What is the only underlying assumption mentioned in the Conceptual Framework for Financial

Reporting?

a. Going concern
b. Accounting entity
c. Time period
d. Monetary unit

Answer: A

Which of the following should not be considered “cash” ?

a. Change fund
b. Certified check
c. Postdated check
d. Personal check

Answer: C
On January 1,2012, Charisma Company bought a machine for 1,500,000. The machine had useful life of six
years with no residual value. On january1,2015, the entity determined that the machine had useful life of
eight years from the date it was acquired with no residual value. The straight line method of depreciation is
used.

What amount of depreciation should be recorded for 2015?

a. 125,000
b. 150,000
c. 187,500
d. 250,000
Ans. b

Orr company prepared an aging of accounts receivable on December 31,2015 and determined that the net
realizable value of the accounts receivable was 2,500,000

Allowance for doubtful accounts on January 1 280,000

Accounts written off as uncollectible 230,000
Accounts receivable on December 31 2,700,000
Uncollectible accounts recovery 50,000
What amount should be recognized as doubtful accounts expense for the current year?

a. 230,000
b. 200,000
c. 150,000
d. 100,000

Solution ans d

280,000
50,0000
100,000
430,000
(230,000)
200,000
The passage of time as a mode of acquiring or losing a right including the extinguishment of an
obligation is called?

a. Remission
b. Novation
c. Prescription
d. Merger

Ans. c

It is a wrong committed without any pre existing relations between parties?

a. Natural obligations
b. Quasi-delict
c. Quasi-contract
d. Crime

Ans. B
The subscriber of unpaid shares which are not delinquent shall be entitled to the following rights,
except the right to:

a. Vote
b. Inspect corporate books
c. A stock certificate
d. Dividends

Ans C

In 2013, power corp. sold a layout design to Mass, Inc. and will receive royalties of 20% of future
revenues associated with the said layout design. On Deceber 31,2013, Power Designs reported
royalties receivable of 75,000 from mass, Inc. During 2014, power designs received royalty payments
of 200,000. Mass, Inc reported revenues of 1,500,000 in 2014 from the layout design.

In its 2014 profit or loss, what amount should Power Designs report as royalty revenue?

a. 125,000 c. 200,000
b. 175,000 d. 300,000
Solution:
Reported revenue 1,500,000
X royalty revenue 20%
Royalty revenue 300,000

Which of the following statements best describes owner-occupied property?

a. Property held for sale in the ordinary course of business
b. Property held for use in the production and supply of goods or services and property held for
administrative purposes
c. Property held to earn rentals
d. Property held for capital appreciation

Ans b.
The legal portion of state is reserved by the law to the heirs, except.
a. Children
b. Parents
c. Devisee
d. Widow or widower
Ans C

Which of the following is not regarded as compulsory heir?

a. Illegitimate children
b. Legitimate parents
c. Surviving spouse
d. Brother
Ans. D
On December 31, 2008, KL Co. purchased equity securities as available-for-sale securities. Pertinent data are
as follows:

Fair Value
Cost 12/31/2010 12/31/2009
C Company P 900,000 Not available P 880,000
P Company 1,100,000 1,240,000 1,120,000
A Company 2,000,000 1,720,000 1,900,000

On December 31, 2017, KL reclassified security C as nonmarketable equity securities. On such date, a reliable
measure of fair value is no longer available.

How much should be reported as net unrealized loss on AFS in accumulated OCI in equity as of December 31,
2010?
a. 160,000 c. 100,000
b. 140,000 d. 60,000
Answer: A

Total fair value of security P&A, 12/31/10 P2,960,000

Less: Total Cost of security P&A, 12/31/10 3,100,000
Net unrealized loss on AFS (security P&A), 12/31/10 (140,000)
Unrealized loss on security C recognized in OCI on
12/31/09 (P900,000-P880,000) (20,000)
Net unrealized loss on AFS, 12/31/10 (160,000)
Presenter below is selected information pertaining to the Bone Company
Cash balance, Jan. 01,2014 13,000
Accounts Receivable, Jan. 1,2014 19,000
Collection from customers in 2014 210,000
Capital account balance, Jan. 1,2014 38,000
Total assets, Jan. 1,2014 75,000
Cash investment added, July 1,2014 5,000
Total assets, Dec. 31,2014 101,000
Cash balance, Dec 31, 2014 20,000
Accounts Receivable, Dec. 31,2014 36,000
Merchandise taken for personal use during 2014 11,000
Total liabilities, Dec. 31,2014 41,000

How much is the net income for 2014?

a. 22,000 c. 28,000
b. 26,000 d. 30,000
Answer: C
Capital, Dec. 31,2014
Assets 101,000
less: Liabilities, end 41,000 60,000
Less: Capital, Jan. 1,2014 38,000
Net increase in capital 22,000
Add: Withdrawals (merchandise taken) 11,000
Total 33,000
Less: Cash investment 5,000
Net Income 28,000
The following information was taken from the accounting records of Gomez
Company for the year-ended December 31,2014:
Decrease in finished goods inventory P700,000
Increase in raw materials inventory 300,000
Freight-out 900,000
Factory overhead 6,000,000
Direct labor 4,000,000
Raw materials purchased 8,600,000

These was no work in process inventory at the beginning or at the end of the
year. The cost of goods sold is
a. P17,600,000 c. 18,400,000
b. 18,200,000 d. 19,000,000
Answer: D
Raw material, used:
Raw materials purchased P8,600,000
Less: Increase in RM inventory 300,000 8,300,000
Direct Labor 4,000,000
Factory Overhead 6,000,000
Factory cost/ cost of goods manufactured 18,300,000
Add: Decrease in FG inventory 700,000
Cost of goods sold 19,000,000
Seawall Company provided the following data for the preparation of the
statement of cash flows for the current year:
Dividends declared and paid 800,000
Net cash used in investing activities (2,500,000)
Net cash used in financing activities (800,000)
December 31 January 1
Cash 2,100,000 1,200,000
Other Assets 21,000,000 22,700,000
Liabilities 10,500,000 11,700,000
Share Capital 2,000,000 2,000,000
Retained Earnings 10,600,000 10,200,000
What is the net cash provided by operating activities?
a. 4,200,000 c. 4,500,000
b. 2,400,000 d. 5,400,000
• Answer: A
Cash, Jan. 1 1,200,000
Net cash provided by operating activities (SQUEEZE) 4,200,000
Net cash used in investing activities (2,500,000)
Net cash used in financing activities (800,000)
Cash, December 31 2,100,000
When there is much variability, the operating cycle is measured at
a. The mean value
b. The median value
c. Twelve months
d. Three years
Answer: C
A change in reporting entity is actually a change in:
a. Accounting policy
b. Accounting estimate
c. Accounting method
d. Accounting concept
Answer: A
The income tax returns must be filed in
a. Duplicate c. Quadruplicate
b. Triplicate d. Quintuplicate
Answer: A
Who is the current BIR Commissioner
a. Celay Dulay
b. Caesar Dulay
c. Cesar Dulay
d. Cilay Dulay
Answer: C
Subsistence livelihood is a business activity
a.TRUE
b.FALSE
• Answe: A
A single income activity rendered by a resident person such as selling
his family home is a business
a. True
b. False
Answer: B
Which of the following cases falls within the jurisdiction of the Court of
Tax Appeals?
a. Criminal action for violation of the NIRC
b. Question of weather or not to impose a deficiency tax assessment
upon a taxpayer
c. Appeal from undisputed tax assessment
d. Action for refund of real property tax
Answer: B
Statement 1: The decision of one division of the Court of Tax Appeals
may be reviewed on appeal by the court en banc
Statement 2: The Court of Tax Appeals is inferior to the Court of
Appeals but it is in the same level with the Supreme Court
a. True, False
b. True, True
c. False, True
d. False, False
Answer: A
One of the following is not an attachment to the donor’s tax return
a. Sworn statement of the relationship of the donor to the done
b. Certified true copy of the certificate of the title of the donated
property
c. Income of the donated property
d. Proof of claimed deductions
Answer: C
The appropriate method of accounting for a contractor on his long term
construction contract (i.e. it takes more than a year to finish) is:
a. Cash method
b. Accrual method
c. Installment method
d. Percentage of completion method
Answer: D
Under installment method of reporting income tax, the amount of tax
payable in the year of sale of a vacant lot is computed by applying the
following formula:
a. Downpayment /contract price x Final tax due
b. Initial payment / selling price x Final tax due
c. Final tax due / selling price x Collection
d. Initial payment / contract price x Final tax due
Answer: D
Which of the following is not exempt from withholding tax on
compensation
a. Retirement benefits received under RA 7641
b. Remuneration for domestic services
c. Payment for damages
d. Overtime pay
Answer: D
A delinquent stock is deprived of all the rights of a stockholder
including right to dividends
a. TRUE
b. FALSE
Answer: B
The by-laws of a corporation may validly provide that one may be the
President and Secretary or President and Treasurer at the same time
a. TRUE
b. FALSE
Answer: B
A personal defense is available only against a holder not in due course
a. TRUE
b. FALSE
Answer: A
An instrument that is complete but is undelivered shall be considered
validly delivered if it is in the hand of a holder in due course
a. TRUE
b. FALSE
Answer: A
For dacion en pago to apply, the debtor must be insolvent
a. TRUE
b. FALSE
Answer: B
The condonation or remission of an obligation must be accepted in
order for it to be extinguished
a. TRUE
b. FALSE
Answer: A
A void contract may be ratified
a. TRUE
b. FALSE
Answer: B
A voidable contract is binding until it is annulled by a proper action in
court
a. TRUE
b. FALSE
Answer: A
Warranty against eviction is inherent in a contract of sale; hence, it is
an essential element thereof
a. TRUE
b. FALSE
Answer: B
Earnest money is part of the purchase price of a thing; hence,
deductible from the total selling price
a. TRUE
b. FALSE
Answer: A
The purchase by a guardian of the property of the person under his
guardianship is valid
a. TRUE
b. FALSE
Answer: B
A chattel mortgage is valid between the parties although the same is
not recorded in the Chattel Mortgage Register
a. TRUE
b. FALSE
Answer: B
A pledge to be binding against third persons must be registered in the
Registry of Property
a. TRUE
b. FALSE
Answer: B
A stipulation between the agent and the principal that the agent need
not render an accounting of his transaction is valid
a. TRUE
b. FALSE
Answer: B
An agency is not terminated by the death of the principal if it was
constituted in the common interest of the principal and the agent
a. TRUE
b. FALSE
Answer: A
An artificial person like a corporation, may be a partner in a partnership
a. TRUE
b. FALSE
Answer: A
A man and a woman living together as husband and wife without the
benefit of marriage may enter into a universal partnership
a. TRUE
b. FALSE
Answer: B
A partner may be a limited and general partner at the same time
a. TRUE
b. FALSE
Answer: A
Which of the following may be raised as defense against any holder?
a. Want of consideration
b. Want of delivery of complete instrument
c. Insertion of a wrong date
d. Want of delivery of an incomplete instrument
Answer: D
“Pay to Alberto Alvarez for collection only.”
Sgd. Ponciano Parcero
This is an example of
a. Agency type of restrictive instrument
b. Trust type of restrictive instrument
c. A qualified indorsement
d. A conditional indorsement
Answer: A