Beruflich Dokumente
Kultur Dokumente
P700,000
60,000
430,000
90,000
400,000
300,000
200,000
P100,000
P159,000
P103,000
P99,000
P49,000
Solution: C is correct
Unadjusted profit
(1) Write down of inventory to its NRV (20,000 19,000)
(2) Loss not probable no adjustment
(3) Non-adjusting event after the balance sheet date - no
adjustment
(4) Gain not virtually certain no adjustment
Adjusted profit
P100,000
(1,000)
P99,000
Page 1 of 49
P800,000
600,000
90,000
30,000
P80,000
P110,000
P140,000
P200,000
Solution: C is correct
Sales revenue
Less: Cost of goods sold
Less: Operating expenses
Amount taken to P&L
Amount taken to OCI
Total comprehensive income
P800,000
600,000
90,000
P110,000
30,000
P140,000
3. You are assigned to the audit of Canon Company who spent P12,000,000 during the current year
developing its new software package. Of this amount, P4,000,000 was spent before it was at the
application development stage and the package was only to be used internally. The package was
completed during the year and is expected to have a four year useful life. Canon Company has a policy of
taking a full-year's amortization in the first year. After the development stage, P50,000 was spent on
training employees to use the program. What amount should Canon Company report as an expense for the
current year?
A
.
B.
C.
D
.
P2,012,500
P2,050,000
P6,012,500
P6,050,000
Solution: D is correct
Amount spent before the development stage
Amount spent on training employees
Amortization of the software package
(12M 4M) / 4 years
Total expense to be recognized
P4,000,000
50,000
2,000,000
P6,050,000
Page 2 of 49
P400,000
275,000
225,000
P900,000
Assume cost percentage relationships as stated were correct. Which of the following adjusting journal
entries is correct?
A. Raw materials used
Direct labor
B. Direct labor
Raw materials used
C. Raw materials used
Direct labor
D. Direct labor
Raw materials used
P25,000
P25,000
P25,000
P25,000
P50,000
P50,000
P50,000
P50,000
Solution: B is correct
Factory overhead (75% of direct labor)
Divided by 75%
Direct labor, per recomputation
Direct labor, unadjusted
Adjustment to direct labor
P225,000
75%
300,000
275,000
P25,000
5. On June 1, 2008, Psy Corporation purchased as a long term investment 6,000 of the P1,000 face value, 8%
bonds of Lyre Corporation. Psy Corporation has the positive intention and ability to hold these bonds to
maturity. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on
December 1 and June 1. The bonds mature on June 1, 2014. On November 1, 2009, Psy Corporation sold
the bonds for a total consideration of P5,887,500. Based on the above and the result of your audit,
determine the following: (Round off present value factors to four decimal places) - the purchase price of
the bonds on June 1, 2008 is
A
.
B.
C.
D
.
P5,467,992
P5,467,992
P5,545,104
P5,436,894
Solution: A is correct
PV of the principal
(0.5568 x 6,000,000)
PV of the interest
P3,340,800
Page 3 of 49
2,127,192
P5,467,992
6. The Tiger Corporation included the following in its unadjusted trial balance as of December 31, 2012:
Inventory, 12/31/11
Purchases
P19,450,000
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.
Sales include P8 million for goods sold in December 2012 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.
The cost of sales for the year ended December 31, 2012 is
A P138,800,000
.
B. P133,000,000
C. P132,800,000
D P139.000.000
.
Solution: B is correct
Amount in thousands:
Inventory, beginning
Add: Purchases
Less: Inventory, ending
Cost of sales, unadjusted
Add: to adjust to net realizable value the items in ending inventory
Less: Item sold under repurchase agreement
Cost of sales, adjusted
P19,450
127,850
8,500
138,800
200
6,000
P133,000
7. Inventory per count on December 31, 2012 as reported by WS Company was at P560,000. The amount
does not include the following items:
A. Merchandise costing P27,500 received on January 3, 2013, and purchase invoice recorded on
January 5, 2013. Shipment was made on December 25, 2012, terms FOB destination.
B. Merchandise costing P20,000 was physically segregated in the warehouse and was set aside for
shipment to a customer (shipment scheduled on January 2, 2013). This will be invoiced to the
customer by then at P28,000.
C. Merchandise received on January 7, 2013, costing P17,000 was entered in the purchases journal on
January 8, 2013. Invoice shipment was made FOB shipping point on December 30, 2012.
What is the adjusted balance of inventories to be presented in the 2012 statement of financial position?
A P597,000
Page 4 of 49
P580,000
P578,000
P587,500
Solution: A is correct
Unadjusted inventory balance
Item (a) Goods received January 2013, under FOB Destination, thus item is
correctly excluded
Item (b) Goods still in warehouse but were not included in the count
Item (c) Goods received January 2013, under FOB shipping point. Items shipped
December 30, 2012
Adjusted inventory balance
P560,000
20,000
17,000
P597,000
8. Bohol Company leased office premises to Jill Company for a 5-year term starting January 2, 2013. Under the
terms of the lease, rent for the first year is P200,000 and rent for years 2 through 5 is P300,000 annually. As
an inducement to enter the lease, Bohol Company waives the first six month payments. Jill Company likewise
paid a P70,000 security deposit of which 80% is refundable at the end of the lease term. Furthermore,
contingent rent equal to 2% of sales in excess of P12,000,000 shall be paid by Jill Company. Bohol Company
incurred initial direct cost of P40,000 while JL Company paid P30,000 in costs in relation to the lease. In
2013, Jill Company reported sales of P13,000,000.
Rental expense to be included in Jill Companys 2013 income statement is
A 288,800
.
B. 268,800
C. 302,200
D 315,000
.
Solution: A is correct
Total rental payments for five years (P200,000/2) + (P300,000 x 4)
Divided by total years
Annual rental expense (fixed)
Contingent rent [(P13M P12M) x 2%]
Direct cost incurred (30,000 / 5)
Non-refundable portion of security deposit (P70,000 x 20%) / 5
Total rental expense
P1,300,000
5 years
P260,000
20,000
6,000
2,800
P288,800
9.
Disbursing Date
Receiving Date
(Month/Day)
(Month/Day)
Per Bank
Per Books
1.
12/31
12/30
12/31
12/30
2.
1/2
12/30
12/31
12/31
3.
1/3
12/31
1/21/2
4.
1/3
12/31
1/212/31
Based on the schedule of interbank transfers above, which of the cash transfers indicates an error in
cash cutoff at December 31, 2010?
a.
b.
c.
d.
Answer: C
10.
Based on the schedule of interbank transfers above, which of the cash transfers would appear as a
deposit in transit on the December 31, 2010 bank reconciliation?
a.
b.
c.
d.
Answer: D
Auditing Theory
1. Which of the following are the three principal methods in sample selection are specifically identified in PSA
530?
A. Statistical sampling, attribute sampling and haphazard sampling
B. Random number selection, systematic selection and haphazard selection
C. Sequential sampling, discovery sampling and statistical sampling
D. Sequential sampling, discovery sampling and random number selection
Page 6 of 49
Answer: C
(PSA 240, Auditors Responsibility to Consider Fraud in an Audit of Financial Statements)
Fraudulent financial reporting involves intentional misstatements or omissions of amount or disclosures in the
financial statements to deceive financial statement users. This may involve:
I.
Manipulations, falsification or alteration of records or documents.
II.
Misrepresentation in or intentional omission of the effects of transactions from records or documents.
III.
Recording of transactions without substance and
IV.
Intentional application of accounting policies
4. Which of the following is not true with reference to the Code of Professional Ethics for CPAs?
A. Acting as advocate of an audit client in resolution of a dispute or litigation that involves amounts material
to the financial statements of the audit client impairs CPAs independence.
B. A firm or network firm should not provide accounting and bookkeeping services for an audit client that is
not a listed entity.
Page 7 of 49
Answer: A
(PSA 610, Using the Work of Internal Auditors)
8. During an assessment of the risk associated with sales contracts and related commissions, which of the
following factors would most likely result in an expansion of the engagement scope?
A. An increase in product sales, along with an increase in commissions
B. An increase in sales returns, along with an increase in commissions
Page 8 of 49
A.
B.
C.
D.
10. Which of the following fraudulent entries is most likely to be made to conceal the theft of an asset?
Debit expenses, and credit the asset
Debit the asset, and credit another asset account
Debit revenue, and credit the asset
Debit another asset account, and credit the asset
Answer: A
(Sawyers Certified Internal Auditor Reviewer)
A is correct. Most fraud perpetrators would attempt to conceal their theft by charging it against an expense
account.
B is incorrect. Debiting the stolen asset account would be going in the wrong direction to conceal an asset theft.
C is incorrect. An entry decreasing revenue would be unusual and would stand out.
D is incorrect. This entry would not permanently conceal the fraud. It would simply shift the unreconcilable
balance to another asset account.
11. What computer-assisted audit technique would an auditor use to identify a fictitious or terminated employee?
A. Parallel simulation of payroll calculations.
B. Exception testing for payroll deductions.
C. Recalculations of net pay.
D. Tagging and tracing of payroll tax-rate changes.
Page 9 of 49
Solution: B
a) Incorrect. In a parallel simulation, data that were processed by the engagement clients system are
reprocessed through the auditors program to determine if the output obtained matches the output
generated by the clients system. This technique might identify problems with the clients processing but
would not identify a fictitious or terminated employee.
b) Correct. This type of computer-assisted audit technique (CAAT) program can identify employees
who have no deductions. This is important because fictitious or terminated employees will generally
not have any deductions.
c) Incorrect. A CAAT program can recalculate amounts such as gross pay, net pay, taxes and other
deductions, and accumulated or used leave times. These recalculations can help determine if the payroll
program is operating correctly or if employee files have been altered, but would not identify a fictitious or
terminated employee.
d) Incorrect. In this type of CAAT program, certain actual transactions are tagged, and as they proceed
through the system, a data file is created that traces the processing through the system and permits an
auditor to subsequently review that processing. This would not, however, identify a fictitious or terminated
employee.
12. A chief audit executive (CAE) suspects that several employees have used desktop computers for personal
gain. In conducting an investigation, the primary reason that the CAE chose to engage a forensic information
systems auditor rather than using the organizations information systems auditor is that a forensic information
systems auditor would possess:
A. Knowledge of the computing system that would enable a more comprehensive assessment of the computer
use and abuse.
B. Knowledge of what constitutes evidence acceptable in a court of law.
C. Superior analytical skills that would facilitate the identification of computer abuse.
D. Superior documentation and organization skills that would facilitate in the presentation of findings to
senior management and the board.
Solution: B
a) Incorrect. The organizations information systems auditor would probably have more knowledge of the
organizations computing systems.
b) Correct. The distinguishing characteristic of forensic auditing is the knowledge needed to testify as
an expert witness in a court of law. Although a forensic auditor may possess the other attributes
listed, the organizations information systems auditor may also possess these skills or knowledge
elements.
c) Incorrect. A forensic auditor would not necessarily have analytical or organizational skills that are superior
to those of the organizations auditor.
d) Incorrect. See answer c.
13. An audit committee is concerned that management is not addressing all internal audit observations and
recommendations. What should the audit committee do to address this situation?
A. Require managers to provide detailed action plans with specific dates for addressing audit observations
and recommendations.
B. Require all managers to confirm when they have taken action.
C. Require the chief executive officer to report why action has not been taken.
D. Require the chief audit executive to establish procedures to monitor progress.
Page 10 of 49
a)
b)
c)
d)
A service department's location is not well suited to allow adequate service to other units.
Employees hired for sensitive positions are not subjected to background checks.
Managers do not have access to reports that profile overall performance in relation to other benchmarked
organizations.
Management has not taken corrective action to resolve past engagement observations related to inventory
controls.
I and II only.
I and IV only.
II and III only.
II and IV only.
Incorrect. This is a symptom of weak controls for achieving organizational goals and objectives, but not
for safeguarding of assets.
Correct. This is a symptom of weak controls for safeguarding of assets.
Incorrect. This is a symptom of weak controls for achieving organizational goals and objectives, but not
for safeguarding of assets.
Correct. Management's failure to take corrective action on past engagement observations, which
related to safeguarding of assets, is a weakness related to safeguarding of assets.
19. The use of an analytical review to verify the correctness of various operating expenses would not be a
preferred approach if:
A. An auditor notes strong indicators of a specific fraud involving these accounts.
B. Operations are relatively stable and have not changed much over the past year.
C. An auditor would like to identify large, unusual, or non-recurring transactions during the year.
D. Operating expenses vary in relation to other operating expenses, but not in relation to revenue.
Solution: A
a) Correct. If the auditor already suspects fraud, a more directed audit approach would be
appropriate.
b) Incorrect. Relatively stable operating data is a good scenario for using analytical review.
c) Incorrect. Analytical review would be useful in identifying whether large, non-recurring, or unusual
transactions occurred.
Page 13 of 49
Prepare a flowchart.
Prepare a system narrative.
Perform a test of controls.
Perform a substantive test.
Solution: C
a) Incorrect. Flowcharts are most appropriate for studying internal control design. The audit objective is
whether the controls are in place and effective, which indicates the need for a test of controls.
b) Incorrect. System narratives are most appropriate for studying internal control design. The audit objective
is whether the controls are in place and effective, which indicates the need for a test of controls.
c) Correct. Tests of controls, also known as compliance tests, help an auditor determine whether
controls are being followed and are effective. For instance, a policy may require that all large
transactions be approved by a manager. As a test of controls, the auditor may sample large
transactions and review whether manager approval was obtained and whether the proposed
transaction meets all the criteria that the manager was supposed to verify.
d) Incorrect. Substantive tests are tests to determine whether an objective has been achieved and do not
necessarily test internal controls.
Management Accounting Services
1. Product cost under absorption costing is characteristically:
A
.
B.
C.
D
.
Solution: A is correct.
2. NFJPIA Co. is considering the following investment proposals. Rank the following proposals using the
profitability index (in order of the most profitable proposal down to the least profitable proposal).
Investment required
Present value of future net cash flows
A
.
A
160,000
192,000
B
200,000
300,000
C
120,000
168,000
D
150,000
240,000
D, B, C, A
Page 14 of 49
B, D, C, A
B, D, A, C
A, C, B, D
Solution: A is correct.
Profitability index is an investment appraisal technique calculated by dividing the present value of future cash
flows of a project by the initial investment required for the project. Profitability index of the above proposals are
as follows:
Decision Rule. Accept a project if the profitability index is greater than 1, stay indifferent if the profitability index
is zero and don't accept a project if the profitability index is below 1. The ranking of the proposals in terms of
preference using the profitability index is determined as follows.
A
192,000
160,000
1.2
B
300,000
200,000
1.5
C
168,000
120,000
1.4
D
240,000
150,000
1.6
Page 15 of 49
+3.94%
-4.73%
-5.68%
+4.22%
Solution: C is correct.
The dividend discount model (DDM) is a method of valuing a company based on the theory that a stock is worth
the discounted sum of all of its future dividend payments. In other words, it is used to value stocks based on
the net present value of the future dividends.
Using Dividend Discount Model given Po = D1/(k g). When k g = 11.5% - 3.2% = 8.3%, the price is given by
Po = D1/0.083. When the spread increases by 50 basis points and all else stays constant, the price becomes P1=
D1/(0.083 + 0.005) = D1/0.088. The percentage change in the price equals (P1 Po)/Po = (1/0.088
1/0.083)*0.083 = 0.083/0.088 1 = -5.68%. Thus, the stock price falls by 5.68% when the spread between k and
g increases by 50 basis points, all else equal.
4. Which of the following statements is true?
A
.
B.
C.
D
.
A firm with financial leverage has a larger equity multiplier than an otherwise identical firm
with no debt in its capital structure.
The use of debt in a companys capital structure results in tax benefits to the investors who
purchase the companys bonds.
All else equal, a firm with a higher debt ratio will have a lower basic earning power ratio.
All of the statements above are correct.
Solution: A is correct.
A firm with financial leverage means the firm uses debt for financing. Equity multiplier is a measure of financial
leverage, calculated as: Total Assets / Total Stockholders' Equity.
Like all debt management ratios, the equity multiplier is a way of examining how a company uses debt to finance
its assets. It is also known as the financial leverage ratio or leverage ratio. A higher equity multiplier indicates
higher financial leverage, which means the company is relying more on debt to finance its assets.
The use of debt provides tax benefits to the corporations that issue debt, not to the investors who purchase debt (in
the form of bonds).
The basic earning power ratio is calculated as the ratio of Earnings Before Interest and Taxes to Total Assets.
The higher the BEP ratio, the more effective a company is at generating income from its assets. BEP is useful for
comparing firms with different tax situations and different degrees of financial leverage. The basic earning power
ratio would be the same if the only thing that differed between the firms were their debt ratios.
Choice A is correct. Other choices are false.
Page 16 of 49
Page 17 of 49
Solution: D is correct
D is correct because the first installment is a current liability which affects the quick ratio, the current ratio, and
working capital.
6. The internal rate of return is the
A
.
B.
C.
D
.
Rate of interest that equates the present value of cash outflows and the present value of cash
inflows
Minimum acceptable rate of return for a proposed investment
Risk-adjusted rate of return
Required rate of return
Solution: A is correct.
7. An analyst has obtained the following information regarding two companies, Company X and Company Y:
Solution: D is correct.
Times interest earned (also called interest coverage ratio) is the ratio of earnings before interest and tax
(EBIT) of a business to its interest expense during a given period. It is a solvency ratio measuring the
ability of a business to pay off its debts.
Page 18 of 49
Breakeven point is not a good planning tool since the goal of business is to make a
profit.
Focusing on target net income rather than operating income will increase the
breakeven point.
Companies with a greater proportion of fixed costs have a greater risk of loss than
companies with a greater proportion of variable costs.
Breakeven point is the level of sales at which profit is zero.
Solution: A is correct.
Statement 1 is false - breakeven point is an important planning tool that helps managers determine volume
of sales/production needed to be profitable.
Statement 2 is false - the same breakeven point will be calculated whether target operating income or
target net income is used in the CVP calculation.
Statements 3 and 4 are correct.
9. A call option on a share of common stock is more valuable when there is lower
A
.
B.
C.
D
.
Source: Wiley CPA Exam Review Business Environment and Concepts by Whittington and Delaney (2005)
11. Operational budgets are used by a retail company for planning and controlling its business activities. Data
regarding the companys monthly sales for the last 6 months of the year and its projected collection
patterns are shown below.
The cost of merchandise averages 40% of its selling price. The companys policy is to maintain an
inventory equal to 25% of the next months forecasted sales. The inventory balance at cost is Php80,000 as
of June 30.
Forecasted sales
July
August
September
October
November
December
Php775,000
750,000
825,000
800,000
850,000
900,000
What is the budgeted cost of the companys purchase for the month of August?
A.
B.
C.
D.
Php307,500
Php300,000
Php450,500
Php142,500
Answer: A. Php307,500
Page 20 of 49
Php300,000
82,500
(75,000)
Php307,500
Source: Wiley CPA Exam Review Business Environment and Concepts by Whittington and Delaney (2005)
12. The management of ABC Corporation has decided to implement a transfer pricing system. ABCs MIS
department is currently negotiating a transfer price for its services with the four producing divisions of the
company as well as the marketing department. Charges will be assessed based on number of reports
(assume that all reports require the same amount of time and resources to produce). The cost to operate the
MIS department at its full capacity of 1,000 reports per year is budgeted at Php450,000. The user subunits
expect to request 250 reports each this year. The cost of temporary labor and additional facilities used to
produce reports beyond capacity is budgeted at Php480.00 per report. ABC could purchase the same
services from an external Information Services firm for Php700,000. What amounts should be used as the
floor and the ceiling in determining the negotiated transfer price?
Floor
Ceiling
A. Php450
Php500
B. Php456
Php560
C. Php540
Php500
D. Php500
Php540
Answer: B. Floor Php456.00; Ceiling Php560.00
Negotiated transfer prices should fall within a range limited by a ceiling and a floor. The ceiling is the lowest
market price that could be obtained from an external supplier, and the floor equals the outlay costs plus
opportunity cost of the transferring division. Since ABCs MIS department does not have the option to sell
services to external customers, its opportunity cost is Php0. Since all costs of service departments must be covered
by the revenue-producing departments, the MIS departments outlay cost equals its total costs. The departments
full capacity level is 1,000 reports per year. However, the user departments will be requesting 1,250 reports (5 user
subunits 250 reports each). Thus, the MIS department will incur costs of Php120,000 [Php480 (1,250 1,000)]
for the 250 reports above capacity, in addition to the Php450,000 budgeted costs for full capacity. The total cost of
Php570,000 (Php450,000 + Php120,000) is used to calculate the floor. The ceiling is based on the Php700,000 that
would be incurred to purchase MIS services externally. Since the MIS department will be producing 1,250 reports,
the floor is Php456.00 (Php570,000 1,250), and the ceiling is Php560.00 (Php700,000 1,250). At full capacity,
any differential costs of additional production are added to the floor. Php480.00 represents only the differential
cost of producing each report above full capacity, not cost per report for total production. Budgeted costs are based
on production of 1,250 reports, not 1,000.
Source: Wiley CPA Exam Review Business Environment and Concepts by Whittington and Delaney (2005)
13. ABC Company has a single product called JGH. The company normally produces and sells 70,000 JGHs
each year at a selling price of Php45.00 per unit. The companys unit costs at this level of activity are
given below:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling expenses
Fixed selling expenses
Total cost per unit
Php10.00
3.50
6.80
8.00
2.00
3.00
Php33.30
Page 21 of 49
Assume that ABC Company has sufficient capacity to produce 100,000 units of JGH each year without
any increase in fixed manufacturing overhead costs. The company could increase its sales by 30% above
the present 70,000 units each year if it were willing to increase the fixed selling expenses by Php100,000.
How much would be the increase in income if the production and sales are increased by 30%?
A.
B.
C.
D.
Php376,700
Php300,000
Php465,600
Php356,750
Answer: A. Php376,700
Selling price
Variable expenses
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling expenses
Unit contribution margin
Php45.00
Php10.00
3.50
6.80
2.00
22.30
Php22.70
Php476,700
100,000
Php376,700
20
24
108
40
34
48
10
16
72
60
40
20
The Company has 24,000 production hours available after meeting the requirements for the regular
market. The market can absorb all units of any product line that is produced with one exception - only
48,000 units of Product 3 can be sold. In addition, there is a shortage of materials for Product 4.
Materials are available for the production of a total of 12,000 units of Product 4.
What is the number of hours available for Product 2 to maximize profit while observing all the
restrictions?
A 6,000 hours
.
B. 4,000 hours
Page 22 of 49
3,000 hours
0 hours
1
60
20
3
24
72
108
(36)
Product Line
2
3
60
60
40
10
1.5
6
34
16
51
96
48
72
3
24
4
60
60
1
40
40
20
20
Product Line
2
3
8,000
4
12,000
4,000
0
4,000
8,000
12,000
When idle capacity exists, there is no opportunity cost to producing intermediate products
for another division.
Market-based transfer prices should be reduced by any costs avoided by selling internally
rather than externally.
No contribution margin is generated by the transferring division when variable cost-based
transfer prices are used.
The goal of transfer pricing is to provide segment managers with incentive to maximize the
profits of their divisions.
Solution: D is correct
Page 23 of 49
3/11/199
1
6/14/199
8
6/19/200
6
9/15/201
2
For the year ended 2012, how much basic personal exemption can Employee J claim?
A.
B.
C.
D.
E.
P150,000
P125,000
P100,000
P50,000
Zero
Answer: D. P50,000
12. Co. C had the following data in the month of September:
Sales
Purchases of goods
Purchase of machines
Machine Life
P1,900,000
1,260,000
1,440,000
8 years
Assuming that the said transactions are properly substantiated for VAT purposes, compute the VAT
payable. Note: The amounts are exclusive of VAT.
A. Php70,920
B. Php76,800
C. Php73,920
D. Php225,120
Page 28 of 49
151,200
2,880
154,080
73,920
13. On July 31, 2013, Esperanza received a preliminary assessment notice from the BIR demanding that she
pays P180,000.00 deficiency income taxes on her 2011 income. How many days from July 31, 2013
should Esperanza respond to the notice?
A. 180 days
B. 30 days
C. 60 days
D. 15 days
Answer: D. 15 days
14. The gross estate of Ms. Layda amounted to P5 million. The actual funeral expenses are as follows:
Mourning apparel of the surviving spouse
Mourning apparel of married children
Publication charges for death notices
Interment and/or cremation fees and charges
Total
P100,000
90,000
70,000
50,000
310,000
100,000
70,000
50,000
220,000
5% of gross estate
250,000
Limit
200,000
15. Gianna Corporation is engaged in the business of publishing magazines as well as the merchandising of
office supplies. For CY 2012, it has the following revenue/sales:
Revenue from magazines
Sales from office supplies
587,400
197,500
Page 29 of 49
P8,657.33
P8,350.00
P6,861.50
P6,554.17
Answer: D. P6,554.17
Revenue
Actual EAR
Revenue from
magazines
587,400
2/
3
5,56
6.67
197,500
1/
3
2,78
3.33
8,35
0.00
EAR LIMIT
(1% of
5,874.0 revenue from
0 magazines)
(0.5% of sales
987.5 from office
0 supplies)
Deductible EAR
5,566.6
7
987.5
0
6,554.1
7
Theory of Accounts
1. This refers to IASBs main vehicle for consulting the public and sets out a specific proposal in the form of
a proposed IFRS (or amendment to an IFRS).
A. Final Standards
B. Due Process Handbook
C. Amendments
D. Exposure Draft
Answer: D. Exposure Draft
Due Process Handbook for the IASB and IFRS Interpretations Committee (February 2013) provides:
An Exposure Draft is the IASBs main vehicle for consulting the public and therefore includes an invitation to
comment, setting out the issues that the IASB has identified as being of particular interest. Although it is
normally included with the ballot draft, it is not necessary for the IASB to ballot the invitation to comment.
(Par. 6.3)
An Exposure Draft sets out a specific proposal in the form of a proposed Standard (or amendment to a
Standard) and is therefore generally set out in the same way as, and has all of the components of, a Standard.
(Par. 6.2)
2. Which of the following is not an indicator of situations that would individually or in combination lead to a
lease being classified as a finance lease?
A
.
B.
C.
The leased assets are of such a specialized nature that only the lessee can use them without
major modifications.
Gains or losses from the fluctuation in the fair value of the residual accrue to the lessor.
The lessee has the ability to continue the lease for a secondary period at a rent that is
substantially lower than market rent.
Page 30 of 49
If the lessee can cancel the lease, the lessor's losses associated with the cancellation are
borne by the lessee.
Answer: B. Gains or losses from the fluctuation in the fair value of the residual accrue to the lessor.
Paragraphs 10-11 of PAS 17, Leases state:
Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather
than the form of the contract.1 Examples of situations that individually or in combination would normally
lead to a lease being classified as a finance lease are:
(a) the lease transfers ownership of the asset to the lessee by the end of the lease term;
(b) the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the
fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of
the lease, that the option will be exercised;
(c) the lease term is for the major part of the economic life of the asset even if title is not transferred;
(d) at the inception of the lease the present value of the minimum lease payments amounts to at least
substantially all of the fair value of the leased asset; and
(e) the leased assets are of such a specialized nature that only the lessee can use them without major
modifications.
Indicators of situations that individually or in combination could also lead to a lease being classified as a
finance lease are:
(a) if the lessee can cancel the lease, the lessor's losses associated with the cancellation are borne by the
lessee;
(b) gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example,
in the form of a rent rebate equaling most of the sales proceeds at the end of the lease); and
(c) the lessee has the ability to continue the lease for a secondary period at a rent that is substantially
lower than market rent.
3. Which of the following statement(s) is/are incorrect?
Statement I: PAS 17, Leases, permits initial direct costs incurred by lessors in negotiating an operating
lease to be charged as expenses when incurred.
Statement II: It is mandatory to apply the finance lease accounting methodology set out in PAS 17 to
investment properties held under operating leases.
A
.
B.
C.
D
.
Statements I, IV and V
Statements I, II and IV
Statements I and IV
Statements I, II, IV and V
the bankruptcy of a customer that occurs after the reporting period usually confirms that a loss
existed at the end of the reporting period on a trade receivable and that the entity needs to adjust
the carrying amount of the trade receivable; and
Page 33 of 49
the sale of inventories after the reporting period may give evidence about their net realizable
value at the end of the reporting period.
(c) the determination after the reporting period of the cost of assets purchased, or the proceeds from assets
sold, before the end of the reporting period.
(d) the determination after the reporting period of the amount of profit-sharing or bonus payments, if the
entity had a present legal or constructive obligation at the end of the reporting period to make such payments
as a result of events before that date (see PAS 19, Employee Benefits).
(e)
the discovery of fraud or errors that show that the financial statements are incorrect.
6. When disclosing financial instruments, an entity shall group them into classes as follows:
I.
II.
III
.
A
.
B.
C.
D
Group the financial instruments into classes that are appropriate to the nature of the information
disclosed and that take into account the characteristics of those financial instruments.
Group the financial instruments according to the categories of financial instruments in PAS 39,
Financial Instruments: Recognition and Measurement.
Provide sufficient information to allow reconciliation to the line items presented in the statement
of financial position.
I only.
I and II.
I and III
I, II and III.
B.
C
.
Incorrect. Although Statement I is correct such that PFRS 7 paragraph 6 provides that an entity
shall group financial instruments into classes that are appropriate to the nature of the information
disclosed and that take into account the characteristics of those financial instruments, the standard
also requires that sufficient information shall be provided to permit reconciliation to the line items
presented in the statement of financial position (Statement III).
Incorrect. Although Statement I is correct such that PFRS 7 paragraph 6 provides that an entity
shall group financial instruments into classes that are appropriate to the nature of the information
disclosed and that take into account the characteristics of those financial instruments, grouping the
financial instruments into categories (Statement II) is not consistent with the standards requirement
to group financial instruments into classes.
Correct. I and III are true. PFRS 7.6 provides that an entity shall group financial instruments
into classes that are appropriate to the nature of the information disclosed and that take into
account the characteristics of those financial instruments. Also, the standard requires that
sufficient information shall be provided to permit reconciliation to the line items presented in
the statement of financial position.
Incorrect. Statements I and III are consistent with the requirements in PFRS 7.6 about grouping
financial instruments into classes. However, grouping the financial instruments into categories
(Statement II) is not consistent with the standards requirement to group financial instruments into
classes. The correct answer is C.
Page 34 of 49
Statement II:
Statement III:
A
.
B.
C.
D
.
A
.
Statement I only
Statement II only
None of the above.
Answer: D. Remeasurements of the net defined benefit liability (asset) in profit or loss
Par. 120 of PAS19R states:
An entity shall recognize the components of defined benefit cost, except to the extent that another PFRS
requires or permits their inclusion in the cost of an asset, as follows:
(a) service cost (see paragraphs 66-112) in profit or loss;
(b) net interest on the net defined benefit liability (asset) (see paragraphs 123-126) in profit or loss; and
(c) remeasurements of the net defined benefit liability (asset) (see paragraphs 127-130) in other
comprehensive income.
10. Which of the following is/are an example of a situation in which offsetting is inappropriate?
Statement I: Financial assets and financial liabilities that arise from financial instruments having the
same primary risk exposure (e.g., assets and liabilities within a portfolio of forward contracts or other
derivative instruments) but involve different counterparties.
Statement II: Financial or other assets pledged as collateral for non-recourse financial liabilities
Statement III: Obligations incurred as a result of events giving rise to losses are expected to be
recovered from a third party by virtue of a claim made under an insurance contract.
Statement IV: The entity currently has a legally enforceable right to set-off the recognized amounts and
intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
A
Statement I only
Page 36 of 49
The present value of 1 at 8% for 4 periods is 0.735 and the present value of an ordinary annuity of 1 at 8%
for 4 periods is 3.31. How much is the gain on extinguishment to be recognized for 2014 assuming that
the prevailing market rate for similar note is at 8%?
A.
B.
C.
D.
P1,178,000
P538,000
P1,641400
P0
Solution: A is correct
Original principal
Accrued interest
Carrying amount of overdue debt and interest
Restructured principal @ present value
(Php7,000,000 0.735)
Restructured interest @ present value
Php8,000,000
640,000
Php8,640,000
5,145,000
2,317,000
7,462,000
Page 37 of 49
Php 1,178,000
Solution: C is correct
EPS as originally calculated in Year 1 will be 40 (200 million / 5 million).
In the following year, it is necessary to calculate the bonus element of the rights issue. This is done as follows:
Computing the theoretical ex-rights value per share
Fair value of all outstanding shares before exercise of rights + Total amount received from exercise of rights
Page 38 of 49
= 75
5,000,000 + 1,000,000
= 80 / 75 = 1.067
52.93
60.00
6,000,000
3. LKF Company has the following outstanding liabilities and capital as of December 31, 2012:
a. Three million ordinary shares issued at P1.00 (which is also the par value) three years ago. LKF
Company has bought back 2,500 of its shares this year.
b. P6,500,000 million loan with GHC Bank maturing August 31, 2013. The company has communicated
with GHC Bank that it will roll over the said loan on November 7, 2012. Upon rollover, the maturity of
the said loan is deferred to August 31, 2014. This was noted by the bank.
c. Accounts payable amounting to P3,489,000. This account does not include the following items:
(1) Purchases from suppliers amounting to P678,000 shipped FOB shipping point. The goods were in
transit as of December 31, 2012.
(2) Purchases from suppliers amounting to P58,000 shipped FOB destination. The goods were in transit
as of December 31, 2012.
d. Dividends on cumulative preference shares amounting to P3,500,000. The declaration of the said
dividends was made only on February 6, 2013.
Page 39 of 49
P1,023,647,000
P1,011,757,000
P1,014,647,000
P1,020,757,000
Solution: D is correct
c.
c.1
f.
h.
i.
Total current liabilities
Php3,489,000
678,000
7,590,000
9,000,000
1,000,000,000
Php1,020,757,000
4. On January 1, 2014, KGY Company contracted with a contractor to construct an equipment for
P43,000,000. The equipment was completed during the year. KGY Company is required to make the
following payments in 2012:
January 1
March 1
July 1
September 1
December 1
Total
P4,300,000
21,500,000
5,000,000
7,600,000
4,600,000
P43,000,000
KGY Company had the following outstanding debt as of December 31, 2013 and December 31, 2014:
11% 4-year note with simple interest payable annually on
March 31 (specifically used to fund the construction)
12% 5-year loan with simple interest payable annually on
June 30
10% 3-year loan with simple interest payable annually
on July 31
P15,000,000
20,000,000
11,000,000
How much interest should be capitalized by KGY Company for the year ended December 31, 2014?
Page 40 of 49
P4,854,700
P3,076,303
P5,150,000
P3,092,170
Solution: B is correct
Date
January 1
March 1
July 1
September 1
December 1
Expenditure
Fraction
4,300,000
12/12
21,500,000
10/12
5,000,000
6/12
7,600,000
4/12
4,600,000
1/12
Average expenditures
Average expenditures
Applicable to specific borrowing
Applicable to general borrowings
Average
P4,300,000
17,916,667
2,500,000
2,533,333
383,333
P27,633,333
P27,633,333
(15,000,000)
P12,633,333
Principal
P20,000,000
11,000,000
P31,000,000
Interest
P2,400,000
1,100,000
P3,500,000
11.29%
P1,650,000
1,426,303
P3,076,303
5. JKL Company, on adoption of PAS 41, Agriculture, has reclassified certain assets as biological assets in its
2011 Statement of Financial Position. The total value of the entitys biological assets as of December 31,
2013 was P2,000,000 comprising:
Fruit-bearing trees
Land under trees
Roads near the plantation
P1,700,000
200,000
100,000
On February 28, 2014, the owner of the entity purchased P300,000 worth of farm animals from his friend
to be used in the business. However, such animals do not have a quoted market price, and is not traded in
an active market. Other valuation methods are also clearly inappropriate or unworkable. The estimated
lives of the trees and the animals are 20 years and 5 years, respectively.
During the last quarter of the year 2014, the following events occurred:
Increase in fair value in 2012 due to growth of trees
Decrease in fair value due to harvest
Harvest of fruits
Estimated fair value of the animals based on the judgment of the entitys CPA
P100,000
90,000
500,000
500,000
Page 41 of 49
P1,960,000
P2,010,000
P2,210,000
P1,950,000
Solution: A is correct
Fair value of fruit bearing trees, December 31, 2013
Decrease in fair value due to harvest
Increase in fair value to due to growth of trees
Fair value of fruit bearing trees, December 31, 2014
P1,700,000
(90,000)
100,000
P1,710,000
P300,000
(50,000)
P250,000
P1,710,000
250,000
P1,960,000
6. Lex Company shipped inventory on consignment to Lionel Company that cost P20,000. Lionel Company
paid P500 for advertising that was reimbursable from Lex Company. At the end of the year, 70% of the
inventory was sold for P30,000. The agreement states that a commission of 20% will be provided to
Lionel Company for all sales. What amount of inventory on consignment remains in the balance sheet of
Lex Company?
A. 0
B. 4,800
C. 6,000
D. 6,150
Solution: C is correct
Cost of inventory sent out on consignment
Multiply by: % of goods in the hand of consignee
Inventory on consignment
20,000
30%
6,000
7. On January 1, 2014, AJ Corporation purchased several pieces of inventory for P20,000. However, SC
Company, the seller agreed to wait for exactly two years before receiving payment. Then, on December
31, 2014, AJ Company sells the entire said inventory to BY Corporation for P30,000. AJ Company agrees
to wait for exactly three years to receive the P30,000 payment. A reasonable interest rate for these
transactions is 8% although no separate cash interest is to be paid on either the purchase or the sale. The
gross profit that AJ Company should recognize for the year ended December 31, 2014 is (Round off
present value factors to 5 decimal places):
A. 10,000
B.
7,938
C.
6,668
D.
3,815
Solution: C is correct
Page 42 of 49
Sales
Less: Cost of sales
Gross Profit
0.79383
0.85734
23,815
17,147
6,668 C
8. In December 2014, Judith Company began including one coupon in each package of candy that it sells and
offers a toy in exchange for P5 and 5 coupons. The toys cost P12 each and an additional P4 to deliver it to
customers. Eventually, 80% of the coupons will be redeemed. During December, Judith Company sold
220,000 packages of candy, 70,000 coupons were already sent for redemption of which 20,000 is still
under processing by year end.
The estimated liability in the December 31, 2014 balance sheet of Judith Company is
A. 233,200
B.
277,200
C.
330,000
D. 387,200
Solution: B is correct
Total coupons issued
Multiply by:
Coupons expected to be redeemed
Less: coupons received and processed (70,000 - 20,000)
Remaining coupons expected to be redeemed (and processed) in the future
Divide by: conversion rate toys/coupons
Expected number of toys to be given away
Multiply by: cost per unit (12 + 4 -5)
Total estimated liability 12/31/10
220,000
80%
176,000
50,000
126,000
5
25,200
11
277,200 B
9. Barry Company purchased equipment by making a down payment of P4,000 and issuing a note payable for
P18,000. A payment of P6,000 is to be made at the end of each year for three years. The applicable rate of
interest is 8%. Shipping charges for the equipment were P2,000, and installation charges were P3,500.
How much is the capitalized cost of the equipment (Round off present value factors to 2 decimal places)?
A. 19,480
B. 21,480
C. 24,980
D. 27,500
Solution: C is correct
Down payment
Add: PV of future installments @ 8%
Shipping cost
Installation cost
Capitalized cost of equipment
(6,000 x 2.58)
4,000
15,480
2,000
3,500
24,980
10. D Company had the following deferred tax balances at reporting date - Deferred tax assets, P1,200,000;
Deferred tax liabilities, P3,000,000. Effective from the first day of the next financial period, the company
rate of income tax was reduced from 40% to 30%. The adjustment to income tax expense to recognize the
impact of the tax rate change is:
A. Dr 600,000
B. Cr 600,000
C. Dr 450,000
D. Cr 450,000
Solution: D is correct
Page 43 of 49
Tax rate
DTA
40%
1,200,000
30%
900,000
Net change (decrease)
Practical Accounting 2
DTL
3,000,000
2,250,000
1. George Company works on a Php70 million contract in 2014 to construct an office building. During 2014,
George Company uses the cost to cost method. As of December 31, 2014, the balances in certain accounts
were: Construction in Progress, Php24.5 million; Accounts Receivable, Php2.4 million; and Progress Billings,
Php12 million. The estimated future costs to complete the project totaled Php31.85 million as of December
31, 2014.
The actual cost incurred in 2014 was
A Php17.00 million
.
B. Php24.50 million
C. Php17.15 million
D Php70.00 million
.
Solution: C is correct
Construction in Progress
Total Contract Price
Percentage of completion
Estimated future costs to complete
Percentage yet to be completed
Total estimated cost
Estimated future costs to complete
Actual cost incurred in 2014
Php24.5 million
70.0 million
35%
Php31.85 million
65%
49.00 million
31.85 million
Php17.15 million
2. Presented below are items taken from the unadjusted trial balances of Progressive Company and its branch on
December 31, 2014.
Home Office Books Branch Books
Shipments to branch
Php300,000
Allowance for overvaluation of branch inventory
99,900
Shipments from home office
Php390,000
Purchases (from outsiders)
144,600
Merchandise inventory, January 1
54,600
Merchandise inventory, December 31
48,750
Sales
540,000
Expenses
51,000
It is the companys policy to bill all branches for merchandise shipments at 30% above cost. How much of the
branch inventory on January 1 represents purchases from outsiders?
A. Php11,700
B. Php42,000
C. Php42,900
D. Php11,000
Page 44 of 49
Solution: A is correct
Allowance for overvaluation of branch inventory, December 31
Over allowance related to shipments during the year
Allowance for overvaluation of branch inventory, January 1
Merchandise inventory, January 1
Shipments from home office (9,900/30%*130%)
Merchandise inventory purchased from outsiders
Php9,900
90,000
Php9,900
Php54,600
42,900
Php11,700
3. On January 2, 2014, Polo Corporation purchased 80 percent of Seed Companys common stock for
Php216,000. Polo Corporation has assessed that it obtained control over Seed Company in accordance with
PFRS 10, Consolidated Financial Statements. Php30,000 of the excess of the consideration paid over the
book value of the net assets of Seed Company is attributed to a depreciable asset with an economic life of ten
years and the remaining balance to goodwill. On the date of acquisition, Seed reported common stock
outstanding of Php80,000 and retained earnings of Php140,000, and Polo reported common stock outstanding
of Php350,000 and retained earnings of Php520,000.
For the year ended December 31, 2014, Seed reported net income of Php35,000 and paid dividends of
Php15,000. Polo reported earnings from its separate operations of Php95,000 and paid dividends of
Php46,000. Goodwill had been impaired by Php2,000 on December 31, 2014.
How much is the consolidated net income attributable to owners of Polo on December 31, 2014?
A.
Php118,500
B.
Php118,000
C.
Php126,150
D.
Php126,000
Solution: B is correct
Purchase price
Proportionate share of NCI in book value of net assets of Seed (20% x 220,000)
Less book value of net assets of Seed Company
Excess of purchase price and NCI over the book value of net assets of Seed
Less fair value adjustment on the acquired depreciable asset
Difference attributable to goodwill
Php216,000
44,000
220,000
40,000
30,000
Php10,000
Php95,000
28,000
(3,000)
(2,000)
Php118,000
4. The Tommy Store began operations by selling wholesale merchandise on an installment basis and uses the
installment method of accounting. Terms include down payment of 20% and balance payable in three years;
50% in the year of sale; 30% in the year after; and 20% in the third year. Tommy includes a 25% mark-up on
cost for its selling price. Installment sales reported by Tommy are Php550,000 in 2010, Php770,000 in 2013,
and Php908,000 in 2014.
Page 45 of 49
Php770,000*80%*20%
Php908,000*80%*50%
Installment receivable, end of 2012
Unrealized gross profit (Php486,400/125%*25%)
Php123,200
363,200
Php486,400
Php97,280
5. Yam Company has used a traditional cost accounting system to apply quality control costs uniformly to all
products at a rate of 14.5% of direct labor cost. Monthly direct labor cost for Atswete make-up is Php27,500.
In an attempt to distribute quality control costs more equitably, the company is considering activity-based
costing. The monthly data shown in the chart below have been gathered for Atswete make-up:
Activity
Cost Driver
Cost Rates
Php11.50 per type
Php0.14 per unit
Php77 per order
Quantity for
Atswete
12 types
17,500 units
25 orders
The monthly quality control cost assigned to Atswete make-up using activity-based costing is how much
higher or lower than the cost using the traditional system?
A Php8,500.50 higher than the cost using the traditional system
.
B. Php525.50 lower than the cost using the traditional system
C. Php8,500.50 lower than the cost using the traditional system
D Php525.50 higher than the cost using the traditional system
.
Solution: D is correct
Traditional Costing (Php27,500 x 14.5%)
Activity Based Costing
Incoming material inspection (Php11.50 x 12)
In-process inspection (Php0.14 x 17,500)
Product certification (Php77 x 25)
Difference
Php3,987.50
Php138.00
2,450.00
1,925.00
Php4,513.00
(Php525.50)
6. C and D are partners sharing profits and losses in the ratio of 6:4, respectively. On January 1, the partners
decided to admit T as a new partner upon his investment of Php96,000. On this date, the interest in the
partnership of C and D are as follows: C, Php138,000; D, Php111,600. Assuming that the new partner is given
1/4 interest in the firm. The agreed capital of the partnership is Php360,000.
The admission of a new partner will result to which of the following:
Page 46 of 49
Goodwill is Php20,400.
Bonus from D is Php2,400.
Bonus to T is Php6,000.
Capital balance of C after admission of T to the partnership is Php150,240.
Solution: D is correct
C
Php138,000
D
Php111,600
8,640
3,600
Php150,240
5,760
2,400
Php119,760
T (25%)
Php
96,000
(6,000)
Php90,000
Total
Php249,600
96,000
14,400
Php360,000
7. The Rockwell Company of Makati opened a branch at Cebu on January 1, 2014 to expand the market of its
product. Merchandise shipped during 2014 to the Cebu branch totaled Php59,000, and this included a profit
of 25% based on cost. At the end of the year, the inventory was Php6,000 at billed price. Sales on account,
Php72,500; Expenses, Php16,500, of which Php1,200 were unpaid on December 31, 2014; Cash received
from customers on account, Php40,000, after allowing cash discounts of Php1,470; Cash remitted to the home
office during the year, Php33,000.
How much is the income of the branch in 2014 insofar as the home office is concerned?
A Php13,600
.
B. Php12,130
C. Php1,530
D Php3,000
.
Solution: B is correct
Sales
Cash discounts
Cost of goods sold [(Php59,000-Php6,000)/125%]
Expenses
Branch income
Php72,500
(1,470)
(42,400)
(16,500)
Php12,130
8. HIJ Company filed a voluntary bankruptcy petition on September 30, 2014 and the statement of affairs
reflects the following amounts:
Assets
Assets pledged with fully secured creditors
Assets pledged with partially secured creditors
Free assets
Liabilities
Liabilities with priority
Fully secured creditors
Partially secured creditors
Unsecured creditors
Carrying Amount
Fair Value
Php910,000
511,875
1,137,500
Php1,080,625
341,250
796,250
113,750
739,375
568,750
1,478,750
Page 47 of 49
Php341,250
136,500
Php477,750
Php341,250
796,250
1,137,500
(113,750)
1,023,750
1,706,250
60.0%
9. ABC Company, engaged in furniture business around the globe, received an order from a British Corporation
under the term of FOB shipping point on December 1, 2014. This was billed for 98,000 UK pounds and
payable on January 31, 2015. The furniture was shipped and invoiced on December 12, 2014. This shipment
was received by the customer on December 25, 2014.
Relevant spot exchange rates for UK pound to Php on various dates follow:
December 1, 2014
December 12, 2014
December 25, 2014
December 31, 2014
January 31, 2015
How much is the foreign exchange gain or loss to be reported on this transaction in 2014 income statement of
ABC Company assuming that the functional currency of ABC Company is Philippine Peso?
A Php18,620 gain
.
B. Php8,820 loss
C. Php19,600 loss
D Php19,600 gain
.
Solution: A is correct
Buying spot rate as of December 31, 2012
Less: Buying spot rate as of December 12, 2012
Php69.01
68.82
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0.19
98,000
Php18,620
10. Government Agency AAA issued purchase order for the acquisition of office equipment costing Php30,000.
The equipment was received with the charge invoice and was paid by check after withholding taxes of 10%.
Government Agency AAA remitted the tax withheld to BIR thru a government depository bank.
What is the entry of Government Agency AAA to record payment?
A
.
B.
C.
D
.
Accounts payable
Cash National Treasury MDS
Office equipment
Cash National Treasury MDS
Office equipment
Due to BIR
Cash National Treasury MDS
Accounts payable
Due to BIR
Cash National Treasury MDS
Answer:
D Accounts payable
.
Due to BIR
Cash National Treasury MDS
27,000
27,000
30,000
30,000
30,000
3,000
27,000
30,000
3,000
27,000
30,000
3,000
27,000
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