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Easy Round

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)

the contribution approach

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

How much is the taxable income using optional standard deduction?


a. P280,000
c. P200,000
b. P250,000
d. None of the choices
Literature
4. Theodore Geisel is a famous American writer who was famous on his childrens books
that were often characterized by imaginative characters. He is well known as
a. Hans Cristian Andersen

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.

Before the construction period

b.

During the construction period

c.

After the construction period

d.

During and after the construction period

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:

Overhead costs incurred

Maintenance

Utilities

P18,700

P 9,000

Services provided to:


Maintenance department

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

C. M = P18,700 + .30U + .40A + .40B

B. M = P9,000 + .20U

D. M = P27,700 + .40A + .40B

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

7. M issued a promissory note to payable to the order of P. P indorsed it specially to A.


Without the knowledge of A, X took the note and forged As signature and then delivered it
to B, who specially indorsed it to C, C to D, D to E, and E to H, a holder in due course.
Against whom can H demand payment of the note?
a. M and P because their signatures are genuine and had not been forged
b. A because he is negligent in keeping the promissory note
c. Against all parties because H is a holder in due course
d. B, C, D and E because their signatures appear after the forgery
Difficult
MAS
1. The following information was extracted from the May Cash Budget of Hair Stars, a
groom pad for men and women:
Budget of Hair Stars, a groom
pad for men and women:
Excess of cash available over
disbursements

800

Cash balance, May 1

10,100

Total cash disbursement for May

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.

Profit for the year


8% convertible bonds issued at par (P1,000 per bond).
Each bond is convertible into 40 ordinary shares

P1,200,000

2,000,000

6% convertible, cumulative preference shares, P100


par value. Each share is convertible into 3 ordinary
shares.

3,000,000

Ordinary shares, P10 par value

6,000,000

Share options (granted in aprior year) to purchase


50,000 ordinary shares at P20 per share
Tax rate
Average market price of ordinary shares

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.

The partial indorsement is not a valid indorsement, although will result in


the assignment of that part.
The partial indorsement will invalidate the whole instrument.
The endorsee will be considered as a holder in due course.
The partial indorsement is valid indorsement up to the extent of the
10,000.

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

any obligation, either contractual or otherwise, to report to other parties, such as


the board of directors or shareholders, the circumstances necessitating the
qualified opinion
C.

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)

4. What are substances that control the rates of chemical reactions?


Answer: Catalyst
5. What is the literal Greek translation of Sarcophagus?
Answer: Flesh Eater
Practical Accounting 2
6. As of July 1, 2007, FF and GG decided to form a partnership. Their balance sheets on this
date are as follows:

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

Basilicas internal failure cost must have increased by around


Answe
r:

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.

3. An entitys equipment used to manufacture a patented drug is expected to be


capable of producing the drug for ten years. However, the entity expects to stop
manufacturing the drug and scrap the equipment after five years of production when
its patent expires and low cost generic drugs are expected to render the entitys
manufacturing of this drug unprofitable. The cost of this equipment is P4,000,000.
4. An entity has the right to use an item of equipment in accordance with the terms of a
finance lease. The equipment is capable of operating for 15 years. However, the
lease term is 10 years and the entity is required to return the equipment to the lessor
at the end of the lease term. The fair value of the equipment at the inception of the
lease is P600,000.
How much should be recognized as depreciation expense for the luxury motor
vehicle?
Answer: P 750, 000
Practical Accounting 1
8. In December 2011, 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 amount of estimated liability in the December 31, 2011 balance sheet of Judith
Company is
a.

233,200

b.

277,200

c.

330,000

d.

387,200

9. What is the next number in the Fibonacci Sequence: 5 4 6 5 7 6 8 7 ?


Answer: 9
10. What animal was executed for a murder of a child in France?
a. Dog
b. Lion
c. Pig
d. Monkey
11. What do you call the white part on your fingernails?
Answer: Lunula
12. A 20 million year-old Sirena Fossil was found in the Puerto Princesa Underground River
that was a remain of which sea creature?
Answer: Sea cow
Business Law
13. What is the nature of the remedies under Article 1484 of the Civil Code, namely: exact
fulfillment, cancellation of the sale and foreclosure of the chattel mortgage on the thing
sold?
a. Cumulative
c. Facultative

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

Applied manufacturing overhead


420,000

680,000

Cost of goods completed and transferred out


400,000 +

900,000

cost of goods transferred to the Finishing Department.


+ cost of goods transferred to finished goods.
The amount of work in process inventory of Rochelle Block at the end of October
must be:
Answer: P 1, 415, 000
17. The process of identifying, measuring and relating revenue and expenses of an
enterprise for an accounting period is known as
Answer: Income Determination
18. The best and most beautiful things in the world cannot be seen or even touched- they
must be felt with the heart. Is the quote of which famous author?
Answer: Helen Keller

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: P 150, 000


24. Which country gave the Statue of Liberty to the USA as a gift?

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