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Practical Accounting 1
1. The accountant of Review Company made the following adjusting entry on December 31,
2012.
Prepaid Rent
Rent Expense
If annual
was
a. Debit
b. Debit
c. Debit
d. Debit
P1,800
P1,800
rent is paid in advance every October 1, the original transaction entry made
Prepaid Rent and credit Cash, P1,800.
Rent Expense and credit Cash, P1,800.
Rent Expense and credit Cash, P2,400.
Rent Expense and credit Cash, P7,200.
MAS
2. Which of the following measures of performance encourages continued expansion by an
investment center so long as it is able to earn a return in excess of the minimum
required return on average operating assets?
A)
return on investment
B)
transfer pricing
C)
D)
residual income
Taxation
3. The following data are presented to you by the administrator of the Estate of Mr. X:
Gross sales . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . .
Business expenses . . . . . . . . . . . . . . . . .
Distribution of years income to the heirs. . . . .
P 500,000
200,000
50,000
30,000
b. Aesop
c. Dr. Seuss
d. Lewis Caroll
Biology
5. A change of the DNA in an organism that results in a new trait is known as a?
a. Mutation
b. Genetic Engineering
c. Regeneration
d. Reproduction
Theory of Accounts
6. Under PAS 23, borrowing costs incurred in constructing a qualifying asset should be
capitalized when they are incurred
a.
b.
c.
d.
Current Events
7. According to World Health Organization, whats the worlds fastest-spreading tropical
disease?
A: Rabies
C: Dengue
B: HIV/AIDS
D: Amoebiais
Average Round
Practical Accounting 2
1. Hartwell Company distributes the service department overhead costs to producing
departments and the following information for the month of January is presented as
follows:
Maintenance
Utilities
P18,700
P 9,000
10%
Utilities department
20%
Producing department A
40%
30%
Producing department B
40%
60%
The company distributes service department costs based on the reciprocal method,
what would be the formula to determine the total maintenance costs?
A. M = P18,700 + .10U
B. M = P9,000 + .20U
Religion
2. All the following animals were mentioned in the Bible, except ?
a.dog
b. cat
c. chicken
d. lion
Auditing Theory
3. Recto is a CPA and a senior auditor for Nam & Partners, CPAs. Nam is conducting an
external audit of Nacks Inc. The audit is taking longer than expected as supporting
documents are not made available to the audit team in a timely manner, and Recto
has found errors when testing the internal controls, which were known to
management but not disclosed to the auditors prior to the test. How would this
situation affect the auditors risk assessments?
a.
The assessed level of control risk should be decreased.
b.
The assessed level of audit risk should be decreased.
c.
The assessed level of inherent risk and control risk should be increased.
d.
The assessed level of detection risk should be increased.
Auditing Problem
4. Troop Co. frequently borrows from the bank to maintain sufficient operating cash.
The following loans were at a 12% interest rate, with interest payable at maturity.
Troop repaid each loan on its scheduled maturity date.
Date of
Note
Payable
Maturity
Date
Amount
11/1/10
P10,000
10/31/11
1 year
2/1/11
30,000
7/31/11
6
months
5/1/11
16,000
1/31/12
9
months
Term
Troop records interest expense when the loans are repaid. Accordingly, an interest
expense of P3,000 was recorded in 2011. If no correction is made, by what amount
would 2011 interest expense be understated?
a. P1,080
c. P1,280
b. P1,240
d. P1,440
Idiomatic Expression
5. When someone says it costs an arm and a leg, it is?
a. very dangerous
b. very frustrating
c. very interesting
d. very expensive
Food
6. Which vegetable was originally color purple during the 16 th century?
a. carrot
c. raddish
b. turnip
d. pumpkin
800
10,100
32,500
The business can only borrow money in round figures of P1,000 amounts. If the business
is required to maintain a minimum cash balance of P10,000, how much money should be
borrowed in May?
Answer: P 10, 000
2. What is the name of the First winner of the Apprentice Asia?
Answer: Jonathan Allen Yabut
Practical Accounting 1
3. The information below pertains to Jelo Company for 2012.
P1,200,000
2,000,000
3,000,000
6,000,000
500,000
40%
P25 per share
There were no changes during 2012 in the number of ordinary shares, preference
shares, or convertible bonds outstanding. There is no treasury share.
Compute diluted earnings per share for 2012.
Answer: P 1. 62
Practical Accounting 2
4. Lake Power Sports sells jet skis and other powered recreational equipment. Customers
pay 1/3 of the sales price of a jet ski when they initially purchase the ski, and then pay
another 1/3 each year for the next two years. Because Lake has little information about
collectibility of these receivables, they use the installment method for revenue
recognition. In 2010 Lake began operations and sold jet skis with a total price of
P900,000 that cost Lake P450,000. Lake collected P300,000 in 2010, P300,000 in 2011,
and P300,000 in 2012 associated with those sales. In 2011 Lake sold jet skis with a total
price of P1,500,000 that cost Lake P900,000. Lake collected P500,000 in 2011, P400,000
in 2012, and P400,000 in 2013 associated with those sales. In 2013 Lake also
repossessed P200,000 of jet skis that were sold in 2011. Those jet skis had a fair value of
P75,000 at the time they were repossessed.
In 2012, Lake would recognize realized gross profit of:
Answer: P 310, 000
Taxation
5. The accounting period of Corporation A is .fiscal year ending on October 31. For the year
2010, Corporation A filed its annual tax return on March 15, 2011. The last day for BIR to
assess is on:
a. February 16, 2014
c. March 15, 2014
b. March 14, 2014
d. April 16, 2014
Space
6. The most recognized model of how the universe begun is known as the?
Answer: Big Bang
Algebra
7. The ratio of two numbers is 5 to 1. The sum is 18. What are the two numbers?
Answer: 3 and 15
Final Round
Theory of Accounts
1.
Under
I)
II)
III)
a.
PFRS 10, an investor controls an investee if and only if the investor has:
Power over the investee
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect the amount of the
investors returns
I, II and III
b.
I, II or III
c.
II and III
d.
I and II
Business Law
2.
A issued a check in the amount of 20,000 payable to B. B endorsed the check but
only to the extent of 10,000. Which statement is most accurate?
a.
b.
c.
d.
Auditing Theory
3. Valmid, CPA, had not agreed to a change in audit engagement due to lack of a reasonable
basis for the change. Upon returning to the clients premises the next day, client
management informed him that he will not be permitted to continue the original
engagement. Valmid in this case should:
A.
Report the days developments immediately to the clients board of directors for
consideration and proceed with the original engagement
B.
Issue a qualified opinion due to a scope limitation and consider whether there is
Issue an adverse opinion due to a material departure from GAAS and consider
whether there is any obligation, either contractual or otherwise, to report to other
parties, such as the board of directors or shareholders, the circumstances
necessitating the adverse opinion
D.
Withdraw from the engagement and consider whether there is any obligation,
either contractual or otherwise, to report to other parties, such as the board of
directors or shareholders, the circumstances necessitating the withdrawal (X)
FF
GG
P 15,000
P 37,500
540,000
225,000
-0-
202,500
150,000
270,000
Total
P705,000
P735,000
Accounts payable
P135,000
P240,000
570,000
-0-
-0-
495,000
P705,000
P735,000
Cash
Accounts receivable
Merchandise inventory
Machinery and equipment
FF, capital
GG, capital
Total
The partners agreed that the machinery and equipment is underdepreciated by P15,000
and that of GG by P45,000. Allowance for doubtful accounts is to be set up amounting to
P120,000 for FF and P45,000 for GG. The partnership agreement provides for a profit and
loss ratio and capital interest of 60% to FF and 40% to GG. How much cash FF must
invest to bring the partners capital balances proportionate to their profit and loss ratio?
Answer: P172, 500
MAS
7. At the beginning of the year, Basilica initiated a quality improvement program. The
program was successful in reducing scrap and rework costs. To help assess the impact of
the quality improvement program, the following data were collected for the current and
preceding years:
Current year
Preceding year
Quality training
10,000
15,000
Materials inspection
20,000
35,000
Scrap
200,000
180,000
Rework
250,000
200,000
40,000
60,000
300,000
250,000
Product inspection
Product warranty
18%
AP
7. You are the risk management partner of RT & Company. The following issues relating to
property and equipment were brought to your attention. For each of the following issue,
determine the amount of depreciation expense that should be recognized each year.
1. As part of their remuneration package an entity provides each senior manager with
the private use of a luxury motor vehicle of the managers choice. The executive
motor vehicles cost P2,000,000 each and are replaced every two years irrespective of
usage. The entity sells its motor vehicles at 25% if its original price after two years
when the vehicles are expected to be economically usable by other users for at least
another three years.
2. An entity bought an equipment for P300,000. An entity does not service its
equipment regularly. With regular servicing the equipment would be available for use
for five years. However, the expected equipment servicing pattern is expected to
render the equipment unusable in three years.
233,200
b.
277,200
c.
330,000
d.
387,200
b. Alternative
d. Speculative
Practical Accounting 2
14. The approved appropriation of Department U for 2011 is P 15,000,000. Eighty five
percent of this appropriation was released by the Department of Budget and
Management (DBM) accompanied by Notice of Cash allocation (NCA). During the year,
the amount of obligations incurred was equivalent to ninety percent of the NCA but only
seventy percent of these obligations were paid by checks.
Determine which of the following is incorrect
A. Department U records the receipt of NCA by debiting an a amount equivalent to
P 12,750,000.
B. The receipt of the allotment is recorded by means of a memorandum entry
C. At the end of the year, Subsidy Income from National Government would be
credited P 6,967,500
D. None of the above
15. What is the full name of Ms. World 2013?
Answer: Ms. Megan Lynne Young
MAS
16. Rochelle Block Co. produces cement blocks used in the foundation for buildings. The
process takes place in two sequential departments. The following data pertain to the
month of October.
Pouring Dept.
Finishing
Dept.
Direct materials entered into production
25,000
Direct labor
P 70,000
340,000
P
280,000
680,000
900,000
Practical Accounting 1
20. Lyn
Company introduced in 2011 a new TV model with a two-year warranty
against defect. Lyn Company estimates the warranty costs at 2% of sales within 12 months
following the sales and 4% in the second 12 months following the sale. Sales and actual
warranty costs for the year ended December 31, 2011 are P3,000,000 and P45,000
respectively. Lyn Company should report an estimated warranty liability in its December 31,
2011 balance sheet of
Answer: P 135, 000
Practical Accounting 1
21. On January 1, 2011 Ply Company purchased a 30% interest in Wood Company for
P300,000 which gave Ply Company significant influence over Wood Company. The excess of
the acquisition cost over the net assets acquired was attributed to goodwill in the amount of
P30,000 since the carrying amounts of the identifiable assets and liabilities of Wood
Company were equal to their fair values.
In 2011 Wood Company reported income of P400,000 and declared dividends of P120,000.
At December 31, 2011, the fair value of the investment in Wood Company was P305,000
while the estimated cost to sell the holdings was P15,000.
Assuming that Ply Company does not have any public accountability and was considered an
SME, the investment income for 2011 and the investment in Wood account at December 31,
2011, assuming further that Ply Company chose to use the cost method
Answer: Investment in income-36,000; Investment in Wood-290,000
22. What is the first brand name used as a logo in a garment?
Answer: Lacoste
MAS
23. N Company has total fixed assets of P100,000 and no current liabilities. The table below
displays its wide variations in current assets components:
1Q
2Q
3Q
4Q
Cash
P 20,000
P 10,000
P 15,000
P 20,000
Accounts receivable
66,000
25,000
47,000
88,000
Inventory
20,000
65,000
59,000
10,000
P106,000
P100,000
P121,000
P118,000
Total
If Ns policy is to finance all fixed assets and half the permanent current assets with longterm financing and rest with short-term financing, what is the level of long-term
financing?
Answer: France
Taxation
25. During 2011, Philip, a resident citizen, received the following income:
Interest from Philippine treasury certificates
Refund pertaining to 2010 income tax
P4,000
500
The total amount of income subject to tax in Philips 2011 income tax return was:
Answer: Zero