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A. Five (5) years

1. According to Section 9(A) of the IRR, the Commission, upon the

recommendation of the Board, shall create an accounting
standard setting body to be known as the A.
Accounting Standards Council
B. Financial Reporting Standards Council
C. Accounting Standards Board
D. Financial Reporting Standards Board

2. According to Section 9(A) of the IRR, the Commission, upon the

recommendation of the Board, shall create an auditing
standard setting body to be known as the A. Auditing and
Assurance Standards Council (AASC)
B. Auditing Standards and Practices Council (ASPC)
C. Auditing Standards Board D. Auditing Standards
Council

3. This standard setting body shall have a chairman who had

been or presently a senior accounting practitioner in any of the
scope of accounting practice.
A. FRSC
B. AASC
C. PICPA
D. ACPAPP

4. This standard setting body shall have a chairman who had

been or presently a senior accounting practitioner in public
accountancy. A. AASC

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B. FRSC
C. ACPAE
D. BOA

5. The Chairman and the members of the FRSC and AASC shall
have a term of A. 3 years B. 5 years C. 6 years
D. 7 years

6. Which of the following is not represented in the AASC?

A. Bangko Sentral ng Pilipinas
B. Board of Accountancy
C. Bureau of Internal Revenue
D. Securities and Exchange Commission

7. Who has the power to suspend or remove any member of the

Board of Accountancy?
A. The Chairman of the FRSC B. The
Chairman of the PRC
C. The Chairman of the AASC
D. The President of the Philippines

8. An applicant for the CPA licensure examination should be

I. A Filipino citizen
II. Of good moral character
III. A holder of the degree of Bachelor of Science in
Accountancy

A. I and II only
B. I and III only

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C. II and III only
D. I, II, and III Section 14 of the IRR states that any person
applying for examination shall be establish the following requisites
to the satisfaction of the Board that he/she:
a) Is a Filipino citizen;
b) Is of good moral character;
c) Is a holder of the degree of Bachelor of Science in
Accountancy conferred by a school, college, academy or
institute duly recognized and/or accredited by the
CHED or other authorized government offices;
d) Has not been convicted of any criminal offense involving
moral turpitude.

9. The following documents shall be submitted by applicants for

the CPA licensure examination, except
A. Certificate of Live Birth in National Statistics Office (NSO)
security paper.
B. Marriage contract in NSO security paper for married male
applicants.
C. NBI clearance.
D. Transcript of records with indication therein of date of
graduation and Special Order number unless it is not required.

Section 14 of the IRR requires applicants to submit the following:

a) Birth certificate in NSO security paper;
b) Marriage contract in NSO security paper for married female
applicants;
c) College diploma;
d) Transcript of records;

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e) NBI clearance;
f) Other documents that the Board may require.

10. Section 16 of the IRR states that to be qualified as having

passed the licensure examination for accountants, a candidate
must obtain a
A. General average of seventy-five percent (75%), with no grades
lower than sixty percent (60%) in any given subject.
B. General average of seventy-five percent (75%), with no grades
lower than sixty-five percent (65%) in any given subject.
C. General average of seventy-five percent (70%), with no grades
lower than sixty percent (60%) in any given subject.
D. General average of seventy-five percent (75%), with no grades
lower than sixty percent (60%) in any given subject.

11. A candidate who obtains the rating of seventy-five percent

(75%) and above in at least a majority of the subjects shall
receive a conditional credit for the subjects passed. He/she
shall take an examination in the remaining subjects within how
many years from the preceding examination?
A. 1 B. 2 C. 3
D. 5

12. Any candidate who fails in two (2) complete CPA board
examinations shall be disqualified from taking another set of
examinations unless he/she has completed at least how many
units of subjects given in the licensure examination?
A. 4
B. 8

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C. 16
D. 24

13. The Board of Accountancy shall submit to the PRC the ratings
obtained by each candidate within how many calendar days
after the examination?
A. 1 B. 2
C. 5
D. 10

Which of the following does not appear on an income

statement prepared using variable costing?
A. Gross margin/profit.
B. Manufacturing margin
C. Fixed production costs.
D. Variable production costs.

8. On a variable costing income statement, the difference

between sales and variable cost of goods sold is called:
A. gross margin.
B. contribution margin.
C. profit margin.
D. manufacturing margin.

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9. What factor related to manufacturing costs causes the
difference in net earnings computed using absorption
costing and net earnings computed using variable
costing?
A. Absorption costing considers all costs in the
determination of net earnings, whereas variable costing
considers only direct costs.
B. Absorption costing "inventories" all direct costs, but
variable costing considers direct costs to be period costs.
C. Absorption costing "inventories" all fixed manufacturing
costs for the period in ending finished goods inventory,
but variable costing expenses all fixed costs.
D. Absorption costing allocates fixed manufacturing costs
between cost of goods sold and inventories, and variable
costing considers all fixed costs to be period costs.

10. Net income reported under variable costing will

exceed net income reported under absorption costing for
a given period if:
A. Production equals sales for that period.
B. Production exceeds sales for that period.
C. Sales exceed production for that period.
D. The variable overhead exceeds the fixed overhead.

11. A manager can increase income under absorption

costing by
A. increasing variable costs.
B. increasing production.
C. increasing fixed costs.
D. increasing leased assets.

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12. The use of either absorption or variable costing will
make little difference in companies
A. with large inventories.
B. using JIT.
C. with high fixed costs.
D. with high variable costs.

13. A basic tenet of variable costing is that fixed overhead

costs should be currently expensed. What is the basic
rationale behind this procedure?
A. Fixed overhead costs will occur whether or not
production occurs and so it presents a clearer picture of
how changes in production volume affect costs and
income.
B. Fixed overhead costs are generally immaterial in
amount and the cost of assigning the amounts to specific
products would outweigh the benefits.
C. Allocation of fixed overhead costs is arbitrary at best
and could lead to erroneous decisions by management.
D. Fixed overhead costs are uncontrollable and should not
be charged to a specific product.

14. Absorption cost is required for:

A. income tax purposes.
B. external financial reporting but not income tax
purposes.
C. both external financial reporting and income tax
purposes.
D. neither external financial reporting nor income tax
purposes.

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15. Segment profitability analysis may be used to evaluate
the profitability of:
A. Divisions.
B. Sales territories.
C. Product lines.
D. All of these are correct.

16. When evaluating profitability of a segment, costs that

are directly identifiable with a specific segment are
called:
A. Direct costs.
B. Common costs.
C. Indirect costs.
D. Fixed costs.

17. When evaluating profitability of a segment, costs that

would disappear if the company eliminated the segment
are called:
A. Direct costs.
B. Common costs.
C. Indirect costs.
D. Fixed costs.

18. The excess of revenue over variable costs, including

manufacturing, selling and administrative, is called:
A. Gross margin.
B. Manufacturing margin.
C. Contribution margin.
D. Segment margin.

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19. Johns Company operates in three different industries
each of which is appropriately regarded as a reportable
segment. Segment No. 1 contributed 60 percent of Johns
Company's total sales. Sales for Segment No. 1 were
$600,000 and total variable costs were $400,000. Total
common costs for all segments were $320,000. Johns
allocates common costs based on the ratio of each
segment's sales to the total sales. What should be the
contribution margin presented for Segment No. 1?
A. $(100,000)
B. $8,000
C. $20,000
D. $200,000

20. Nolan Company has two segments: Audio and Video.

Sales for the Audio Segment were $500,000, and variable
costs were 40% of sales. The Video Segment also had
sales of $500,000, but variable costs were 60% of sales.
Fixed costs directly traceable to the Audio and Video
segments were $150,000 and $120,000, respectively.
Common fixed costs of $200,000 were arbitrarily allocated
equally to each segment.

What was the contribution margin of the Audio Segment.

A. $50,000
B. $300,000
C. $200,000
D. $150,000

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21. Nolan Company has two segments: Audio and Video.
Sales for the Audio Segment were $500,000, and variable
costs were 40% of sales. The Video Segment also had
sales of $500,000, but variable costs were 60% of sales.
Fixed costs directly traceable to the Audio and Video
segments were $150,000 and $120,000, respectively.
Common fixed costs of $200,000 were arbitrarily allocated
equally to each segment.

What was the segment margin of the Video Segment.

A. $200,000
B. $80,000
C. $(20,000)
D. $150,000

14. The Certificate of Registration issued to successful

examinees
A. Is renewable every three years.
B. Is renewable every five years.
C. Shall remain in full force and effect until withdrawn,
suspended or revoked in accordance with RA9298.
D. Shall bear the signature of the PRC Chairperson and the two
PRC Commissioners.

According to Section 20 of the IRR, the Certificate of Registration

shall:
a) Bear the signature of the Chairperson of the PRC and the
Chairman and Members of the Board of Accountancy,
stamped with the official seal of the PRC and of the Board of
Accountancy, indicating that the person named therein is
entitled to the practice of the profession with all the
privileges appurtenant thereto;

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b) Remain in full force and effect until withdrawn, suspended
or revoked in accordance with RA 9298.

15. The Professional Identification Card issued to successful

examinees
A. Is renewable every three years.
B. Is renewable every five years.
C. Shall remain in full force and effect until withdrawn,
suspended or revoked in accordance with RA 9298.

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