SINGLE ENTRY

when a system of record keeping in which

transaction are not analyzed and recorded in

the double entry framework.
For proprietorship or partnership

Capital, end the year

xxx
Add: withdrawals
xxx
Less: Capital, beg of yr
xxx
Additional inv.
xxx
Net income (loss)
XXX

For corporation

Retained earnings, end

xxx
Add: dividends dec or pd. xxx
Other items that
decreased the RE
xxx
Less: ret. earnings, beg
xxx
Other items that
increased the RE
xxx
Net income (loss)
XXX

RELATED PARTIES

1. the ability to control the other party

Related Parties - if one party has:
- 50% or more ownership
2. the ability to exercise significant influence
over the other party
- 20% to 49%
3. joint control over the entity
- key management personnel
- Close family members

Control the other Party

PARENT

SUBSIDIARY

Significant Influence

INVESTOR

INVESTEE

1. A related party transaction is a transfer of resources or obligations

A. Between related parties, when price is charged
B. Between related parties, regardless of whether a price is charged
C. Between unrelated parties, when price is charged
D. Between unrelated parties, regardless whether a price is charged
2. What is control of one party by another party?
A. The holding of significant proportion of the ordinary shares
B. The contractually agreed sharing of control over an entity
C. The power to participate in the financial and operating policy
decisions
D. The power to govern the financial and operating policies of an entity
so as to obtain benefits
3. Close family members of an individual include all of the following except
A. The individual's spouse and children
B. Children of the individual's spouse
C. Dependents of the individual or individual's spouse
D. Brothers and sisters of the individual

INTERIM
REPORTING
AND
ACCOUNTING
CHANGES

Interim Financial Reporting

- means preparation and presentation of FS for

a period less than 1 year.
- can be monthly, quarterly or semi-annually
Condensed set of FS
Interim Reports
Selected Explanatory
Notes

Accounting Changes

- it is a normal recurring correction or

adjustment
Two types of Accounting Changes
- Change in Accounting Policy
- Change in Accounting Estimate

An entity shall change an accounting policy

if:
- is required by Standard of Interpretation
- results in the FS providing reliable and
more
relevant information
Application of changes In accounting policy:

- Retrospective application
- Prospective application

Changes in Accounting Estimate

Bad Debts
Inventory Obsolescence
FV of financial assets and liabilities
Useful life of assets
Depreciation method

Application of changes in accounting

estimate:
- In the period of change if the change
affects that period only
- In the period of change and future
periods, if the change affects both

 Interim Reporting

1. Under PAS 34, interim financial reports shall be published

A. On a quarterly basis
B. Whenever the entity wishes
C. Once a year at any time in the same year
D. Within one month from the end of the year
2. As a minimum requirement, interim financiak reports should include:
A. A balance sheet and a statement of comprehensive income
B. A complete set of financial statements pursuant to PAS 1
C. A condensed set of financial statements and selected explanatory
notes
D. A balance sheet, statement of cash flows and statement of
comprehensive income
3. PAS 34 states a presumption that anyone reading interim financial
reports will
A. Have access to the records of entity
B. Have access to the most recent annual report
C. Should not make decisions based on interim report

4. Statement I. An entity shall apply the same accounting policies

in its interim FS and in its annual FS.
Statement II. Revenues are generally recognized for interim reportd
on the same basis as for the annual period while costs and
expenses are recognized as incurred on interim period
A. True, true
B. True, false
C. False, true
D. False, false
5. A rare and unusual casualty loss occuring in the second quarter
shall be recognized as a loss
A. In the second quarter only
B. At the end of fiscal year
C. Proportionately in each of the second, third and fourth
quarters
D. Proportionately in each first, second, third and fourth quarters

6. Grapes company's P190,000 net income for the quarter

ended sept. 30, 2016 included the following items:
--A P120,000 gain on disposal of equipment realized on april
30, 2016 was allocated equally to 2nd, 3rd and 4th quarter
--A P32,000 cumulative effect loss resulting from a change
in inventory valuation was recognized in august 4, 2016
In addition, grapes paid P96,000 on february 1, 2016 for
calendar year property tax, of this amount P24,000 was
allocated to the 3rd quarter of 2016.
For the quarter ended september 30, 2016, how much
should grapes report as net income?

Accounting Changes

1. It is the specific principle, basis, convention, rule and practice adopted

by an entity in preparing and presenting the financial statements
A. Prior period error
B. Accounting policy
C. Accounting estimate
D. GAAP
2. A change in accounting policy shall affected when:
I. Required by an accounting standard ot its interpretation
II. It helps an entity save on corporate taxes by way of understating net
income
III. The change results in FS providing more relevant or reliable financial
information about reporting entity
A. I and II
B. II and III
C. I and III
D. I, II and III

3. Which is considered as a change in accounting policy rather than change

in accounting estimate?
A. Revision of an intangible's useful life
B. Change in residual value of a building used as a plant site
C. Change in inventory valuation from FIFO to weighted average method
D. Change in depreciation method from straight line to double declining
balance method
4. It is difficult to distinguish between a change in accounting estimate and
accounting policy, then the change is
A. Prior period error
B. Current period error
C. Change in accounting policy
D. Change in accounting estimate
5. Prior period errors discovered in the current period are reported as
A. Extraordinary items
B. Component of current income from ordinary activities
C. Adjustments to the opening balance of RE
D. Component of current income from continuing operations

Items 6-9
TL Co. decided on january 2, 2016, to effect the following changes in
accounting policies:
BAD DEBTS: Bad debt percentage from 2% to 4% of accounts receivable.
Ending balance of AR is P690,000 and the allowance for bad debt has a debit
balance of P2,000.
DEPRECIATION: From SYD to straight line method of depreciation and a revised
remaining useful life of 10 years as of january 2, 2016. There is no change in
residual value of P50,000. Said equipment was purchased on january 1, 2006
for P1,150,000, a total useful life of 15 yrs and P50,000 residual value.
6. The effect of the entry to record the current provision for bad debts on bad
debts expense is:
7. The carrying value of the accounts receivable is:
8. The depreciation expense for the current year is:
9. The carrying value of the equipment as of december 31, 2016 is:

CASH
AND
ACCRUAL
BASIS

Cash Basis

- income is recognized when received

regardless of when earned, and expense is
recognized when paid regardless of when incurred.
- does not recognized AR, AP, accrued income,
deferred income, accrued expense and prepaid
expense.
Accrual Basis

- income is recognized when earned regardless

of when received, and expense is recognized when
incurred regardless of when paid.

Computation of Sales
Cash sales
xxx
Sales on Account :
Trade AR and NR, end
xxx
Collections of AR and NR xxx
Sales ret, discnts, and allow
xxx
AR and NR written off
xxx
Trade NR discounted
(NR directly credited)
xxx xxx
Less: Trade AR and NR, beg.
xxx
Total Sales- Accrual Basis
xxx

Computation of
Purchases
Purchases per book
xxx
Purchases on Account:
Trade AP and NP. End
xxx
Payment to AP and NP
xxx
Purchases ret, dscnt and allow xxx
Total
xxx
Less: Trade AP and NP, beg
xxx xxx
Total Purchases accrual basis
xxx

Computation of Expenses
Expenses paid cash basis
xxx
Add: Prepaid expenses- beg
xxx
Accrued expenses- end
xxx
Total
xxx
Less: Prepaid expenses end
xx
Accrued expenses beg
xx xxx
Expenses Accrual basis
xxx

Income other than sales

Income received cash basis
xxx
Add: Deferred income beg
xxx
Accrued income end
xxx
Total
xxx
Less: Deferred income end
xxx
Accrued income beg
xxx xxx
Income other than sales- accrual
xxx

1. Under cash basis of accounting

A. Revenue is recorded when earned
B. Accounts receivable would appear in the statement of financial position
C. Depreciation of assets having an economic life of more than 1 year is
not recognized
D. Matching principle is ignored
2. If ending balance exceeds the beginning balance of accounts receivable
A. Cash collections during the year exceed sales
B. Net income is less than cash basis income
C. No cash was collected during period
D. Cash collections during the year are less than sales
3. Under the cash basis of accounting, revenue is recorded
A. When earned and realized
B. When earned and realizable
C. When earned
D. When realized

4. When an item of expense has been incurred but not

yet paid. It is called
A. Prepaid expense
B. Adjusted expense
C. Estimated expense
D. Accrued expense
5. The ending balance in unearned fees represents
A. Cash received in advance and not yet earned
during the period
B. The decrease in accounts receivable for the period
C. Cash paid in advance and not yet incurred during
the period
D. The increase in accounts receivable for the period

6. Under the accrual basis, rental income of TARA SA CONDO Co. for the
current year is P600,000. Additional information regarding rental income
is as follows:
-- Unearned rental income, jan. 1 P50,000
-- Unearned rental income, dec. 31 75,000
-- Accrued rental income, jan. 1
30,000
-- Accrued rental income, dec. 31
40,000
How much cash was received from rental in the current year?
7. Gelou Company maintain records using cash basis of accounting but
uses accrual basis in preparing its FS. During 2016, the entity collected
P5,000,000 in fees from clients. On december 31, 2015, accounts
receivable of P800,000 and unearned fees of P500,000 had been
recorded.
On december 31, 2016, accounts receivable increased to P1,500,000
while unearned fees increased to P900,000. In the accrual basis, what is
the service revenue for 2016