Quiz Bee

1.
An accounting concept that disallows the presentation of the personal assets and liabilities of the owner in the
financial statement of the owner’s business.
Time allotment: 10 seconds
Answer: Entity Principle
2. When special journals are used, adjusting and closing entries are recorded in what kind of journal?
Answer: General Journal
3. These entries are made to remove the balances from the entity’s temporary accounts.
Answer: Closing entries
4. At the beginning of the year, the liabilities of Aling Puring Service Station amounted to P120,000 but it decreased by
P50,000 during the year. The assets increased by P160,000 during the year and amounted to P360,000 at the end of
the year. The owner’s equity at the start of the year is
Answer: P80,000
5. The company had the following incomplete information

Sales returns and allow. P 6,500 Merchandise inventory, end P 42,875
Purchase discount 11,500 Cost of sales 525,350
Purchase returns and allow. 7,300 Gross profit 452,150
Net cost of purchases 441,370
One of the collections is from a customer in payment of his account worth P135,000 which was opened 13 days ago
and with a term 5/10, 3/15, n/30. Transportation cost on one of the purchases amounted to P15,000 with a term F.O.B.
Shipping Point.
The amount of gross sales is .

Answer: P988,050
6. The operating expenses other than interest expense of Tactful Company for the current year amount to 40% of cost of
sales but only 20% 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 P560,000. What is the amount of sales for
the current year?
Answer: P3,200,000
7. The principle that a person is free to choose those whom he wants to be associated in partnership.
Answer: Principle of delectus personae
8. The maximum number of shares of stock that the government gives a corporation permission to issue is the
Answer: Authorized shares
9. Precious and Anne are forming a partnership by combining their businesses. Their books show the following:
Precious Anne
Cash P72,000 P 30,000
Accounts Receivable 150,000 108,000
Merchandise Inventory 240,000 156,000
Furniture and Fixtures 330,000 102,000
Prepaid Expenses 63,000 21,000
Accounts Payable 366,000 144,000
Precious, Capital 489,000
Anne, Capital 273,000
It has been agreed to recognized Uncollectible Accounts of P7,500 and P5,400 to each party, respectively and that
Furniture and Fixtures of Anne are over depreciated by P9,000.
If each partner’s share in equity is to be equal to the net assets invested, the capital accounts of Precious would be
Answer: P481,500
10. Banayo and his very close friend Buendia formed a partnership on January 1, 2010 with Banayo contributing
P160,000 cash and Buendia contributing equipment with a book value of P64,000 and a fair value of P48,000, and
inventory items with a book value of P24,000 and a fair value of P32,000. During 2010, Buendia made additional
investment of P16,000 on April 1, and P16,000 on June 1. On September 1, he withdrew P40,000. Banayo had neither
additional investment nor withdrawals during the year. The average capital balance at the end of the fiscal year 2010
for Buendia is
Answer: P88,000
11. Cunanan invests P160,000 in a partnership for a one-fourth interest. Prior to Cunanan’s admission, the partnership had
two partners with capital balances of P190,000 each. If no asset revaluation is recognized prior to Cunanan’s
admission, what amount is credited to his capital account?
Answer: P135,000
12. The shareholder’s equity section of GGG Corporation as of December 31, 2011 contained the following accounts:
Ordinary Share Capital, 25,000 shares authorized,
10,000 shares issued and outstanding P 30,000
Ordinary Share Premium 40,000
Retained Earnings 80,000
P 150,000
GGG’s board of directors declared a 10% stock dividend on April 1, 2012 when the market value of the share capital
was P7 per share. Accordingly, 1,000 new shares were issued. All of GGG’s shares has a par value of P3 per share.
GGG incurred a loss of P12,000 for the first three months.
What is the balance of the Retained Earnings accounts as of April 1, 2012?
Answer: P61,000
13. It is a qualitative characteristic that helps assure users that information faithfully represents the economic
phenomenon it purports to represent so that different knowledgeable and independent observers could reach
consensus, although not necessarily complete agreement, that a particular depiction is a faithful representation.
Answer: Verifiability
14. A transaction amounting to P1,234 recorded in the journal as P1,243 depicts what kind of error?
Answer: Transposition Error
15. What is the former name of the Philippine Financial Reporting Council?
Answer: Accounting Standards Council
16. If a financial information that is presented in a balance sheet or income statement is misstated and it influences the
economic decision users, that information is described as .
Answer: Material
17. A check that is merely drawn and recorded but not given to the payee before the end of the reporting period.
Answer: Undelivered or Unreleased checks
18. A system of control of cash which requires that all cash receipts should be deposited intact and all cash disbursements
should be made by means of check.
Answer: Imprest system
19. The following data pertain to Ablaze Company at year-end:

Cash balance in checking account with First Bank P 5,000,000
Overdraft in checking account with Second Bank ( 500,000)
Cash in a special fund for plant expansion 2,000,000
Change fund 50,000
Currency and coins in petty cash fund 15,000
Time deposit – three months 2,500,000
What total amount should be reported as cash at year-end?
Time allotted: 30 seconds
Answer: P5,065,000
20. In preparing its bank reconciliation on December 31, 2012, Cardinal Company has made available the following data:
Balance per bank statement P 3,800,000
Deposit in transit 520,000
Amount erroneously credited by bank to the entity’s account 40,000
Bank service charges for December 5,000
Outstanding checks 675,000
What is the adjusted cash in bank in December 31, 2012?
Answer: P3,605,000
21. On January 1, 2015, Malice Company’s allowance for doubtful accounts had a credit balance of P300,000. During
2015, the entity charged P650,000 to doubtful accounts expense, wrote off P450,000 of uncollectible accounts
receivable and unexpectedly recovered P100,000 of bad debts written off in prior year. What is the allowance for
doubtful accounts on December 31, 2015?
Answer: P600,000
22. Gena Company accepted from a customer in settlement of an account a P4,000,000, 90-day 12% note dated August
31, 2016. On September 30, 2016, the entity discounted the note at 15% with recourse at the bank. The note was paid
in full by the maker in maturity. The discounting with recourse is accounted for as a conditional sale with recognition
of a contingent liability. What amount was received from the note receivable discounting?
Answer: P4,017,000
23. On September 30, 2016, a fire at Eirene Company’s warehouse caused severe damage to the entire inventory. The
entity has a gross profit ratio of 30% on cost. The following data are available for the nine months ended September
30, 2016:
Inventory, January 1 P 1,100,000
Net purchases 6,000,000
Net sales 7,280,000
A physical inventory disclosed usable damaged goods which can be sold for P100,000. What is the estimated amount
of fire loss on September 30, 2016?
Time allotted: 60 seconds:
Answer: P1,400,000
24. The principle applicable for “bearer plants” is under what standard?
Answer: PAS 16: PPE
25. Any contract that gives rise to a financial asset of one entity and a financial liability or an equity of another entity.
Answer: PAS 16: Financial Instrument
26. A transaction whereby the outstanding shares are called in and replaced by a larger number, accompanied by a
reduction in the par or stated value of each share.
Answer: Split up
27. On January 1, 2016, Therese Company purchased 9% bonds with face amount of P4,000,000 for P3,756,000 to yield
10%. The bonds are dated January 1, 2016, and pay interest annually on December 31. The interest method of
amortization is used. What is the interest income for 2017?
Answer: P377,160
28. Justice Company purchased 50,000 shares on January 15, 2015 representing 5% ownership interest. The entity
received a stock dividend of 20% on March 31, 2012 when the market price of the share is P40. The investee paid
cash dividend of P5 per share on December 15, 2015. What amount should be reported as dividend income for 2015?
Answer: P300,000
29. These are tangible assets that are held for use in production or supply of goods or services, for rental to others, or for
administrative purposes, and are expected to be used during more than one period.
Answer: Property, plant and equipment
30. It is a way of cost allocation in recognition of exhaustion of the life of an item of property, plant and equipment.
Answer: Depreciation.
31. Character Company purchased equipment by making a down payment of P400,000 and issuing note payable for
P1,800,000. A payment of P600,000 is to be made at the end of each year for three years. The applicable rate of
interest is 8%. The PV of an ordinary annuity of 1 at 8% for three periods is 2.58 while the PV of 1 at 8% for three
periods is 0.79. Shipping charge for the equipment of P200,000 and installation cost of P350,000 were incurred. What
is the capitalized cost of the equipment?
Answer: P2,498,000
32. These are manufacturing costs incurred to produce units of outputs.

Answer: Product costs
33. In period of rising prices, what effect would the use of FIFO have on the net income of a company?
a. No effect
b. The net income increases
c. The net income decreases
d. There will be a loss
Answer: B
34. The annual demand for tennis racquets is 50,000 units, and carrying costs amount to P2 per unit. Order costs of the
company amount to P5. The economic order quantity in units for tennis racquets is (rounded to the nearest unit):
Answer: 500 units
35. Which of the following costs is not a product cost?

a. Wages paid to workers for rework on defective products.
b. Wages paid to truck loaders who load finished goods onto outgoing delivery trucks.
c. Fringe benefits paid to factory workers.
d. Wages paid to workers for idle time due to machine breakdown in a production department.
Answer: B
36. When production (in units) decreases, the average cost per unit of product increases. This increase in the average cost
per unit is due to the
a. Increase in variable cost per unit. c. increase in total variable costs.
b. Increase in fixed cost per unit. d. increase in total fixed costs.
Answer: B
37. Which of the following statements about cost behavior is correct?

a. Within the relevant range, total variable costs may vary directly with activity, while total fixed costs remain
unchanged for a given period despite fluctuations in activity.
b. Within the relevant range, variable cost per unit varies directly with activity, while fixed cost per unit remains
c. Within the relevant range, fixed cost per unit varies directly with activity, while variable cost per unit remains
d. Within the relevant range, total variable costs may vary inversely with activity, while total fixed costs remain
Answer: A
38. ABC Co has a manufacturing capacity of 10,000 units The flexed production cost budget of the company is as
follows:
Capacity 60% 100%
Total Production Costs P11,280 P15,120
Using high-low method, what is the budgeted total production cost if it operates at 85% capacity?
Answer: P13,680
39. Following are costs incurred by PATRICIA Manufacturing Corporation during the previous month:
Direct materials P 5,000 Indirect materials P 2,000
Direct labor 6,000 Indirect labor 1,000
Factory utilities 4,000 Advertising costs 8,000
Sales commissions 12,000 Depreciation on a admin bldg 3,000
Salaries of an admin personnel 20,000 Depreciation – delivery eqpmt 2,000
Overtime pay – factory workers 1,500 Rework cost – defective product 2,500
The total product cost is:
Answer: P22,000
40. In cost terminology, conversion costs consists of:

a. Direct and indirect labor
b. Direct labor and direct materials
c. Direct labor and factory overhead
d. Indirect labor and variable factory overhead
Answer: B
41. For a liability to exist

a. A past transaction or event must have occurred.
b. The exact amount must be known.
c. The identity of the party owed must be known.
d. An obligation to pay in the future must exist.
Answer: A
42. An entity has a loan due for repayment in six months’ time, but the entity has the option to refinance for repayment
two years later. The entity plans to refinance this loan. In which section of the statement of financial position should
this loan be presented?
a. Current liabilities c. Noncurrent liabilities
b. Current assets d. Noncurrent assets
Answer: C
43. Which of the following is not a liability?

a. Deposit received from a customer c. Zero-interest bearing note payable
b. Unearned revenue d. Stock dividend payable
Answer: D
44. It is a marketing scheme whereby an entity grants award credits to customers and the entity can redeem the award
credits in exchange for free or discounted goods or services.
Answer: Customer loyalty program
45. Topsy Company started a new promotional program. For every 10 box tops returned, customer receive a basketball.
The entity estimated that only 70% of the box tops reaching the market will be redeemed. Additional information is as
follows:
Units Amount
Sales of product 100,000 P30,000,000
Basketball purchased 5,500 4,125,000
Basketball distributed 4,000
What is the amount of year-end estimated liability associated with this promotion?
a. P 2,250,000 c. P 3,000,000
b. P 1,500,000 d. P 4,500,000

Answer: A
46. Clam Company offers its customers a pottery cereal bowl if they send in two boxtops from its products and P10. The
entity estimated that 60% of the boxtops will be redeemed. In 2016, the entity sold 675,000 boxes and customers
redeemed 330,000 boxtops. The cost of each bowl is P25. The cost of each bowl is P25. What is the liability for
outstanding premiums on December 31, 2016?
a. P 250,000 c. P 562,500
b. P 375,000 d. P 875,000

Answer: C
47. Trend Company provided the following information for the current year:
Net loss P 100,000
Total assets, Dec. 31 3,000,000
Share capital, Dec. 31 1,000,000
Share premium, Dec. 31 500,000
Dividends declared 700,000
Total liabilities, Dec. 31 1,000,000
What is the retained earnings balance on Jan. 01?
a. P 1,100,000 c. P 500,000
b. P 1,300,000 d. P 600,000

Answer: B
48. Mile Company sells washing machines that carry a three-year warranty against manufacturer’s defects. Based on
entity experience, warranty costs are estimated at P300 per machine. During the current year, the entity sold 2,400
washing machines and paid warranty costs of P170,000. What amount should be reported as warranty expense for the
current year?
a. P 170,000 c. P 550,000
b. P 240,000 d. P 720,000

Answer: D
49. Mill Company revealed the following account balances in December 31, 2016:
Accounts payable P 1,500,000
Bonds payable due 2017 2,500,000
Discount on bonds payable 300,000
Dividends payable 800,000
Note payable due 2018 2,000,000
What total amount should be reported as current liabilities?
a. P 4,500,000 c. P 6,500,000
b. P 5,100,000 d. P 7,800,000

Answer: A
50. Witt Company reported the following liability account balances on December 31, 2014:
6% note payable issued October 1, 2013 maturing October 1, 2015 P 500,000
8% note payable issued April 1, 2013 maturing April 1, 2015 800,000
The 2014 financial statements were issued on March 31, 2015. On March 1, 2015, the entire P800,000 balance of 8%
note was refinanced by issuance of a long-term obligation payable lump sum. ON December 31, 2014, what amount
of the notes payable should be classifies as current?
a. P 1,300,000 c. P 800,000
b. P 500,000 d. P 0

Answer: C

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1.

5. The company had the following incomplete information

The amount of gross sales is .

19. The following data pertain to Ablaze Company at year-end:

32. These are manufacturing costs incurred to produce units of outputs.

35. Which of the following costs is not a product cost?

37. Which of the following statements about cost behavior is correct?

40. In cost terminology, conversion costs consists of:

41. For a liability to exist

43. Which of the following is not a liability?

Time allotted: 60 seconds

Time allotted: 60 seconds

Time allotted: 60 seconds

Time allotted: 30 seconds

Time allotted: 30 seconds

Time allotted: 30 seconds

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