POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

STO. TOMAS BRANCH

STO. TOMAS BATANGAS

ACCOUNTANCY PROGRAM
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
jpia.pupstb@gmail.com

The Scepter: Clash of Brilliant Minds

2nd Academic and Literary Showdown
Basic Accounting Questionnaires

EASY ROUND
Theory
(Multiple Choice)

1. Which of the following elements of financial statements is not a component of comprehensive income?
a. Revenues
b. Expenses
c. Losses
d. Distributions to owners

2. Financial statements issued for the use of parties external to the enterprise are the primary
responsibility of the
a. management of the enterprise.
b. stockholders of the enterprise.
c. independent auditors of the enterprise.
d. creditors of the enterprise.

3. The debit and credit analysis of a transaction normally takes place when the
a. entry is posted to a subsidiary ledger.
b. entry is recorded in a journal.
c. trial balance is prepared.
d. financial statements are prepared.

4. A routine collection on a customer's account was recorded and posted as a debit to Cash and a credit to
Sales Revenue. The journal entry to correct this error would be
a. a debit to Sales Revenue and a credit to Accounts Receivable.
b. a debit to Sales Revenue and a credit to Unearned Revenue.
c. a debit to Cash and a credit to Accounts Receivable.
d. a debit to Accounts Receivable and a credit to Sales Revenue.

5. The responsibility to review the work of the accountants and issue opinions as to the fairness of the
financial statements rests with
a. the external auditor.
b. the board of directors.
c. the internal auditors.
d. management.
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STO. TOMAS BRANCH
STO. TOMAS BATANGAS

ACCOUNTANCY PROGRAM
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
jpia.pupstb@gmail.com

6. On January 1, 2017, Brecon Co. installed cabinets to display its merchandise in customers’ stores.
Brecon expects to use these cabinets for 5 years. Brecon’s 2017 multi-step income statement should
include
a. One-fifth of the cabinet costs in cost of goods sold.
b. One-fifth of the cabinet costs in selling, general, and administrative expenses.
c. All of the cabinet costs in cost of goods sold.
d. All of the cabinet costs in selling, general, and administrative expenses.

7. Which of the following is an accrued liability?

a. Cash dividends payable.
b. Wages payable.
c. Rent revenue collected 1 month in advance.
d. Portion of long-term debt payable in current year.

8. Which of the following would not be reported for capital stock in the contributed capital section of a
classified balance sheet?
a. Dividends per share
b. Shares authorized
c. Shares issued
d. Shares outstanding

9. What is the correct order of the following events in the accounting process?

I Financial statements are prepared.

II Adjusting entries are recorded.
III Nominal accounts are closed.

a. I, II, III
b. II, I, III
c. III, II, I
d. II, III, I

10. Which of the following is not presented in an income statement?

a. Revenues
b. Expenses
c. Net income
d. Dividends
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STO. TOMAS BRANCH
STO. TOMAS BATANGAS

ACCOUNTANCY PROGRAM
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
jpia.pupstb@gmail.com

AVERAGE ROUND
Theory and Problems
(Multiple Choice and Problem Solving)

1. If the balance shown on a company's bank statement is less than the correct cash balance, and neither
the company nor the bank has made any errors, there must be
a. deposits credited by the bank but not yet recorded by the company.
b. outstanding checks.
c. bank charges not yet recorded by the company.
d. deposits in transit.

2. Historical cost has been the valuation basis most commonly used in accounting because of its
a. timelessness.
b. conservatism.
c. reliability.
d. accuracy.

3. Iowa Cattle Company uses a periodic inventory system. Iowa purchased cattle from Big D Ranch at a
cost of P27,000 on credit. The entry to record the receipt of the cattle would be

ANS: Debit: Purchases P27,000; Credit: Accounts Payable P27,000

4. A measure of profitability analysis is

a. times interest earned.
b. cash flow per share.
c. quick ratio.
d. dividend payout ratio.

5. On August 1 of the current year, Kyle Company borrowed P278,000 from the local bank. The loan was
for 12 months at 9 percent interest payable at the maturity date. How much interest expense would be
included at the year-end income statement?

ANS: P10,425 (I=prt; P278,000x9%x5/12)

6. Failure to record depreciation expense at the end of an accounting period results in

a. understated income.
b. understated assets.
c. overstated expenses.
d. overstated assets.
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STO. TOMAS BRANCH
STO. TOMAS BATANGAS

ACCOUNTANCY PROGRAM
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
jpia.pupstb@gmail.com

7. Conservatism is best described as selecting an accounting alternative that

a. understates assets and/or net income.
b. has the least favorable impact on owners' equity.
c. overstates, as opposed to understates, liabilities.
d. is least likely to mislead users of financial information.

8. In a consolidated balance sheet, the minority interest is reported

a. as part of long-term liabilities.
b. between liabilities and stockholders’ equity
c. as part of stockholders’ equity.
d. as part of long-term assets.

9. The following balances have been excerpted from Edwards' balance sheets:

December 31, 2013 December 31, 2012

Prepaid Insurance P6,000 P7,500
Interest Receivable 3,700 14,500
Salaries Payable 61,500 53,000

Edwards Company paid or collected during 2013 the following items:

Insurance premiums paid 41,500

Interest collected 123,500
Salaries paid 481,000

The insurance expense on the income statement for 2013 was

ANS: P43,000

Prepaid insurance, 2012 P7,500

Insurance premiums paid 41,500
Prepaid insurance, 2013 (6,000)
Insurance expense, 2013 P43,000

10. On August 1, a company received cash of P9,324 for one year’s rent in advance and recorded the
transaction on that day as a credit to rent revenue. The December 31 adjusting entry would include

ANS: Debit: Rent Revenue P5,439; Credit: Unearned Rent Revenue P5,439 (P9,324x7/12)
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STO. TOMAS BRANCH
STO. TOMAS BATANGAS

ACCOUNTANCY PROGRAM
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
jpia.pupstb@gmail.com

DIFFICULT ROUND
Problems
( Problem Solving)

1. On December 31 of the current year, Holmgren Company's bookkeeper made an entry debiting
Supplies Expense and crediting Supplies on Hand for P12,600. The Supplies on Hand account had a
P15,300 debit balance on January 1. The December 31 balance sheet showed Supplies on Hand of
P11,400. Only one purchase of supplies was made during the month, on account. The entry for that
purchase was

ANS: debit Supplies on Hand, P8,700 and credit Accounts Payable, P8,700

Supplies on hand, January 1 P15,300

Supplies purchased (work back) 8,700
Supplies on hand, December 31 (11,400)
Supplies expense, December 31 P12,600

2. Crescent Corporation's interest revenue for 2013 was P13,100. Accrued interest receivable on
December 31, 2013, was P2,275 and P1,875 on December 31, 2012. The cash received for interest during
2013 was

ANS: P12, 700

Accrued interest receivable, 2012 P1,875

Interest Revenue, 2013 13,100
Accrued interest receivable, 2013 (2,275)
Cash received for interest, 2013 P12,700

3. Information from Caine Company's balance sheet is as follows:

Current assets:
Cash P 900,000
  Marketable securities 3,750,000
  Accounts receivable 26,800,000
  Inventories 33,150,000
  Prepaid expenses 600,000
  Total current assets P65,200,000
Current liabilities:
  Notes payable P 1,050,000
  Accounts payable 8,750,000
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STO. TOMAS BRANCH
STO. TOMAS BATANGAS

ACCOUNTANCY PROGRAM
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
jpia.pupstb@gmail.com
  Accrued expenses 5,250,000
  Income taxes payable 250,000
  Payments due within one year on long-term debt 1,950,000
  Total current liabilities P17,250,000

What is Caine's current ratio? (Round off to the nearest hundredths)

ANS: 3.78 to 1 (P65,200,000/P17,250,000)

4. On January 3, 2017, Paterson Services, Inc. signed an agreement authorizing Cobb Company to operate
as a franchisee over a 20-year period for an initial franchise fee of P50,000 received when the agreement
was signed. Cobb commenced operations on July 1, 2017, at which date all of the initial services required
of Paterson had been performed. The agreement also provides that Cobb must pay a continuing franchise
fee equal to 5% of the revenue from the franchise annually to Paterson. Cobb’s franchise revenue for
2017 was P400,000. For the year ended December 31, 2017, how much should Paterson record as
revenue from franchise fees in respect of the Cobb franchise?

ANS: P70,000 (P50,000+(P400,000x5%))

5. On November 1, 2017, Key Co. paid P3,600 to renew its insurance policy for 3 years and used an
income statement account to record this transaction. At December 31, 2017, Key’s unadjusted trial
balance showed a balance of P90 for prepaid insurance and P4,410 for insurance expense. What amounts
should be reported for insurance expense in Key’s December 31, 2017 financial statements?

ANS: P1,100 (P4,410-((P3,600x34/36)-P90))

6. Arid Company paid P1,704 on June 1, 2013, for a two-year insurance policy and recorded the entire
amount as Insurance Expense. The December 31, 2013, adjusting entry is

ANS: debit Prepaid Insurance and credit Insurance Expense, P1,207 (P1,704x17/24)

7. Southeast Company's adjusted trial balance at December 31, 2021, includes the following account
balances:

Common Stock, P3 par P300,000

Additional Paid-In Capital 400,000
Treasury Stock, at cost 25,000
Net Unrealized Holding Loss on Available-For-Sale
Securities 10,000
Retained Earnings-Appropriated for Uninsured Earthquake
Losses 75,000
Retained Earnings-Unappropriated 100,000
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STO. TOMAS BRANCH
STO. TOMAS BATANGAS

ACCOUNTANCY PROGRAM
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
jpia.pupstb@gmail.com

What amount should Southeast report as total owners' equity in its December 31, 2021, balance sheet?

ANS: P840,000

Common Stock, P3 par P300,000

Additional Paid-In Capital 400,000
Treasury Stock, at cost (25,000)
Net Unrealized Holding Loss on Available-For-Sale
Securities (10,000)
Retained Earnings-Appropriated for Uninsured Earthquake
Losses 75,000
Retained Earnings-Unappropriated 100,000
Total owner’s equity, December 31, 2021 P840,000

8. James Lee, M.D., keeps his accounting records on a cash basis. During 2017, Dr. Lee collected
P100,000 in fees from his patients. At December 31, 2007, Dr. Lee had accounts receivable of P20,000.
At December 31, 2017, Dr. Lee had accounts receivable of P30,000, and unearned fees of P1,000. On an
accrual basis, how much was Dr. Lee’s patient service revenue for 2017?

ANS: P109,000

Fees collected from patients, 2017 P100,000

Accounts receivable, December 31, 2017 30,000
Accounts receivable, December 31, 2007 (20,000)
Unearned fees, December 31, 2017 (1,000)
Service Revenue, 2017 P109,000

9. UVW Broadcast Co. entered into a contract to exchange unsold advertising time for travel and lodging
services with Hotel Co. As of June 30, advertising commercials of P10,000 were used. However, travel
and lodging services were not provided. How much expense should UVW account in its advertising in its
June 30 financial statements?

ANS: 0

10. Carbon Company’s accounting records provided the following information:

Balances 12/31/2012 Balances 12/31/2013

Current Assets P240,000 P?
Property, Plant, and Equipment 1,600,000 1,700,000
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STO. TOMAS BRANCH
STO. TOMAS BATANGAS

ACCOUNTANCY PROGRAM
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
jpia.pupstb@gmail.com
Current Liabilities ? 130,000
Long-term Liabilities 580,000 ?

All assets and liabilities of the firm are reported in the schedule above. Working capital of P92,000
remained unchanged from 2012 to 2013. Net income in 2011 was P64,000. No dividends were declared
during 2013 and there were no other changes in owners’ equity. Total long-term liabilities at the end of
2013 would be

ANS: P616,000 (((222,000+1,700,000)-(130,000+1,112,000))-64,000)

Working Capital = Current Assets – Current Liabilities

2012 2013

P92,000 = P240,000 – x P92,000 = x – P130,000

x = P148,000 x = P222,000

*Assets = Liabilities + Owner’s Equity

2012 2013

Current Assets P240,000 P222,000

Property, Plant and Equipment 1,600,000 1,700,000

Current Liabilities 148,000 130,000

Long-term Liabilities 580,000 X
Owner’s Equity* 1,112,000 1,112,000