7THPICPA

NATIONAL ACCOUNTING
QUIZ SHOWDOWN
Visayas Eliminations
EASY ROUND
 Easy Round | Question #1
Which of the following statements is/are false?
I. An entity that avails the itemized deduction on the first
quarter of its taxable year may still avail the OSD on the
second quarter of the same taxable year. However, upon
availment of the OSD, the entity shall irrevocably apply it to
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its third quarter ITR and annual ITR.
II. The election to claim either the OSD or the itemized
deduction for the taxable year must be signified by Show Answer
checking the appropriate box in the income tax return filed
for the first quarter of the taxable year adopted by the
taxpayer. I only
 Easy Round | Question #2
In PFRS 9 Financial Instruments, if the entity transfers
substantially all the risks and rewards of ownership of the
financial asset, the entity

a. shall derecognize the financial asset.

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b. shall derecognize the financial asset and recognize separately as assets
or liabilities any rights and obligations created or retained in the transfer. Show Answer

c. shall continue to recognize the financial asset.

d. shall continue to recognize the financial asset but also recognize as

liabilities any rights created or retained in the transfer.
 Easy Round | Question #3
On January 2, 2014, Lea Company purchased land for
P450,000, from which it is estimated that 400,000 tons of
ore could be extracted. It estimates that it will cost P80,000
to restore the land, after which it could be sold for P30,000. End
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During 2014, the company mined 80,000 tons and sold
50,000 tons. During 2015, the company mined 100,000 tons
and sold 120,000 tons. At the beginning of 2016, the
company spent an additional P100,000, which increased Show Answer
the reserves by 60,000 tons. In 2016, the company mined
140,000 tons and sold 130,000 tons. The company uses
FIFO cost flow assumption. The depletion for 2015 is - P125,000
__________________.
 Easy Round | Question #4
BCP Corporations common stocks currently sell for P75 per
share. Floatation cost is 4.5%. In the past, the company paid
dividends of P3.50 per share. The next dividend would be
P3.85 per share. Using the dividend growth model, the cost End
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of retained earnings is _____. (Round your answers up to
two decimal %)

Show Answer

15.13%
 Easy Round | Question #5
In auditing bank reconciliation, which of the following is/are
false?
I. The auditor obtains copies of the entitys reconciliation
and agrees the bank balance to the bank confirmation and
the book balance to the general ledger.
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II. The auditor note the date on which outstanding items
are shown on subsequent bank statements and obtain
explanations for all material items cleared within the Show Answer
reasonable time of the date of receipt of the cash or the
drawing of the checks.
II only
 Easy Round | Question #6
Amara, Tatia and Katherine sharing profits and losses 5:3:2,
have capital credit balances of P400,000, P300,000 and
P200,000, respectively. They decided to admit a new
partner, Elena to a 30% interest in the partnership upon
Elenas investment of an amount equal to 5/6 of her capital
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credit with no asset adjustment recognized. Immediately
after the admission of Elena, the capital credit balance of
Tatia will be _____________________. Show Answer

P282,000
 Easy Round | Question #7
Fill in the blank.
In a contract of ________________________, commonly
known as hypoteca, the debtor turns over the possession
and cultivation of the land to the creditor, including all the
fruits or harvest of the property in lieu of interest due to
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the latter.

Show Answer

Antichresis
 Easy Round | Question #8
Which is/are FALSE?
I.

II.
In a business combination, any gain on bargain
purchase shall be recognized in profit or loss.
Acquisition accounting requires an acquirer to be
identified for every business combination.
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III. PRFS 3 (Business Combination) applies to
combination of entities or businesses under common
control. Show Answer
IV. An acquirer can obtain control of an acquiree by
contract alone, even without consideration.
III only
 Easy Round | Question #9
Careful Co.s break-even point is P150,500 and its unit
contribution margin is P2.3. Operating results for 2014
show a net income of P27,000. Assuming that the unit price
was P5.50, what was the sale revenue for 2014 rounded to End
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the nearest hundred peso?

Show Answer

P215,100
 Easy Round | Question #10
Your audit of the RMV Corp.s cash in bank account revealed the following information:
The unadjusted balance per bank statement on November 30, 2013 was at P435,600.
The unadjusted balance per book on December 31, 2013 was at P289,200
November bank credits included a customer note collected by the bank at P138,000
and a P75,000 deposit of AMV Corp., erroneously credited by the bank to RMV Corp.s
account.
November bank deposits included a P9,000 bank service charge and a P25,000
customer check returned by the bank marked NSF.
November deposit in transit was a P125,000 while outstanding checks was at
P90,000, which included a P10,000 check certified by the bank at the request of RMV
Corp.
A P52,000 collection check from customer was recorded by the company as P25,000
in November.
 Easy Round | Question #10
All reconciling items in the month of November were recorded in
the books in the month of December.
A P40,000 depositors note was charged by the bank in December
along with a P12,000 December bank service charge.
Among December bank credits was P100,000 bank credit for a
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loan proceeds from the same bank.
A P32,000 check issued to a supplier was recorded by the
company as P23,000 in December. Show Answer
The bank statement for December showed total credits at
P2,140,000 and total debits at P1,890,000.
The cash records for December showed total collections at
P405,600
P2,400,000 and a total disbursement at P1,900,000.
What is the correct cash balance as of November 30, 2013?
AVERAGE ROUND
 Average Round | Question #1
Maleficent, Aurora and Stefan are partners with initial
capital balances on January 2, 2014 of P70,000, P84,000
and P56,000, respectively. Their loss sharing ratio is 3:5:2.
On July 1, 2014, Maleficent retires from the partnership
because she felt betrayed on the partnership. On the date
of retirement, the partnerships net profit from operations
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is P48,000. The partners agreed further to pay Maleficent
P76,560 in settlement of her interest. How much will be the Show Answer
capital of Aurora after the retirement of Maleficent?

P108,864
 Average Round | Question #2

He is the person named by the drawee or indorser as the

one whom the holder may resort in case of need, that is, in
case the bill is dishonored by non-payment or non-
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acceptance.

Show Answer

Referee in case of need

 Average Round | Question #3
DARREN Co. started its business on January 5, 2014. After considering the
collections experience of other companies in the industry, the company decided
to recognized doubtful accounts expense at 5% credit sales. The balance of the
Allowance for doubtful accounts was a credit of P225,000 after recording
estimated doubtful accounts expense for the year and after writing-off
_____?______ , of uncollectible accounts. No recoveries of previously written-
off accounts were made.

Your analysis of the companys accounts revealed that merchandise purchased in

2014 amounted to P8.1M and ending Merchandise inventory was P1.35M.
Goods were sold at 40% above cost. 80% of total sales were on account. Total
collections from customers were P8M, which included collection of cash sales.
There were no discounts nor returns and allowances for the period.
 Average Round | Question #3
An aging schedule of the accounts receivable as of December 31, 2014
revealed the following information:

Classification
Current
60 days past due
More than 60 days past due
% of the total balance per books
50%
25%
20%
% uncollectible
2%
20%
50%
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Additional accounts which 5%
are definitely worthless
Show Answer
What is the correct allowance for doubtful accounts expense per audit as
of 12/31/2014?
P207,520
 Average Round | Question #4
The Heart Company has the following budget for the coming year:

Fixed costs P80,000

Subcontracting costs (variable)

Other variable costs

Sales price

Budgeted production and sales

P4/unit

P2/unit

P10

25,000 units
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As an alternative to sub-contracting, the company can leave a plant for the Show Answer
year for P122,400. Total variable costs under this arrangement would be
P2.40/unit. What is the indifference point between the sub-contracting
plan and the lease plan?
11,778 units
 Average Round | Question #5

In 2013, Silvers wife died of a car accident. His dependents are as

follows:
Pipay, child, 22, employed on April 12, 2013
Trixie, child 18, married on January 31, 2013
Zeus, child, 17, gainfully employed on November 1, 2013
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Nimbus, child, 15, afflicted with dengue on May 14, 2013
Storm, child, 13, died of an accident in 2013
Maya, sister, 28, paralytic Show Answer
From the above dependents, Silver can claim additional
exemption in 2014 for income tax purposes from whom? (Select
one or more names) Nimbus only
 Average Round | Question #6
Which of the following statements is/are true?
I. Demolition costs of the old building can be considered

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as part of costs of site preparation mentioned under PAS 16.17(b)
and, therefore, may be capitalized
II. If the land and building purchased in a lump sum price
will be subsequently measured using the fair value model, the
land and building will be classified as two separate items under
Investment Property at their allocated cost determined using the
relative fair value.
III. As the entity, at date of acquisition, has decided to Show Answer
initially use the property as owner-occupied property, the land
and building acquired in lump sum price will be classified as two
separate items under Plant, Property and Equipment measured at I and III only
their allocated cost determined using the relative fair value
method.
 Average Round | Question #7

PSRE 2400 (Engagements to Review Financial Statements)

applies to?

a. Reviews of historical financial or other information of an audit client.

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b. Reviews of historical financial or other information by a practitioner
other than the entitys auditor. Show Answer
c. Reviews of any historical financial or other information by a practitioner
other than the entitys auditor.

d. Reviews of any historical financial statements of an audit client.

 Average Round | Question #8

On December 1, 2014, H Co. (reporting entity) sells inventory

costing P750,000 to A Co. (40% owned and considered associate
of H Co.) for P1 million. On January 10, 2015, A Co. sells the
inventory to a third party for P1.2 million. What adjustments are
made in the group financial statements of H at December 31, 2014
and December 31, 2015? (Indicate the journal entry and the
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respective amounts)
Show Answer

Revenue 400,000
Cost of sales 300,000
Investment in A 100,000
 Average Round | Question #9
Hiccup Educational Supply, VAT registered, is engaged in the
business of selling books, school supplies and gift items.
The following are the record for the purchases and sales
during the month of May (inclusive of VAT)

Sale of school supplies P560,000

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Sale of books 200,000
Sale of gift items 336,000 Show Answer
Purchase of school supplies and gift items 406,000
Purchase of books 176,000
Purchase of computer used in taxable & exempt
P3,619.20
transactions 42,224
The creditable input tax on the purchase if computer is:
 Average Round | Question #10
On December 1, 2012, Duraplex Corporation acquired all the assets and
liabilities of Sentura Corporation with Duraplex issuing 200,000 shares to acquire
these net assets. The fair value of the Senturas assets and liabilities at this date
were:
Cash P100,000
Furniture and fittings 40,000
Accounts Receivable 10,000
Plant 250,000
Accounts Payable 30,000
Current Tax Liability 16,000
Provision for annual leave 4,000
 Average Round | Question #10
The financial year for Duraplex Corporation is January to
December. The fair value of each Duraplex Corporation
share at acquisition date is Php1.90. At acquisition date,
the acquirer could only determine a provisional fair value
for the plant. On March 1, 2013, Duraplex received the
final fair value from the independent appraisal, the fair
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value at acquisition date being Php274,000.
Show Answer
Assuming the plant had a further five-year life from the
acquisition date, how much would be charged to Retained
Earnings, beginning on January 1, 2013 as a result of
zero
adjustment to depreciation due to provisional accounting?
DIFFICULT ROUND
 Difficult Round | Question #1
Ms. PC is contemplating whether to investigate the
efficiency variance in its variable manufacturing costs. The
investigation will cost P75,000. If the production
departments are formed to be operating improperly, the
company will incur P100,000 (in addition to the cost of
investigation) to correct the operations.
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If the production departments are operating improperly
and Ms. PC fails to investigate, operating costs from various Show Answer
inefficiencies are expected to amount to P150,000.
Ms. PC would be indifferent between the two actions
investigate and do not investigate if the probability of
66.67%
improper operations is _________________
 Difficult Round | Question #2

Which of the following statements is/are false?

I. Acts and practices under the Disbursement Acceleration
Program (DAP) are unconstitutional.
II. The use of unprogrammed funds despite the absence of a
certification by the Treasurer is considered void.
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Show Answer
None of the above
 Difficult Round | Question #3
The Revenge Builders Company enters into a contract on January
1, 2014, to construct a 10-storey building for P16,000,000. During
the construction period, many change orders are made to the
original contract. The following schedule summarizes these
changes made in 2014: (Use percentage of completion method)
Cost Incurred Estimated Cost to Contract Price
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2014 Complete
Basic contract P3,200,000 P11,200,000 P16,000,000
Change order no. 1 20,000 20,000 50,000 Show Answer
Change order no. 2 0 20,000 0
Change order no. 3 120,000 120,000 Still to be negotiated, at
least cost
Change order no. 4 50,000 0 P100,000 P376,922
Realized gross profit for the year ended December 31, 2014
amounts to ____________.
 Difficult Round | Question #4
On the same date an individual sold two (2) parcel of land in the
Philippines.

Land 1
Selling price (sold thru a real stock broker)
Fair market value at the time of sale
P3,000,000
3,200,000
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Commission paid to the broker 80,000
Cost of land 1 (excluding brokers commission) 1,000,000
Show Answer
Land 2
Selling price (direct sale to a buyer at its fair market value)
P3,000,000
P367,200
Fair market value when inherited 3,100,000
How much is the capital gains tax?
 Difficult Round | Question #5

A Corporation has 15 directors as provided in the Articles of

Incorporation. Seven months after the election, 3 directors died
and 2 resigned. For quorum purposes, the board needs how many
directors?
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Eight (8). Unless the Articles or the by-laws provide for a greater
majority, a majority of the number of directors or trustees as fixed Show Answer
in the Articles shall constitute a quorum. (Section 25 of the
Corporation Code of the Philippines)
 Difficult Round | Question #6

IFRS 15 Revenue from Contracts with Customers is mandatorily

effective for IFRS preparers when?
(Identify the effective date)
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Show Answer
January 1, 2017
 Difficult Round | Question #7
The following three markets exist for Entity A's fleet of vehicles. Entity A has the
ability to transact in all three markets (and has historically done so). As of the
measurement date, the entity has 100 vehicles (same make, model and mileage)
that it needs to measure at fair value. Volumes and prices in the respective
markets are as follows:

Market Price per car (P) Transaction costs in the Transportation costs The entitys volume for the Total market-based
market (P per car) asset in the market (based on volume for the
(P per car) history and/or intent) asset

A 30,000 4,500 3,000 60% 15%

B 25,000 1,667 5,000 25% 75%
C 20,000 2,000 2,000 15% 10%
 Difficult Round | Question #7

Determine the fair value of the 100 vehicles based on PFRS 13

Fair Value Measurement.

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P2,000,000 Show Answer
 Difficult Round | Question #8
As a result of sampling procedures applied as a test of control, an
auditor incorrectly assesses control risk lower than appropriate.
Which of the following is the most likely explanation for this
situation?

a. The deviation rate in the auditors sample exceeds the tolerable rate,
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but the deviation rate in the population is less than the tolerable rate.

b. The deviation rate in the auditors sample is less than the tolerable rate,
Show Answer
but the deviation rate in the population exceeds the tolerable rate.

c. The deviation rates of both the auditors sample and population are less
than the tolerable rate.

d. The deviation rates of both the auditors sample and the population
exceed the tolerable rate.
 Difficult Round | Question #9
On January 1, 2009, an entity invested P1 million in a loan with a
par value of P1 million. The loan pays interest at 7.5% on
December 31 annually in arrears and is to be redeemed at par on
December 31, 2018. The entity accounts for the loan at amortized
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On January 1, 2014, it unconditionally sells the right to receive the
remaining five interest payments to a bank. The derecognition
provisions of IFRS 9 are applied to the interest payments as an Show Answer
identifiable part of the asset, leading to the conclusion that they
are required to be derecognized. The current market interest rate
that would be available to the borrower is 5%.
P31,713
Determine the gain (loss) on disposal.
 Difficult Round | Question #10
Manolo, Jane, Joshua and Loisa own a publishing company
operating as a partnership. Their agreement includes the following:

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Manolo will receive a salary of P20,000 and a bonus of 3% of
income after all the bonuses
Jane will receive a salary of P10,000 and a bonus of 2% of income
after all the bonuses
All partners are to receive the following: Manolo P5,000; Jane
P4,500; Joshua P2,000; and Loisa P4,700, representing 10%
interest on their average capital balances. Show Answer
Any remaining profits are to be divided equally among partners
Partnership reports a profit of P40,000.
How much is Janes share in the profit if the profit is distributed in
the following order of priority: interest on invested capital, then P12,560
bonuses, then salary, and then according to profit and loss
percentage?
CLINCHER ROUND
 Clincher Round | Question #1
Insta-Gram began operations on June 1, 2014. On that, Insta and
Gram have capital credits of P175,000 and P240,000,
respectively. The partnership has the following profit-sharing
plan:
10% interest on partners capital balances at the end of the
year
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P75,000 and P60,000 annual salaries of Gram and Insta,
respectively
Remaining profit will be divided to Insta and Gram on a Show Answer
60:40 ratio, respectively
During the year, Insta invested P150,000 worth of merchandise
P426,625
and withdrew P40,000 cash, while Gram invested P120,000 cash.
The partnership earned a profit of P266,375 during the year.How
much is Instas capital balance at the end of 2014?
 Clincher Round | Question #2
On December 31, 2011, Solid Bank has a loan receivable of
P4,000,000 from a borrower that it is carrying at face value
and is due on December 31, 2016. Interest on the loan is
payable 9% each December 31. The borrower paid the
interest due on December 31, 2011 but informed the bank
that it would probably miss the next two years interest
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payments because of financial difficulties. After that the
borrower is expected to resume its annual interest payment Show Answer
but it would make the principal payment one year late, with
interest paid for that additional year at the time of principal
P634,640
payment. What is the loan impairment loss to be
recognized on December 31, 2011?
 Clincher Round | Question #3
Standard direct labor hours 10,000
Standard direct labor rate 3.75
Actual direct labor rate 3.50
Direct labor usage (efficiency) variance unfavorable
4,200 End
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What were the actual hours worked, round to the nearest
hour? Show Answer

11,120 hours
 Clincher Round | Question #4
Which of the following is/are false about documentation in

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auditing cash?

I. Identification of the nature, timing and extent of procedures

performed and conclusions reached with respect to the
procedures performed, together with a conclusion statement with
respect to cash.
II. Identification of problems encountered and bases of resolution.
III. If appropriate, documentation of investigations of usual cash Show Answer
disbursements, transfers between bank accounts or operating
units, and deposits in transit
III only
 Clincher Round | Question #5
E Company is to construct an electric plant in towns of Cebu
and Palawan. The following information are available.

Contract price
Costs incurred to date
Cebu
10,837,625
6,927,918
Palawan
7,609,192
7,719,516
End
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Estimated costs to complete 3,463,959 1,102,788
Billings during the year 7,827,618 1,672,918
Collections during the year 6,872,162 1,928,632 Show Answer

Compute the amount of gross profit/loss to be recognized

P915,947
using the percentage of completion method.
 Clincher Round | Question #6

Belgian Company provided fringe benefit to its managerial

employees in the amount of P272,000 and to its rank and
file employees amounting to P100,000. The deductible
expense by Belgian Company is: End
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P500,000
Show Answer
FBT to managerial employees P272,000
Divide 68% 68%_
Gross up amount P400,000
FBT to rank and file employees 100,000
Total Deductible Expense P500,000
 Clincher Round | Question #7

It means transfer of possession, actual or constructive, from one

person to another. End
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Show Answer
Delivery
 Clincher Round | Question #8
The Tiger Corporation included the following in its unadjusted trial balance as of
December 31, 2012:
Inventory, 12/31/11
Cost P19,450,000
NRV 19,300,000
Purchases 127,850,000

Additional information:
The inventory at December 31, 2012 was counted at a cost of P8.5 million. This
includes P500,000 of slow moving inventory that is expected to be sold for
P300,000.
 Clincher Round | Question #8
Sales include P8 million for goods sold in December 2012

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for cash to Beer Finance Company. The cost of these goods
was P6 million. Beer Finance Company has the option to
require Tiger to repurchase these goods within one month
of year-end at their original selling price plus a facilitating
fee of P250,000.
The Companys accounting policy is to present cost of
writing down inventory to NRV as part of cost of sales. Show Answer

The cost of sales for the year ended December 31, 2012 is P132,850,000
 Clincher Round | Question #9
According to PAS 19, Employee Benefits, actuarial gains and losses
are comprised of:

I. Experience adjustments
II. Effects of changes in actuarial assumptions
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III. Interest income from actuarial gains and losses

I and II Show Answer

Par. 7 of PAS 19, Employee Benefits, provides:
(a) Actuarial gains and losses comprise:
experience adjustments (the effects of differences between the previous
actuarial assumptions and what has actually occurred); and
(b) the effects of changes in actuarial assumptions
 Clincher Round | Question #10
The following T-account summarizes the transactions affecting the accounts
receivable of FLASH Company for 2014:
Accounts Receivable
Beginning balance after deducting credit Collections from customers, including
balances of P3,000 P 53,000 Overpayment of P5,000 P620,000
Charge sales 625,000 Write offs 3,500

Charge to goods out on consignment 5,000 Merchandise returns 2,500

Shareholders subscriptions 30,000 Allowance to customers for shipping damages 1,500

Accounts written-off but recovered 1,000 Collections on carrier claims 1,000

Cash paid to customer for Jan. 1 credit Collection on subscription 15,000

Balance 2,500
Deposit on contract 15,000

Claim against common carrier for shipping

damages 1,500
IOUs from employees 500

Cash advance to affiliate 10,000

Advances to supplier 5,000

 Clincher Round | Question #10
Compute for the correct balance of accounts receivables.

P59,500
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Show Answer
 Clincher Round | Question #11
A principal auditor decides not to refer to the audit of another CPA who
audited a subsidiary of the principal auditor's client. After making inquiries
about the other CPA's professional reputation and independence, the
principal auditor most likely would

a. Contact the other CPA and review the audit programs and working
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papers pertaining to the subsidiary

b. Obtain written permission from the other CPA to omit the reference in
Show Answer
the principal auditor's report

c. Document in the engagement letter that the principal auditor assumes

no responsibility for the other CPA's work and opinion

d. Add an explanatory paragraph to the auditor's report indicating that the subsidiary's
financial statements are not material to the consolidated financial statements.
 Easy Round | Question #1

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animation.

Show Answer

a. c.

b. d.
 Easy Round | Question #1

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a. c.

b. d.
 Easy Round | Question #1

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a. c.

b. d.