Prelim-Quiz 1

MULTIMULTIPLE CHOICE (THEORY)
Choose the best answer.
A branch that maintains a general ledger is said to use a(n) accounting system?
Centralized
Decentralized
All of the above
Authoritarian
Clear selection
Which of the following accounts is reciprocal account to the Investment in Branch

account?
Home Office capital
None of the above
Branch Income
Equity in Home Office
Clear selection
S1: Start-up costs incurred by a branch in the initial months of operations are
appropriately deferred and amortized in subsequent profitable accounting periods. S2:
Sperate financial statements of home office and branch do not meet the needs of
investors, creditors, or other outside users of financial statements.
Only S2 is correct.
Only S1 is correct.
Both statements are incorrect.
Both statements are correct.
S1: When inventory is received from the home office, a branch increases its home
office account. S2: Reciprocal home office and branch accounts are eliminated when
home office and branch financial statements are combined for external reporting.
Only S1 is correct.
Only S2 is correct.
S1: Branch fixed assets can be carried on the home office’s books under a
decentralized accounting system. S2: If branch fixed assets are recorded on the home
office’s books, depreciation expense, would not be charged to branch operation.
Only S2 is correct.
Only S1 is correct.
A home office, month-end allocation of previously recorded advertising expenses to a
branch requires the following entry on the home office books
DR: Branch Income CR: Home Office Capital
DR: Advertising Expense CR: Branch Income
None of the above.
DR: Advertising Expense CR: Accrued Liabilities
The income: Branch ledger account is maintained is the accounting records of:
Both the home office and the branch
The branch only
Neither the home office nor the branch
The home office only
The branch paid the home office for services rendered to the branch.
The branch incurred operating expenses for the benefit of the home office.
The home office incurred operating expenses for the benefit of the branch
None of the foregoing occurred.
A debit to the Income Summary ledger account and a credit to the Home Office
account appear in:
The accounting records of the Home office to record the net income of the home office.
The accounting records of the branch to record the net income of the branch.
The accounting records of the Home office to record the net income of the branch.
Some other manner.
If both the home office and the branch of a business enterprise use the perpetual
inventory system, a Shipment to Branch ledger account appears in the accounting
records of:
The home office only
Both the home office and the branch
Neither the home office nor the branch
The branch only
PLE CHOICE (PROBLEMS)

Choose the best answer.
Use the following information for the next 5 questions

Your answer
How much is the sales of branch to be included in the combined financial statements?
2,800,000
0
2,333,333
2,240,000
How much is the cost of goods sold of the branch to be included in the combined
financial statements?
900,000
1,200,000
1,800,000
1,500,000
How much is the ending inventory of the branch to be included in the combined
financial statements?
1,000,000
1,250,000
800,000
8333,333
How much is the true profit of the branch?

1,400,000
1,266,667
1,200,000
1,250,000
How much is the adjusted balance of the branch current account immediately prior to
combining the financial statements?
3,400,000
3,666,667
3,500,000
3,800,000
LONG PROBLEMS
Write your solution in good accounting form on any clean paper (better if you have a worksheet) and take a
photo or scan your paper then submit it as ONE PDF file. Do not forget to ENCIRCLE your final answer.
ABC owns a branch in Baguio City. During the year, the home office shipped to the
branch supplies costing P120,000 at a billed price of 20% above cost. The inventories
of supplies at the branch were as follows: Beg Inventory, P90,000 and Ending
inventory P108,000. On December 31, the home office holds inventories of P160,500
which included P10,500 held on consignment. Both locations use the periodic
inventory method. Compute for the inventories in a combined Statement of Financial
Position as of December 31.
240,000
Your answer
DEF’s branch submitted the following data for the current year (its first year of
operation): Sales of P203,500, Debit balance for Shipment from home office of
P186,120, Operating Expenses of P18,755 and a credit balance for Home Office
account of P48,125. Shipment to the branch are billed at cost. The ending inventory of
the branch was P25,245. Compute for the correct balance of Branch Account- to be
presented in the home office books?
71,995
Your answer
GHI Company established a sales agency in a different location. Upon the

establishment of the sales agency, the home office sent merchandise samples costing
P10,000 and a cash working fund of P50,000 to be maintained on the imprest basis.
During the month of June, the sales agency reported to the home office sales orders.
These were billed at P170,000, of which half was collected. The sales agency paid
expenses of P45,800 but was reimbursed by the home office. At the end of the month
there was no samples left. It was estimated that the gross profit on goods shipped to
fill sales agency sales orders averaged 60% of sales. What is the net income of the
sales agency for the current month?
56,000
Your answer
23,750
Your answer
24700
Your answer

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MULTIMULTIPLE CHOICE (THEORY)

Choose the best answer.

Which of the following accounts is reciprocal account to the Investment in Branch

PLE CHOICE (PROBLEMS)

Use the following information for the next 5 questions

How much is the true profit of the branch?

GHI Company established a sales agency in a different location. Upon the

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