The major financial statements include all, except

Select one:
a. Statement of comprehensive income
b. Statement of changes in equity
c. Statement of financial position
d. Statement of changes in financial position 
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Question 2
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 A complete set of financial statements includes all of the following components, except

Select one:
a. Environmental reports and value added statements 
b. Notes to financial statements
c. Statement of financial position
d. Statement of Changes in Equity
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Question 3
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 What is the objective of financial statements?

Select one:
a. To prepare financial statements in accordance with all applicable standards
b. To provide information about the financial position, financial performance and changes in
financial position useful to a wide range of users. 
c. To present relevant, reliable, comparable and understandable information
d. To prepare a statement of financial position and statement of comprehensive income
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Each material class of similar items shall be presented separately and items of a dissimilar
nature or function shall be presented separately unless they are immaterial.

Select one:
a.  Materiality and aggregation 
b. Comparability
c. Accounting policy
d. Offsetting
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Question 5
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The elements directly related to the measurement of financial performance are

Select one:
a. Assets and liabilities
b. Income and expenses 
c.  Assets, liabilities, equity, income and expenses
d. Assets, liabilities and equity
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The primary responsibility for the preparation of the financial statements is reposed in

Select one:
a. Controller
b. Internal auditor
c. External auditor
d. Management of the entity 
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Question 7
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The presentation and classification of items in the financial statements shall be retained
from one accounting period to the next.

Select one:
a. Comparability
b. Materiality
c. Aggregation
d. Consistency of presentation 
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Question text

The elements directly related to the measurement of financial position are

Select one:
a. Assets, liabilities and equity 
b. Assets and liabilities
c. Income and expenses
d. Assets, liabilities, equity, income and expenses
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These are the present obligations of an entity arising from past transactions or events the
settlement of which is expected to result in an outflow from the entity of resources
embodying economic benefits.

Select one:
a. Assets
b. Expenses
c. Equity 
d. Liabilities 
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Which of the following information is not specifically a required disclosure in relation to

financial statements?

Select one:
a. Whether the financial statements cover the individual entity or a group of entities.
b. Names of major shareholders of the entity.
c. Level of rounding used in presenting the financial statements
d. Names of the reporting entity or other means of identification an any change in that
information from the previous year. 
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Question 11
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Which of the following is included in a complete set of financial statements?

Select one:
a. Summarized statements of financial position for the last five years
b. A statement of the board of directors of compliance with local legislation
c. A statement of changes in equity 
d. Value added statement
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These are the resources controlled by the entity as a result of past transactions or events
and from which future economic benefits are expected to flow to the entity.

Select one:
a. Assets 
b. Equity
c. Income
d. Liabilities
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Question 13
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Which statement indicates a going concern?

Select one:
a. Management intends to liquidate the entity.
b. Management has no realistic alternative but to cease the operations of the entity.
c. None of the choices would indicate going concern. 
d. Management intends to cease the operations of the entity.
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 It is the residual interest in the assets of the entity after deducting all of its liabilities.

Select one:
a. Expense
b. Equity 
c. Income
d. Net income
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 Items of dissimilar nature or function

Select one:
a. Must be presented separately in financial statements if those items are material.
b.  Must always be presented separately in financial statements.
c. Must not be presented separately in financial statements.
d. Must be presented separately in financial statements if those items are material. 
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Financial statements must be prepared at least

Select one:
a. Annually 
b. Quarterly
c. Every two years
d. Semiannually
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The effects of transactions and other events on economic resources and claims are depicted
in the periods in which those effects occur even if the resulting cash receipts and payments
occur in a different period.

Select one:
a. Modified accrual accounting
b. Accrual accounting 
c. Cash accounting
d. Modified cash accounting
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An entity shall classify an asset as current when (choose the incorrect one)

Select one:
a. The entity expects to realize the asset within twelve months after the reporting period.
b. The entity holds the asset for the purpose of trading.
c. The entity expects to realize the asset or intends to sell or consume it within the entity’s
normal operating cycle.
d. The asset is cash or cash equivalent that is restricted to settle a liability for more than
twelve months after the reporting period. 
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Which of the following statements is incorrect concerning assets?

Select one:
a. There is a close association between incurring an expenditure and generating asset but
the two do not necessarily coincide.
b. Physical form is not essential to the existence of an asset.
c. An asset results from past event
d.  In determining existing of an asset, the right of ownership is essential. 
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Question 20
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The major financial statements include all, except

Select one:
a. Income statement
b. Statement of financial position
c. Statement of retained earnings 
d. Statement of changes in equity
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Winner Company provided the following information at year end:

     Cash                                                                              1,500,000
     Accounts receivable                                                      1,200,000
     Inventory                                                                       1,000,000
     Financial asset held for trading                                        300,000
     Equity investment at fair value
           through other comprehensive income                      800,000
     Equipment held for sale                                                2,000,000
     Deferred tax asset                                                            150,000
 What amount should be reported as total current assets at year-end?

Select one:
a. P 6,000,000
b. P 4,000,000 
c. P 6,800,000
d. P 4,800,000
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 An entity shall present expenses using a classification based on

Select one:
a. Either the nature of expenses or the function of expenses within the entity, whichever
provides information that is reliable and more relevant. 
b. The nature of expenses
c. Either the nature of expenses or the function of expenses within the entity, whichever the
entity would prefer to present.
d. The function of expenses
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 Separate line items of expenses by function include

Select one:
a.  Purchases of materials, distribution costs, administrative costs, employee benefits,
depreciation, taxes
b.  Cost of sales, administrative expenses and distribution expenses 
c.  Purchases of materials, transport costs, employee benefits, depreciation, extraordinary
items
d. Depreciation, purchases of materials, transport costs, employee benefits and advertising
costs.
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It is the total income less expenses, excluding the components of other comprehensive
income.

Select one:
a. Profit or loss 
b. Economic income
c. Comprehensive income
d. Accounting income
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Which of the following changes during a period is not a component of other comprehensive
income?

Select one:
a.
Foreign currency translation adjustment

b.  Unrealized gain on equity instruments measured at fair value through other

comprehensive income
c.  Minimum pension liability
d. Treasury share, at cost 
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Other comprehensive income includes all of the following, except

Select one:
a. Actuarial gain on defined benefit plan that is fully recognized through other
comprehensive income
b. Dividend paid to shareholders
c.  Loss from translating the financial statements of a foreign operation 
d. Unrealized gain on forward contract designated as cash flow hedge
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Question 7
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This term comprises items of income and expenses including reclassification adjustments,
that are not recognized in profit or loss as required or permitted by PFRS.
Select one:
a. Retained earnings
b. Other comprehensive income 
c. Profit or loss
d. Comprehensive income
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Revenue may be derived from any of the following activities, except

Select one:
a. rendering services
b. selling products
c. allowing others to use the entity's resources
d. borrowing from banks 
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Question 9
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Question text

Little Company reported the following current assets on December 31, 2020:
     Cash                                                                                          P 5,000,000
     Accounts receivable                                                                     2,000,000  
     Inventory, including goods received on
          consignment P 200,000                                                              800,000
     Prepaid expenses, including deposit of P 50,000 made
           on inventory to be delivered in 18 months                               150,000
    Total current assets                                                                       P 7,950,000

     Cash in general checking account                                               P 3,500,000

     Cash fund to be used to retire bonds payable in 2022                  1,000,000
     Cash held to pay value added taxes                                                  500,000
     Total cash                                                                                      P 5,000,000
 
 What amount of current assets should be reported on December 31, 2020?

Select one:
a. P 6,750,000
b. P 7,750,000
c. P 6,700,000 
d. P 7,700,000
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 Which of the following terms cannot be used to describe a line item in the statement of
comprehensive income

Select one:
a. Profit before tax
b. Gross profit
c. Revenue
d. Extraordinary item 
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Question 11
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 Comprehensive income includes

Select one:
a. Both profit or loss and other comprehensive income 
b. Profit or loss only
c. Other comprehensive income only
d. Neither profit or loss nor other comprehensive income
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What is the purpose of reporting comprehensive income?

Select one:
a. To report changes in equity due to transactions with owners
b. To report a measure of overall entity performance 
c. To replace net income with a better measure
d.  To combine income from continuing operations with income from from discontinued
operations.
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Question 13
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An entity shall present all items of income and expense recognized in a period
I. In a single statement of comprehensive income
II. In two statements, one statement displaying the components of profit or loss, and the
second statement beginning with profit or loss and displaying components of other
comprehensive income.

Select one:
a. I only
b. Either I or II 
c. Both I and II
d. II only
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Show Company provided the following trial balance on December 31, 2020 which had been
adjusted except for income tax expense: 
     Cash                                                                                  600,000
     Accounts receivable                                                       2,800,000
     Inventory                                                                        2,000,000
     Property, plant and equipment (net)                            10,500,000
     Accounts payable and accrued liabilities                                                       1,800,000
     Income tax payable                                                                                        1,500,000
     Deferred tax liability                                                                                          700,000
     Share capital                                                                                                   2,500,000
     Share premium                                                                                               3,000,000
     Retained earnings, January 1                                                                          3,500,000
     Net sales and other revenue                                                                         15,000,000
     Costs and expenses                                                         10,000,000
     Income tax expense                                                          2,100,000                               
                                                                                              28,000,000            28,000,000
The accounts receivable included P 1,000,000 due from a customer and payable in quarterly
installments of P 125,000. The last payment is due December 30, 2022.
 On December 31, 2020, what amount should be reported as total current liabilities?
Select one:
a. P 3,450,000
b. P 2,700,000
c. P 3,300,000 
d. P 4,050,000
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Guard Company reported the following account balances on December 31, 2020:
     Accounts payable                                                                              P 1,900,000
     Bonds payable                                                                                      3,400,000
     Premium on bonds payable                                                                    200,000
     Deferred tax liability                                                                                400,000
     Dividend payable                                                                                    500,000
     Income tax payable                                                                                 900,000
     Note payable, due January 31, 2021                                                       600,000
 
On December, 2020, what total amount should be reported as current liabilities?

Select one:
a. P 4,300,000
b. P 7,100,000
c. P 4,100,000
d. P 3,900,000 
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All of the following are components of other comprehensive income, except

Select one:
a.  Deferred gain and loss on derivative financial instruments
b. Change in revaluation surplus
c. Foreign currency translation adjustment
d. Unrealized gain and loss on financial asset held for trading 
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Show Company provided the following trial balance on December 31, 2020 which had been
adjusted except for income tax expense: 
     Cash                                                                                   600,000
     Accounts receivable                                                        2,800,000
     Inventory                                                                         2,000,000
     Property, plant and equipment (net)                            10,500,000
     Accounts payable and accrued liabilities                                                  1,800,000
     Income tax payable                                                                                   1,500,000
     Deferred tax liability                                                                                     700,000
     Share capital                                                                                               2,500,000
     Share premium                                                                                           3,000,000
     Retained earnings, January 1                                                                      3,500,000
     Net sales and other revenue                                                                    15,000,000
     Costs and expenses                                                  10,000,000
     Income tax expense                                                    2,100,000                                
                                                                                       28,000,000              28,000,000
 
The accounts receivable included P 1,000,000 due from a customer and payable in quarterly
installments of P 125,000. The last payment is due December 30, 2022.
On December 31, 2020, what amount should be reported as total current assets?

Select one:
a. P 4,900,000 
b. P 4,400,000
c. P 3,400,000
d. P 5,400,000
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The expenses are classified according to their function, as part of cost of sales, distribution
costs, administrative activities and other operating activities.

Select one:
a. Account form
b. Cost of sales method 
c. Nature of expense method
d. Report form
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 Which method is acceptable in the presentation of the income statement?

I. Nature of expense method
II. Function of expense method 

Select one:
a. Either I or II 
b. I only
c. Neither I nor II
d. II only
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Question 20
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Separate line items of expenses by nature include

Select one:
a. Depreciation, purchases of materials, transport costs, employee benefits and advertising
costs. 
b. Purchases of materials, transport costs, employee benefits, depreciation, extraordinary
items
c.  Purchases of materials, distribution costs, administrative costs, employee benefits,
depreciation, taxes
d. Cost of sales, administrative costs, transport costs and distribution costs.
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Which of the following is included in a complete set of financial statements?

Select one:
a. Value added statement
b.  Summarized statements of financial position for the last five years
c.  a statement of the board of directors of compliance with local legislation
d.  a statement of changes in equity 
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 Which of the following is not a non-current investment?

Select one:
a. Land held for speculation
b. Franchise 
c. Sinking fund
d. Cash surrender value of life insurance
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Which of the following information is not specifically a required disclosure in relation to

financial statements?

Select one:
a. .Level of rounding used in presenting the financial statements.
b. Names of the reporting entity or other means of identification an any change in that
information from the previous year.
c. .Names of major shareholders of the entity. 
d. Whether the financial statements cover the individual entity or a group of entities.
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 Non-current liabilities include

Select one:
a. All of these are non-current liabilities 
b. Deferred tax liability
c. Short-term obligation refinanced on a long-term basis at the end of the reporting period
d. Bonds payable
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Other comprehensive income includes all of the following, except

Select one:
a. Unrealized gain on forward contract designated as cash flow hedge
b.  Loss from translating the financial statements of a foreign operation
c. Actuarial gain on defined benefit plan that is fully recognized through other
comprehensive income
d.  Dividend paid to shareholders 
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Which method is acceptable in the presentation of the income statement?

Select one:
a. II only
b. Either I or II 
c. Neither I nor II
d. I only
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An entity shall present expenses using a classification based on

Select one:
a. The nature of expenses
b. The function of expenses
c.
Either the nature of expenses or the function of expenses within the entity, whichever provides
information that is reliable and more relevant. 

d. Either the nature of expenses or the function of expenses within the entity, whichever the
entity would prefer to present.
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Question 8
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The elements directly related to the measurement of financial position are

Select one:
a.  Assets, liabilities, equity, income and expenses
b. Assets, liabilities and equity 
c. Assets and liabilities
d.  Income and expenses
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Comprehensive income includes

Select one:
a. Other comprehensive income only
b. Neither profit or loss and other comprehensive income
c. Both profit and loss and other comprehensive income 
d. Profit or loss only
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Question 10
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Separate line items of expenses by function include

 Select one:
a.
Purchases of materials, transport costs, employee benefits, depreciation, extraordinary items

b. Purchases of materials, distribution costs, administrative costs, employee benefits,

depreciation, taxes
c.
 Cost of sales, administrative expenses and distribution expenses 

d.  Depreciation, purchases of materials, transport costs, employee benefits and advertising

costs.
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Question 11
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These are the resources controlled by the entity as a result of past transactions or events
and from which future economic benefits are expected to flow to the entity.

Select one:
a. Assets 
b. Equity 
c. Income
d. Liabilities
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Financial statements must be prepared at least

Select one:
a. quarterly
b. semiannually
c. every two years
d. annually 
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Question 13
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This term comprises items of income and expenses including reclassification adjustments,
that are not recognized in profit or loss as required or permitted by PFRS.

Select one:
a. Retained earnings
b. Profit or loss
c. Comprehensive income
d. Other comprehensive income 
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Show Company provided the following trial balance on December 31, 2020 which had been
adjusted except for income tax expense: 
          Cash                                                                                          600,000           
          Accounts receivable                                                               2,800,000
          Inventory                                                                                 2,000,000
          Property, plant and equipment (net)                                    10,500,000
          Accounts payable and accrued liabilities                                                                   
1,800,000
          Income tax payable                                                                                                   
1,500,000
          Deferred tax liability                                                                                                     
700,000
          Share capital                                                                                                               
2,500,000
          Share premium                                                                                                           
3,000,000
          Retained earnings, January 1                                                                                     
3,500,000
          Net sales and other revenue                                                                                     
15,000,000
          Costs and expenses                                                                    10,000,000
          Income tax expense                                                                      2,100,000                    
                                                                                                              28,000,000              
28,000,000
The accounts receivable included P1,000,000 due from a customer and payable in quarterly
installments of P 125,000. The last payment is due December 30, 2022.
On December 31, 2020, what amount should be reported as total current liabilities?

Select one:
a. P 4,050,000
b. P 3,450,000
c. P 3,300,000 
d. P 2,700,000
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The expenses are classified according to their function, as part of cost of sales, distribution
costs, administrative activities and other operating activities.

Select one:
a. Report form
b. nature of expense method
c. Account form
d. Cost of sales method 
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Question 16
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It is the residual interest in the assets of the entity after deducting all of its liabilities.

Select one:
a. Equity 
b. Expense
c. Income
d. Net income
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 An entity shall classify an asset as current when (choose the incorrect one)

Select one:
a. The entity holds the asset for the purpose of trading.
b. The asset is cash or cash equivalent that is restricted to settle a liability for more than
twelve months after the reporting period.
c.  The entity expects to realize the asset or intends to sell or consume it within the entity’s
normal operating cycle. 
d.  The entity expects to realize the asset within twelve months after the reporting period.
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Question 18
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 Show Company provided the following trial balance on December 31, 2020 which had been
adjusted except for income tax expense:
            Cash                                                                           600,000
            Accounts receivable                                                2,800,000
            Inventory                                                                 2,000,000
            Property, plant and equipment (net)                    10,500,000
            Accounts payable and accrued liabilities                                          1,800,000
            Income tax payable                                                                           1,500,000
            Deferred tax liability                                                                             700,000
            Share capital                                                                                      2,500,000
            Share premium                                                                                  3,000,000
            Retained earnings, January 1                                                             3,500,000
            Net sales and other revenue                                                            15,000,000
           Costs and expenses                                               10,000,000
            Income tax expense                                                2,100,000                            
                                                                                          28,000,000          28,000,000
 The accounts receivable included P 1,000,000 due from a customer and payable in quarterly
installments of P 125,000. The last payment is due December 30, 2022.
On December 31, 2020, what amount should be reported as total current assets?

Select one:
a. P 4,400,000
b. P 4,900,000 
c. P 3,400,000
d. P 5,400,000
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 The effects of transactions and other events on economic resources and claims are
depicted in the periods in which those effects occur even if the resulting cash receipts and
payments occur in a different period.

Select one:
a. Modified accrual accounting
b. Accrual accounting 
c. Modified cash accounting
d. Cash accounting
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Guard Company reported the following account balances on December 31, 2020:
           Accounts payable                                                                       P 1,900,000
           Bonds payable                                                                               3,400,000
           Premium on bonds payable                                                             200,000
           Deferred tax liability                                                                         400,000
           Dividend payable                                                                              500,000
           Income tax payable                                                                          900,000
           Note payable, due January 31, 2021                                                600,000
   On December, 2020, what total amount should be reported as current liabilities?

Select one:
a. P 4,100,000
b. P 7,100,000
c. P 3,900,000 
d. P 4,300,000
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Which statement indicates a going concern

Select one:
a.  Management intends to cease the operations of the entity. 
b. None of the choices would indicate going concern.
c. Management has no realistic alternative but to cease the operations of the entity
 d. Management intends to liquidate the entity.
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Question 22
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What is the objective of financial statements?

Select one:
a.
To prepare financial statements in accordance with all applicable standards

b. To prepare a statement of financial position and statement of comprehensive income

c. To provide information about the financial position, financial performance and changes in
financial position useful to a wide range of users. 
d. To present relevant, reliable, comparable and understandable information
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Question 23
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All of the following are components of other comprehensive income, except

 Select one:
a.
Foreign currency translation adjustment

b.  Unrealized gain and loss on financial asset held for trading 

c.
Deferred gain and loss on derivative financial instruments

d.
Change in revaluation surplus
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Question 24
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Separate line items of expenses by nature include

Select one:
a. Purchases of materials, distribution costs, administrative costs, employee benefits,
depreciation, taxes
b.  Purchases of materials, transport costs, employee benefits, depreciation, extraordinary
items
c.
Cost of sales, administrative costs, transport costs and distribution costs.

d.
Depreciation, purchases of materials, transport costs, employee benefits and advertising costs. 
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 Each material class of similar items shall be presented separately and items of a dissimilar
nature or function shall be presented separately unless they are immaterial.

Select one:
a. Materiality and aggregation 
b. Comparability
c. Offsetting
d. Accounting policy
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 Winner Company provided the following information at year end:

           Cash                                                                      1,500,000
           Accounts receivable                                              1,200,000
           Inventory                                                               1,000,000
           Financial asset held for trading                               300,000
          Equity investment at fair value
                   through other comprehensive income             800,000
          Equipment held for sale                                          2,000,000
          Deferred tax asset                                                     150,000
 What amount should be reported as total current assets at year-end?

 
 
 
 

Select one:
a. P 6,800,000
b. P 4,000,000 
c. P 4,800,000
d. P 6,000,000
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Question 27
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What is the purpose of reporting comprehensive income?

Select one:
a.
To replace net income with a better measure

b. To report a measure of overall entity performance 

 c.
 To combine income from continuing operations with income from from discontinued
operations.

d. To report changes in equity due to transactions with owners

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Question 28
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The major financial statements include all, except

Select one:
a. Statement of financial position
Statement of financial position 
b. Income statement
c. Statement of retained earnings 
d. Statement of cash flows
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When there is much variability in the duration of entity’s normal operating cycle, the
operating cycle is measured at

Select one:
a. Its mean value
b. its median value
c. Three years
d. Twelve months 
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The major financial statements include all, except

Select one:
a. Statement of changes in equity
b. Statement of financial position
c. Statement of comprehensive income
d. Statement of changes in financial position  
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The elements directly related to the measurement of financial performance are

Select one:
a. Assets, liabilities, equity, income and expenses
b. Income and expenses
c.  Assets, liabilities and equity 
d. Assets and liabilities
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Question 32
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The presentation and classification of items in the financial statements shall be retained
from one accounting period to the next.

Select one:
a. Comparability
b. Aggregation 
c. Consistency of presentation 
d. Materiality
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Question 33
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Revenue may be derived from any of the following activities, except

Select one:
a. borrowing from banks 
b.
 selling products

c. rendering services
d. allowing others to use entity's resources
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Question 34
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 A complete set of financial statements includes all of the following components, except

Select one:
a. Statement of financial position
b. Statement of changes in equity
c.  Notes to financial statements
d. Environmental reports and value added statements 
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Question 35
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Which of the following statements is incorrect concerning assets?

Select one:
a. An asset results from past event
b. Physical form is not essential to the existence of an asset.
c. There is a close association between incurring an expenditure and generating asset but
the two do not necessarily coincide.
d. In determining existing of an asset, the right of ownership is essential. 
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 It is the total income less expenses, excluding the components of other comprehensive
income.

Select one:
a. Comprehensive income
b. Economic income
c. Accounting income
d. Profit or loss 
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Question 37
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 Which of the following changes during a period is not a component of other

comprehensive income?

Select one:
a. Unrealized gain on equity instruments measured at fair value through other
comprehensive income
b. Foreign currency translation adjustment
c. Minimum pension liability
d.
Treasury share, at cost 
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 The primary responsibility for the preparation of the financial statements is reposed in

Select one:
a. Internal auditor
b. Controller
c. External auditor
d. Management of the entity 
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Question 39
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The operating cycle of an entity

Select one:
a.  It is a period of one year.
b.  It is the period of time normally elapsed from the time the entity expends cash to the
time it converts trade receivables back into cash. 
c.  Causes the distinction between current and noncurrent items to depend on whether they
will affect cash within one year.
d. It is the time between the acquisition of materials entering into a process and their
realization in cash or cash equivalent.
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These are the present obligations of an entity arising from past transactions or events the
settlement of which is expected to result in an outflow from the entity of resources
embodying economic benefits.

Select one:
a. Equity
b. Expenses
c. Liabilities 
d. Assets
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An entity shall present all items of income and expense recognized in a period.
I. In a single statement of comprehensive income
II. In two statements, one statement displaying the components of profit or loss, and the
second statement beginning with profit or loss and displaying components of other
comprehensive income.

Select one:
a. I only
b. II only
c. Neither I nor II
d. Either I or II 
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Which of the following terms cannot be used to describe a line item in the statement of
comprehensive income

Select one:
a. Gross profit
b. Revenue
c. Extraordinary item 
d. Income before tax
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Items of dissimilar nature or function

Select one:
a.
 Must be presented separately in financial statements if those items are material.

b. Must not be presented separately in financial statements.

c. Must always be presented separately in financial statements.
d.  Must be presented separately in financial statements if those items are material. 
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Question 44
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Little Company reported the following current assets on December 31, 2020:
           Cash                                                                                         P 5,000,000
           Accounts receivable                                                                    2,000,000  
           Inventory, including goods received on
                     consignment P 200,000                                                      800,000
           Prepaid expenses, including deposit of P50,000 made
                     on inventory to be delivered in 18 months                         150,000
           Total current assets                                                                   P 7,950,000
  
            Cash in general checking account                                          P 3,500,000
            Cash fund to be used to retire bonds payable in 2022             1,000,000
            Cash held to pay value added taxes                                            500,000
            Total cash                                                                               P 5,000,000
What amount of current assets should be reported on December 31, 2020?

Select one:
a. P 7,750,000
b. P 6, 750,000
c. P 6,700,000 
d. P 7,700,000
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Which should be classified as a non-current asset?

Select one:
a. Goods in process
b. Prepaid rent
c. Supplies
d. Plant expansion fund 
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V Each material class of similar items shall be presented separately and items of a dissimilar
nature or function shall be presented separately unless they are immaterial.
Comprehensive income includes
On December 31, 2020, what amount should be reported as total current liabilities?

Select one:
a. P 4,050,000
Green Company incurred the following costs during the current year:
     Property taxes                                                                      P    250,000
     Freight in                                                                                 1,750,000
     Doubtful accounts                                                                  1,600,000
     Officers’ salaries                                                                      1,500,000
     Insurance                                                                                    850,000
     Sales representative salaries                                                    2,150,000
     Interest on inventory loan                                                          500,000
 What amount of these costs should be reported as administrative expense?

Select one:

a. P 3,350,000

b. P 4,200,000 

c. P 5,200,000

d. P 2,600,000

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Brook Corporation reports operating expenses in two categories (1) selling, and (2) general
and administrative. The adjusted trial balance at December 31, 20x1, including the following
expense and loss accounts:
     Accounting and legal fees                                                          P    120,000
     Advertising                                                                                        150,000
     Freight out                                                                                          80,000
     Interest                                                                                                70,000
     Loss on sale of long-term investment                                                30,000
     Officers’ salaries                                                                                225,000
     Rent for office space                                                                         220,000
     Sales salaries and commission                                                          140,000
One-half of the rented premises is occupied by the sales department.
Brook’s total selling expenses for 20x1 are:

Select one:

a. P 370,000

b. P 480,000 

c. P 360,000

d. P 400,000
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ASB Company provided the following information for the current year:
     Beginning inventory                                                            P    400,000
     Freight in                                                                                   300,000
     Purchase returns                                                                        900,000
     Ending inventory                                                                        500,000
     Distribution costs                                                                    1,250,000
     Sales discount                                                                            250,000
 The cost of goods sold is six times of the distribution costs.
 What is the amount of gross purchases?

Select one:

a. P 6,700,000

b. P 6,500,000

c. P 8,000,000

d. P 8,200,000 

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Partner Company reported operating expenses as distribution and general or

administrative. 
The adjusted trial balance at the end of the current year included the following expense
accounts: 
     Accounting and legal fees                                                           P 1,450,000
     Advertising                                                                                      1,500,000
     Freight out                                                                                         750,000
     Interest                                                                                               600,000
     Loss on sale of long-term investment                                               300,000
     Officers’ salaries                                                                               2,250,000
     Property, taxes and insurance                                                            300,000
     Rent for office space                                                                        1,800,000
     Sales salaries and commissions                                                       1,400,000
 One-half of the rented premises is occupied by the sales department.
 What amount should be included in the distribution expenses for the current year.
 

Select one:

a. P 3,650,000

b. P 4,900,000

c. P 6,000,000
d. P 4,550,000 

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The following costs were incurred by LIP company, a manufacturer during 20x1:
      Accounting and legal fees                                                                  P      25,000
      Freight-in                                                                                                  175,000
      Freight-out                                                                                                160,000
      Officers’ salaries                                                                                        150,000
      Insurance                                                                                                    85,000
      Sales representatives salaries                                                                   215,000
 What amount of these costs should be reported as general and administrative expenses for
20x1?

Select one:

a. P 635,000

b. P 550,000

c. P 810,000

d. P 260,000 

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  Which of the following is presented as an operating activity?

Select one:

a.

cash repayments by a lessee for the reduction of the outstanding liability relating to the finance
lease.
Answer: A 

b. cash advances and loans made by financial institutions

c.

cash payments of amount borrowed

d. cash proceeds from issuing shares or other equity instruments

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In preparing a statement of cash flows, sale of treasury shares at an amount greater than
cost would be classified as a/ an

Select one:

a. financing activity 

b. operating activity

c. transfer activity
d. investing activity

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In a statement of cash flows, proceeds from the sale of a company’s own bonds or
mortgages should be classified as

Select one:

a. investing activity 

b. operating activity

c. financing activity

d. leveraging activity

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Question text

 Would the following be added to or deducted from profit when reporting cash flow from
operating activities using the indirect method?
 

Select one:

a. Depreciation expense is deducted and increase in accounts receivable is deducted.

b. Depreciation expense is deducted and increase in accounts receivable is added. 

c. Depreciation expense is added and increase in accounts receivable is added.

d. The depreciation expense is added and increase in accounts receivable is deducted.

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In a statement of cash flows, receipt from sale of property, plant, and equipment would be
classified as cash inflows from

Select one:
a. financing activity

b. investing activity

c. operating activity 

d. liquidating activity

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The following was taken from the 2020 financial statements of Tulip Company.
     Accounts receivable: January 1 - P 216,000; December 31 - P 304,000
     Cash sales and credit sales - P 4,380,000
     Bad debt expense - P 10,000 (No accounts receivable were written off or recovered
during the year.)
What is the amount of cash collected from customers during 2020?

Select one:

a. P 4,478,000

b. P 4,468,000 

c. P 4,282,000

d. P 4,292,000

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Which of the following is classified as an operating activity in the statement of cash flows?

Select one:

a. Cash receipts and payments involving property, plant and equipment, intangible assets
and other long-term assets

b. Cash advances and loans made to other parties, other than advances and loans made by
a financial institution.

c. Cash receipts and payments involving equity and debt instruments of other entities 

d. Cash receipts and payments from contracts held for dealing or trading purposes

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What is the primary purpose of the statement of cash flows?

 Select one:

a. To provide information about an entity’s financial position at a point in time.

b. To provide information about the entity’s financial performance for a period of time.

c. To provide information about an entity’s financial structure. 

d.

To provide information that is useful in assessing the ability of the entity to generate cash and
cash equivalents.
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The declaration of cash dividends by the board of directors

Select one:

a. is an activity that would not be reported in a statement of cash flows.

b.  would be reported as an operating activity in a statement of cash flows.

c. would be reported as an investing activity in the statement of cash flows. 

d. would be reported as a financing activity in the statement of cash flows

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In preparing a statement of cash flows, which of the following transactions would be

considered an investing activity?

Select one:

a. issuance of bonds payable at a discount 

b. sale of a business segment

c. sale of share capital

d.  purchase of treasury shares

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 Statement of Cash flows is

 Answer: D
Select one:

a. a financial statement that reports the cash inflows and outflows for an accounting period.

b. a financial report showing the assets, liabilities and equity of an enterprise on a specific
date.

c.

another name for statement of financial position.

d. a financial statement showing revenues earned by a business, the expenses incurred in

earning the revenues, and the resulting profit or loss. 

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Which of the following would appear only in the statement of cash flows using the indirect
method?

Select one:

a. depreciation expense

b.  cash receipts for money borrowed from a bank 

c. cash payments for operating expenses

d. cash receipts from customers

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A company required a building, paying a portion of the purchase price in cash and issuing a
mortgage note payable to the seller for the balance. In a statement of cash flows, what
amount is included in investing activities for the above transaction?

Select one:

a. acquisition price

b. cash payment 

c. mortgage amount 

d. zero

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In a statement of cash flows using indirect method of presenting cash flow from operating
activities, depreciation is treated as an adjustment to reported profit because depreciation

Select one:

a. reduces the reported profit and involves an inflow of cash.

b. reduces the reported profit but does not involve an outflow of cash. 

c. is an inflow of cash for asset replacement fund.

d. usually represents a significant portion of operating expenses.

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Which of the following would be classified as an investing activity?

Select one:

a. sale of financial assets at fair value through other comprehensive income. 

b.  purchase of treasury shares.

c. payment of cash dividend.

d.  issuance of ordinary shares.

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 Orchidia Company’s prepaid insurance was P 500,000 at December 31, 2020 and P 250,000
at December 31, 2019. Insurance expense was P200,000 for 2020 and P 150,000 for 2019.
 What is the amount of cash disbursed for insurance reported in Orchidia’s 2020 statement
of cash flows under the direct method?

Select one:

a. P 200,000

b. P 300,000 

c. P 450,000

d. P 550,000

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When preparing a statement of cash flows using the indirect method, the amortization of
trademarks should be reported as a/an

Select one:

a. addition to profit to arrive at a cash flows from operating activities

b.  deduction from profit to arrive at cash flows from operating activities. 

c. cash inflow from investing activities

d. cash outflow for investing activities

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Lily Corporation’s transactions for the year ended December 31, 2019 included the
following:
          Purchased real estate for P 550,000 cash which was borrowed from a bank.
          Sold investment securities for P 500,000.
          Paid dividends of P 600,000.
          Issued ordinary shares for P 250,000 cash.
          Purchased machinery and equipment for P 125,000 cash. 
          Paid P 450,000 toward a bank loan.
Lily’s net cash used in investing  activities for 2019 was

Select one:

a. P 175,000

b. P 675,000

c. P 50,000

d. P 375,000 

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Under the indirect method, which of the following items would be added to profit to arrive
at cash flows from operating activities?

Select one:

a.  increase in prepaid expenses

b. decrease in accounts payable 

c. decrease in accounts receivable

d. gain on sale of investments

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Question 20
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The following information is available for Champaca Company for the year ended December
31, 2020.
          Cash received from customers                                                  P  870,000
          Cash received for rent                                                                    1 0,000
          Cash paid to suppliers and employees                                         510,000
          Taxes paid                                                                                     110,000
          Gain on sale of equipment                                                             30,000
 What is the net cash flow from operating activities for 2020?

Select one:

a. P 220,000

b. P 260,000 

c. P 230,000

d. P 250,000

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