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FINANCIAL ACCOUNTING AND REPORTING

PAS 1 PRESENTATION OF FINANCIAL STATEMENTS

1. The components financial statements include all of the following, except

a. Statement of financial position
b. Income statement
c. Statement of cash flows
d. Statement of retained earnings
2. Which of the following must be included in the component of the financial statements?
a. A statement of retained earnings
b. Accounting policies
c. An auditors report
d. A directors report
3. A third statement of financial position at the beginning of the earliest comparative period is
required
a. When an entity applies an accounting policy retrospectively.
b. When an entity makes a restrospective restatement of items in the financial statements.
c. When an entity reclassifies items in the financial statements.
d. In all of the above cases.
4. An entity shall prepare how many statements of financial position as a result of retrospective
application, retrospective restatement and reclassification of items in financial statements?
a. Two
b. Three
c. Four
d. One
5. Which of the following best describes financial position?
a. The income, expenses and net income or loss for a period.
b. The assets, liabilities and equity at a particular moment in time.
c. The financial assets minus financial liabilities
d. The total assets of an entity
6. The statement of financial position is useful for analyzing all of the following, except
a. Liquidity
b. Solvency
c. Profitability
d. Financial flexibility
7. The statement of financial position provides a basis for all of the following, except
a. Computing rate of return.
b. Evaluating the capital structure of the entity.
c. Determining the increase in cash due to operations.
d. Assessing the liquidity and financial flexibility of the entity.
8. An entity shall present
a. The statement of cash flows more prominently than the other statements.
b. The statement of financial position more prominently than the other statements.
c. The statement of comprehensive income more prominently than the other statements.
d. Each financial statement with equal prominence.

9. Which is incorrect concerning fair presentation of financial statements?

a. In virtually all circumstances, a fair presentation is achieved by compliance with applicable
Philippine Financial Reporting Standards.
b. Financial statements shall present fairly the financial position, performance and cash flows
of an enterprise.
c. An enterprise whose financial statements comply with PFRS shall make an explicit and
unreserved statement of such compliance in the notes.
d. Inappropriate accounting treatments are rectified either by disclosure of the accounting
policies used or by note or explanatory material.
10. Immaterial amounts of similar nature and function shall be grouped or condensed as one line
item in the financial statements.
a. Aggregation c. Offsetting
b. Accounting policy d. Comparability

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11. Technically offsetting in the financial statements is accomplished when
a. The allowance for doubtful accounts is deducted from accounts receivable.
b. The accumulated depreciation is deducted from property plant and equipment.
c. The total liabilities are deducted from total assets to arrive at net assets.
d. Gains and losses from disposal of noncurrent assets are reported by deducting the
proceeds from the carrying amount of the assets and the related selling cost.
12. In virtually all circumstances, a fair presentation is achieved by compliance with applicable
PFRS. A fair presentation requires an entity (choose the incorrect one)
a. To select and apply accounting policies in accordance with standards.
b. To present information including accounting policies, in a manner that provides relevant and
reliable information.
c. To provide additional disclosures when specific requirements of PFRS is insufficient to
enable users to understand the impact of particular transactions on the entitys financial
position and financial performance.
d. To disclose inappropriate accounting policies used either by notes or explanatory material
without rectification.
13. Which is incorrect concerning the overall considerations in the preparation and presentation of
financial statements?
a. An entity shall prepare its financial statements, except for cash flow information, under the
accrual basis of accounting.
b. The presentation and classification of items in the financial statements shall be retained
from one period to the next.
c. Asset and liabilities, income and expenses, shall not be offset unless required or permitted
by another PFRS.
d. Comparative information need not be disclosed in respect of the previous period for all
numerical information in the financial statements.
14. Which is incorrect concerning the concept of materiality and aggregation?
a. Materiality depends on the size and nature of the item judged in the particular
circumstances of its omission or misstatements.
b. Materiality provides that the specific disclosure requirements of a PFRS must be met even
if the resulting information is not material.
c. Items of a dissimilar nature or function shall be presented separately unless they are
immaterial.
d. Information is material if its nondisclosure could influence the economic decisions of users
taken on the basis of the financial statements.
15. The effects of transaction and other events are recognized when they occur and they are
recorded in the accounting records and reported in the financial statements of the periods to
which they relate.
a. Going concern c. Time period
b. Entity d. Accrual basis
16. The components of the financial statements include all, except
a. Statement of financial position, income statement and statement of cash flows
b. Statement of changes in equity or statement of recognized gains and losses
c. Notes, comprising a summary of significant accounting policies and other explanatory notes
d. Additional statements such as environmental reports and value added statements
17. Which of the following reports is not a component of the financial statements?
a. Statement of financial position c. Directors reports
b. Statement of changes in equity d. Notes to the financial statements
18. To meet the objective of providing information about financial position, financial performance
and cash flows of an entity, financial statements shall provide information about all of the
following, except
a. Assets, liabilities and equity c. Cash flows.
b. Income expenses, including gains and losses. d. Nature of the business activities.
19. Which of the following generally is considered as a limitation of the statement of financial
position?
a. The statement of financial position reflects the current value of the entity.
b. The statement of financial position reflects the instability of the peso.
c. Statement of financial position formats and classifications do not vary to reflect industry
differences.
d. Due to measurement problems, some entity resources and obligations are not reported on
the statement of financial position.

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20. Which of the following is a limitation of the statement of financial position?

a. Many items that are of financial value are omitted.
b. Judgments and estimates are used.
c. Current fair value is not reported.
d. All of these
21. Which statement is incorrect concerning the line items on the face of the statement of
financial position?
a. As a minimum, PAS 1 requires that the face of the statement of financial position shall
include certain line items.
b. Additional line items, headings and subtotals shall be presented on the face of the
statement of financial position when such presentation is relevant to the understanding of
the entitys financial position.
c. PAS 1 simply provides a list of items that are sufficiently different in nature or function to
warrant separate presentation on the face of the statement of financial position.
d. PAS 1 prescribes the order or format in which items are to be presented on the face of the
statement of financial position.
22. Which statement is correct concerning presentation of information on the face of the statement
of financial position?
I. Additional line items, headings and subtotals shall be presented on the face of the
statement of financial position when such presentation is relevant to an understanding of
the entitys financial position.
II. The standard does not prescribe the order or format in which items are to be presented.
a. I only c. Both I and II
b. II only d. Neither I nor II
23. The statement of financial position is useful for analyzing all of the following, except
a. Financial structure c. Cash flow prospects
b. Liquidity and solvency d. Financial flexibility.
24. The operating cycle of an entity
a. Is set be the industrys trade association usually on an average length of time for all firms
which are members of the association.
b. Is the time between the acquisition of assets for processing and their realization in cash or
cash equivalents.
c. Is the period of time normally elapsed from the time the entity expends cash to the time it
converts trade receivables back into cash.
d. Causes the distinction between current and noncurrent items to depend on whether they
will affect cash within one year.
25. When an entitys normal operating cycle is not clearly identifiable, its duration is assumed to be
a. Twelve months c. Three months
b. Six months d. Twenty-four months

26. A liability shall be classified as current when it satisfies any of the following criteria (choose the
incorrect one)
a. It is expected to be settled in the entitys normal operating cycle.
b. It is held primarily for the purpose of being traded.
c. It is due to be settled within twelve months after the statement of financial position date.
d. The entity has an unconditional right to defer settlement of the liability for at least twelve
months after the statement of financial position date.
27. An asset shall be classified as current when it satisfies any of the following criteria, except
a. It is expected to be realized, or intended for sale or consumption in the normal course of the
entitys normal operating cycle.
b. It is expected to be realized within twelve months form the statement of financial position
date.
c. It is cash or cash equivalent asset, which is restricted for the purchase of an asset with in
12 months from the statement of financial position date.
d. It is held primarily for the purpose of being traded
28. Which obligations are classified as current liabilities even if they are due to be settled after
more than twelve months from the statement of financial position date?
a. Trade payables and accruals from employee and other operating cost.
b. Current portion of noncurrent financial liabilities.
c. Bank overdrafts
d. Dividend payable

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29. Which of the following statements regarding assets is not true?
a. An asset represents a probable economic benefit.
b. Assets are obtained or controlled as a result of past transactions and events.
c. Assets reported on the statement of financial position include both monetary and
nonmonetary resources.
d. Assets include costs that have not yet been matched with revenue.
30. Investment securities held for the purpose of retiring bonds payable should be classified as
a. Current assets c. Deferred bond liability
b. Noncurrent assets d. Intangible assets
31. Which is incorrect concerning assets?
a. The future economic benefit embodied in an asset is the potential to contribute directly or
indirectly to the flow of cash and cash equivalents to the entity.
b. Many assets have physical form but physical form is not essential to the existence of an
asset.
c. In determining the existence of an asset, the right of ownership is essential.
d. The asset of an entity results from past transaction or other past event.
32. A long-term debt that is due to be settled within twelve months after the statement of financial
position date is classified as current when
I. An agreement to refinance or reschedule payment on a long-term basis is completed after
statement of financial position date and before the financial statements are authorized for
issue.
II. The entity has the discretion to refinance or roll over the obligation for at least twelve
months after the statement of financial position date under an existing loan facility.
a. I only c. Either I or II
b. II only d. Neither I nor II
33. When an entity breaches an undertaking under a long-term loan agreement on or before the
statement of financial position date with the effect that the liability becomes payable on demand
I. The liability is classified as current even if the lender has agreed after the statement of
financial position date and before the issuance of the financial statements not to demand
payment as a consequence of the breach.
II. The liability is classified as noncurrent if the lender agreed on or before the statement of
financial position date to provide a grace period for at least twelve months after the
statement of financial position date within which to rectify the breach.
a. I only c. Either I or II
b. II only d. Neither I nor II

34. Which statement is incorrect?

a. As a minimum, the face of the statement of financial position shall include line items that
are sufficiently different in nature or function to warrant separate preparation.
b. The standard does not prescribe the order or format in which the line items are to be
presented.
c. Additional line items, heading and subtotals shall be presented on the face of the statement
of financial position when such presentation is relevant to an understanding of the entitys
financial position.
d. When an entity presents current and noncurrent captions, it shall classify deferred tax
assets and deferred tax liabilities as current.
35. What is the common practice in the Philippines in presenting the statement of financial
position?
a. Current assets plus noncurrent assets minus current and noncurrent liabilities equals
equity.
b. Noncurrent assets before current assets, noncurrent liabilities before current liabilities and
equity after liabilities.
c. Equity before assets and liabilities, noncurrent liabilities before current liabilities and
noncurrent assets before current assets.
d. Current assets before noncurrent assets, current liabilities before noncurrent liabilities and
equity after liabilities.
36. Which one of the following is not required to be presented as minimum information on the face
of the statement of financial position?
a. Investment property
b. Investments accounted under the equity method
c. Biological assets
d. Contingent liability

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37. Which statements is incorrect concerning the presentation of the income statement?
a. The nature of expense method means that expenses are aggregated according to their
nature and are not reallocated among various functions within the entity.
b. The cost of sales method means that expenses are classified according to their function as
cost of sales, distribution or administrative activities.
c. PAS 1 requires the use of the cost of sales method than the nature of expense method.
d. The choice between the functional and natural presentation depends on historical and
industry factors and the nature of the entity.

38. Which of the following approaches to income measurement underlies financial accounting and
reporting?
a. Transaction approach
b. Economic approach
c. Valuation approach
d. Physical capital maintenance approach

39. The concept of earnings

a. Includes changes in market value of FA at FVOCI.
b. Includes foreign currency translation adjustments
c. Includes gains resulting from the sale of a productive asset in an arms length transaction
d. Same as comprehensive income.

40. Separate line items in an analysis of expenses by nature include

a. Purchases, transport costs, employee benefits, depreciation, extraordinary items.
b. Purchases, distribution costs, administrative costs, employee benefits, depreciation.
c. Depreciation, purchases, transport costs, employee benefits and advertising costs.
d. Cost of sales, administrative costs, transport costs and distribution costs.

41. Separate line items in an analysis of expenses by function include

a. Purchases, transport costs, employee benefits, depreciation, extraordinary items.
b. Purchases, distribution costs, administrative costs, employee benefits, depreciation.
c. Depreciation, purchases, employee benefits and advertising costs.
d. Cost of sales, administrative expenses and distribution expenses.

42. Information in the income statement helps users to

a. Evaluate the past performance of the entity.
b. Provide a basis for predicting future performance.
c. Assess the amount, timing and risk or uncertainty of future cash flows.
d. All of these.

43. Other comprehensive income shall include all of the following, except
a. Net unrealized loss on available for sale securities
b. Foreign currency translation gain
c. Revaluation surplus
d. Dividends paid to stockholders

44. The notes to the financial statements of an entity shall

I. Present information about the basis of preparation of the financial statements and the
specific accounting policies used.
II. Disclose the information required by Philippine Financial Reporting Standards that is not
presented on the face of the financial statements.
III. Provide additional information, which is not presented on the face of the financial
statements but is not relevant to understanding of the financial statements.
a. I, II and III c. I and III only
b. I and II only d. I only
45. The notes to financial statements should be presented in what order?
I. Summary of significant accounting policies
III. Supporting computations for items presented on the face of the statements.
III. Other disclosures, including contingent liabilities, unrecognized contractual commitments
and nonfinancial disclosures.
IV. Statement of compliance with PFRS
a. I, II, III and IV c. IV, I, II and III
b. II, III, IV and I d. No specific order

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46. Which of the following information is not specifically a required disclosure of PAS 1?
a. Name of the reporting entity or other means of identification, and any change in that
information from the previous year.
b. Names of major shareholders of the entity.
c. Level of rounding used in presenting the financial statements.
d. Whether the financial statements cover the individual entity or a group of entities.

47. Nonfinancial disclosures include all of the following except

a. Contingencies and commitments
b. Domicile and legal form of the entity, its country of incorporation and address of the
registered office.
c. Description of the nature of the entitys operations or principal activities.
d. Name of the parent and the ultimate parent of the group.

48. The disclosure of accounting policies

a. May describe policies that are peculiar to the reporting companys industry.
b. Should not appear in the notes to the financial statements
c. Should not describe unusual or innovative applications of GAAP.
d. Is encouraged but not required

49. A pending obligation of the company as of statement of financial position date would generally
be considered under GAAP as
a. Nonmonetary liability
b. Contingent liability
c. Estimated liability
d. Current liability

50. An entity shall disclose of all the following, except

a. The domicile and legal form of the entity, its country of incorporation and the address of the
registered office.
b. A description of the nature of the entitys operations and its principal activities.
c. The amount of noncumulative preference share dividends not declared.
d. Contingent liabilities and unrecognized contractual commitments.

51. The presentation of notes to financial statements in a systematic manner

a. Is voluntary
b. Is mandatory
c. Is mandatory, as far as practicable
d. Depends on the industry

52. Disclosure of information about key sources of estimation uncertainty and judgments
a. Is voluntary.
b. Is mandatory.
c. Is either voluntary or mandatory
d. Depends on the industry

53. The cross-reference between each line item in the financial statements and any related
information disclosed in the notes to the financial statements
a. Is voluntary.
b. Is mandatory.
c. Depends on the industry.
d. Is either voluntary or mandatory

54. Which of the following is not a method of disclosing pertinent information?

a. Supporting schedule
b. Parenthetical explanation
c. Cross reference and contra item
d. All of these are methods of disclosing pertinent information

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55. In the absence of an accounting standard that applies specifically to a transaction, what is the
most authoritative source in developing and applying an accounting policy?
a. The requirement and guidance in the standard or interpretation dealing with similar and
related issue.
b. The definition, recognition criteria and measurement of asset, liability, income and
expense in the conceptual framework.
c. Most recent pronouncement of other standard-setting body.
d. Accounting literature and accepted industry practice.

56. Jaymar Company provided the following adjusted balances on December 31, 2016, except for
income tax expense.

Cash 550,000
Accounts receivable 1,650,000
Prepaid taxes 300,000
Accounts payable 120,000
Share capital 500,000
Share premium 680,000
Retained earnings 630,000
Foreign currency translation adjustment - debit 430,000
Revenue 3,600,000
Expenses 2,600,000

During the current year, estimated tax payments of P300,000 were charged to prepaid taxes.
The entity has not yet recorded income tax expense. There were no differences between
financial statement and income tax income, and the tax rate is 30%. Included in accounts
receivable is P500,000 due from a customer. Special terms granted to this customer require
payment in equal semiannual installments of P125,000 every April 1 and October 1.

1. On December 31, 2016, what amount should be reported as total current assets?
a. 1,950,000
b. 2,500,000
c. 2,200,000
d. 2,250,000

2. On December 31, 2016, what amount should be reported as total retained earnings?
a. 1,029,000
b. 1,200,000
c. 1,330,000
d. 1,630,000

57. The accounts below were taken from the unadjusted trial balance of Kitty Company as at
December 31, 2016:

Cash, net of bank overdraft of P150,000 600,000

Notes receivable (including discounted note of P100,000) 500,000
Trade accounts receivable, net of customers credit balances of P50,000 700,000
Merchandise inventory 800,000
Trade accounts payable, net of creditors debit balances of P100,000 800,000

What is the correct amount of current assets on December 31, 2016?

a. 2,800,000
b. 2,700,000
c. 2,600,000
d. 2,900,000
58. The expenses other than interest expense of John Company for the current year is 40% of cost
of sales but only 20% of sales. Interest expense is 5% of sales. The amount of purchases is
120% of cost of sales. Ending inventory is twice as much as the beginning inventory. The
income after tax of 30% for the current year is P350,000. What is the amount of sales for the
current year?
a. 1,625,000
b. 1,300,000
c. 2,000,000
d. 2,500,000

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59. Hanna Company incurred the following costs and expense during the current year:

Raw material purchases 4,000,000

Direct labor cost 1,500,000
Indirect labor cost factory 800,000
Factory repairs and maintenance 200,000
Taxes on factory building 100,000
Depreciation factory building 300,000
Taxes on sales room and general offices 150,000
Depreciation sales equipment 50,000
Advertising 400,000
Sales salaries 500,000
Office salaries 700,000
Utilities (50% applicable to factory, 30% to salesroom and 20% to office) 1,000,000

Beginning Ending
Raw Materials 200,000 450,000
Work in process 500,000 350,000
Finished goods 400,000 700,000

What was Hannas cost of goods sold?

a. 7,000,000
b. 7,300,000
c. 7,400,000
d. 7,700,000

60. The following information was taken from James accounting records for the year ended
December 31, 2016.

Decrease in raw materials 500,000

Increase in goods in process inventory 800,000
Decrease in finished goods inventory 1,000,000
Raw materials purchased 20,000,000
Direct labor payroll 5,000,000
Factory overhead 4,000,000
Freight out 1,500,000
Freight in 2,300,000

The cost of goods sold is

a. 32,000,000
b. 33,500,000
c. 30,000,000
d. 30,600,000

61. The following items were among those that were reported on Victor Companys income
statement for the year ended December 31, 2016.

Legal and audit fees 2,000,000

Rent for office space 4,000,000
Interest on acceptances payable 800,000
Officers salaries 1,000,000
Loss on abandoned data processing equipment 500,000
Insurance 300,000
Interest expense 600,000

The sale and accounting departments use the office space equally. What amount should be
classified as general and administrative expenses?
a. 5,900,000
b. 7,000,000
c. 7,800,000
d. 5,300,000

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62. Drake Companys stockholders equity on January 1, 2016 was at P40,000,000. Drake
Company did not issue any shares nor acquired any treasury shares during the year. The
company reported a net income of P10,000,000 for the year ended December 31, 2016. The
auditor raised questions about the following amounts that had been included in the net income:

Loss from expropriation of property, net 1,500,000

Unrealized gain on the increase in value of Available for Sale Securities 500,000
Adjustment of profit of prior year, net- debit 4,500,000
Accumulated translation loss 2,000,000
Revaluation surplus realization 1,000,000
Loss on write-off of inventory due to a government prohibition, net 3,500,000

The loss from expropriation was unusual in occurrence in Drakes line of business. Drake
Companys 2016 income statement should report net income at
a. 15,000,000
b. 13,000,000
c. 15,500,000
d. 16,000,000

63. Rizal Corporation's trial balance contained the following account balances at December 31,
2016:

Trading securities 1,500,000

Prepaid Insurance 300,000
Cash 330,000
Merchandise inventory 900,000
Investment in derivatives 250,000
Investment property 2,000,000
Available for sale securities 1,300,000
Equipment and furniture (net) 5,200,000
Patent 400,000
Accounts receivable (net) 480,000
Equipment used and held for sale 750,000
Rizals trading securities, available for sale securities and investment property have been
adjusted to their market values. On Rizal's December 31, 2016 balance sheet, the total current
assets should be
a. 4,260,000
b. 3,760,000
c. 4,510,000
d. 5,560,000

64. The trial balance of Zambales Company reflected the following liability account balances on
December 31, 2016:

Accounts payable 5,000,000

Bonds payable, due December 30, 2017 10,000,000
Premium on bonds payable 500,000
Deferred tax liability 2,500,000
Dividends payable 4,500,000
Income tax payable 1,500,000
Note payable bank 4,000,000

The bank note payable matures on June 30, 2017. On March 1, 2017, the entire balance of the
bank payable was refinanced on a long-term basis. Zambaless financial statements were
issued on March 31, 2017.

In its December 31, 2016 statement of financial position, Zambales Company should report
current liabilities at
a. 21,500,000
b. 24,000,000
c. 25,500,000
d. 28,000,000

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65. An analysis of Tarlac Company should report current liabilities at

Accounts payable, after deducting debit balances in suppliers

Accounts amounting to P100,000 4,000,000
Accrued expenses 1,500,000
Credit balances of customers accounts 500,000
Stock dividend payable 1,000,000
Claims for increase in wages and allowance by employees of the
Company, covered in a pending lawsuit 400,000
Estimated expenses in redeeming prize coupons represented by customers 600,000

How much should be presented as total current liabilities on the statement of financial position?
a. 6,700,000
b. 6,600,000
c. 7,100,000
d. 7,700,000

66. The adjusted trial balance of Bulacan on December 31, 2016 includes the following accounts:
Share capital 15,000,000
Share premium 5,000,000
Treasury shares, at cost 2,000,000
Unrealized gain on AFS securities 1,000,000
Retained earnings unappropriated 6,000,000
Retained earnings appropriated 3,000,000
Revaluation Increment 4,000,000
Cumulative translation adjustment debit 2,500,000
What amount should be reported as total shareholders equity?
a. 27,500,000
b. 27,000,000
c. 30,000,000
d. 29,500,000

67. Jenna Companys December 31, 2016 statement of financial position reported the following
current assets:

Cash (net of an overdraft of P500,000 in another bank) 3,500,000

Accounts receivable 7,500,000
Inventory 3,000,000
Prepaid expenses 1,200,000
Deferred tax asset 500,000
Land classified as held for sale 2,000,000
18,200,000
An analysis of the accounts receivable disclosed that accounts receivable comprised the
following:
Trade accounts receivable (net of a P300,000 credit balance in
a customers account) 5,000,000
Allowance for doubtful accounts (500,000)
Selling price of Jenna Companys unsold goods sent to Baguio Company on
consignment at 150% of cost and excluded from Jennas ending inventory 3,000,000
7,500,000
What is the total current assets at December 31, 2016?
a. 17,200,000
b. 14,700,000
c. 14,500,000
d. 17,000,000

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68. The following data are available for purposes of stating the financial position of Jake Company
on December 31, 2016:

Cash, including sinking fund of P800,000 2,000,000

Notes receivable (P500,000 pledged) 1,500,000
Accounts receivable-unassigned 200,000
Accounts receivable-assigned 400,000
Notes receivable discounted 300,000
Equity in assigned accounts 50,000
Inventory, including P200,000 cost of goods in transit purchased
FOB shipping point. The goods were received on January 5, 2017 4,000,000
Allowance for doubtful accounts 150,000
Financial Assets held for trading (Cost P800,000) 1,000,000

How much of the current assets should be shown in the statement of financial position as of
December 31, 2016?
a. 7,850,000
b. 7,650,000
c. 7,900,000
d. 8,150,000

69. Included in Stephan Corporations liability account balances at December 31, 2016 were the
following:
12% note payable issued on April 15, 2013 maturing on April 15, 2017 10,000,000
10% note payable issued on February 1, 2014 maturing
on January 31, 2020 5,000,000
Stephans December 31, 2016 financial statements were issued on April 10, 2017. As of
December 22, 2016, the lender of the P10,000,000 has agreed to postpone payment until
January 1, 2018. The 10% note payable maturing on January 31, 2017 includes a loan
covenant. The term of the note gives the lender to demand payment if Stephan fails to make a
monthly interest payment. As of December 31, 2016, Stephan is three months behind in
paying the required interest. However the holder has agreed as of December 30, 2016 not to
demand payment in 2017 and for Stephan to rectify the breach with in 2017. What is the total
amount to be presented as noncurrent liability relating to these notes?
a. 10,000,000
b. 5,000,000
c. 15,000,000
d. 0

70. Jay Company provided the following information on December 31, 2016:

Accounts payable, net of debit balances of P100,000 in creditors accounts 1,900,000

Accrued expenses 500,000
Bonds payable due December 31, 2017 3,000,000
Discount on bonds payable 200,000
Deferred tax liability 400,000
Income tax payable 700,000
Cash dividend payable 800,000
Stock dividend payable 300,000
Note payable 6%, due March 1, 2017 1,500,000
Note payable 8%, due October 1, 2017 1,000,000

The 2016 financial statements were issued on March 31, 2017. On March 1, 2017, the 6% note
payable was refinanced on a long-term basis. Under the loan agreement for the 8% note
payable, the entity has the discretion to refinance the obligation for at least twelve months after
December 31, 2016. The deferred tax liability is based on temporary differences that will
reverse in 2017. A sinking fund of P3,000,000 was set aside to pay the bonds payable upon
maturity. What amount should be reported as total current liabilities on December 31, 2016?
a. 8,300,000
b. 9,300,000
c. 9,000,000
d. 5,500,000

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80. The income statement accounts of Gringo Company for the year 2016 included the following:

Net sales 9,500,000

Cost of goods sold 4,000,000
Distribution cost 600,000
Administrative expenses 1,200,000
Interest expense 700,000
Other expense 400,000
Interest income 200,000
Gain from expropriation 100,000
Investment income 200,000
Income tax 800,000
Income from discontinued operations 600,000
Unrealized gain FA at FVTOCI 1,100,000
Foreign currency translation adjustment loss 200,000
Revaluation surplus 2,500,000
Dividends declared 1,000,000
Investments by stockholders 400,000
Correction of an error-debit 3,000,000
1. The 2016 statement of comprehensive income should report income before income taxes at
what amount?
a. 3,000,000
b. 3,100,000
c. 2,300,000
d. 3,500,000
2. The 2016 statement of comprehensive income should report income from continuing
operations at what amount?
a. 3,200,000
b. 3,100,000
c. 2,300,000
d. 2,900,000
3. The 2016 statement of comprehensive income should report net income at what amount?
a. 3,400,000
b. 3,100,000
c. 2,300,000
d. 2,900,000
4. The 2016 statement of comprehensive income should report comprehensive income at what
amount?
a. 5,700,000
b. 6,300,000
c. 5,900,000
d. 6,500,000

81. The following information was taken from Ozz Companys accounting records for the year
ended December 31, 2016:

Sales 10,000,000
Decrease in goods in process inventory 200,000
Decrease in raw materials inventory 350,000
Increase in finished goods inventory 500,000
Raw materials purchased 2,100,000
Direct labor payroll 1,000,000
Factory overhead 800,000
Freight in 300,000
Freight out 900,000
General and administrative expenses 1,600,000

How much is Ozz Companys income before tax?

a. 4,150,000
b. 4,000,000
c. 3,250,000
d. 3,750,000

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82. Mark Company provided the following information for the current year:

Income from continuing operations 5,000,000

Income from discontinued operation 1,300,000
Unrealized gain on financial asset at FVTPL 2,500,000
Unrealized gain on financial asset at FVTOCI 1,500,000
Unrealized gain on futures contract designated as a cash flow hedge 500,000
Actuarial loss during the year due to increase in PBO 400,000
Foreign translation adjustment debit 100,000
Revaluation surplus during the year 2,000,000
Loss on credit risk of financial liability designated at FVPL 300,000

What amount should be reported as comprehensive income for the year?

a. 3,500,000
b. 1,500,000
c. 6,000,000
d. 9,500,000

END

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