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What is the proper accounting for credit card sales if the credit card company is Affiliated with a bank Not affiliated with a bank a. Sale on account Cash sales b. Sale on account Sale on account c. Cash sale Cash sale d. Cash sale Sale on account 2. Losses which are expected to arise from firm and noncancellable commitments for the future purchase of inventory items, if material should be a. Recognized in the accounts by debiting loss on purchase commitments and crediting estimated liability for loss on purchase commitments b. Disclosed in the notes c. Ignored d. Charged to retained earnings 3. If a transaction causes total liabilities to decrease but does not affect the owners equity, what change, if any, will occur in total assets? A. assets will be increased B. no change in total assets C. assets will be decreased D. none 4. In accounting parlance, the sequence of the arrangements of the accounts in a ledger that is, assets first, followed by liabilities, owners equity accounts, revenues and expenses is called: A. financial statement order B. double entry method C. account balance D. accounting cycle 5. The recording phase of accounting covers the following steps, except: (a) business documents are received and prepared. (b) transactions are journalized. (c) transactions are posted to the ledger. (d) financial statements are prepared. 6. An accrued expense is an expense: (a) incurred but not paid (b) paid but not incurred (c) incurred and paid (d) not reasonably estimable 7. Balance sheet accounts that are not eliminated in the closing entries are called: (a) nominal

(b) positive (c) private (d) real 8. Entries prepared, as a step in the accounting process, to bring the books and accounts up-to-date, is known as: (a) opening entries (b) closing entries (c) adjusting entries (d) reversing entries 9. If a general partnership, whose partnership contract provides for interest on partners' capital account balances, incurs a net loss, the interest provision of the contract: a. Must be enforced b. May be either enforced or disregarded c. Must be disregarded d. Must be rescinded by the partners 10. The basic purpose of accounting is a.To provide the information that the managers of an economic entity need to control its operations b.To provide information that the creditors of an economic entity can use in deciding whether to make additional loans to the entity. c.To measure the periodic income of the economic entity d.To provide quantitative financial information about an entity that is useful in making rational economic decision 12..These are the events that affect the entity and in which other entities participate a.internal events c.external events b.current events d.past events 13.It is the accounting standard setting body created by PRC upon recommendation of the Board of Accountancy to assist the Board of Accountancy in carrying out its powers and functions under R.A. No 9298. a.Accounting Standards Council b.Auditing and Assurance Standards Council c.Philippine Accounting Standards Board d.Financial Reporting Standards Council 14.The International Accounting StandardsBoard publishes its standards in a series of pronouncements called a. International Accounting Standards b. Financial Reporting Standards c. International Financial Reporting Standards d. Statement of Financial Accounting Standards

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15. When discussing asset valuation, the following valuation bases are sometimes mentioned: replacement cost, exit value, and discounted cash flow. Which of these bases should be considered a current value measure? a. replacement cost and exit value only b. replacement cost and discounted cash flow only c. exit value and discounted cash flow only d. replacement cost, exit value, and discounted cash flow. 16. Which of the following statements is incorrect? a. The accrual method, which builds directly on the revenue and matching principles, ignores the timing of cash receipts or payments in determining when to recognize revenue or expenses b. Expenses are matched with revenue, not the reverse c. In accordance with the unit of measure assumption, accountants normally revise the amounts to reflect the changing purchasing power of money due to inflation or deflation d. In accordance with the going concern assumption, the life of a business is presumed to be indefinite. 17. Which statement is incorrect concerning the conceptual framework? a. the framework applies to the financial statements of all commercial, industrial and business reporting entities, whether in the public and private sector. b. special purpose financial reports, for example, prospectuses and computations prepared for taxation purposes, are within the scope of the framework. c. the framework is not a Philippine Financial Reporting Standard and hence does not define standard for any particular measurement or disclosure issue. d. the framework is concerned with general purpose financial statements including consolidated financial statements 18. Which statement is incorrect concerning financial statements? a. financial statements are prepared and presented at least annually and are directed toward the specific information needs of a wide range of users. b. the objective of financial statements is to provide information about financial position, performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. c. financial statements also show the results of the stewardship of management of the accountability of management for the resources entrusted to it. d. the management of an entity has the primary responsibility for the preparation and presentation of the financial statements of the entity.

19. Information about financial structure is useful in predicting a. future borrowing needs and how future profits and cash flows will be distributed among those with an interest in the entity b. the ability of the entity to meet its financial commitments as they fall due over a longer term c. the ability of the entity to use its available cash for unexpected requirements and investment opportunities. d. the capacity of the entity to generate cash flows from its operations 20. The primary accounting objective is fair presentation of the performance of the entity a. entity b. proprietary c. residual equity d. fund 21. The purpose of the International Financial Reporting Standards is to a. Issue enforceable standards which regulate the financial accounting and reporting of multinational corporations. b. develop a uniform currency in which the financial transactions of companies throughout the world would be measured. c. promote uniform accounting standards among countries of the world. d. arbitrate accounting disputes between auditors and international companies 22. The financial statement prepared under GAAP a. do not articulate with one another. b. reflect a single measurement basis which is historical cost c. are not highly precise because many estimates and judgements must be made d. contain a limited number of future projections, such as projected sale. 23. Four types of money prices are used in measuring resources in financial accounting, The type which uses such concepts as present value, discounted cash flow and value in use is known as a. price in a current purchase exchange c. price in past purchase exchange b. price based on future exchange d. price in a current sale exchange 24.External events are those that affect the entity and in which other entities participate. An example of external event is a. manufacture of a product out of raw materials b. loss of property due to flood c. issuance of a promissory note in settlement of an account d. transfer of goods from one department to another.

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25. It is the accounting standard setting body created by PRC upon recommendation of the Board of Accountancy to assist the Board of Accountancy in carrying out its powers and functions under R.A No 9298 a. Accountig Standards Council b. Auditing and Assurance Standards Council c. Philippine Accounting Standards Board d. Financial Reporting Standards Council 26.Which is incorrect concerning the FRSC? a. TheFRSC replaces the ASC as the standard setting body in the Philippines b. The FRSC is composed of 15 members with a Chairman and 14 representatives from various sectors. c. The Chairmanand members of the FRSC shall have a term of 3 years renewable for another term d. Any member of the ASC shall be disqualified from being appointed to the FRSC. 27. One of the basic features of financial accounting is the a. direct measurement of economic resources and obligations and changes in them in terms of money and sociological and psychological impact. b. direct measurement of economic resources and obligations and changes in them in terms of money. c. direct measurement of economic resources and obligations and changes in them in terms of money and sociological impact. d. direct measurement of economic resources and obligations and changes in them in terms of money and psychological impact. 28. The conceptual framework is intended to establish a. generally accepted accounting principles in financial reporting by entities b. the meaning of present fairly in accordance with GAAP c. the objectives and concepts for use in developing standards of financial accounting and reporting d. the hierarchy of sources of GAAP 29. Which of the following is not an important characteristic of the financial statements that accountants currently prepare? a. the information in financial statements is expressed in units of money adjusted for changing purchasing power. b. financial statements articulate with one another because measuring financial position is related to measuring changes in financial position c. the information in financial statements is summarized and classified to help meet users needs. d. financial statements can be justified only if the benefits they provide exceed the costs.

30..The theory of accounting which best describes the accounting equation expressed assets=liabilities +proprietorship is the a.entity theory c.fund theory b. proprietary theory d.residual equity theory MARILLA, Inc. grants its customers 30 days credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 2% by the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly. At the end of 2017, accounts receivable were P1,250,000 and the allowance account had a credit balance of P106,000. Accounts receivable activity for 2017 was as follows: Credit sales Write-offs Collections P 3,800,000 82,000 ?

The companys controller prepared the following aging summary of year-end accounts receivable: Age Group 0-60 days 61-90 days 91-120 days Over 120 days Total Amount P825,000 220,000 50,000 128,000 P1,223,000 Percent Uncollectible 2% 10% 30% 40%

Based on the preceding information, determine the following: 31. Allowance for uncollectible accounts (before year-end adjustment). a. P100,000 b. P104,700 c. P106,000 d. P76,000 32. Required allowance for uncollectible accounts balance at December 31, 2008. a. P100,000 b. P76,000 c. 104,700 d. 106,000 33. Total bad debts expense for 2008. a. P76,000 b. P71,300 c. P4,700 d. P80,700

34. Net realizable value of accounts receivable at December 31, 2008. a. P1,123,000 b. P1,118,30 c. P1,223,000 d. P1,142,300

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35. Collections from customers during 2008. a. P1,332,000 b. P4,968,000 c. P4,941,000 d. P3,745,000 36. NARANJO corporations accounting records provided the following information (in 000s): Balances Account 12/31/2011 12/31/2012 Current assets P 240 P ? Property, plant and equipment 1,600 1,500 Current liabilities ? 130 Non-current liabilities 580 ? Working capital of P92 remained unchanged from year 2011 to 2012. (Working capital is current assets less current liabilities). Net income in year 2012 was P88. No dividends were declared during year 2012 and there were no other changes in owners equity. Total longterm liabilities at the end of year 2012 would be: (a) P568 (b) P616 (c) P480 (d) P392 37. A corporation prepared financial statements each December 31. On December 31, year 2012, a P2,500 decrease in cash is reported on the statement of cash flows. If the cash account had a balance of P12,500 at December 31, year 2012, the cash account balance at December 31, year 2011 was: (a) P10,000 (b) P12,500 (c) P15,000 (d) P0 38. HERMIONE Company has the following partial bank reconciliation shown below. Balance per bank Balance per books Deposit in transit Interest earned Checks outstanding Service charge NSF check Adjusted balance Adjusted balance P50,000 P51,240 10,000 ? 8,600 20 100 P51,400 ?

a)The amount of coins and currency in the petty cash fund is the same before the fund is reimbursed as it is afterwards. b)Entries to record the replenishment of the imprest petty cash fund result in debit to various expense accounts and a credit to the petty cash funds. c) At any time, the sum of the cash in the petty cash fund and the total petty cash vouchers should equal the amount for which the imprest petty cash fund was established. d)Under the imprest petty cash system, it is not necessary to adjust unreplenished petty cash expenses at end of the year. 40. Expenses paid out of the petty cash is recorded under two systems of accounting for petty cash: Imprest system Fluctuating system (a) (b) (c) (d) When paid When replenished When paid When replenished When paid When paid When replenished When replenished

41. In reimbursing the petty cash fund, which of the following is true? (a) cash is debited. (b) petty cash is credited. (c) petty cash is debited. (d) expense accounts are debited. 42. A cash short or over account: (a) is not generally accepted. (b) is debited when the petty cash fund proves out over. (c) is debited when the petty cash fund proves out short. (d) is a contra account to cash. 43. In the process of preparing a bank reconciliation: (a) outstanding checks should be added to the bank balance of cash. (b) outstanding checks should be subtracted from the book balance of cash. (c) all of the reconciling items shown on a bank reconciliation must be entered in the accounting records after the reconciliation is completed. (d) items that appear on the reconciliation as corrections to the book balance of cash should be entered in the accounting records. 44. What is the adjusting entry for a customer NSF check? (a) debit cash and credit accounts receivable (b) debit service charge and credit cash (c) debit accounts receivable and credit cash (d) no adjustment is necessary

Assuming a combination entry, when the adjusting journal entry is made to record the preceding bank reconciliation, cash should be debited for: (a) P 0 (b) P160 (c) P120 (d) P280 39. The following statements relate to the petty cash fund. Which statement is true?

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45. On Dream Companys bank reconciliation at the end of May, the amount of P500 is deducted from the bank statement balance as a step in determining the adjusted cash in bank balance that should appear on the balance sheet. A possible explanation for this P500 deduction is: (a) a check deposited by Dream has been returned by the bank marked NSF. (b) the bank has collected a note for the account of the company. (c) a deposit in transit in the amount of P500. (d) the bank erroneously credited Great Companys deposit on Dream Companys bank statement. 46. Which of the following statements is false? (a) Deposits in transit will cause the balance shown in the depositors cash ledger account to be greater than the balance reported in the bank statement, all other things being equal. (b) Bank service charges not yet entered in the depositors accounting records will cause his balance of cash to be higher than that reported by the bank, all other things being equal. (c) Outstanding checks of a depositor will cause the balance of the cash account in his books to be lower than the balance reported by the bank, all other things being equal. (d) An error made by the bank in crediting an amount to a depositors account requires a correcting journal entry in the depositors own records. 47. LONGBOTTOM Company has the following cash balances at December 31, 2012: Undeposited coins and currency P 35,000 Unrestricted demand deposits 1,450,000 Company checks written (and deducted from the demand deposits amount) but not scheduled to be delivered until January 6, 2013 180,000 Time deposits restricted for use (expected use in 2003) 3,000,000 The unrestricted demand deposits included P150,000 compensating balance but not legally restricted as to withdrawal. How much should LONGBOTTOM report as cash in its December 31, 2012 balance sheet? (a) P1,665,000 (c) P1,520,000 (b) P1,515,000 (d) P1,335,000

Receipts for expenses advanced for the account of certain suppliers 1,600 Customers postdated checks 1,500 Customers checks returned by the bank marked NSF 1,800 Currencies and coins on hand 600 Travelers check 500 Checks in payment of accounts, still in the safe of the cashier, awaiting instructions for delivery to payees 6,000 Petty cash fund (P160 in currency and P840 in expense receipts) 1,000 The correct cash balance for the balance sheet is: (a) P82,500 (b) P76,500 (c) P81,660 (d) P72,360 49. A cash count on the morning of January 2, 2012 showed the following items in the petty cash box of Tray Corporation: Currencies and coins counted P12,560 Envelope containing contributions to employees party 90,000 Approved and paid petty cash vouchers 14,500 Employees IOUs 180,000 Company check for fund replenishment 92,000 The petty cash fund was established for an amount of P300,000. What is the correct amount of petty cash on the balance sheet as of December 31, 2012? (a) P300,000 (b) P12,560 (c) P104,560 (d) P13,500 50. On April 1, 2012, GRINGOTS Company established an imprest petty cash fund for P10,000 by writing a check drawn against its general checking account. On April 30, the fund contained the following: Currency and coins P3,000 Receipts for office supplies 4,000 Receipts for postage (still unused) 2,000 Receipts for transportation 600 On April 25, the company wrote a check to replenish the fund. What is the amount of replenishment under the imprest fund system? (a) P7,000 (b) P6,600 (c) P10,000 (d) P3,000 51. In an audit of HAGRID Company on December 31, 2019, the following information is gathered: Balance per book 6,700,000 Customers check 200,000 Depositors note charged to account 650,000 Customers note collected by bank 120,000

48. The balance sheet of VOLDEMORT Company as of December 31, 2012 showed the cash amount of P87,300. It was found to include the following items: Postal money orders from customers P2,400 Notes receivable in the possession of a collecting agency 3,200

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Outstanding checks 800,000 Checkbook printing charge 2,000 Certified checks included in the outstanding checks 100,000 Deposit in transit 1,200,000 Interest earned on deposits net of 20% final tax 32,000 The adjusted cash in bank of HAGRID Company on December 31, 2019 is a. 6,050,000 b. 6,700,000 c. 6,000,000 d. 5,300,000 52. On January 1, 2009, DUMBLEDOR Company purchased serial bonds with a face value of P4,000,000 and a stated interest rate of 10% to be held to maturity. The stated interest is payable annually on December 31. The bonds are acquired to have an effective yield at 12%. The bonds mature at annual installments of P1,000,000 every January 1, beginning in January 1, 2010 and every January 1 thereafter. What is the market price of the bond investment on January 1, 2009? (Round off present value factors to 2 decimal places) a. 4,000,000 b. 3,776,000 c. 3,842,000 d. 3,876,000 53. On December 31, 2009, the balance of accounts receivable of Jalena Company was P6,000,000 and the January 1, 2009 balance of allowance for doubtful accounts was P800,000. The following data were gathered: Write offs Recoveries Credit Sales 2006 9,000,000 400,000 30,000 2007 13,000,000 600,000 70,000 2008 15,000,000 700,000 120,000 2009 20,000,000 650,000 150,000 Doubtful accounts are provided for a percentage of credit sales. The accountant calculates the percentage annually by using the experience of the three years prior to the current year. Hpw much should be reported as allowance for doubtful accounts on December 31, 2009? a. 1,100,000 b. 800,000 c. 1,300,000 d. 1,250,000 54. Esplanade Company sells a variety of merchandise to its customers. On December 31, 2009, the balance of Esplanades ending inventory account was P3,000,000, and the allowance for inventory writedown account before any adjustment was P150,000. Relevant information about the proper valuation of inventories and the breakdown of inventory cost and market data at December 31, 2009, are as follows: Cost Replacement Sales NRV Normal Cost Price Profit Bags 800,000 900,000 1,200t 550,000 250,000

Shoes 1,200,000 1,200,000 1,300t 1,100,000 150,000 Clothing 700,000 1,000,000 1,250t 950,000 300,000 Lingerie 500,000 600,000 1,000t 350,00 300,000 How much loss on inventory writedown is included in 2009 cost of sales? a. 50,000 b. 200,000 c. 400,000 d. 250,000 55. Pearl Company began operations on January 1, 2015. On December 31, 2015, Pearl provided for uncollectible accounts based on 1% of annual credit sales. On January 1, 2016, Pearl changed its method of determining its allowance for uncollectible accounts by applying certain percentage to the accounts receivable aging as follows: Days past invoice date Percent deemed to be uncollectible 0-30 1 31-90 5 91-180 20 Over 180 80 In addition, Pearl wrote off all accounts receivable that were over 1 year old. The following additional information relates to the year ended December 31, 2015 and 2016: 2016 2015 Credit sales P6,000,000 P5,600,000 Collections 5,830,000 4,800,000 Accounts written off 54,000 none Recovery of accounts previously Written off 14,000 none Days past invoice date @ 12/31 0-30 600,000 500,000 31-90 160,000 180,000 91-180 120,000 90,000 Over 180 50,000 30,000 What is the provision for uncollectible accounts for the year ended December 31, 2016? a. 22,000 b. 62,000 c. 76,000 d. 78,000 56. The balance sheet at December 31, 2006 of Mall Company showed a cash balance of P91,750. An examination of the books disclosed the following: Cash sales of P12,000 from January 1 to 7 were predated as of December 28, 31, 2006 and charged to the cash account. Customers check totaling P4,500 deposited with and returned by the bank NSF on December 27, 2006 were not recorded in the books. Checks of P5,600 in payment of liabilities were prepared before December 31, 2006 and recorded in the books,

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but withheld by the treasurer. Post-dated checks totaling P3,400 are being held by the cashier as part of cash. The companys experience shows that post-dated checks are eventually realized. The cash account includes P20,000 being reversed for the purchased of a mini-computer which will be delivered soon. Personal checks officers, P2,700 were redeemed on December 31, 2006, but returned to cashier on January 2, 2007. How much is the cash balance that should be shown in the December 31, 2006? a. 91,750 b. 69,150 c. 54,750 d. 43,550 59. DIGORY Company purchased from Ora Company a P2,000,000, 8% 5-year note that required five equal annual year-end payments of P500,900. The note was discounted to yield a 9% rate to DIGORY. At the date of purchase, DIGORY recorded the note at its present value of P1,948,500. What should be the total revenue earned by DIGORY over the life of this note? (a) P504,500 (b) P556,000 (c) P800,000 (d) P900,000 National Bank grants a 10-year loan to Abbo Company in the amount of P1,500,000 with a stated interest rate of 6%. Payments are due monthly and are computed to be P16,650. National Bank incurs P40,000 of direct loan origination cost and P20,000 of indirect loan origination cost. In addition, National Bank charges Abbo a 4-point nonrefundable loan origination fee. 60. National Bank, the lender, has a carrying amount of: (a) P1,440,000 (b) P1,480,000 (c) P1,500,000 (d) P1,520,000 61. On June 30, 2003, Ray Company discounted at the bank a customers P60,000, 6-month, 10% note receivable dated April 30, 2003. The bank discounted the note at 12%. Rays proceeds from this discounted note amounted to: (a) P56,400 (b) P57,600 (c) P60,480 (d) P61,740 X Corporation factored P6,000,000 of accounts receivable to A Corporation on October 1, 2004. Control was surrendered by X Corporation. A Corporation accepted the receivables subject to recourse for nonpayment. A Corporation assessed a fee of 3% and retains a holdback equal to 5% of the accounts receivable. In addition, A Corporation charged 15% interest computed on a weighted-average time to maturity of the receivables of 54 days. The fair value of the recourse obligation is P90,000. 62. X Corporation will receive and record cash of:

(a) P5,296,850 (b) P5,386,850 (c) P5,476,850 (d) P5,556,850 63. Assuming all receivables are collected, X Corporations cost of factoring the receivables would be: (a) P313,150 (b) P180,000 (c) P433,150 (d) P613,150 64. From inception of operations to December 31, 2003, Murr Corporation provided for uncollectible accounts receivable under the allowance method, provisions were made monthly at 2% of credit sales, bad debt written off were charged to the allowance account, recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Murrs usual credit terms are net 30 days. The balance in the allowance for doubtful accounts was P120,000 at January 1, 2004. During 2004, credit sales totaled P9,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P90,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P15,000. Murr installed a computer facility in November 2004 and prepared an aging of accounts receivable for the first time as of December 31, 2004. A summary of the aging is as follows: Classification by Balance in Estimated % month of sale each category uncollectible Nov Dec 2004 P2,000,000 2% July October 600,000 10% January June 400,000 25% Prior to 1/1/2004 200,000 75% P3,200,000 Based on the review of collectibility of the account balances in the prior to 1/1/2004 aging category, additional receivables totaling P60,000 were written off as of December 31, 2004. Effective with the year ended December 31, 2004, Murr adopted a new accounting method for estimating the allowance the allowance for doubtful accounts at the amount indicated by the yearend aging analysis of accounts receivable. What is the year-end adjustment to the allowance for doubtful accounts as of December 31, 2004? (a) P305,000 (b) P180,000 (c) P320,000 (d) P140,000 ------------------------ THE END--------------------------GOD BLESS

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