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B-ACTG123 BSM11 2nd Sem (2021-2022)

Standalone assessment

SA 1
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Question 1
The allowance method of recognizing bad debt expense is generally considered a generally accepted accounting principle. What 2 conditions must be met before the
allowance method can be used?

Response: bad debts must be expected and material

Correct answer: Bad debts must be probable and measurable

Score: 0 out of 1 No

Question 2
Candelaria Company accepted from a customer a 4,000,000m 90-day, 12% interest-bearing note dated August 31, 2021. On September 30, 2021, the entity discounted the
note with recourse at the Imus Rural Bank at 15%. However, the proceeds were not received until October 1, 2021. The discounting with recourse is accounted for as a
conditional sale with recognition of contingent liability.

What amount should be recognized as loss on note receivable discounting?

Response: 17,000

Correct answer: 23,000

Score: 0 out of 1 No

Question 3
Loans and receivables are non-derivative financial assets

Response: with fixed or determinable payments that are not quoted in the active market

Correct answer: with fixed or determinable payments that are not quoted in the active market

Score: 1 out of 1 Yes

Question 4
Tigreal Company started business at the beginning of current year. The entity established an allowance for doubtful accounts estimated at 5% of credit sales.

During the year, the entity wrote off P50,000 of uncollectible accounts. Further analysis showed that merchandise purchased amounted to P9,000,000 and ending
merchandise inventory was P1,500,000. Goods were sold at 40% above cost.

The total sales comprised 80% sales on account and 20% cash sales. Total collections from customers, excluding cash sales, amounted to P6,000,000.

What is the net realizable value of accounts receivable at year-end?

Response: P1,980,000

Correct answer: P1,980,000

Score: 1 out of 1 Yes

Question 5
Which criterion is excluded in the definition of cash equivalents under PAS7?

Response: investment in high-quality instruments

Correct answer: investment in high-quality instruments

Score: 1 out of 1 Yes

Question 6
Abel Company provided the following account balances on December 31, 2019

Cash in bank. -->. P 2,250,000

Cash on hand --> 125,000
Cash restricted for addition to plant expected to be disbursed in 2020 --> 1,600,000
Cash in money market account --> 750,000
Treasury bill purchased Nov. 1, 2019 maturing on Jan. 31, 2020 --> 3,500,000
Treasury bill purchased Dec. 1, 2019 maturing Mar. 31, 2020 --> 2,000,000

Cash in bank included P600,000 of compensating balance against short-term borrowing arrangement. The compensating balance is not legally restricted as to withdrawal.
What total amount should be reported as cash and cash equivalents on December 31, 2019?

Response: P 6,625,000

Correct answer: P 6,625,000

Score: 1 out of 1 Yes

Question 7
It is a financing arrangement whereby one party formally transfers rights to accounts receivable to another party in consideration for a loan

Response: assignment

Correct answer: assignment

Score: 1 out of 1 Yes

Question 8
Paquito Company provided the following data for the month of January:

> Balance per book, January 31 - P3,130,000

> Balance per bank statement, January 31 - P3,500,000
> Collection on January 31 but undeposited - P550,000
> NSF checks received from a customer returned by the bank on February 5 with the January bank statement - P50,000
> Checks outstanding on January 31 - P650,000
> Bank debit memo for safety deposit box rental not recorded by depositor - P5,000
> A creditor check for P30,000 was incorrectly recorded in the depositor’s book as 300,000
> A customer check for P200,000 was recorded by the depositor as 20,000
> The depositor neglected to make an entry for a check drawn in payment of an account payable - P125,000

What amount should be reported as adjusted cash in bank on January 31?

Response: P3,400,000

Correct answer: P3,400,000

Score: 1 out of 1 Yes

Question 9
David Company sold goods to wholesalers on terms 2/15, n/30. The entity had no cash sales but 50% of the customers took advantage of the discount. The entity uses the
gross method of recording sales and accounts receivable. An analysis if the trade receivables at year-end revealed the following:

AGE AMOUNT COLLECTIBLE

0 -15 days 1,000,000 100%
16 – 30 days 700,000 95%
31- 60 days 200,000 90%
Over 60 days 100,000 50%
TOTAL 2,000,000

Assuming that there is a P 15,000 credit balance for allowance for doubtful accounts, what should be the net realizable value of accounts receivable?

Response: P 1,880,000

Correct answer: P 1,885,000

Score: 0 out of 1 No

Question 10
Which of the following statements is true when accounts receivable are factored without recourse?

Response: the factor assumes the risk of collectibility and absorbs any credit losses in collecting the accounts receivable
Correct answer: the factor assumes the risk of collectibility and absorbs any credit losses in collecting the accounts receivable

Score: 1 out of 1 Yes

Question 11
Where the operating cycle extends beyond one year because of normal credit terms, as in the case of installment sales of household appliances:

Response: It is proper to classify the entire receivables as current assets with disclosure of the amount not realizable within one year, if material.

Correct answer: It is proper to classify the entire receivables as current assets with disclosure of the amount not realizable within one year, if material.

Score: 1 out of 1 Yes

Question 12
July Company had the following account balances on December 31, 2019

Cash in bank --> P 5, 200,000

Cash on hand--> 350,000
Cash fund set aside for duividend payable in 2020 --> 200,000
Cash fund set aside for land acquisition in 2020 --> 1,500,000

The cash in bank included P 250,000 compensating balance against short term borrowing and is not legally restricted as to withdrawal. the cash on hand included a check of
P100,000 check payabke to the entity dated January 3, 2020.

What amount should be recported as cash under current assets on December 31, 2019?

Response: P 5,750,000

Correct answer: P 5,650,000

Score: 0 out of 1 No

Question 13
Which of the following should be excluded from cash and cash equivalents?

Response: time deposit which matures in one year

Correct answer: time deposit which matures in one year

Score: 1 out of 1 Yes

Question 14
Lolo Company reported the following information in relation to cash on December 31, 2020:

-Checkbook balance, P2,000,000

-Undeposited collections, P200,000
-Customer check amounting to P100,000 dated January 2, 2021 was included in the December 31, 2020 checkbook balance.
-Another customer check for P250,000 deposited on December 22, 2020 was included in the checkbook balance but returned by the bank for insufficiency of fund. This
check was redeposited on December 26, 2020 and cleared 2 days later.
-A P 200,000 check payable to supplier dated and recorded on December 30, 2020 was mailed on January 16, 2021
-A petty cash fund of P25,000 comprised the following on December 31, 2020:
Coins and currencies P 2,500
Petty cash vouchers 20,000
Refundable deposit for returnable containers 2,500
-A check of P20,000 was drawn on December 31, 2020 payable to petty cashier.

What total amount should be reported as Cash on December 31, 2020?

Response: P 2, 322,500

Correct answer: P 2, 322,500

Score: 1 out of 1 Yes

Question 15
At the beginning of the current year, Goretti Company had a credit balance of 260,000 in the allowance for uncollectible accounts. Based on past experience, 2% of credit
sales would be uncollectible.
During the current year, the entity wrote off 325,000 of uncollectible accounts. Credit sales for the year totaled 9,000,000.

What amount should be reported as allowance for uncollectible accounts at year end?

Response: 115,000

Correct answer: 115,000

Score: 1 out of 1 Yes

Question 16
If a company employs the gross method of recording receivables from customers the sales discounts take should be reported as

Response: deduction from accounts receivable in getting net realizable value

Correct answer: a deduction from sales in the income statement

Score: 0 out of 1 No

Question 17
Radiant Company accepted from a customer a P2,000,000, 90-day, 12% note dated August 31, 2021.

On September 30, 2021, the entity discounted the note at 15% without recourse. The proceeds were only received on October 1, 2021.

What amount should be reported as loss on notes receivable discounting?

Response: P 8,500

Correct answer: P 11,500

Score: 0 out of 1 No

Question 18
JH, Inc. prepared the following bank reconciliation on June 30:

Balance per bank - P9,800,000

Deposits in transit - P400,000
Outstanding checks - P1,400,000
Balance per book - P8,800,000

There were total deposits of P6,500,000 and charges for disbursements of P9,000,000 for July per bank statement. All reconciliation items on June 30 cleared the bank on
July 31.

Checks outstanding amounted to P1,000,000 and deposits in transit totaled P1,200,000 on July 31.

What is the adjusted cash in bank on July 31?

Response: P7,500,000

Correct answer: P7,500,000

Score: 1 out of 1 Yes

Question 19
In order to be classified as cash equivalent, an investment must have a maturity value of

Response: three months or less

Correct answer: three months or less

Score: 1 out of 1 Yes

Question 20
The internal control feature that is specific to petty cash is:

Response: Imprest system

Correct answer: Imprest system

Score: 1 out of 1 Yes

Question 21
Mixxiw Company sold accounts receivable without recourse with face amount of 6,000,000. The factor charged 15% commission on all accounts receivable factored and
withheld 10% of the accounts factored as protection against customer returns and other adjustments. The entity had previously established an allowance for doubtful
accounts of 200,000 for these accounts. By year-end, the entity had collected the factor's holdback there being no customer returns and other adjustments.

What amount of cash was initially received from factoring?

Response: 4,500,000

Correct answer: 4,500,000

Score: 1 out of 1 Yes

Question 22
On June 30, 2020, Chichi, Inc. discounted at the bank a customer's P6,000,000, 6-month, 10% note receivable dated April 30, 2020. The bank discounted the note at 12%.
Based on this, what is the loss on note receivable discounting?

Response: P52,000

Correct answer: P52,000

Score: 1 out of 1 Yes

Question 23
Choles Company factored accounts receivable with the bank, with recourse, P 1,000,000.
Finance charge is 5% and factor's holdback is 10% to cover sales returns, discounts and allowances.
The transaction is considered as sale subject to recourse for non-payment. The factor estimated the recourse obligation at P25,000.

What total amount should be recognized initially as loss on factoring?

Response: P 100,000

Correct answer: P 75,000

Score: 0 out of 1 No

Question 24
Angela Company reported the following bank reconciliation for the month of November:

Balance per bank statement on November 30 - 2,000,000

Deposit in transit - 415,000
Outstanding checks - (630,000)
Bank credit recorded in error - (5,000)
Balance per book November 30 - 1,780,000

Data per bank statement for the month of December:

December deposits - 2,600,000
December disbursements - 2,200,000

All items that were outstanding on November 30 cleared through the bank in December, including the bank credit. In addition, checks of 250,000 were outstanding on
December 31.

What is the balance of cash per book on December 31?

Response: 2,400,000

Correct answer: 2,150,000

Score: 0 out of 1 No

Question 25
What amount should be reported as adjusted cash in bank on June 30?

Response: 1,950,000

Correct answer: 2,200,000

Score: 0 out of 1 No

Question 26
A bank reconciliation is

Response: a schedule that accounts for the differences between an entity's cash balance as shown in the bank statement and the cash balance shown in the general ledger

Correct answer: a schedule that accounts for the differences between an entity's cash balance as shown in the bank statement and the cash balance shown in the general
ledger

Score: 1 out of 1 Yes

Question 27
BDO Company provided the following data:

Savings Account - P10,000,000

Treasury Bills (3 months before maturity) - P1,000,000
3-month Time Deposit - P5,000,000
Current Account - P15,000,000

The cash in bank included P1,000,000 of compensating balance against short term borrowing arrangement on December 31, 2017. The compensating balance is not legally
restricted as to withdrawal. A check of P3,000,000 dated January 31, 2018 in payment of accounts payable was recorded and mailed on December 31, 2017.

What amount should be reported as Cash on December 31, 2017?

Response: P31,000,000

Correct answer: P28,000,000

Score: 0 out of 1 No

Question 28
Hilda Company revealed a balance of P8,200,000 in the accounts receivable control account at year-end. An analysis of the accounts receivable showed the following:

> Accounts known to be worthless - P100,000

> Advance payments to creditors on purchase orders - P400,000
> Advances to affiliated entities - P1,000,000
> Customers' accounts reporting credit balances arising from sales returns - (P600,000)
> Interest receivables on bonds - P400,000
> Trade accounts receivable - unassigned - P2,000,000
> Subscription receivable due in 30 days - P2,200,000
> Trade accounts receivable- assigned (Finance Company's equity in assigned accounts is P500,000) - P1,500,000
> Trade installments receivable due 1 - 18 months, including unearned finance charge of P50,000 - P850,000
> Trade accounts receivable from officers, due currently - P150,000
> Trade accounts on which postdated checks are held and no entries were made on receipt of checks - P200,000

What amount should be reported as trade accounts receivable at year-end?

Response: P4,650,000

Correct answer: P4,650,000

Score: 1 out of 1 Yes

Question 29
Short term non-interest bearing notes receivable are usually recorded at their

Response: maturity value

Correct answer: maturity value

Score: 1 out of 1 Yes

Question 30

Using the book to bank method, what is the balance per bank as of February 28?

Response: P70,000

Correct answer: P124,000

Score: 0 out of 1 No

Question 31
Kara Company provided the following information on December 31, 2019:

Cash on hand --> P 500,000

Petty cash fund --> 20,000
Security bank CA --> 3,000,000
BDO CA 1 --> 400,000
BDO CA 2 --> (50,000)
BSP Treasury bill - 60 days --> 4,000,000
BDP Treasury bill - 30 days --> 1,000,000

Response: P 8,070,000

Correct answer: P 8,070,000

Score: 1 out of 1 Yes

Question 32
Which of the following statements it not incorrect?

Response: Accounts receivable pledged should still be included in total accounts receivable.

Correct answer: Accounts receivable pledged should still be included in total accounts receivable.

Score: 1 out of 1 Yes

Question 33

What is the amount of deposits in transit on June 30?

Response: 0

Correct answer: 400,000

Score: 0 out of 1 No

Question 34
Pearl Co. maintains a checking account at the Union Bank. The bank provides a bank statement along with the canceled checks on the last day of each month. The July bank
statement included the following information:

Balance, July 1 275,000 Deposits 900.000

Checks processed 700,000 Service charge 15,000
NSF Check 60,000 Monthly automatic loan payment deduction by bank 50,000

Deposits outstanding totaled P 50,000 and all checks written by the depositor were processed by the bank except for check of P75,000.

A P100,000 July deposit from a credit customer was recorded as P10,000 debit Cash and credit Accounts receivable.

A check correctly recorded by the entity as P15,000 disbursements was incorrectly processed by the bank as P150,000 disbursement.

What is the cash balance per ledger on July 31?

Response: P 675,000

Correct answer: P 675,000

Score: 1 out of 1 Yes

Question 35
Pharsa Company provided the following data for the current year:

Allowance for doubtful accounts, January 1 - P180,000

Sales - P9,500,000
Sales return and allowances - P800,000
Sales discounts - P200,000
Accounts written off as uncollectible - P200,000

The entity provided for doubtful accounts expense at the rate of 5% of net sales.

What amount should be reported as allowance for doubtful accounts on December 31?

Response: P405,000

Correct answer: P405,000

Score: 1 out of 1 Yes

Question 36
Which of the following is not acceptable in estimating uncollectible accounts receivable?

Response: the estimate of uncollectible accounts is based on a percentage of sales for the period

Correct answer: no estimate of uncollectible accounts is made but accounts are written off when it is determined that the accounts cannot be collected

Score: 0 out of 1 No

Question 37
At the beginning of the current year, Goretti Company had a credit balance of 260,000 in the allowance for uncollectible accounts. Based on past experience, 2% of credit
sales would be uncollectible.
During the current year, the entity wrote off 325,000 of uncollectible accounts. Credit sales for the year totaled 9,000,000.

What amount should be reported as uncollectible accounts expense for the year?

Response: 180,000

Correct answer: 180,000

Score: 1 out of 1 Yes

Question 38
Deposits held as compensating balance

Response: none of these

Correct answer: none of these

Score: 1 out of 1 Yes

Question 39
Which is false regarding measurement of cash and cash equivalents?

Response: cash equivalents should be measured at maturity value meaning face value plus interest

Correct answer: cash equivalents should be measured at maturity value meaning face value plus interest

Score: 1 out of 1 Yes

Question 40
Sanely Company prepared the following bank reconciliation on December 31:

Balance per bank statement - 2,800,000

Add: Deposit in transit - 195,000, Checkbook printing charge - 5,000, Error made by Sanely in recording check issued in December - 35,000, NSF Check - 110,000
Total - 3,145,000
Less: Outstanding check - 100,000, Note collected by bank including 15,000 interest - 215,000
Balance per book - 2,830,000

The entity had cash on hand 500,000 and petty cash fund 50,000 on December 31.

What amount should be reported as cash in bank at year end?

Response: 2,895,000
Correct answer: 2,895,000

Score: 1 out of 1 Yes

Question 41
Leopard Co. prepared the following bank reconciliation on June 30

Balance per bank statement, June 30 --> P 1,500,000

Deposit in transit --> 200,000
Outstanding Checks -->. (450,000)
Balance per book, June 30--> P 1,250,000

The bank statement for the month of July showed the following:
Deposits, including P100,000 note collected for Leopard --> P4,500,000
Disbursements, including P 70,000 NSF check and P 5,000 service charge --> P3,500,000

All reconciling items on June 30 cleared through the bank in July.

The outstanding checks totaled P 300,000 and the deposit in transit amounted to P 500,000 on July 31.

What amount should be reported as adjusted Cash in bank balance on July 31?

Response: P 2,525,000

Correct answer: P 2,700,000

Score: 0 out of 1 No

Question 42
After being held for 60 days, a 120-day, 8% interest-bearing note receivable was discounted at the bank at 12%. The amount received by the bank is equal to

Response: maturity value less discount at 12%

Correct answer: maturity value less discount at 12%

Score: 1 out of 1 Yes

Question 43
A proof of cash would be useful for

Response: discovering cash receipts that have been recorded but have not been deposited

Correct answer: discovering cash receipts that have been recorded but have not been deposited

Score: 1 out of 1 Yes

Question 44
When examining the accounts of Leni Company, it is ascertained that balances relating to both receivables and payables are included in a single controlling account called
"receivables control" with a debit balance of 4,850,000. An analysis of the make-up of this account revealed the following:

After further analysis of the aged accounts receivable, it is determined that the allowance for doubtful accounts should be 200,000.

What amount should be reported as accounts payable?

Response: 4,800,000
Correct answer: 4,500,000

Score: 0 out of 1 No

Question 45
Sanely Company prepared the following bank reconciliation on December 31:

Balance per bank statement - 2,800,000

Add: Deposit in transit - 195,000, Checkbook printing charge - 5,000, Error made by Sanely in recording check issued in December - 35,000, NSF Check - 110,000
Total - 3,145,000
Less: Outstanding check - 100,000, Note collected by bank including 15,000 interest - 215,000
Balance per book - 2,830,000

The entity had cash on hand 500,000 and petty cash fund 50,000 on December 31.

What amount should be reported as cash at year end?

Response: 3,445,000

Correct answer: 3,445,000

Score: 1 out of 1 Yes