FMCC225 – Financial Accounting 3

Final Examination
1st sem. S/Y 2020-20221

Name: ________________________________________ Section: ___________

Multiple Choice:

1. It refers to a plan where plan assets, if any, are retained and managed by the employer.
A. Funded plan C. Unfunded plan
B. Non-contributory plan D. Delicate plan
2. These are pool of assets contributed by various unrelated employers to be used to pay retirement benefits to
participants without regard to the identity of the contributing employers.
A. Multi-employer plans C. Pooling of assets plan
B. State plans D. Secret plan
3. Multi-employer plans are treated as
A. Defined contribution plan C. Hybrid plan
B. Defined benefit plan D. A or B
4. These are established by legislation and are operated by a government agency which is not subject to control or
influence by the reporting entity.
A. State plans C. GSIS
B. SSS D. Puro plan
5. State plans are
A. accounted for as defined contribution plan
B. accounted for as defined benefit plan
C. accounted for in the same way as multi-employer plans
D. accounted for only by the Commission on Audit
6. The accounting for defined contribution plan
A. is straightforward – actuarial computations are not required.
B. is complex – actuarial computations are required
C. is simple – not accounted for
D. is done only by CPAs
7. Under a defined contribution plan, the retirement benefits expense is
A. equal to an actuarially determined amount
B. equal to the agreed periodic contribution to the fund
C. equal to the contribution made during the period
D. zero, if no employee retired during the period
8. Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees.
Which of the following employee benefits is not within the scope of PAS 19?
A. Short-term D. Termination
B. Post-employment E. Shared-based payments
C. Other long-term
9. Which of the following employee benefits is not within the scope of PAS 19?
A. Semi-monthly salaries of employees
B. Employer’s share in SSS contributions
C. One sack rice allowance
D. Bonus in the form the entity’s shares
10. Accumulating compensated absences are those that
A. can be carried over to the next period if not fully used during the year of entitlement.
B. expire if not fully used during the year of entitlement.
C. can be carried over to the next period if not fully used during the year of entitlement and are paid in cash
when the employee leaves the company
D. are recognized only when actually taken by employees
11. The last payday for a firm was December 27 on which it paid ₱40,000 to its employees, the amount earned by
employees through the pay period ending December 16. For the period December 17 through December 31, the
employees earned ₱12,000. The adjusting entry required at December 31 would include:
A. cr. crash ₱12,000 D. dr. wages expense ₱40,000
B. dr. wages payable ₱12,000
C. dr. wages expense ₱12,000

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12. Gavin Co. grants all employees two weeks of paid vacation for each full year of employment. Unused vacation time can
be accumulated and carried forward to succeeding years and will be paid at the salaries in effect when vacations are
taken or when employment is terminated. There was no employee turnover in 20X6. Additional information relating to
the year ended December 31, 20X6, is as follows:

Liability for accumulated vacations at 12/31/X5 ₱35,000

Pre-20X6 accrued vacations taken from 1/1/X6 to 9/30/X6
(the authorized period for vacations) 20,000
Vacations earned for work in 20X6 (adjusted to current rates) 30,000

Gavin granted a 10% salary increase to all employees on October 1, 20X6, its annual salary increase date. For the
year ended December 31, 20X6, Gavin should report vacation pay expense of
A. 45,000 C. 31,500
B. 33,500 D. 30,000
13. ANOMALOUS IRREGULAR Co. grants its employees twelve days paid vacation leave each year. Per ANOMALOUS’s
policy, employees are required to take vacation leave each year, but not necessarily for their entire vacation leave
entitlement. Vacation leaves not taken during a year can be carried over indefinitely.

ADHERE has 500 employees with an average salary of ₱4,000 per day. The average annual pay increase is 5%.
During 20x1, total vacation leaves taken by employees were 5,400 days. Based on past experience, 90% of unused
vacation leave for a year are taken in the immediately following year.

If unused vacation leaves vest, how much should ANOMALOUS accrue as liability for unused vacation leave on
December 31, 20x1?
A. 2,520,000 C. 2,268,000
B. 25,200,000 D. 0

Use the following information for the next four questions:

ADHERE TO STICK Co. grants its managerial employees bonus in the form of profit sharing. Information on
operations in 20x1 is shown below:
Profit before tax ₱4,000,000
Bonus rate or percentage 10%
Income tax rate 30%

14. How much is the bonus “before bonus and before tax?”
A. 363,636 C. 400,000
B. 280,000 D. 288,660
15. How much is the bonus “after bonus and before tax?”
A. 400,000 C. 261,684
B. 363,636 D. 245,798
16. How much is the bonus “before bonus and after tax?”
a. 363,636 b. 261,684 c. 245,798 d. 288,660

17. How much is the bonus “after bonus and after tax?”
a. 363,636 b. 261,682 c. 245,798 d. 288,660

18. ARTIFACT MAN MADE OBJECT Co. provides an incentive compensation plan under which its president receives a
bonus equal to 10% of ARTIFACT’s profit before tax but after deduction of the bonus. ARTIFACT’s profit after tax and
after bonus for the year is ₱2,545,456. Income tax rate is 30%. How much is the bonus?
A. 245,798 C. 363,636
B. 261,684 D. 288,660

Use the following information for the next two questions:

AMNESTY PARDON Co. has a post-employment benefits plan that is considered as defined contribution plan. According to
the plan, AMNESTY agrees to contribute ₱800,000 annually to a retirement fund for the benefit of its employees.

On December 31, 20x1, because of poor results of operations and insufficient working capital, AMNESTY was only able to
contribute ₱320,000 to the fund. On December 31, 20x2, because of a profitable year, AMNESTY decided to contribute
₱1,800,000 to the retirement fund. On January 12, 20x3, an employee retired and was eligible to a ₱60,000 retirement
benefits based on the operating efficiency and investment earnings of the fund.

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19. How much is the retirement benefits expense recognized in 20x2?
A. 800,000 C. 1,800,000
B. 320,000 D. 60,000

20. How much is the retirement benefits expense recognized in 20x3?

A. 800,000
B. 320,000
C. 1,800,000
D. 60,000
21. The following information pertains to RIK Co.’s two employees:
Name Weekly No. of weeks Vacation rights vest or
salary worked in 2019 accumulate
Ryan 800 52 Yes
Todd 600 52 No
Neither Ryan nor Todd took the usual two-week vacation in 2019. I RIK’s December 31, 2019 financial statements,
what amount of vacation expense and liability should be reported?
A. 2,800 C. 1,400
B. 1,600 D. 0
22. On January 1, 2019, Cruz Co. decided to grant its employees 10 vacation days and five sick days each year. Vacation
days earned can be carried over the next year but not sick days. Each employee took an average of three sick days in
2019. During 2019, each of Cruz’s six employee earned ₱100 per day and earned 10 vacation days. The vacation
days were taken during 2020. What amount should Cruz report for compensated absence expense for the year ended
December 31, 2019.
A. 0 C. 7,800
B. 6,000 D. 9,000
23. Southwest Company determine that it has an obligation relating to employees’ rights to received compensation for
future absences attributable to employees’ services already rendered. The obligation relates to rights that vest, and
payment of the compensation is probable. The amounts of Southwest obligations as of December 31 are reasonably
estimated as follows:
Vacation pay ₱110,000
Sick pay 80,000
In its December 31 balance sheet, what amount should Southwest report as its liability for compensated absences?
A. 0
B. 80,000
C. 110,000
D. 190,000
24. Stacey Corporation provides an incentive compensation plan under which its president is to receive a bonus equal to
10 percent of Stacey’s income in excess of ₱100,000 before deducting income tax but after deducting bonus. If
income before income tax and bonus is ₱320,000 and the effective tax rate is 40 percent, the amount of bonus should
be
A. 20,000 C. 32,000
B. 22,000 D. 44,000
25. Sadang Co. has an incentive compensation plan under which the sales manager receives a bonus equal to 10 percent
of the company’s income after deductions for bonus and income taxes. Income before bonus and income taxes is
₱400,000. The effective tax rate is 30 percent. How much is the bonus (rounded to the nearest peso)?
A. 40,000 C. 28,866
B. 30,108 D. 26,168

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