POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

College of Accountancy and Finance

CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

THEORIES
1. Disclosures that related party transactions were made on terms equivalent to those that
prevail in arm’s length transactions are made only if __________
a. it is necessary for an understanding
b. such terms can be substantiated
c. it is a transaction between related parties
d. it is an extension of the disclosure requirement
2. I. Relationships between a parent and its subsidiaries shall be disclosed irrespective of
whether there have been transactions between them.
II. An entity shall disclose the name of its parent and, if different, the ultimate controlling
party.
III. If neither the entity’s parent nor the ultimate controlling party produces consolidated
financial statements available for public use, the name of the next least senior parent that
does so shall also be disclosed.
Which of the statements is/are true?
a. Statement I only
b. Statements I and III only
c. Statements I and II only
d. None of the above
3. The terms ‘control’ and ‘investment entity’, ‘joint control’ and ‘significant influence’ are
defined in IFRS ___, IFRS ___ Joint Arrangements, and IAS ___ Investments in Associates
and Joint Ventures respectively.
a. 9, 10, 11
b. 10, 11, 38
c. 11, 12, 28
d. 10, 11, 28

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

4. Those family members who may be expected to influence, or be influenced by, that person
in their dealings with the entity includes all of the following, except:
a. that person’s neighbor
b. that person’s children and spouse or domestic partner
c. children of that person’s spouse or domestic partner
d. dependants of that person or that person’s spouse or domestic partner
5. I. A modified cash basis is a mixture of cash basis and accrual basis where deferral and
accrual of operating expenses are permitted.
II. On a modified cash basis, the entity recognizes revenue when it is received regardless
of when it is earned.
III. Under the modified cash basis, the entity recognized bad debts expense and
depreciation expense.
a. False, false, false
b. True, false , true
c. True, true, true
d. False, true, false
6. It is the process of recording non-cash transactions in chronological order to the daybook.
a. Memorandum entry
b. Single-entry accounting system
c. Double-entry accounting system
d. Journal entry
7. Which of the following statements is true about the single-entry accounting system?
a. Cash and non-cash transactions are recorded in a descriptive manner.
b. Transactions involving cash may be recorded in the entity’s daybook.
c. The entity uses accounts receivable and accounts payable title to record the
transactions affecting sales and inventory.
d. Single-entry accounting system provides complete data for the preparation of
financial statements.

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

8. This system provides a chronological record of every type of accountable event affecting
assets, liabilities, equity, revenue, and expenses.
a. Posting
b. Single-entry accounting system
c. Double-entry accounting system
d. Journalizing
9. I. Gross sales = Cash received + A/R beginning - A/R end + write-off + Customer
Advances, beginning - Customer Advances, end
II. Interest revenue = Cash received for interest + interest receivable, end – interest
receivable, beginning + amortization of premium – amortization of discount
III. Income tax expense = Cash paid for income tax – income tax payable, beginning +
income tax payable, end + deferred tax liability, end + deferred tax asset, beginning –
deferred tax asset, end
a. False, false, false
b. True, false, true
c. True, true, true
d. False, true, false
10. A person or a close member of that person’s family is related to a reporting entity if that
person:
I. has a control or joint control of the reporting entity
II. is a member of the key management personnel of the reporting entity or of a parent of
the reporting entity.
a. Statement I and Statement II.
b. Statement I only
c. Statement II only .
d. None of the statements.

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

11. Which of the following is not a related party under IAS 24?
a. Associates
b. Subsidiaries
c. Key management personnel
d. Two companies having a director in common
12. Which of the following statements is/are true?
I. Post-employment benefits are not considered compensation of key management
personnel.
I. Amounts incurred by the entity for the provision of key management personnel services
that are provided by a separate management entity shall not be disclosed.
a. Both statements are true.
b. Only Statement I is true.
c. Only Statement II is true.
d. None of the statements are true.
13. A related party transaction is a:
a. transfer of resources only between a reporting entity and related party, regardless
of whether a price is charged.
b. transfer of resources, services, or obligations between a reporting entity and related
party when price is charged.
c. transfer of resources, services, or obligations between a reporting entity and related
party, regardless of whether a price is charged.
d. transfer of resources only between a reporting entity and related party when a price
is charged.

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

14. I. PAS 34 requires entities to submit a quarterly report within forty-five (45) days after the
end of each of the first three quarters of each fiscal year.
II.: PAS 34 encourages public traded entities to provide interim financial reports at least
semi-annually and such reports are to be made available not later than 60 days after the end
of the interim period.
a. Only statement 1 is true
b. Only statement 2 is true
c. Either of the statements is true
d. Neither of the statements is true
15. Interim financial reports shall include as a minimum all of the following components:
I. Condensed statement of financial position
II. Complete statement of financial position
III. Condensed statement of comprehensive income
IV. Complete statement of comprehensive income
V. Condensed statement of changes in equity
VI. Complete statement of changes in equity
VII. Condensed statement of cash flows
VIII. Complete statement of cash flows
IX. Accounting policies and explanatory notes
X. Selected explanatory notes
a. II, III, V, VII, and IX
b. II, III, V, VIII, and X
c. I, III, V, VII, and IX
d. I, III, V, VII, and X

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

16. PAS 34 provides the presumption that financial statement users shall:
a. Understand all the Internation Financial Reporting Standards
b. Have access to the records of the entity
c. Have access to the most recent annual report
d. There are no such presumptions PAS 34 provides
17. If the business is highly seasonal, the entity is encouraged to disclose the following
information except:
a. C or D
b. None of the statements are correct.
c. Financial information for 12 months up to the end of interim period.
d. Comparative information for the prior 12-month period.
18. I. Write-down of inventories to net realizable value and reversal thereof.
II. Corrections of future period errors.
III. Related party transactions.
IV. Changes in the measurement of financial assets.
V. Reversal of provision for restructuring costs.
Which of the following are considered significant events and transactions?
a. I, II, III, IV, V
b. I, III, V
c. I, III, IV, V
d. III, IV, V
19. The following are classification of operating segments’ disclosures, except:
a. General and specific information on their strategy
b. Reconciliations
c. Information about profit or loss, assets and liabilities
d. Entity-wide Disclosures

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

20. Which of the following is not a related party?

a. Entities with joint control or significant influence over the entity.
b. The parent company of the entity.
c. An entity that has a common director with the entity.
d. Joint ventures in which the entity is a venturer.
21. Statement 1: Single-entry bookkeeping uses the concept of accounting equation
(Assets = Liabilities + Equity).
Statement 2: Single-entry bookkeeping - as system of bookkeeping whereby, as a rule, only
cash and personal accounts are recognized.
a. Statement 1 is true but Statement 2 is false
b. Statement 1 is false but Statement 2 is true
c. Both statements are true
d. Both statements are false
22. The following are characteristics of a Single-entry system, except:
a. Usually one effect of each transaction is recognized
b. Records every type of accountable events
c. Trial balance cannot be prepared
d. Net income is determined by reconstructing revenue and expenses or comparing
beginning and ending capital.
23. Statement 1: Under cash basis of accounting, income is recognized when received
regardless of when earned, and expense is recognized when paid regardless of when
incurred.
Statement 2: Accrual basis of accounting recognizes income when earned regardless when
cash is received and recognizes expense when incurred regardless of when paid.
a. Statement 1 is true but Statement 2 is false
b. Statement 1 is false but Statement 2 is true
c. Both statements are true
d. Both statements are false

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

24. Statement 1: Under the Financial Capital Maintenance Approach, a profit is earned only if
the financial (or money) amount of the net assets at the end of the period exceeds the
financial (or money) amount of net assets at the beginning of the period, after including
any distributions to, and contributions from, owners during the period.
Statement 2: The conversion of data from cash basis to accrual basis focuses on the
recognition of cash payments and cash receipts, since these are the items that are usually
taken under the accrual basis that are not considered under cash basis.
a. Only one statement is true
b. Only one statement is false
c. Both statements are true
d. Both statements are false
25. Statement I: An entity shall disclose information to enable users of its financial statements
to evaluate the nature and financial effects of the business activities in which it engages
and the economic environments in which it operates.
Statement II: Segment information is not required if a financial report contains both the
consolidated financial statements of a parent that is within the scope of this IFRS as well
as the parent’s separate financial statements.
a. True, True
b. False, False
c. True, False
d. False, True
26. An operating segment is considered reportable when any of the following conditions is
met, except:
a. Segment revenue is 10% or more of the combined revenue of all segments.
b. Segment assets are 10% or more of the combined assets of all segments.
c. Segment liabilities are 10% or more of the combined liabilities of all segments.
d. Segment loss is 10% or more of the combined profit of all segments that did not
incur a loss.

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

27. All of the following are quantitative threshold that is needed to meet for an entity to report
separately information about an operating segment:
a. Its reported revenue, including both sales to external customers and intersegment
sales or transfers, is 10 per cent or more of the combined revenue, internal and
external, of all operating segments.
b. The absolute amount of its reported profit or loss is 10 per cent or more of the
greater, in absolute amount, of the combined reported profit of all operating
segments that did not report a loss and the combined reported loss of all operating
segments that reported a loss.
c. Its assets are 10 per cent or more of the combined assets of all operating segments.
d. All of the above information.
28. For external reporting purposes, it is appropriate to use estimated gross profit rate to
determine the cost of gods sold for
a. Financial Reporting
b. Interim Reporting
c. Year-end Reporting
d. Both B and C
29. Interim financial reports shall include as a minimum:
a. A complete set of financial statements.
b. A condensed statement of financial position, income statement and statement of
cash flows
c. A condensed statement of financial position and an income statement.
d. A condensed set of financial statements and selected notes.
30. Which statement is true regarding interim financial statements?
a. If interim financial statements are presented, four basic financial statements are
required.
b. Interim financial statements must be presented with the most recent annual financial
statements.
c. If interim financial statements are presented, only a statement of financial position
and a statement of comprehensive income are required.
d. Interim financial statements are required.

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

31. If an entity does not prepare interim financial reports

a. Interim financial reports shall be included in the year-end financial statements.
b. The year-end financial statements’ compliance with IFRS is not affected.
c. The year-end financial statements are deemed not to comply with IFRS.
d. The year-end financial statements shall not be acceptable under local jurisdiction.
32. Under the Financial Capital Maintenance Approach, other items that change SHE but no
profit or loss includes the following, except.
a. Changes in the revaluation surplus related to inventories.
b. Actuarial gains and losses.
c. Gains and losses arising from translating the financial statements in foreign
operations.
d. The effective portion of gains and losses on hedging instruments in a cash flow
hedge.
33. Which of the following is true about the single-entry system?
a. Accounting equation is used.
b. Usually, two effects of each transaction are recognized.
c. Data needed for preparation of financial statements is complete.
d. Net income is determined by reconstructing revenue and expenses or comparing
beginning and ending capital.
34. Statement 1: In getting the accrual basis of sales, the increase in accounts receivable or
notes receivable must be deducted to the cash basis of sales.
Statement 2: In getting the cash basis of purchases, the decrease in accounts payable or
notes payable must be added to the accrual basis of purchases.
a. Both statements are true
b. Both statements are false
c. Statement 1 is true; Statement 2 is false
d. Statement 1 is false; Statement 2 is true

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

35. What would be the effect of an overstatement of write-offs to the ending balance of
accounts receivables?
a. Overstated
b. Understated
c. No effect
d. Counterbalanced
PROBLEMS
36. Mateo is engaged with the manufacture of T-shirts. All the transactions regarding the
purchase and sale of the T-shirts are made in a cash journal. Transactions that do not
involve cash are recorded in a separate book. For the year ended 2023, the cash journal
shows the following data:

Cash Purchases 960,000

Cash Sales 660,000
Cash Received from Customers 760,000
Cash Payment to Creditors 35,000
Increase in Accounts Receivable 550,000
Decrease in Notes Receivable 50,000
Sales Return (Credit Sales) 25,000
Sales Discount 14,000

What is the total gross sales?

a. 1,110,000
b. 1,959,000
c. 530,000
d. 439,000

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

37. Joshua Corporation’s net income for the year 2023 amounted to P360,000 under the cash-
basis. Additional information for the years ended 2022 and 2023:

2022 2023
Accounts Receivable 250,000 140,000
Inventory 450,000 750,000
Accounts Payable 750,000 1,050,000
Payment to the Supplier 600,000

Under accrual basis, what amount should be reported for cost of goods sold in 2023?
a. 900,000
b. 600,000
c. 300,000
d. 750,000

38. Merc Company began operation on January 1, 2021. During the year ended December 31,
2022, the accounting records have been maintained on a double entry basis but the cash
basis of accounting has been employed. The entity decided to convert the accounting
records to the accrual basis on December 31, 2022.

What is the balance of expense account on an accrual basis considering the following:
▪ December 31, 2022 trial balance recorded expense at P800,000.
▪ Expenses include P30,000 one-year insurance dated May 1, 2022.
▪ There was an accrued expenses on December 31, 2021 and December 31, 2022 of
P70,000 and P85,000, respectively.

a. P800,000

b. P850,000

c. P805,000

d. P855,000

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

39. Merc Company began operation on January 1, 2021. During the year ended December 31,
2022, the accounting records have been maintained on a double entry basis but the cash
basis of accounting has been employed. The entity decided to convert the accounting
records to the accrual basis on December 31, 2022.
What is the balance of sales account on an accrual basis considering the following:
December 31, 2022 trial balance recorded sales at P5,000,000. December 31, 2021 account
receivable was P300,000 while on December 31, 2022 the account receivable was
P400,000. It is also estimated that 5% of the outstanding account receivable on December
31, 2022 may prove uncollectible. Included in sales was P50,000 deposited by a customer
for merchandise to be delivered in 2022.
a. P5,000,000
b. P5,050,000
c. P5,500,000
d. P5,550,000
40. An entity provided the following data for the current year:

January 1 December 31

Total assets 1,000,000 4,000,000

Total Liabilities 300,000 1,000,000

Additional investments 800,000

Withdrawals 500,000

What is the net income in the current year?

a. P4,000,000
b. P3,000,000
c. P2,000,000
d. P1,000,000

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

41. Kara Company, reported the following income before tax and effective tax rate for the
first three quarters of the current year:

Income before tax Effective tax rate

First Quarter 2,000,000 30%

Second Quarter 4,000,000 30%

Third Quarter 5,000,000 25%

Compute for the income tax expense for the third quarter.
a. P2,750,000
b. P1,800,000
c. P950,000
d. P600,000
42. Artemia Company reported P1,000,000 net income for the quarter ended September 30,
2022, which included the following after-tax items:
▪ A P540,000 gain from expropriation realized on April 30, 2022, was allocated
equally to the second, third, and fourth quarters of 2022.
▪ A P250,000 loss resulting from a change in inventory valuation method was
recognized on August 1, 2022.
▪ In addition, the entity paid P560,000 on February 1 for 2022 calendar-year property
taxes. Of this amount, P140,000 was allocated to the third quarter of 2022.

For the quarter ended September 30, 2022, what amount should be reported as net income?
a. P820,000
b. P1,290,000
c. P790,000
d. P1,150,000

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

43. Saeko Company and its division are engaged solely in manufacturing operations. The entity
reported the following segment revenue for the current year:

A 340,000
B 100,000

C 200,000

D 40,000
E 20,000

Total 700,000
In the segment information, what is/are the reportable segment/s?
a. A, B, C, D
b. A, B, C
c. A, C, D
d. A, B, C, D, E
44. Shiki Company and its division are engaged solely in manufacturing operations.

Revenue Profit/Loss Assets

A 10,000,000 1,750,000 21,000,000

B 7,000,000 1,400,000 17,300,000

C 8,000,000 1,100,000 10,700,000

D 3,000,000 560,000 5,600,000

E 2,050,000 220,000 3,000,000

Total 30,050,000 5,030,000 57,600,000

How many reportable segments does Shiki have?
a. Two
b. Three
c. Four
d. Five

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

45. LifeSaver pays staff bonuses at year-end based on sales. The expected staff bonuses and
annual sales are P7,000,000 and P100,000,000, respectively. In the second quarter of 2021,
LifeSaver recorded P20,000,000 revenues. How much staff bonus should be recognized in
the second quarter?
a. P0
b. P3,000,000
c. P800,000,000
d. P1,400,000
46. Avenida Company recorded P3,000,000 expenses in the first quarter of 2022. One-third of
which were variable expenses. The fixed expenses included advertising expense P500,000
incurred evenly during 2022, and amortization expense of P300,000 for 2022 for a patent
that was registered on January 1, 2022. What amount should be reported as total expense
in the first quarter ended March 31,2022?
a. P2,555,555
b. P2,333,456
c. P2,400,000
d. P2,500,000
47. Chloe Company estimated that total depreciation expense for 2021 is P500,000 and the
2022 year-end bonuses to employees will total P1,200,000. How much expenses should be
reported in its income statement for the 9 months ended September 30,2022?
a. P1,275,000
b. P1,725,000
c. P1,527,000
d. P1,257,000

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

48. During 2022, the operations of Sandy Inc. produced and received P6,500,000 from
customers. The balance sheet contained the following data:
2021 2022
Accounts Receivables P1,800,000 P1,920,000
Unearned Sales Revenue P4,200,000 P2,700,000

What amount of sales revenue should be reported for 2022?

a. P7,880,000
b. P5,120,000
c. P4,880,000
d. P8,120,000
49. During 2022, the income taxes paid were P1,430,000. Retrieved from the books of Sandy
Inc. are the following data:
2021 2022
Income Tax Payable P132,000 P120,000
Deferred Tax Asset P 60,500 P 79,200
Deferred Tax Liability P 77,000 P 72,000

How much is the income tax expense for the year 2022?
a. P1,394,300
b. P1,465,700
c. P1,441,700
d. P1,455,700

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

50. During 2022, the total amount paid to suppliers was P1,500,000. The following information
are acquired from the books of Sandy Inc.:
2021 2022
Accounts Payable P168,000 P253,000
Notes Payable P174,000 P142,000
Advances to Suppliers P120,000 P173,000
Purchase Discounts P4,300

What is the amount of gross purchases in 2022?

a. P1,610,300
b. P1,504,300
c. P1,398,300
d. P1,495,700

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

Answer Key & Solutions

1. B 6. B 11. D 16. C 21. B 26. C 31. B
2. C 7. A 12. D 17. A 22. B 27. D 32. A
3. D 8. C 13. C 18. B 23. C 28. B 33. D
4. A 9. A 14. B 19. A 24. D 29. D 34. D
5. D 10. A 15. D 20. C 25. C 30. A 35. B

36. B.
Cash Sales P 660,000
ADD: Increase in Accounts Receivable 550,000
Cash Received from Customers 760,000
Sales Return (Credit Sales) 25,000
Sales Discount 14,000
LESS: Decrease in Notes Receivable (50,000)
Gross Sales 1,959,000

37. B.
Beginning Inventory P 450,000
ADD: Purchases 900,000
Cost of Goods Available for Sale 1,350,000
LESS: Cost of Goods Sold (600,000)
Ending Inventory P 750,000

Accounting Payable, beg. P 750,000

ADD: Purchases 900,000
LESS: Payments to Supplier (600,000)
Accounting Payable, end. P 1,050,000

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

38. C.
Expenses per book P 800,000
ADD: Accrued Expense (Dec. 31, 2022) 85,000
Total 885,000
LESS: Accrued Expense (Dec. 31, 2021) (70,000)
Prepaid Insurance (Dec. 31, 2021
(10,000)
(30,000 x 4/12)
Net Income P 805,000

39. B.
Sales per book P 5,000,000
ADD: Accounts Receivable (Dec. 31, 2022) 400,000
Total 5,400,000
LESS: Accounts Receivable (Dec. 31, 2021) (300,000)
Advances from Customers (50,000)
Net Income P 5,050,000

40. C.
Capital, December 31 P 3,000,000
ADD: Withdrawals 500,000
LESS: Capital, January 1 (700,000)
Additional Investment (800,000)
Net Income P 2,000,000

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

41. C.

First Quarter (2,000,000 × 30%) P 600,000

ADD: Second Quarter (4,000,000 × 30%) 1,200,000

Total income tax for first two-quarters P1,800,000

Commulative income tax for three quarters (11,000,000 × 25%) 2,750,000

LESS: Income tax for first two quarters (1,800,000)

Third quarter - income tax expense P 950,000

42. A.

Net Income P 1,000,000

LESS: Gain from expropriation (540,000/3) (180,000)

Total Net Income P 820,000

43. B.
10% of 700,000 = 70,000
A, B, and C are reportable segments because revenue associated with each of these
segments is at least 70,000.

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

44. C.
Revenue 10% = 3,050,000; Profit 10% = 503,000; Assets 10% = 5,760,000

Revenue Profit/Loss Assets

A X X X
B X X X

C X X X

D X
E

45. D.

2021 2nd Quarter Revenue P 20,000,000

MULTIPLY: Expected Bonuses 7,000,000

DIVIDE: Expected Sales 100,000,000

Recognized Bonus in 2nd Quarter P 1,400,000

46. C.

Variable Expenses (3,000,000/3) P 1,000,000

ADD: Fixed Expenses for the first quarter

1,200,000
(3,000,000*2/3 - 500,000 - 300,000)

Allocated Advertising Expenses (500,000/4) 125,000

1st Quarter Depreciation 75,000

Total Expense in 1st Quarter P 2,400,000

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

47. A.

Est. Depreciation Expense, 2021 P 500,000

ADD: Est. Year-end Bonuses 1,200,000

MULTIPLY: Accrued Months 9/12

Total Expense P 1,275,000

48. D.

Cash received P 6,500,000

ADD: Increase in accounts receivables 120,000

Decrease in unearned sales revenue 1,500,000

Sales revenue P 8,120,000

49. A.

Cash paid for income tax P 1,430,000

ADD: Decrease in income tax payable (12,000)

Increase in deferred tax asset (18,700)

Decrease in deferred tax liability (5,000)

Income Tax Expense P 1,394,300

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Accountancy and Finance
CAF Review: M&M
ACCO 20063: CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS

50. B.

Payment to suppliers P 1,500,000

ADD: Increase in accounts payable 85,000

Purchase discounts 4,300

LESS: Decrease in notes payable (32,000)

Increase in advances to suppliers (53,000)

Sales revenue P 1,504,300

References:
Vedasto, Binaluyo, Carlos, Ortega, Ison, Fajutagana, & Bergonia. (2021). ACCO 20063

Conceptual Framework and Accounting Standards. Instructional Materials.

Valix, C. T. (n.d.). Conceptual Framework and Accounting Standards.

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