SVFC BS Accountancy - 3rd Set Online Resources SYSY20-19 1st Semester PDF

SAINT VINCENT DE FERRER COLLEGE AUGUST 2019
BS ACCOUNTANCY (1st semester SY 2020-2019) Part 3

ONLINE RESOURCES by Prof. Hector Santos Jr., CPA, MBA
AUDITING THEORY
I. Topic(s):
Code of Ethics
II. Learning Objective(s):

To understand the general application of Code of Ethics for Professional Accountants in the
Philippines
III. Rundown
Please read and understand the other file entitled “Code of Ethics.pdf”
IV. Recommended Reference(s):

1. Text Book - Auditing Theory Edition by Salosagcol
2. Text Book – Assurance Principle by Cabrera
3. Text Book Auditing & Assurance Services - David Ricchiute
4. Internet
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Copyright of Prof. Hector U. Santos Jr., CPA, MBA
This online resource is intended solely to whom it is authorized to receive it. If you are not the intended recipient you are hereby notified that
any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be
unlawful.
MANAGEMENT ADVISORY SERVICES
I. Topic(s):
Systems Design: Job-Order Costing
II. Learning Objective(s)

(after studying the topic, you should be able to):
1. Distinguish between process costing and job-order costing and identify companies that would use
each costing method.
2. Identify the documents used in a job-order costing system.
3. Compute predetermined overhead rates and explain why estimated overhead costs (rather than
actual overhead costs) are used in the costing process.
4. Understand the flow of costs in a job-order costing system and prepare appropriate journal entries
to record costs.
5. Apply overhead cost to Work in Process using a predetermined overhead rate.
6. Prepare schedules of cost of goods manufactured and cost of goods sold.
7. Use T-accounts to show the flow of costs in a job-order costing system.
8. Compute underapplied or overapplied overhead cost and prepare the journal entry to close the
balance in Manufacturing Overhead to the appropriate accounts.
III. Rundown
1. Please watch below link to know and understand the topic

http://highered.mcgraw-hill.com/sites/0073379611/student_view0/chapter3/narrated_slides.html
2. Please read and understand attached slide entitled “Job Order”
3. After watching and reading above (1 and 2), try to answer this online multiple quiz for self
assessment. http://highered.mcgraw-
hill.com/sites/0073379611/student_view0/chapter3/multiple_choice_quiz.html
4. After watching and reading above (1 and 2), try to answer the practice exam for self assessment
Please see attached word file “Job Order – Practice Exam”

1. Managerial Accounting by Garrison
2. Managerial Accounting by Kieso Weyganth
3. Managerial Accounting by local authors
4. Internet
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THEORY OF ACCOUNTS
I. Topic(s):
CASH AND CASH EQUIVALENTS
BANK RECONCILIATION
II. Learning Objectives:

Understand concepts of “Cash and Cash equivalents” account and Bank Reconciliation
III. Rundown
Please read the latest textbook version of “Financial Accounting Volume 1” by Valix
Chapter 3 and 4
Important things to remember

Cash
 is any item that is used as standard medium of exchange.
 In accounting, cash includes “money and any other negotiable instrument that is payable
in money and acceptable by the bank for deposit and immediate credit”.
 Includes checks, bank drafts and money orders because these are acceptable by the bank
for deposit or immediate encashment.
 Must be unrestricted in use.
The following cash items are included in cash:

a. Cash on Hand
Includes undeposited cash collections and other cash items awaiting deposit such
as customers’ checks, cashier’s or manager’s checks, travelers checks, bank drafts
and money orders.
b. Cash in Bank
It includes demand deposit or checking account and saving deposit which are
unrestricted as to withdrawal.
c. Cash Fund
Set aside for current purposes such as petty cash fund, payroll fund and dividend
fund.
Cash Equivalents
Under PAS 7 it is defined as short-term and highly liquid investments that are readily
convertible into cash and so near their maturity that they present insignificant risk of changes
in value because of changes in interest rates.
The standard states that only highly liquid investments that are acquired three months before
maturity can qualify as cash equivalents.
Examples of cash equivalents are:
a. Three-month BSP treasury bill
b. Three-month BSP treasury bill purchased three months before date of maturity
c. Three-month time deposit
d. Three-month money market instrument
Valuation of Cash in the Balance Sheet

 Cash is valued at face value
 Cash in foreign currency is valued at the current exchange rate
Financial Statement Presentation

Cash and cash equivalents should be shown as the first item among the current assets. It
includes all cash items, such as cash on hand, cash in bank, petty cash fund and cash
equivalents which are unrestricted in us for current operations.
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Cash Fund for a Certain Purpose

If the cash fund is set aside for use in current operations or for the payment of current
obligation, it is a current asset. It is included as part of cash and cash equivalents.
Examples are:
a. petty cash fund
b. payroll fund
c. travel fund
d. interest fund
e. dividend fund
f. tax fund
If the cash fund is set aside for noncurrent purpose or for payment of noncurrent obligation, it
is shown as long-term investment.
Examples are:
a. sinking fund
b. preference share redemption fund
c. contingent fund
d. insurance fund
e. fund for acquisition of property, plant and equipment
Compensating Balance
A set of amount of cash that a firm must keep to its checking account or savings accounts at
all times as part of loan agreement.
Classification of Compensating Balance

If the deposit is not legally restricted as to withdrawal by the borrower, the compensating
balance is part of cash.
If the deposit is legally restricted, the compensating balance is classified separately as

“cash held as compensating balance” under current assets if the related loan is short-term.
If the related loan is long-term, it is classified as long-term investment.
Bank Reconciliation
Bank Reconciliation
 is a statement which brings into agreement the cash balance per bank and cash balance
per book. It is usually prepared monthly because the bank provides the depositor with the
bank statement at the end of every month.
Bank Statement
 is a monthly report of the bank to the depositor showing the cash balance per bank at the
beginning, the deposits acknowledged, the checks paid, other charges and credits and the
daily cash balance per bank during the month.
Reconciling Items
At the end of every month, comparison between the cash records of the depositor and the
bank statement received from the bank will yield the following reconciling items:
1. Book Reconciling Items

a. Credit Memos
b. Debit Memos
c. Errors
2. Bank Reconciling Items
a. Deposit in Transit
b. Outstanding Checks
c. Errors
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Credit Memos
Refer to items not representing deposits credited by the bank to the account of the
depositor, but not yet recorded by the depositor as cash receipts.
Examples of credit memos are:
a. Notes receivable collected by the bank in favor of the depositor and credited to
the account of the depositor
b. Proceeds of bank loan credited to the account of the depositor
c. Matured time deposits transferred by the bank to the current account of the
depositor
Debit Memos
Refer to items not representing checks paid by the bank which are charged or debited by
the bank to the account of the depositor but not yet recorded by the depositor as cash
disbursements.
Examples of debit memos are:
a. NSF checks
b. Defective checks
c. Bank service charges
d. Reduction of loan
Deposit in Transit
Collections already recorded by the depositor as cash receipts but not yet reflected on the
bank statement.
Deposits in transit include:

a. Collections already forwarded to the bank for deposit but too late to appear in the
bank statement.
b. Undeposited collections or those still in the hands of the depositor. In effect, these
are cash on hand awaiting delivery to the bank for deposit.
Outstanding Checks
Checks already recorded by the depositor as cash disbursements but not yet reflected on
the bank statement.
Outstanding checks include:
a. Checks drawn and already given to payees but not yet presented for payment.
b. Certified checks – is one where the bank has stamped on its face the word
“accepted” or “certified” indicating sufficiency of fund.
Certified checks should be deducted from the total outstanding checks because
they are no longer outstanding for bank reconciliation purposes
Forms of Bank Reconciliation

a. Adjusted balance method
Under this method, the book balance and the bank balance are brought to a correct
cash balance that must appear on the balance sheet.
b. Book to bank method
Under this method, the book balance is reconciled with the bank balance or the book
balance is adjusted to equal the bank balance.
c. Bank to book method
The bank balance is reconciled with the book balance or the bank balance is adjusted
to equal the book balance.

1. Latest Edition - Financial Accounting 1 by Conrado Valix
Philippine Accounting Standards
2. Philippine Accounting Standards Compilation
3. Internet
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BUSINESS LAW
I. Topic(s):
Law on Business Transactions - Contracts
II. Learning Objective(s):

To learn about the following concepts of contracts:
1. Classification of contracts
2. Elements and stages of contracts
3. Freedom to contract and limitations
4. Persons bound by contract
5. Consent – capacitated person
6. Object of contracts
7. Cause or consideration of contracts
8. Formalities, interpretation and reformation of contracts
9. Defective contracts: recissible, voidable, unenforceable, and void
III. Rundown
Please read above topic in the latest textbook version of “Obligation and Contract” by Hector S.
De Leon

Latest Edition - “Obligation and Contract” by Hector S. De Leon
Latest Edition - “Obligation and Contract” by Suarez
Civil Code
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ONLINE ASSESSMENTS
Reminders:
1. Should be submitted using excel format on or before January 15, 2020 exclusively to
saintvincentdeferrercollege@yahoo.com
2. Answers should follow below format for easy checking
a. Mutiple Choice
Multiple
Choice AT TOA MAS BL
1 a a b a
2 c a a a
3 a a b a
4 c a a a
5 a a b a
6 c
7 a
8 a
9 c
10 a
b. True or False
True or
False AT TOA MAS BL
1 True False True False
5 True False
6 True False
7 True False
8 True False
9 True False
10 True False
c. Identification
True or
False AT TOA MAS BL
Management
1 PSA GAAP Accounting Obligatio
2 AASC
3
4
5
6
7
8
9
10
d. Problem Solving
– must write/type the solution and answer.
e. Fill in the blanks
– must write the question and answer
3. Excell file should have a file name which consists of surname, first name and part
number (Example: SantosHectorPart1, DelaCruzJuanPart1, etc.)
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QUESTIONS:
(Multiple Choice, Computation & Identification)
Auditing Theory
1. Match each of the following actions with the Code of

Conduct rule violated by the action. No rule is used more
than once.
a. Independence
b. Integrity and objectivity
c. General standards
d. Compliance with standards
e. Accounting principles
f. Confidential client information
g. Contingent fees
h. Acts discreditable
i. Advertising and other forms of solicitation
j. Commissions and referral fees
k. Form of practice and name
____ Juanita Garcia, CPA, refused to be associated with

a client’s financial statements after the client
declined to correct a material misstatement. Garcia
later contacted James Jordan, CPA, retained by the
client to replace Garcia, and informed Jordan of the
misstatement.
____ Brianna Lopez, CPA, agreed to review loan

applications for First Charter Bank, an audit client.
The bank granted or denied the loans on the basis of
Lopez’ recommendations.
____ Rudy Boesch, CPA, accepted an audit engagement

for a fixed fee of $27,000 plus 1% of audited net
assets.
____ Ben Williams, CPA, issued an unqualified opinion on

a set of financial statements, even though he felt
uncomfortable about an accounting practice applied by
the client. Although the practice in question was in
accordance with GAAP, it increased net income
significantly above a level that Williams considered
reasonable.
____ Jones Transfer Company wishes to defer charging

certain research and development expenditures to
current income on the basis that the expenditures
are virtually certain to benefit future operations.
For this reason, Jack Risher, CPA and Jones’ auditor,
agrees with the proposed accounting treatment.
2. In order to achieve the objectives of the accountancy profession, professional

accountants have to observe a number of prerequisites or fundamental principles. The
fundamental principles include the following, except
a. Objectivity
b. Professional Competence and due Care
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c. Technical Standards
d. Confidence
3. In the marketing and promotion of themselves and their work, professional accountants
may make claims for the services they are able to offer, the qualifications they possess,
or experience they have gained.
A CPA-lawyer, acting as a legal counsel to one of his audit client, is an example of

familiarity threat.
a. True, True b. True, False c. False, True d. False, False
4. If a firm, or a network firm, has a direct financial interest in an audit client of the firm, the
self-interest threat created would be so significant no safeguard could reduce the threat
to an acceptable level. The action appropriate to permit the firm to perform the
engagement would be to dispose of the financial interest
Safeguards created by the profession, legislation or regulation, include the policies and
procedures that emphasize the assurance client’s commitment to fair financial reporting.
5. Professional accountant who author books or articles on professional subjects, may not
state
a b c d
 His or her name Yes Yes Yes No
 Professional qualifications Yes Yes Yes No
 Name of organization Yes Yes No No
 Information as to the services his or her firm
provide Yes No No Yes
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Management Advisory Services
1. At the end of April, Good News Company had completed Job 766 and 765. Job 766 is for 675
units, and Job 765 is for 900 units. According to the individual job cost sheets the information is
as follows:
Job Direct Materials Direct Labor Machine Hours
Job 765 $5,670 $3,500 25

Job 766 $8,900 $4,775 46
Job 765 produced 152 units, and Job 766 consisted of 250 units.
Assuming that the predetermined overhead rate is applied by using machine hours at a rate of $150
per hour, determine the cost per unit of Job 766 and Job 765 at the end of April.
2. Put the following in the order of the flow of manufacturing costs for a company
a. Closing under/over applied factory overhead to cost of goods sold
b. Materials purchased
c. Factory labor used and factory overhead incurred in production
d. Completed jobs moved to finished goods
e. Factory overhead applied to jobs according to the predetermined overhead rate
f. Materials requisitioned to jobs
g. Selling of finished product
h. Preparation of financial statements to determine gross profit
3. A manufacturing company applies factory overhead based on direct labor hours. At the beginning of
the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be
45,000. Actual factory overhead costs incurred were $377,200, and actual direct labor hours were
46,000. What is the amount of overapplied or underapplied manufacturing overhead at the end of the
year?
a. $17,000 overapplied b. $17,000 underapplied.
c. $9,200 overapplied d. $9,200 underapplied.
4.Selected accounts with some debits and credits omitted are presented as follows:
Work in Process
Aug. 1 Balance 275,000 Aug. 31 Goods finished 1,230,000
31 Direct materials X
31 Direct labor 350,000
31 Factory overhead X
Factory Overhead
Aug. 1-31 Costs incurred 90,000 Aug. 1 Balance 15,000
31 Applied X
If the balance of Work in Process at August 31 is $200,000, what was the amount debited to Work in
Process for factory overhead in August, assuming a factory overhead rate of 30%?
a. $105,000
b. $120,000
c. $90,000
d. $70,000
5. On the balance sheet for a manufacturing business, the cost of direct materials, direct labor,
and factory overhead, which have entered into the manufacturing process but are associated
with products that have not been finished, is reported as direct materials inventory. True or
False?
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Direct labor cost is an example of a period cost. True or False?
A receiving report is prepared when purchased materials are first received by the
manufacturing department. True or False?
In the job order system, the finished goods account is the controlling account for the factory
overhead ledger. True or False?
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Theory of Accounts
1. Money orders are considered cash. True or False?
A customer's check received in settlement of an account receivable is considered cash.

True or False?
If the balance in Cash Short and Over at the end of a period is a credit, it indicates that
cash shortages have exceeded cash overages for the period. True or False?
The bank often informs the depositor of bank service charges by including a credit
memorandum with the monthly bank statement. True or False?
Bank customers are considered creditors of the bank so the bank shows their accounts
with credit balances on the bank's records. True or False?
2. In preparing a bank reconciliation, the amount of deposits in transit is deducted from the
balance per bank statement. True or False?
In preparing a bank reconciliation, the amount of outstanding checks is added to the

balance per bank statement. True or False?
In preparing a bank reconciliation, the amount indicated by a debit memorandum for

bank service charges is added to the balance per depositor's records. True or False?
In preparing a bank reconciliation, the amount of a check omitted from the journal is
added to the balance per depositor's records. True or False?
3. In preparing a bank reconciliation, the amount of an error indicating the recording of

a check in the journal for an amount larger than the amount of the check is added to the
balance per depositor's records. True or False?
A check outstanding for two consecutive months will appear only on the first month's
bank reconciliation. True or False?
Most companies who have several bank accounts, petty cash, and cash on hand,
would list each separately on the balance sheet. True or False?
A petty cash fund is used to pay relatively large amounts. True or False?
The petty cash fund eliminates the need for a bank checking account. True or False?
4. The notification accompanying a check that indicates the specific invoice being paid is
called a
a. remittance advice b. voucher
c. debit memorandum d. credit memorandum
5. Following the completion of the bank reconciliation, an adjusting entry was made that
debited cash and credited Interest Revenue. Therefore the bank reconciliation must have
included an item that was
a. deducted from the balance per depositor's records
b. deducted from the balance per bank statement
c. added to the balance per bank statement
d. added to the balance per depositor's records
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Business Law
1. May the validity or compliance of a contract be left to the will of one of the parties?
May the determination of the performance of a contract be left to a third person?
2. Suppose the offerer has allowed the offeree a certain period to accept. May the offer be
withdrawn even before expiration period?
Are business advertisements of things for sale definite offers?
3. Are advertisements calling for bidders definite offers?
Does a threat to enforce one’s claim through competent authority vitiate consent?
6. True, True b. True, False c. False, True d. False, False
4. Is the contract valid although the cause is not stated?
Does illegality of motive affect the validity of a contract?
5. A contract shall be obligatory or binding in whatever form it may have been entered into
provided part of the essentials requisites for its validity are present?
There is an undue influence when a person takes improper advantage of his power over
the will of another depriving the later reasonable freedom of choice?
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SAINT VINCENT DE FERRER COLLEGE AUGUST 2019

BS ACCOUNTANCY (1st semester SY 2020-2019) Part 3

II. Learning Objective(s):

IV. Recommended Reference(s):

MANAGEMENT ADVISORY SERVICES

II. Learning Objective(s)

1. Please watch below link to know and understand the topic

IV. Recommended Reference(s):

II. Learning Objectives:

Important things to remember

The following cash items are included in cash:

Valuation of Cash in the Balance Sheet

Financial Statement Presentation

Cash Fund for a Certain Purpose

Classification of Compensating Balance

If the deposit is legally restricted, the compensating balance is classified separately as

1. Book Reconciling Items

Deposits in transit include:

Forms of Bank Reconciliation

IV. Recommended Reference(s):

II. Learning Objective(s):

IV. Recommended Reference(s):

1. Match each of the following actions with the Code of

____ Juanita Garcia, CPA, refused to be associated with

____ Brianna Lopez, CPA, agreed to review loan

____ Rudy Boesch, CPA, accepted an audit engagement

____ Ben Williams, CPA, issued an unqualified opinion on

____ Jones Transfer Company wishes to defer charging

2. In order to achieve the objectives of the accountancy profession, professional

A CPA-lawyer, acting as a legal counsel to one of his audit client, is an example of

a. True, True b. True, False c. False, True d. False, False

a. True, True b. True, False c. False, True d. False, False

Management Advisory Services

Job Direct Materials Direct Labor Machine Hours

Job 765 $5,670 $3,500 25

Direct labor cost is an example of a period cost. True or False?

1. Money orders are considered cash. True or False?

A customer's check received in settlement of an account receivable is considered cash.

In preparing a bank reconciliation, the amount of outstanding checks is added to the

In preparing a bank reconciliation, the amount indicated by a debit memorandum for

3. In preparing a bank reconciliation, the amount of an error indicating the recording of

May the determination of the performance of a contract be left to a third person?

a. True, True b. True, False c. False, True d. False, False

Are business advertisements of things for sale definite offers?

a. True, True b. True, False c. False, True d. False, False

3. Are advertisements calling for bidders definite offers?

6. True, True b. True, False c. False, True d. False, False

4. Is the contract valid although the cause is not stated?

Does illegality of motive affect the validity of a contract?

a. True, True b. True, False c. False, True d. False, False

a. True, True b. True, False c. False, True d. False, False

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