RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
1. Which is done first in the accounting process considering the following?
a. Financial statements are prepared.
b. Nominal accounts are closed.
c. Adjusting entries are recorded.
d. A post-closing trial balance is prepared.
2. Which statement is true about the Conceptual Framework?
a. The Conceptual Framework is not a standard.
b. The Conceptual Framework describes the concepts for general purpose reporting.
c. In case of conflict, the requirements of IFRS prevail over the Conceptual
Framework.
d. All of these statements are true about the Conceptual Framework.
3. The major financial statements include all, except
a. Statement of financial position
b. Statement of comprehensive income
c. Statement of cash flows
d. Statement of retained earnings
4. The estimate of uncollectible accounts based on percentage of sales.
a. Emphasizes measurement of accounts receivable.
b. Emphasizes measurement of bad debt expense.
c. Emphasizes measurement of total assets
d. Is acceptable only for tax purposes.
5. Accounting standard-setters use the following process in establishing international
standards:
a. Research, exposure draft, discussion paper, standard.
b. Discussion paper, research, exposure draft, standard.
c. Research, preliminary views, discussion paper, standard.
d. Research, preliminary views, exposure draft, standard.
6. The initial recognition amount of the debt investment minus repayments plus or minus
cumulative amortization and net of any reduction for uncollectibility.
a. Fair Value
b. Value in use
c. Amortized Cost
d. Historical Cost
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
7. What is the cost flow assumption to adopt if the inventories are not ordinarily
interchangeable, or for goods and services produced or segregated for specific projects?
a. FIFO
b. LIFO
c. Moving Average
d. Specific Identification
8. The following are the five-step process for Revenue Recognition, except for
a. Identify the contract with customers
b. Determine the transaction price
c. Recognize revenue upon receipt of cash
d. Allocate the transaction price to the separate performance obligations
9. The following are the conditions for the initiation of the capitalization period of borrowing
costs, except for
a. Expenditures for the asset are being incurred.
b. Activities that are necessary to get the asset ready for its intended use or sale are
in progress.
c. Borrowing cost is being incurred.
d. None of the above.
10. Which of the following statements about the Conceptual Framework are TRUE?
a. The objective of financial reporting is the foundation from which the other aspects
of the framework logically result.
b. General-purpose financial reports are most useful to company insiders in making
strategic business decisions.
c. Capital providers are the only users who benefit from general purpose financial
reporting
d. Accounting rule-making that relies on a body of concepts will result in useful and
consistent pronouncements.
11. An entity is a resort located in Palawan. The entity collects cash when guests make a
reservation. During December 2022, the entity collected P5,000,000 of cash and recorded
the receipt by recognizing revenue. The entity had earned P4,000,000 of this amount and
the balance will be earned during January 2022. What is the impact of the adjusting entry
on December 31, 2022?
a. 4,000,000 increase in revenue
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
b. 1,000,000 decrease in liability
c. 5,000,000 increase in asset
d. 1,000,000 increase in liability
12. Which of the following is a current asset?
a. cash surrender value of a life insurance policy, where the company is the
beneficiary
b. investment in marketable securities for the purpose of controlling the issuing
company
c. cash designated for the purchase of tangible fixed asset
d. trade installments receivable normally collectible in 18 months
13. In recording the bank balance with the book cash balance, which of the following would
not cause the bank balance shown on the bank statement to be lower than the
unadjusted book balance?
a. cash on hand at the company
b. NSF checks from a customer, as reported on the bank statement
c. interest credited to the account by the bank
d. deposits in transit
14. As a result of differences between depreciation for financial reporting purposes and tax
purposes, the financial reporting basis of a company's plant assets falls below the tax
basis. Assuming the company had no other temporary differences, the company should
report a
a. Current tax receivable
b. Current tax payable
c. Deferred tax asset.
d. Deferred tax liability
15. Which of these would cause the inventory turnover ratio to increase the most?
a. increasing the amount of inventory on hand
b. keeping the amount of inventory on hand constant but increasing sales
c. decreasing the amount of inventory on hand and increasing sales
d. keeping the amount of inventory on hand constant but decreasing sales
16. A large manufacturer of cosmetics sells merchandise to a retailer, which in turn sells the
goods to the public at large through its chain of retail outlets. The retailer purchases
merchandise from the manufacturer under a consignment contract. When should
revenue from the sale of merchandise to the retailer be recognized by the manufacturer?
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
a. When goods are delivered to the retailer
b. When goods are sold by the retailer
c. It will depend on the terms of delivery of the merchandise (i.e., CIF cost, insurance,
and freight or FOB)
d. It will depend on the terms of payment (i.e., cash or credit)
17. When the allowance method of recognizing bad debt expense is used, the typical write
off of a specific customer’s account:
a. has no effect on net income
b. decreases current asset
c. decrease net income
d. decreases working capital
18. Which of the following is incorrect?
a. Investments classified as long-term are reclassified as short-term investments
only if it is the intention of the management to dispose of them in the short term
b. If an investor company does not have significant influence in another company, it
must use either the fair value method or the cost method to account for that
investment in equity securities
c. If an investor company has a controlling interest in another company, it must use
either the cost method or the equity method to account for that investment in
equity securities
d. The cost method is sometimes applied to investments in equity securities
19. Which of the following is not true of a subsidiary ledger?
a. The purpose of a subsidiary ledger is to store details of certain general ledger
accounts
b. The sum of the individual balances in a subsidiary ledger should equal the balance
in the general ledger control accounts
c. Journal entries posted to a subsidiary ledger need not be posted to the general
ledger
d. One benefit of a subsidiary ledger is that the number of general ledger accounts
necessary is reduced
20. The closing entry for sales discounts is:
a. debit sales discounts and credit income summary
b. debit income summary and credit sales discounts
c. debit sales discounts and credit sales revenue\
d. not used because sales discount is a real account which is not closed
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
21. Jeff purchased a new register system for his grocery store, paying P1,000 in cash and
issuing a P6,000 note payable for the balance owed. As a result of this transaction, Jeff’s
balance sheet would reflect
a. an increase in assets and an increase in liabilities
b. a decrease in assets and an increase in liabilities
c. an increase in assets and a decrease in liabilities
d. an increase in assets and an increase in owner’s equity
22. In a lease that is recorded as an operating lease by the lessee, the equal monthly rental
payments should be:
a. allocated between a reduction in the liability for leased asset and depreciation
expense
b. allocated between a reduction in the liability for leased asset and interest expense
c. recorded as a reduction in the liability for leased asset
d. recorded as rental expense
23. Which of the following is not considered in estimating the useful life of intangible assets?
a. expected usage of the asset by the enterprise
b. stability of the industry in which the intangible asset operates
c. salvage value of the asset
d. level of maintenance expenditure required to obtain the future economic benefit
from the asset
24. When computing diluted EPS for an entity with a complex capital structure, what is the
denominator in the computation?
a. Number of ordinary shares outstanding at year-end
b. Weighted average number of ordinary shares outstanding
c. Weighted number of ordinary shares outstanding plus all other potentially
antidilutive securities.
d. Weighted average number of ordinary shares outstanding plus all other
potentially dilutive securities
25. The present value of pension benefits accrued to date using assumptions as to future
compensation levels is the
a. Prior service cost
b. Accumulated benefit obligation
c. Projected benefit obligation
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
d. Accrued pension cost
26. All accounts in the financial statements are affected to a certain extent by inflationary
conditions but the effect is more explicit in some accounts than in others. Which account
is the more seriously affected by inflation?
a. PPE
b. Inventory
c. Receivables
d. Cash
27. Which of the following situations violates the concept of reliability?
a. Financial statements were issued nine months late.
b. Report data on segments having the same expected rises and growth rates to
analysts estimating future profits.
c. Financial statements included property with a carrying amount increases to
d. Management’s estimate of market value
28. Which of the following is not true about accounting for inventory under IFRS?
a. FIFO is allowed.
b. Interest costs may be capitalized if there is a lengthy production period to prepare
goods for sale
c. Inventories are always valued at net realizable value.
d. The weighted-average method is acceptable
29. Justification for the method of determining periodic deferred tax expense is based on the
concept of
a. Matching of periodic expense to periodic revenue
b. Objectivity in the calculation of periodic expense.
c. Recognition of assets and liabilities.
d. Consistency of tax expense measurements with actual tax planning strategies.
30. Statement 1: In periodic system, inventory is counted periodically and then priced.
Statement 2: For periodic system, the ending inventory is usually recorded in the cost of
goods sold (CGS) entry.
Statement 3: In perpetual system, a running total is kept of the units on hand (and possibly
their value) by recording all increases and decreases as they occur
a. All are false
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
b. All are true
c. Statements 1 and 2 are True
d. Statements 1 and 3 are True
31. IFRS requires changes in accounting principles to be reported
a. On a prospective basis.
b. On a retrospective basis.
c. By restating the financial statements.
d. By a cumulative adjustment on the income statement.
32. On August 1, 2022, Pixie opened Perfume Company, a perfume shop with an initial shop
with an initial investment of P500,000. The said company borrowed a total of P350,000
to finance its initial operation.
In early October, Pixie issued a personal check for P60,000 as payment for one of Perfume
Company’s loan.
In mid-December, Pixie took merchandise costing P20,000 which were marked to sell for
P45,000 for personal use.
Sales and other income for the period amounted to P280,000 while total expenses
amounted to P110,000. There were no other transaction affecting capital.
Perfume Company’s liabilities decreased to P310,000.
The assets of Perfume Company at December 31, 2022
a. 710,000
b. 310,000
c. 1,020,000
d. 300,000
33. An entity identified the following segments for the current year:
Segment Revenue Profit Assets
A 10,000,000 1,750,000 20,000,000
B 8,000,000 1,400,000 17,500,000
C 6,000,000 1,200,000 12,500,000
D 3,000,000 550,000 7,500,000
E 4,000,000 575,000 5,500,000
F 2,000,000 525,000 3,000,000
What are the reportable segments?
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
a. Segments A, B and C
b. Segments A, B, C and D
c. Segments A, B, C, D, and E
d. Segments A, B, C, D, E, and F
34. An entity provided the following information on December 31, 2022:
Accounts Payable 2,000,000
Accrued Expenses 800,000
Bonds Payable 2,500,000
Premium on bonds payable 300,000
Deferred tax liability 500,000
Income tax payable 1,100,000
Cash dividend payable 600,000
Share dividend payable 400,000
Note payable – due March 1, 2023 1,500,000
What amount should be reported as total current liabilities?
a. 6,000,000
b. 6,400,000
c. 4,500,000
d. 6,500,000
35. On January 1, 2019, an entity purchased for P5,000,000 a machine with useful life of ten
years and residual value of P200,000. The machine was depreciated by the double
declining balance method. The entity changed to the straight line method on January 1,
2021 and the residual value did not change. What is the carrying amount of the asset on
December 31, 2021?
a. 2,825,000
b. 2,175,000
c. 2,625,000
d. 3,200,000
36. An entity’s shareholders’ equity on December 31, 2022 is:
6% non-cumulative preference shares, P100 par, liquidation value P105 P1,000,000
Ordinary share capital, P60 par P3,000,000
Retained Earnings P950,000
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
What is the book value per ordinary share?
a. 76.50
b. 90.00
c. 76.80
d. 67.60
37. In the memo accounts of Sword Company in relation to its pension plan, it reported a
defined benefit obligation balance at January 1, 2022 of P3,000,000. The following items
were likewise provided in relation to the defined benefit obligation account:
Service costs – 2022 250,000
Present value of the increase in benefits as 900,000
a result
of an amendment made at the start of
2022
Settlement rate 8%
Contributions made to the plan at the end 450,000
of the year
Actual return on plan assets 210,000
Actuarial loss on plan assets 230,000
Actuarial loss – experience adjustment – 40,000
DBO
Benefits paid to retirees at the end of 2020 160,000
The defined benefit obligation account balance as of December 31, 2022 is
a. 4,442,000
b. 4,342,000
c. 4,520,000
d. 4,042,000
38. On October 1, 2022, Nahimatay Company enters into a 10 month non-cancellable lease.
The contract amounting to P800,000 shall be paid in two equal installments on October
1, 2022 and March 1, 2023. The present value of the March 1, 2023 payment applying
current rates is P749,067.
What is the initial measurement of the lease liability?
a. P749,067
b. P800,000
c. P0
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
d. None of the above
39. During 2022, an entity purchased marketable equity securities as a trading investment.
For the year ended December 31, 2022, the entity recognized an unrealized loss of
P200,000. There were no security transactions during 2023. The entity provided the
following information on December 31, 2023:
Security Cost Market Value
A 2,450,000 2,300,000
B 1,800,000 2,700,000
4,250,000 5,000,000
In the 2023 income statement, what amount should be reported as unrealized gain or
loss?
a. Unrealized gain of P950,000
b. Unrealized loss of P950,000
c. Unrealized loss of P750,000
d. Unrealized gain of P750,000
40. An entity provided the following data during the current year:
Beginning inventory 500,000
Net purchases 2,500,000
Net sales 3,500,000
A physical count at year-end resulted in an inventory of P600,000. The gross profit had
remained constant at 40%. The entity suspected that some inventory may have been
taken by a new employee. What is the estimated cost of missing inventory at year-end?
a. 600,000
b. 900,000
c. 450,000
d. 300,000
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
41. Annabelle Company is engaged in raising poultry. Information regarding its activities is as
follows:
Carrying amount on January 1, 2022 500,000
Increase due to purchases 200,000
Gain arising from change in fair value less 40,000
cost to sell – due to price change
Gain arising from change in fair value less 60,000
cost to sell – due to physical change
Decrease due to sales 85,000
Decrease due to harvest 20,000
The carrying amount of the biological asset on December 31, 2022 is
a. P700,000
b. P695,000
c. P675,000
d. P685,000
42. Santos Company issues 4,000 ordinary shares to its external lawyers for services related
to the successful completion of a lawsuit that Santos Company is currently defending. The
lawyers spent 250 hours working on the case. On the basis of recent invoices from the
lawyers, Santos Company determines the fair value of the services received to be P1,400
per hour. The quoted price and the par value of the shares were P82.50 and P50.00,
respectively.
What is the amount to be reported as expense in relation to legal services receive?
a. P350,000
b. P330,000
c. P200,000
d. None of the above.
43. An entity reported on December 31, 2022 at P6,000,0000 based on a physical count of
goods priced at cost and before any necessary year-end adjustments relating to the
following:
Excluded from the physical count were goods billed to a customer FOB
Shipping Point on December 31, 2022. These goods had a cost of P200,000
and were picked up by the carrier on January 15, 2023.
Goods shipped to a customer FOB shipping point on December 31, 2022
which are being held for the customer to call at the customer’s
convenience with a cost of P300,000 were included in the count.
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
Goods with invoice cost of P400,000 shipped FOB seller on December 31,
2022 from a vendor were received on January 15, 2023.
What amount should be reported as inventory on December 31, 2022?
a. 6,100,000
b. 6,000,000
c. 6,300,000
d. 6,400,000
On January 1, 2022, an entity sold a building with carrying amount of P6,000,000 in exchange for
a non-interest bearing note requiring ten annual payments of P1,000,000. The first payment was
made on December 31, 2022. The market interest rate for similar notes at date of issuance was
8%. The present value of an ordinary annuity of 1 at 8% is 6.71 for ten periods. The present value
of an annuity due of 1 at 8% is 7.25 for ten periods.
44. What is the interest income for 2022?
a. 500,000
b. 580,000
c. 536,800
d. 376,800
45. What is the carrying amount of note receivable on December 31, 2022?
a. 6,246,800
b. 7,246,800
c. 6,830,000
d. 6,750,000
An entity factored P5,000,000 of accounts receivable. Control was surrendered by the entity.
The transaction met the criteria to be accounted for a as sale but subject to recourse for
nonpayment. The fair value of the recourse obligation is P250,000.
46. What amount was initially received from the factoring of accounts receivable?
a. 4,500,000
b. 4,200,000
c. 4,100,000
d. 4,101,370
47. What total amount should be recognized initially as loss on factoring?
a. 398,630
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
b. 898,630
c. 800,000
d. 648,630
48. What amount should be reported as loss on factoring assuming the accounts are fully
collected by the factor?
a. 398,630
b. 300,000
c. 550,000
d. 400,000
49. An entity provided the following data for the current year:
Allowance for doubtful accounts, January 180,000
1
Sales 9,500,000
Sales returns and allowances 800,000
Sales discount 200,000
Accounts written off as uncollectible 200,000
The entity provided for doubtful accounts expense at the rate of 5% of net sales. What
amount should be reported as doubtful accounts expense for the current year?
a. 435,000
b. 425,000
c. 475,000
d. 415,000
50. An entity provided the following data on December 31, 2022:
Cash on hand 500,000
Cash in bank 4,000,000
Cash in sinking fund 1,500,000
Treasury bills, purchased Nov 1, 2022 and 2,500,000
Maturing Jan 31, 2023
Time deposit, purchased Oct 1, 2022 and 2,000,000
maturing
RIZAL TECHNOLOGICAL UNIVERSITY
COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY
DEPARTMENT OF ACCOUNTANCY
Jan 31, 2023
What amount should be reported as cash and cash equivalents on December 31, 2022?
a. 7,000,000
b. 4,500,000
c. 9,000,000
d. 5,500,000
