total 27,946
Less: Outstanding checks
No. 3408 440
3413 300
3414 6,820
3416 3,924
3417 800 12,284

4
 Balance 15,662
Add: Bank service charge for Nov 36*
Balance per books 15,698

*Entered in check register in December. The cash receipts journal shows a total receipts for December of P371,766. The check register reflects total
checks issued in December of P377,632. A collection of P5,912 was recorded on company books on Dec. 31 was not deposited until Jan. 2, 2014.The
balance per bank statement at Dec. 31, 2013 is P17,516. The statement shows total receipts of P373,502 and checks paid of P380,284.Your examination
revealed the following additional information:

Check no.3413 dated Nov. 24, 2013, was entered in the Check Register as P300. Your examination of the paid returned with the December bank
statement reveals that the amount of the check is P30.

Check no. 3417 was mutilated and returned by the payee. A replacement check (no.3453) was issued. Bothe checks were entered in the Check
register but no entry was made to cancel check no. 3417.

The Dec. bank statement includes an erroneous bank charge of P480.

On Jan. 3, 2014, the bank informed your client that a Dec. bank charge of P423 was omitted from the statement.

Your examination of the bank credit memo accompanying the Dec. bank statement discloses that it represents proceeds from the note collection
in Dec. for P4,000.

The outstanding checks at Dec. 31,2013, are as follows:

No. 3468 440
No. 3417 800
No. 3418 2,814
No. 3419 5,788

31. What are the total book disbursements for the month of December?

32. What is the book balance at Dec. 31:

33. What is the amount of total outstanding checks at December 31?

34. What is the adjusted bank balance on November 30?

35. What are the adjusted book receipts for the month of December?

36. What are the adjusted book disbursements for the month of December?

37. What is the adjusted book balance on December 31?

You are conducting an audit of the MART CORPORATION for the year ended December 31, 2013. The internal control procedures surrounding cash
transactions were not adequate. Jane Quipit, the bookkeeper-cashier handles cash receipts, maintains accounting records and prepares the monthly
reconciliations of the bank account. She prepared the following reconciliation at the end of the year:

Balance per bank statement P 315,000

Add: Deposit in transit P 157,725
Note collected by bank 13,500 171,225
Total P 486,225
Less: Outstanding checks 222,075
Balance per general ledger P 264,150

In the process of your audit, you gathered the following:

At December 31, 2013, the bank statement and the general ledger showed balances of P315,000 and P264,150 respectively.

The cut off bank statement showed a bank charge on January 02, 2014 for P35,250 representing a correction of an erroneous bank credit.

Included in the list of outstanding checks were the following:

 A check payable to a supplier, dated December 29, 2013, in the amount of P13,275, released on January 05, 2014.
 A check representing advance payment to a supplier in the amount of P33,489, the date of which is January 04, 2014, and released
in December 2013.

5
  On December 31, 2013, the company received and recorded customer’s postdated check amounting to P45,000.

38. Compute the adjusted deposit in transit as of December 31, 2013.

39. Compute the adjusted outstanding checks as of December 31, 2013.

40. Compute the adjusted cash to be presented in the balance sheet as at Dec. 31, 2013.

You gathered the following November 30 bank reconciliation from the cash records of the Maria Co. in connection with your audit of the company’s FS
for the year 2014:

Balance per bank P 560,000

Deposits in transit 123,200
Outstanding checks (160,000)
Balance per books P 523,200

Results for the month of December follow:

Bank Book
Balance, December 31 P 692,000 P 740,000
December deposits 400,000 464,800
December note collected (not included in deposits) 80,000
December bank service charge 1,200
December NSF check, returned by the
Bank (recorded by bank as a charge) 26,800

Based on the above and the result of your audit, answer the following:

41. The outstanding checks as of December 31, 2014 amount to

42. The adjusted cash balance as of December 31, 2014 is

Pearl Company began operations on January 1, 2005. On December 31, 2005, Pearl provided for uncollectible accounts based on 1% of annual credit
sales. On January 1, 2006, Pearl changed its method of determining its allowance for uncollectible accounts by applying certain percentage to the
accounts receivable aging as follows:
Days past invoice date Percent deemed to be uncollectible
0 – 30 1
31 – 90 5
91 – 180 20
Over 180 80

In addition, Pearl wrote off all accounts receivable that were over 1 year old. The following additional information relates to the years ended December
31, 2005 and 2006:

2006 2005
Credit sales P6,000,000 P5,600,000
Collections 5,830,000 4,800,000
Accounts written off 54,000 None
Recovery of accounts previously written off 14,000 none

Days past invoice date at December 31

0 – 30 600,000 500,000
31 – 90 160,000 180,000
91 – 180 120,000 90,000
Over 180 50,000 30,000

43. What is the provision for uncollectible accounts for the year ended December 31, 2006?

On January 1, 2014, TAKEN FOR GRANTED Company granted a five year loan to a borrower amounting to P 5,000,000. The loan bears interest of 10%
and to be collectible every December 31.
On December 31, 2015, TFG considers the loan impaired and that only P 4,000,000 principal amount will be collected. No cash flows received in 2015 and
the company did not accrue the interest because of the impairment. The prevailing rate of interest for a loan of this type is 12%.
On December 31, 2016, the financial condition of the borrower has improved and that it can pay its entire unpaid obligation, including principal and
interest at maturity.

6
Use 4 decimal places for the PV factors.
44. Compute for the loan impairment loss on 2015
45. Compute for the gain on reversal of impairment loss in 2016
The Enlightenment Company sold its Building to Meditate Company. The seller received a 1 year 12% promissory note as a consideration for the deal.
The following information is related to the transaction:

Gain on Sale on March 1, 2017 800,000

Cost of the Tower 15,000,000
Accumulated Depreciation of Tower 1,000,000

The entity discounted the note from Meditate Company to Run Bank. Enlightenment recognized interest income amounting to 592,000 upon
discounting the note.

The discounting was entered as Conditional Sale.

Loss on Note Receivable Discounting 473,600

After three months from the date of discounting, Meditate Company dishonored the note. Enlightenment paid Run Bank for the total maturity value
plus a bank charge of 20,000.

46. What is the rate of discounting?

47. How much did Enlightenment receive from Run Bank?

48. When did the discounting happen?

49. How much was recorded loss due to the dishonor of Note?

50. How much was debited to Accounts Receivable as a result of dishonor of note?