reviewer 2, fundamentals of accounting 2

8/10/2019 Reviewer 2, Fundamentals of Accounting 2

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1

Fundamentals of Accounting , Part 2

1.

The following adjusting entries are not reverse at the beginning of the new accounting period?

a.

Accrued expenses

b.

Accrued revenue

c.

Prepaid expense recorded under the asset methodd.

Unearned revenue recorded under the revenue method

2.

The rent expense account on ecember !1 before adjustment is P2"#$$. At %ear end" it was ascertained that

P1"2&$ is unexpired. The amount of the re'uired adjustment on ecember !1 is(

a.

P2"#$$

b.

P1"2&$

c.

P1")&$

d.

P*"1&$

!.

+hich of the following characteristics is a disadvantage?a.

,oluntar% association

b.

-ase of dissolution

c.

Unlimited liabilit%

d.

Participation in partnership income

*.

The partnership agreement is contained in the articles of partnership" an express contract among the partners.

uch an agreement ordinaril% does not include

a.

The rights and duties of the partners

b.

The allocation of income or loss among the partners

c.

The provision for arbitration of disputes" dissolution" and li'uidation

d.

The limitation on a partner/s liabilit% to creditors

&.

0n arch 1" 2$11" -spejo and A'uino formed a partnership. -spejo contributed cash. A'uino" previousl% a

sole proprietor" contributed propert% other than cash" including land subject to a mortgage" which was

assumed b% the partnership. A'uino/s capital account at arch 1" 2$11 should be recorded at

a.

oo3 value of the propert% at arch 1" 2$11

b.

4air mar3et value of the propert% at arch 1" 2$11

c.

oo3 value of the propert% less the mortgage pa%able at arch 1" 2$11

d.

4air mar3et value less the mortgage pa%able at arch 1" 2$11

).

5o%no% invested cash of P)$"$$$6 land of P2$$"$$$ with an appraised value of P*1$"$$$6 store furniture

costing P*$"$$$ less accumulated depreciation of P1$"$$$6 mortgage note pa%able P1&"$$$ plus accrued

interest for a %ear at 178. 9f the mortgage note is to be assumed b% the partnership" 5o%no%" capital should

be credited for

a.

P*7&"$$$

b.

P&*&"$$$

c.

P*72"!$$

d.

P&1&"$$$



!

d.

P17"2$$

12.

,irgie was credited with a salar% of P:2"$$$" interest of P2$"$$$ on her capital contribution. he was charged

with P)"$$$ as her share in the negative balance on a 1(2 ratio. The capital contributions are P1$$"$$$ for

,irgie and P2$$"$$$ for =ose with ,irgie as managing partner.

>ow much was the profit or loss share of =ose?

a.

P#$"$$$

b.

P12"$$$

c.

P12"$$$@

d.

P!$"$$$

1!.

To meet the objective of providing information about financial position" financial performance and cash flows

of an entit%" financial statements should provide information about all of the following" except

a.

Assets" liabilities and e'uit%

b.

9ncome and expenses" including gains and lossesc.

ontributions b% and distribution to owners in their capacit% as owners

d.

5ature of the entit%/s business activities

1*.

An anal%sis of urma ompan%/s liabilities disclosed the following(

Accounts pa%able" after deducting debit balance in suppliers/

accounts amounting to P1$$"$$$ P*"$$$"$$$

Accrued expenses 1"&$$"$$$

hortBterm notes pa%able 2"$$$"$$$

toc3 dividends pa%able 1"$$$"$$$

>ow much should be presented as total current liabilities in the statement of financial

position?

a. P7"&$$"$$$

b. P7")$$"$$$

c. P:"&$$"$$$

d. P:")$$"$$$

1&.

A complete set of financial statements includes the following components" except

a.

tatement of financial position" statement of comprehensive income and statement of cash flows

b.

tatement of changes in e'uit%

c.

5otes" comprising a summar% of significant accounting policies and other explanator% information

d.

=eports and statements such as environmental reports and value added statements

1).

+hich of the following is included in a complete set of financial statements?

a.

A statement b% the board of directors of compliance with local legislation

b.

A statement of changes in e'uit%

c.

ummari<ed statements of financial position for the last five %ears

d.

,alue added statement

1:.

9t is the total of income less expenses" excluding the components of other comprehensive income.

a.

omprehensive income

b.

Profit or loss



*

c.

Accounting income

d.

-conomic income

17.

The following information is provided b% =omarie ompan% for the current %ear

5et sales #$$"$$$

ales returns and allowances 1$"$$$

ost of sales &*$"$$$

istribution cost 1!&"$$$

Administrative cost 1$$"$$$

4inance cost 2$"$$$

The net income is

a.

P1$&"$$$

b.

P11&"$$$

c.

P #&"$$$

d.

P1$$"$$$

1#.

At the beginning of 2$1$" the capital balances of =iver and =osario are P2*"$$$ and P2)"$$$" respectivel%.

=ivera and =osario share profits and losses in a !(: ratio. uring 2$1$" the partnership experienced a P*$"$$$

loss. =ivera withdrew P1$"$$$ from the partnership during the %ear and =osario withdrew P17"$$$. +hat will

be the balance in =ivera/s capital on ecember !1" 2$1$?

a.

P!")$$

b.

P2"$$$

c.

P12"$$$

d.

P2)"$$$

2$.

Partner A'uino had a beginning capital balance of P!&"$$$ and made additional investment of P2:"$$$ during

the %ear. >e also made a drawing of P&"$$$ a month. The post closing capital balance of Cuinto is P:2"$$$.+hat is the share in the partnership profit?

a.

P:$"$$$

b.

P1&"$$$

c.

P)$"$$$

d.

P:2"$$$

21.

An entit% shall classif% an asset as current when choose the incorrect one@

a.

The entit% expects to reali<e the asset or intends to sell or consume it within the entit%/s normal

operating c%cle

b.

The entit% holds the asset for the purpose of trading

c.

The entit% expects to reali<e the asset within twelve months after the reporting period

d.

The asset is cash or a cash e'uivalent that is restricted to settle a liabilit% for more than twelve months

after the reporting period

22.

-ast ompan%/s trial balance reflected the following account balances on ecember !1" 2$1$.

Accounts receivable 2$$"$$$

Accumulated depreciation !$$"$$$

ash and cash e'uivalents 1&$"$$$

9nventor% &$$"$$$

-'uipment 1"$$$"$$$

Prepaid expense 2$"$$$



&

;and &$$"$$$

9n the ecember !1" 2$1$ statement of financial position" what amount should be reported as total current

assets?

a.

P7:$"$$$

b.

P7&$"$$$

c.

P#:$"$$$

d.

P#&$"$$$

2!.

9n a statement of cash flows using indirect approach for operating activities" an increase in inventor% is

presented as

a.

0utflow of cash

b.

9nflow and outflow of cash

c.

Addition to net income

d.

eduction from net income

2*.

un ompan% provided the following data for the preparation of the statement of cash flows for the current

%ear(

9ncrease in accounts receivable !$$"$$$

ecrease in income tax pa%able 1:$"$$$

epreciation 1"$$$"$$$

5et income 2&$"$$$

Dain on sale of e'uipment **$"$$$

;oss on sale of building 21$"$$$

Using the indirect method" what amount should be reported as cash flow from operating activities?

a.

P:7$"$$$

b.

P:$$"$$$c.

P77$"$$$

d.

P&&$"$$$

2&.

+hich of the following will not result in dissolution of a partnership?

a.

Admission of a new partner

b.

an3ruptc% of a partner

c.

5egative capital balance of a partner

d.

9ncapacit% of a partner

2).

Darcia invested P2$$"$$$ for a 1E! interest in a partnership in which the other partners have capital totaling

P&2$"$$$ before admitting Darcia. After distribution of the bonus" what is Darcia/s capital?

a.

P2$$"$$$

b.

P2*$"$$$

c.

P1:!"!*$

d.

P1$)"))$

2:.

+hen a partner withdraws from a partnership ta3ing assets that represent more than his capital balance"

a.

5o bonus results

b.

The remaining partners receive a bonus

c.

The withdrawing partner receives a bonus



)

d.

The withdrawing partner owe the remaining partners the difference

27.

" a partner in the A Partnership died. 0ne of the partners with the consent of the remaining partners"

purchased /s interest for P*$$"$$$. /s capital after the boo3s were closed was P!&$"$$$. This will (

a.

5ot affect the partnership assets and the partners/ e'uit%

b.

ecrease the partners/ assets and the partners/ e'uit% b% P!&$"$$$

c.

ecrease partners/ e'uit% onl% b% P!&$"$$$

d.

ecrease partnership assets onl% b% P!&$"$$$

2#.

=T Partnership is selling electronic e'uipment and supplies. Profits and losses are shared &(!(2. The boo3s

are 3ept on a calendar basis

After the business has been in operation for several %ears" onn% died on eptember !$. The

wife of onn% desired to sell onn%/s interest to the partnership for P!:$"$$$. After the boo3s

were closed" the partners/ capital accounts had credit balances as follows(

=o% P&$$"$$$

onn% !$$"$$$

Tro% 2$$"$$$

The capital balance of =o% after the cash settlement to onn%/s wife is

a.

P*&$"$$$

b.

P*)&"$$$

c.

P&&$"$$$

d.

P&!&"$$$

!$.

+hich of the following would not be underta3en when a partnership decides to incorporate?

a.

Adjust the partnership/s assets to be transferred to the corporation

b.

onvert the noncash assets into cash

c.

lose the partnership boo3s

d.

Transfer the assets and liabilities to the corporation in exchange for shares of stoc3

!1.

0n ecember !1" 2$1$" A Partnership was dissolved. The fair mar3et values of its assets and liabilities are

as follows(

urrent assets P1")$$"$$$

-'uipment 2"1$$"$$$

;iabilities :$$"$$$

0n Fanuar% 2" 2$11" A Partnership was incorporated" with &"$$$ shares of P1$$ par value

ordinar% shares issued. >ow much should be credited to share premium?

a.

P!"2$$"$$$

b.

P2"&$$"$$$

c.

P2"!$$"$$$

d.

P2"$$$"$$$



:

!2.

9n li'uidation" the sale of the nonBcash assets is called

a.

=eali<ation

b.

5et proceeds

c.

Dain from sale

d.

;oss from sale

!!.

-" D" ; and share profits in the ratio of 2(1(1(1. The partnership cannot meet its obligations to creditors and

dissolution is authori<ed on arch !1" 2$11. A balance sheet for the partnership on this date shows balances

as follows(

ash P #$"$$$ ;iabilities P2)&"$$$

0ther assets *$$"$$$ " ;oan 2&"$$$

-" apital &$"$$$

D" apital &$"$$$

;" apital &$"$$$

" apital &$"$$$

Total Assets P490,000 Total Liabilities and Capital P490,000

The personal status of partners on this date is determined to be as follows(

Partners Personal Assets Personal ;iabilities

- P2&$"$$$ P1&$"$$$

D 1$$"$$$ 1&$"$$$

; 1&$"$$$ 12&"$$$

2$$"$$$ 2&$"$$$

0ther assets of the partnership are sold and reali<ed for P12$"$$$. Additional contribution b%

appropriate parties in meeting the claims of firm creditors were made.

The amount that will be paid to the personal creditors of would be(

a.

P2&$"$$$

b.

P21:"&$$

c.

P2$$"$$$d.

P2!&"$$$

!*.

Ging" Cueen and Prince are partners sharing profit and loss in the ratio of 1(1(2" respectivel%. Their capital

balances are P&$$"$$$ for Ging" P!$$"$$$ for Cueen and P2$$"$$$ for Prince. ;iabilities amounted to

P2$$"$$$. There is also a loan pa%able to Prince" P&$"$$$. The cash balance amounted to P!$$"$$$ and it

increased to P1"*$$"$$$ as a result of the sale of the nonBcash assets. >ow much is the available cash for

distribution to the partners

a.

P1"*$$"$$$

b.

P1"2$$"$$$

c.

P1"1&$"$$$

d.

P 2&$"$$$



7

!&.

9f the proceeds from the sale is less than the boo3 value of the nonBcash assets sold" the result will

a.

ecrease the partnership assets but increase the partners/ e'uit%

b.

9ncrease the partnership assets but decrease the partners/ e'uit%

c.

ecrease both the partnership assets and the partners/ e'uit%

d.

9ncrease both the partnership assets and the partners/ e'uit%

!).

Annie" -m% and ar% are in the process of li'uidating their partnership and their account balances as of

arch 1" 2$11 are as follows(

ebit redit

ash 1&"$$$

5onBcash assets !&"$$$

-m%" ;oan :"$$$

Annie" capital &"$$$

-m%" capital 1:"&$$

ar%" capital 2$"&$$

The profit and loss sharing ratio has been *(!(! between Annie" -m% and ar%" respectivel%. 9f

Annie has personal assets of P2&"$$$ and personal liabilities of P22"&$$ and that the partnership

reali<ed P12"&$$ from the sale of its nonBcash assets" ar% must receive

a.

P2$"&$$

b.

P12"&$$

c.

P1!"$$$

d.

5ot given

!:.

+hich of the following is not correct with respect to an installment li'uidation of a partnership?a.

All remaining li'uidation expenses are anticipated

b.

All nonBcash assets are assumed to be worthless

c.

istributions to partners are alwa%s made according to their profit sharing percentages

d.

Partners with the greatest abilit% to absorb losses and expenses are the first to receive installment

distributions

!7.

The partnership of ravo" A'uino and 9co share profits and losses in the ratio of &(!(2" respectivel%. The

partners voted to dissolve the partnership when its assets" liabilities and capital were as follows(

Assets ;iabilities and apital

ash P !$"$$$ ;iabilities P &$"$$$0ther assets !2$"$$$ ravo" apital 7$"$$$

A'uino" apital 11&"$$$

9co" apital 1$&"$$$

Total P!&$"$$$ Total P!&$"$$$

The partners agreed to li'uidate the partnership b% installment. The first sale of the non cash assets having a

boo3 value of P1&$"$$$ reali<ed P1$$"$$$. 0n the cash available" priorit% is the pa%ment of the liabilities and

the balance is to be distributed to the partners. >ow should the remaining cash be distributed?

ravo A'uino 9co

a.

P&$"$$$ !$"$$$ 2$"$$$

b.

*$"$$$ 2*"$$$ 1)"$$$



#

c.

$ *7"$$$ !2"$$$

d.

$ !1"$$$ *#"$$$

!#.

A corporation has the following attributes except

a.

An artificial being with a personalit% separate and apart from its shareholders

b.

9t is created b% mere agreement of the incorporators

c.

-njo%s the right of succession

d.

>as the powers" attributes and properties expressl% authori<ed b% law or incident to its existence.

*$.

+hich of the following statements is true?

a.

The death of the shareholder dissolves the corporation

b.

hareholders have unlimited liabilit%

c.

hareholders are not general agents of the business

d.

0wnership shares cannot be easil% transferred

*1.

The corporate powers shall cease and the corporation be deemed dissolved if a corporation does not formall%

organi<ed and commence the transactions of its business within

a.

0ne %ear from the date of its incorporationb.

Two %ears from the date of its incorporation

c.

Three %ears from the date of its incorporation

d.

4ive %ears from the date of its incorporation

*2.

The shareholders or members mentioned in the Articles of 9ncorporation originall% forming and composing the

corporation and who are signatories thereof are called

a.

9ncorporators

b.

orporators

c.

Promoters

d.

ubscribers

*!.

The par value of ordinar% shares is e'ual to

a.

A designated peso amount per share established in the articles of incorporation

b.

The amount received b% the corporation when the share was originall% issued

c.

The amount at which the share is currentl% trading in an organi<ed mar3et

d.

The boo3 value of the ordinar% shares

**.

Trina orporation was organi<ed on Fanuar% 1" 2$11 with authori<ed capital of P1"$$$"$$$ consisting of

1$$"$$$ shares of P1$ par ordinar% share. ubse'uentl%" incorporators subscribed for 2&"$$$ shares at P12.

>ow much must be paid up upon subscription to compl% with the re'uirement of the -?

a.

P!$$"$$$

b.

P2&$"$$$

c.

P )2"&$$

d.

P :&"$$$

*&.

Ten persons decided to organi<e a corporation. +hich of the following situation illustrates best the minimum

re'uirement of the law to capital formation?

Authori<ed capital subscribed capital paidBin capital

a.

P2$$"$$$ P*$"$$$ P1$"$$$

b.

P2$$"$$$ P&$"$$$ P1$"$$$

c.

P2$$"$$$ P&$"$$$ P12"&$$

d.

P2$$"$$$ P)$"$$$ P12"$$$



1$

*).

The most powerful person in a corporation is the

a.

President

b.

,ice president

c.

hairman of the board

d.

9ncorporator

*:.

These represent the record of all business transactions which normall% include the journal and the ledger

a.

ubscription boo3

b.

oo3s of accounts

c.

toc3 certificate boo3

d.

toc3 and transfer boo3

*7.

The portion of the paid in capital representing amounts paid b% shareholders in excess of par is

a.

hare premium

b.

0rdinar% shares

c.

Preference shares

d.

;egal capital

*#.

The share gives its owners certain advantage over ordinar% shareholders

a.

onvertible share

b.

allable share

c.

0rdinar% share

d.

Preference share

&$.

Asle% ompan% was organi<ed on Fanuar% 1" 2$11 with authori<ed capital of 1$$"$$$ shares of P2$$ par value.

uring 2$11 Asle% had the following transactions affecting shareholders/ e'uit%(

Fanuar% 12 issued 2&"$$$ shares at P22$ a sharearch 2$ issued 1"$$$ shares for legal services when the fair value was P2*$ a share

August 2& issued &"$$$ shares for a tract of land when the fair value was P2)$ a share

+hat amount should Asle% report for share premium at ecember !1" 2$11?

a.

P&*$"$$$

b.

P&$$"$$$

c.

P7*$"$$$

d.

P7$$"$$$

&1.

0n arch 1" 2$11" 4lor orporation had the following shares issued and outstanding(

• 0rdinar% shares" noBpar" P1$ stated value" 2$"$$$ shares originall% issued for P!$ per share

•

Preference shares" P1$ par value" )"$$$ shares originall% issued for P&$ per share.

4lor/s arch 1" 2$11 statement of shareholders/ e'uit% should report

0rdinar% shares Preference shares hare premium

a.

P)$$"$$$ P )$"$$$ P2*$"$$$

b.

P)$$"$$$ P!$$"$$$ P$

c.

P2$$"$$$ P!$$"$$$ P*$$"$$$

d.

P2$$"$$$ P )$"$$$ P)*$"$$$

&2.

9f shares are issued for services rendered" the shares shall be recorded at



11

a.

4air value of the shares issued

b.

4air value of services rendered

c.

Par value of shares issued

d.

oo3 value of shares issued

&!.

+hat is the entr% to record issuance of share after all cash have been received from a share subscription

following the journal entr% method?

a.

ubscribed ordinar% shares

0rdinar% shares

b.


0rdinar% shares

hare premium

c.


Unissued ordinar% shares

d.

ubscriptions receivableubscribed ordinar% shares

hare premium

&*.

+inwin orporation was authori<ed to issue P*$$"$$$ ordinar% shares divided into *"$$$ shares with a par

value of P1$$ per share. 0n Ful% 1!" 2$11" the compan% received subscriptions for 1"$$$ at par from various

individuals. As at eptember 2&" 2$11" )$$ $f the subscribed shares have been full% paid and the stoc3

certificates issued correspondingl%. The entr% to record the issuance of stoc3 certificate for the )$$ shares is

a.

ubscription receivable )$"$$$

ubscribed ordinar% shares )$"$$$

b.

ash )$"$$$

ubscription receivable )$"$$$

c.

ubscribed ordinar% shares )$"$$$

0rdinar% shares )$"$$$

d.

ash )$"$$$

0rdinar% shares )$"$$$

&&.

+hich statement is incorrect concerning treasur% shares?

a.

Treasur% shares shall be recorded at cost irrespective of whether ac'uired below or above par value

b.

The total cost of treasur% shares should be deducted from e'uit%

c.

Treasur% share is a current asset

d.

Dains or losses on sales of treasur% shares shall not be credited or charged to income

&).

The following statements relate to retirement of treasur% shares. +hich statement is incorrect?

a.

9f an enterprise/s share capital is retired the share capital account is reduced b% its par value and the

number of shares issued is reduced b% the shares retired

b.

The treasur% shares account is credited at cost

c.

9f the retirement results in a gain par value exceeds the cost@" such gain shall be credited to retained

earnings



12

d.

9f the retirement results in a loss cost exceeds par value@ such loss shall be debited to share premium

from original issuance" share premium from treasur% shares and to retained earnings" accordingl%.

&:.

9n 2$1$" =onald orporation issued &"$$$ shares of P1$ par value ordinar% shares for P1$$ per share. 9n 2$11"

=onald ac'uired 2"$$$ of its shares at P1&$ per share and immediatel% canceled these 2"$$$ shares. 9n

connection with the retirement of these 2"$$$ shares" =onald should debit

hare premium =etained earnings

a.

2$"$$$ 27$"$$$

b.

1$$"$$$ 17$"$$$

c.

17$"$$$ 1$$"$$$

d.

27$"$$$ $

&7.

+hich of the following statements about donated capital is not true?

a.

9f the donation is in the form of shares of the corporation" the account share premium or donated

capital is credited at the time the shares are issued

b.

onated capital is shown as part of share premium

c.

The receipt of the donated shares is recorded b% means of a memorandum entr%

d.

The donated asset increases the total assets and total shareholders/ e'uit% b% the boo3 value of the

asset received

&#.

The shareholders decide to donate to the entit% an aggregate of 1$"$$$ ordinar% shares of their stoc3holdings

with par of P1$$. The entr% to record the receipt of the donated shares b% the entit% is

a.

ash 1"$$$"$$$

onated capital 1"$$$"$$$

b.


0rdinar% shares 1"$$$"$$$

c.

0rdinar% shares 1"$$$"$$$


d.

emo entr%( H=eceived from shareholders as donation 1$"$$$ ordinar% shares with P1$$ par value.I

)$.

0n ecember !1" 2$1$" -than orporation received a donation of 2"$$$ shares of its P&$ par value ordinar%

shares from a shareholder. 0n that date" the share/s mar3et value was P!&$ per share. The stoc3 was

originall% issued for P2&$ per share. % what amount would this donation cause total shareholders/ e'uit% to

decrease?

a.

P:$$"$$$

b.

P&$$"$$$

c.

P2$$"$$$

d.

P$

)1.

+hich is incorrect concerning retained earnings?

a.

Appropriated retained earnings shall be clearl% distinguished from unappropriated retained earnings

b.

ividend declaration reduce retained earnings

c.

A deficit in retained is presented as an asset

d.

The retained earnings account is credited with the corporation/s profit or debited with the loss

)2.

A dividend which is a return to shareholders of a portion of their original investment is

a.

ash dividend

b.

;i'uidating dividend

c.

Propert% dividend



1!

d.

hare dividend

)!.

+hich is correct concerning share splits?

a.

The par or stated value per share is decreased

b.

The number of authori<ed" issued and outstanding shares is increased

c.

There is no change in the balances of the shareholders/ e'uit% accounts

d.

All of the above

)*.

The outstanding share capital of ;ion ompan% at ecember 1&" 2$1$" consisted of the following(

J !$"$$$ shares of 1$8 cumulative preference share" par value P1$$ per share" full%

participating as to dividends. 5o dividends were in arrears in prior %ears.

J 2$$"$$$ shares of ordinar% share par value P1$ per share.

0n ecember !1" 2$1$" ;ion declared dividends of P1"$$$"$$$. +hat was the amount of

dividends pa%able to ordinar% shareholders?

a. P*$$"$$$

b. P)$$"$$$c. P:$$"$$$

d. P2$$"$$$

)&.

At ecember !1" 2$1$ and 2$11" arre% orporation had outstanding *$"$$$ shares of P1$$ par value )8

cumulative preference share and 2$$"$$$ shares of P1$ par value ordinar% share. At ecember !1" 2$1$"

dividends on arrears on the preference share were P12$"$$$. ash dividends declared in 2$11 totaled

P**$"$$$. 0f the P**$"$$$" what amounts were pa%able on each class of share capital?

Preference share 0rdinar% share

a.

**$"$$$ $b.

!)$"$$$ 7$"$$$

c.

!2$"$$$ 12$"$$$

d.

2*$"$$$ 2$$"$$$$

)).

+hich statement is correct concerning appropriations of retained earnings?

a.

Appropriations reduce total retained earnings

b.

The onl% proper wa% to eliminate an appropriation of retained earnings after it has served its purpose is

to revert to the unappropriated retained earnings

c.

An appropriation of retained earnings means that assets are segregated for a specific purpose

d.

+hen treasur% share is purchased" retained earnings must be appropriated e'ual to the par or stated

value of the treasur% share.

):.

+hich of the following would result in an increase in the =etained -arnings account?

a.

ash dividend declared

b.

hare dividend declared

c.

;oss for the period

d.

Positive prior period adjustments

)7.

The balance of retained earnings of Dusting ompan% at the beginning of the %ear was P)&$"$$$. uring the

%ear" Dusting earned revenues of P*"&$$"$$$ and incurred expenses of P!"7$$"$$$" dividends $f P&$$"$$$



1)

c.

Total manufacturing cost plus the decrease in wor3 in process e'uals the cost of goods manufactured

d.

ost of goods manufactured plus the finished goods inventor%" beginning e'uals goods available for

sale

:#.

heraton ompan% reported the following information for the current %ear(

-nding goods in process 1"$$$"$$$

epreciation on factor% building !2$"$$$

ales salaries 2:$"$$$

eginning raw materials *$$"$$$

irect labor 1"#7$"$$$

4actor% supervisor/s salar% &)$"$$$

epreciation on head'uarters building 21$"$$$

eginning goods in process :)$"$$$

-nding raw materials !*$"$$$

9ndirect labor !)$"$$$

Advertising &$$"$$$

Purchases of raw materials 2"!$$"$$$

+hat is the cost of goods manufactured for the current %ear?

a.

P&"!*$"$$$

b.

P&"&7$"$$$

c.

P&"&&$"$$$

d.

P&"72$"$$$

7$.

The following data were available from ar3 ompan%/s record on ecember !1" 2$1$(

4inished goods inventor%" Fanuar% 1 1"$$$"$$$

4inished goods inventor%" ecember !1 1"2$$"$$$ost of goods manufactured &"$$$"$$$

;oss on sale of plant e'uipment 1$$"$$$

+hat is the cost of goods sold for the current %ear?

a.

P*"7$$"$$$

b.

P&"2$$"$$$

c.

P*"#$$"$$$

d.

P&"!$$"$$$

71.

The following information was ta3en from Ga% ompan%/s accounting records for the current %ear(

9ncrease in goods in process inventor% &$$"$$$

9ncrease in raw materials inventor% 1&$"$$$

ecrease in finished goods inventor% !&$"$$$

=aw materials purchased *"!$$"$$$

irect labor pa%roll 2"$$$"$$$

4actor% overhead !"$$$"$$$

4reight out *&$"$$$

+hat is the cost of goods sold for the current %ear?

a.

P#"!$$"$$$

b.

P#"1&$"$$$



1:

c.

P7")&$"$$$

d.

P#"$$$"$$$

72.

+hich of the following statements concerning wor3sheet for a manufacturing compan% is not correct?

a.

The wor3sheet for a manufacturing compan% includes a pair of columns for cost of goods

manufactured

b.

eginning raw materials inventor% and wor3 in process are debited in the manufacturing column while

the related ending inventories are credited

c.

The difference between the total debits and total credits of the cost of goods manufactured columns

is extended to the credit column of the statement of recogni<ed income and expense

d.

eginning finished goods inventor% is extended to the debit side of the statement of recogni<ed

income and expense columns

7!.

The oondance mar3eting team is wor3ing so hard after learning that the sales last %ear of atasha " a

competitor" was higher than oondance ompan%/s sales. +hat t%pe of comparative anal%sis is this?

a.

9ntracompan% basis

b.

9ndustr% averages

c.

9ntercompan% basisd.

5one of the above

7*.

This tool of financial statement anal%sis shows the increase or decrease in the financial statement data this

%ear over last %ear" expressed as either an amount or a percentage.

a.

>ori<ontal anal%sis

b.

,ertical anal%sis

c.

=atio anal%sis

d.

5one of the above

7&.

ompares one indicator to another and gives significant insight into the performance and relative importance

of two indicatorsa.

,ertical anal%sis

b.

>ori<ontal anal%sis

c.

=atio anal%sis

d.

5one of the above

7).

+hich of the following statements is true?

a.

A net profit of P2$$"$$$ is alwa%s better than a net profit of P1&$"$$$

b.

A compan% with a current assets of P1$$"$$$ is alwa%s more solvent than a compan% with a current

assets of onl% P&$"$$$

c.

A high ratio of owners/ e'uit% to total liabilities is favorable to creditors

d.

All of the above

7:.

This measures the average time period between bu%ing the inventor% and receiving cash proceeds from its

sales.

a.

0perating c%cle

b.

Average age of receivables or collection period

c.

Average age of inventor%

d.

9nventor% turnover

77.

>ow man% da%s must there be in the operating if the inventor% turns over 1$ times in a %ear and the

receivable turns over # times? Use !)$ da%s in one %ear.

a.

*$



17

b.

!)

c.

1)

d.

:)

7#.

A compan% has sales of P*&$"$$$ :$8 are credit sales@. The gross profit ratio is 2&8. The accounts receivable

turnover is 12 times while the inventor% turnover is * times. >ow much is the average accounts receivable?

a.

P2)"2&$

b.

P!:"&$$

c.

P7*"!:&

d.

5one of the above

#$.

elected information from the accounting records of Arian ompan% is as follows(

Accounts receivable" ecember !1" 2$$# #$$"$$$

Accounts receivable" ecember !1" 2$1$ 1"$$$"$$$

9nventories at ecember !1" 2$$# 1"1$$"$$$

9nventories at ecember !1" 2$1$ 1"2$$"$$$Accounts receivable turnover & times

9nventor% turnover * times

+hat was Ariane/s gross margin or gross profit for 2$1$?

a.

P&":&$"$$$

b.

P!"7$$"$$$

c.

P1"#&$"$$$

d.

P1&$"$$$

#1.

hows the relationship between profit and ordinar% shareholders/ investment in the compan%

a.

asic earnings per ordinar% shareb.

=eturn on total assets

c.

=eturn on ordinar% e'uit%

d.

5one of the above

#2.

+hich ratio is most helpful in appraising profitabilit%?

a.

AcidBtest ratio

b.

ebt ratio

c.

Times interest earned

d.

=eturn on assets

#!.

Pare3o% ompan% has earnings per share of P&.2$ and pa%s dividend of P!.12 and has a mar3et price of P*1.)$

per share. The priceBearnings ratio is

a.

7

b.

1!.!!

c.

21.!!

d.

&.!!

#*.

a%den ompan% had )$$"$$$ ordinar% shares issued and outstanding at ecember !1" 2$$#. uring 2$1$"

no additional ordinar% shares were issued. 0n Fanuar% 1" 2$1$" a%den issued *$$"$$$ preference shares.

uring 2$1$" a%den declared and paid P2$$"$$$ cash dividend on the ordinar% share and P11$"$$$ on the

preference share. 5et income for 2$1$ was P:&$"$$$. +hat should be the basic earnings per share?

a.

$.:!



1#

b.

$.#2

c.

1.$:

d.

1.2&

#&.

The following data are from the financial statements of Amihan" 9nc.

ecember !1" 2$$# ecember !1" 2$1$

Total assets 1*$"$$$ 17$"$$$

Total e'uit% 112"$$$ 1**"$$$

Profit 17"$$$ 2$"$$$

9nterest expense *"2&$ &":&$

The 2$1$ return on total assets ratio is

a.

1!.#18

b.

1).$#8

c.

11.2&8

d.

12.&8

#).

The ratio of earnings before interest and taxes to total interest expense is a measure of

a.

;i'uidit%

b.

olvenc%

c.

Activit%

d.

Profitabilit%

#:.

olvenc% is of least interest to

a.

hortBterm creditors

b.

ondholders

c.

hareholdersd.

an3 holding the compan%/s 1$B%ear note

#7.

The following data pertain to redence orporation/s for the %ear ended ecember !1" 2$1$(

0perating income P7$$"$$$

9nterest expense 1$$"$$$

9ncome tax expense 21$"$$$

+hat was the times interest earned ratio?

a.

*.# times

b.

:

c.

7

d.

11

##.

The following data are from the financial statements of +0+" 9nc.(

Profit P2&)"$$$

9ncome tax rate !&8

9nterest expense )*"$$$

Total liabilities 7*$"$$$

Total e'uit% &)$"$$$



2$

The e'uit% ratio of +0+ is

a.

*$8

b.

)$8

c.

)).):8

d.

17.2#8

1$$. As of the end of 2$1$" 9ce ompan% had total assets of P!:&"$$$ and e'uit% of P2$)"2&$. 4or 2$11" its

budget for capital investment projects is P)2"&$$. To finance a portion of the capital budget" the compan%

ma% borrow from a ban3 which set a condition that the loan would be approved" provided that the 2$11/s

debt ratio should be the same as the debt ratio in 2$1$. >ow much debt should be incurred to satisf% the

ban3/s condition?

a.

P27"12&

b.

P!*"!:&

c.

P&1"1!7

d.

P)2"&$$



21

Anser !e" # Fundamentals of Accounting , Part 2

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22

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reviewer 2, fundamentals of accounting 2

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