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MARK ALYSON B. NGINA, CPA, CMA

AFAR PREWEEK
MARK ALYSON B. NGINA, CPA, CMA
to

1. Upon formation of a partnership, a capitalist partner will be given a capital balance:

A. that is the average of the capital balances of the other partners
B. amounting to the fair value of their services to be rendered
C. amounting to their asset contribution
D. of zero
2. Alice accepts Liseldo in her life and as a partner in an aquafarm business to be called Alisel Aquafarm. The accounts
in the ledger for Alice on November 30, 20x1 just before the admission of Liseldo, show the following balances:
Cash 6,800
Accounts receivable 14,200
Merchandise inventory 20,000
Accounts payable 8,000
Alice, capital 33,000

a) An allowance for doubtful accounts of 3% of accounts receivable is to be established.

b) The merchandise inventory is to be valued at 23,000.
c) Prepaid salary expenses of 600 and accrued rent expense of 800 are to be recognized.
Liseldo is to invest sufficient cash to obtain 1/3 interest in
of Liseldo:
A. 28,174
B. 35,347
C. 35,374
D. 36,374
3. In the absence of agreement as to distribution of loss, how shall the partnership loss be distributed to the partners?
A. The loss shall be distributed equally to all partners including the industrial partner.
B. The industrial partner shall be exempted from partnership loss while the capitalist shall share equally.
C. The industrial partner shall be exempted from partnership loss while the capitalist partners shall be distributed on
the basis of capital contribution ratio.
D. The industrial partner shall be exempted from partnership loss while the capitalist partners shall be distributed in
accordance with the profit agreement ratio.
4. Pooh, Tang, and Ngina are partners in an accounting firm. Their capital account balances at year-end
year were Pooh,
900,000; Tang, 1,100,000 and Ngina, 500,000. They share profits and losses on a 4:4:2. after the following special
terms:
1) Partner Ngina is to receive a bonus of 10% at net income after the bonus.
2) 1,000,000.
3) Salaries of 100,000 and 120,000 shall be paid to partners Pooh & Ngina, respectively.
Assuming a net income of 440,000 for the year, the total profit share of partner Ngina was:
A. 78,000
B. 168,000
C. 194,000
D. 198,000
5. If a retiring-partner receives less than his adjusted capital balance before retirement, what is the logical reason if the
capital balances of the remaining partners increase after the said retirement?
A. Bonus is given by remaining partners to retiring partner
B. Bonus is given by retiring partner to remaining partners
C. Goodwill arising from retirement of a partner is recognized.
D. Revaluation of an existing asset is recognized at the time of retirement.
6. In case of admission of a new partner by investment in the partnership, which of the following statements is correct?
A. If there is bonus but without asset revaluation, the total contributed capital of all partners will be lower than the new
agreed capitalization.
B. If there is positive asset revaluation without bonus, the total contributed capital of all partners will be higher than the
new agreed capitalization.

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C. If there is negative asset revaluation (asset impairment) but without bonus, the contributed capital of the new partner
will be equal to his agreed capitalization in the new partnership.
D. If there is positive asset revaluation or asset impairment, the difference between the total contributed capital of all
partners and the new agreed capitalization shall be distributed to all partners including new partner using the new
profit or loss ratio agreement.
7. Alice and Liseldo have capital balances of 32,500 and 17,500 and share profits 3:2. Jinggoy is admitted as a partner
and is given a 25% interest in the firm upon investing 20,000 cash. Profits are to be shared 5:3:2 by Alice, Liseldo,
and Jinggoy. Risa subsequently enters the partnership by investing 12,500 for a 20% interest in asset and 20% share
ng
with Risa and withdraws from the partnership. The partnership pays

method?
A. 15,500; 15,500; 15,000
B. 17,300; 16,700; 16,500
C. 20,300; 19,200; 19,000
D. 21,500; 20,000; 20,000
8. In the liquidation of general partnership, which of the following credits shall be paid first?
A. Those owing to third persons.
B. Those owing to partners other than capital and profits.
C. Those owing to partners for their capital contribution.
D. Those owing to partners for their share in profits.
9. DDB Partnership is engaged in steel manufacturing business had the following condensed financial position prior to
liquidation:
Assets Liabilities and Capital
Cash 480,000 Liabilities 1,400,000
Non-cash assets 7,200,000 Loan payable to Diskarte 600,000
Diskarte, Capital (50%) 1,800,000
Diploma, Capital (30%) 2,800,000
Backer, Capital (20%) 1,080,000
Total 7,680,000 Total 7,680,000
and all available cash was distributed.

after liquidation?
A. 4,200,000
B. 4,360,000
C. 4,400,000
D. 6,360,000
10. On December 31, 20x0, PBB Partnership with profit or loss ratio of 2:3:5 reported the its financial position as follows:
Cash 100,000 Liabilities to third person 200,000
Noncash assets 400,000 Fyang, capital 100,000
JM, capital 150,000
Jas, capital 50,000
PBB Partnership became bankrupt. The partnership undergoes installment liquidation. On January 31, 20x1, the court-

liquidation expense and 3/4 of the liabilities to third persons. The liquidator also withheld an amount of cash for future
liquidation expense. The amount received by Fyang
withheld?
A. 60,000
B. None of the choices
C. 40,000
D. 30,000
11. All of the following choices are related to each other. Select the exception:
A. Net free assets
B. Estimated deficiency
C. Liabilities to be liquidated
D. Unsecured liabilities with priority

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12. Updates and Corrigenda Company is experiencing financial problems which ultimately resulted in bankruptcy. The
statement of finançai position of the entity before liquidation is presented below:
Cash 100,000 Income tax payable 200,000
Inventory 300,000 Salaries payable 300,000
Land 200,000 Note payable 800,000
Mortgage payable 100,000
Accounts payable 400,000
Contributed capital 500,000
Deficit ( 1,700,000)
Total Assets 600,000 Total Liab. and Equity 600,000

What to the amount received by the employees at the end of corporate liquidation concerning their salaries?
A. 100,000
B. 120,000
C. 72,000
D. 300,000
13. The following data were taken from the statement of affairs for Carlos & Chloe Corp.
360,000
Assets 296,000
280,000
Unsecured liabilities with priority 28,000
Fully secured liabilities 120,000
Partially secured liabilities 240,000
Unsecured liabilities without priority 460,000
Determine the total estimated deficiency to unsecured creditors and the expected recovery per peso of unsecured
claims.
A. 152,000 and .69
B. 180,000 and .63
C. 180,000 and .65
D. 148,000 and .68
14. On a statement of financial affairs prepared for purposes of corporate liquidation, how are liabilities classified?
A. Historic and futuristic
B. Current and noncurrent
C. Secured and unsecured
D. Monetary and nonmonetary
15. A contract provides that the entity must deliver product Bebe Ko and product Bebe Mo to the customer for a total price
of 14,500. Payment is due when both products are delivered. By the end of the year, only product Bebe Ko has been
delivered by the entity. The entry of the entity will include:
A. A debit to accounts receivable
B. A credit to contract liability
C. A debit to contract asset
D. All of the choices
16. Contractor Corp. has a contract to construct a 5,000,000 cruise ship at an estimated cost of 4,000,000. The company
will begin construction of the cruise ship in early January 20x1 and expects to complete the project sometime in late
20x4. Contractor Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship.
Due to this and other circumstances, Contractor Corp. believes there are inherent hazards in the contract beyond the
normal, recurring business risks. Contractor Corp. expects to recover all its costs under the contract. During 20x1 and
20x2 the company has the following activity:
20x1 20x2
Costs to date 980,000 2,040,000
Estimated costs to complete 3,020,000 1,960,000
Progress billings during the year 1,000,000 1,000,000
Cash collected during the year 648,000 1,280,000
Which of the following will be presented in the statement of financial position on December 31, 20x2 in accordance with
PFRS 15?
A. 40,000 contract asset.
B. 72,000 contract asset.

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C. 40,000 contract liability.

D. 20,000 contract liability.
17. On January 1, 20x1, Doc Ong Company accepted a long-term construction project for an initial contract price of

gn of the project. The outcome of the construction contract can be estimated

provided the following data concerning the direct costs related to the said project for 20x1 and 20x2:
20x1 20x2
Costs incurred to date 880,000 2,240,000
Remaining estimated costs to complete at year-end 1,320,000 560,000
Applying PFRS for SME, what is the balance of construction in progress on December 31, 20x2?
A. 2,400,000
B. 2,240,000
C. 2,040,000
D. 1,800,000
18. On January 1, 20x1, Ang Umaayaw granted a franchise agreement to a Di Nagwawagi, a franchisee. The license is
good for 10 years and will commence on January 1, 20x1. The contract provided that Di Nagwawagi shall pay initial
-going
going payment of royalties equivalent to 8% of the sales of the franchisee.
On January 1, 20x1, Di Nagwawagi paid down- -year
year noninterest bearing note for
the balance payable in three equal annual instalments starting December 31, 20x1. The note has present value of

ended December 31, 20x1. Di Nagwawagi paid the first instalment on its due date.
Applying PFRS 15 and assuming the franchise agreement is classified as right to access, which of the following
statements is/are correct?
I. Thehe total revenue to be recognized by Ang Umaayaw for the year ended December 31, 20x1 in relation to the
franchise fee is 84,018.
II. 112,840.
A. Only statement one is true.
B. Only statement two is true.
C. Both statements are true.
D. Both statements are false.
19. Which of the following is not a suitable method for estimating the stand
stand-alone selling price of a good or service?
A. Adjusted market assessment approach
B. Expected cost plus a margin approach
C. Residual approach
D. Economic value-added
added approach
20. The following costs shall be capitalized as part of contract cost, except:
A. General and administrative costs for which reimbursement is specified in the contract
B. Borrowing costs from loans specifically borrowed to finance the construction project
C. Labor compensation for construction workers and supervisors
D. Depreciation expense of construction equipment on stand-by
21. Statement 1: Contract stipulations regarding mobilization fees will not affect the amount of revenue earned by the
entity.
Statement 2: Contract stipulations regarding contract retention fees will not affect the amount of revenue earned by
the entity.
A. Both statements are true
B. Neither statements are true
C. Only statement 1 is true
D. Only statement 2 is true
22. Gigi Department Store sells gift cards that expire three years from the date of purchase. During 20x1, Gigi

of the 20x1 balance remains unused, and Gigi concludes that it will never be redeemed. Gigi

redeemed in 20x3. How much revenue with respect to gift cards should Gigi recognize in 20x3?
A. 64,300

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B. 40,000
C. 22,000
D. 2,300
23. Caloy sells the Tornado vacuum cleaner. Each vacuum cleaner has a one-year warranty (quality-assurance) that covers
any product defects. When customers purchase a vacuum cleaner, they also have the option to purchase an extended
three-year warranty that covers any breakage or maintenance. The extended warranty sells for the same amount
regardless of whether it is purchased at the same time as the vacuum cleaner or at some other time. How many
performance obligations exist?
A. None
B. One
C. Two
D. Three
24. Robust Choice sell natural supplements to customers with an unconditional right of return if they are not satisfied. The

Assuming that based on prior experience, estimated returns are 20%. The journal entry to record the sale and cost of
goods sold includes a
A.
B.
C.
D.
25. Two entities established a business. The contractual agreement provided that the relevant activities of the business will
require unanimous consent of the two parties. The business is not incorporated before SEC. The two parties equally
own interest in the said business. How should the two parties account for their investment?
A. Proportionate consolidation
B. Joint operation
C. Joint venture
D. Business combination
26. On January 1, 20x1, Entity X, a public entity, and Entity Y, a public entity, incorporated Entity Z which has its fiscal and
operational autonomy. The contractual agreement of the incorporating entities provided that the decisions on relevant
activities of Entity Z will require the unanimous consent of both entities. Entity X and Entity Y will have rights to the net
assets of Entity Z.

The financial statements of Entity C provided the following data for its two
two-year operation:
Net income / Dividends
(Net loss) declared
20x1 800,000 400,000
20x2 (2,000,000) -
What amount should Entity X report as Investment in Entity Z on December 31, 20x
20x2?
A. 4,480,000
B. 4,320,000
C. 4,160,000
D. 3,360,000
27. On January 1, 20x1, Timothy acquires a 35% interest in Peter over which it is able to exercise joint control with Timotyo.

a remaining useful life of 10 years.

owned an investment in securities classified as financial asset at fair value through other comprehensive income that
0 during the year. Ignore any tax implication.
What amount will be reported by Timothy in its statement of comprehensive income related to the investment?
A. 70,000
B. 56,000
C. 42,000
D. 14,000
28. On December 31, 20x1 Motivational Co. acquired 30 per cent of the ordinary shares that carry voting rights of Question
acquiring these shares.
Motivational Co. has joint control (together with another company) over Question Co. Motivational Co. uses the cost
model to account for its investments in JCE.

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In January 20x2 Question Co. declared and paid a dividend of 20,000 out of profits earned in 20x1. No further dividends
were paid in 20x2, 20x3 or 20x4.
A published price quotation does not exist for Question Co. At December 31, 20x1, 20x2 and 20x3, in accordance with

investment in Question Co. on December 31, 20x1, 20x2 and 20x3 respectively at:
A.
B.
C.
D.
29. Evaluate the following statements:
I. Branch loading is ordinarily presented in the books of the home office as a contra-asset to the inventory account.
II. Credit memos are
III.
inventory.
IV. In preparing the combined financial statements of the home office and its various branches, reciprocal accounts are
eliminated but nonreciprocal accounts are combined.
A. One statement is incorrect.
B. One statement is correct.
C. All statements are correct.
D. Two statements are incorrect.
30. On December 31, 20x1, the following information has been collected by Basher
reconciling the branch and home office accounts.
The home office's branch account balance on December 31, 20x1 is
balance is 506,700.
On December 30, 20x1, the branch sent a check for 40,000 to the home office to settle its account. The check
was not delivered to the home office until January 3, 20x2.
On December 27, 20x1, the branch returned 15,000 of seasonal merchandise to the home office for the January
clearance sale. The merchandise was not received by the home office until January 6, 20x2
The home office allocated general expenses of 28,000 to the branch. The branch had not entered the allocation
at the year-end.
Branch store insurance premiums of 900 were paid by the home office. The branch recorded the amount at 600.
The correct balance of the reciprocal account amounted to:
A. 575,000
B. 535,000
C. 534,700
D. 507,000
31. The following financial data are provided by 3 Calculator Incorporated concerning its Home Office and Branch for the
year ended December 31, 20x1:
Home office Branch
Beginning inventory 100,000 70,000
Shipment to branch 150,000
Shipment from home office 250,000
Purchases from outsiders 500,000 100,000
Ending inventory 120,000 80,000
Sales to third persons 1,000,000 600,000
Operating expenses 300,000 200,000
Prior to 20x1, the Home Office consistently shipped goods to Branch at 25% above cost. 6/7 of the beginning inventory

suppliers. The Branch employs FIFO cost accounting system for its inventories.
What is the understatement of the branch's reported net income in its separate income statement for the year ended
December 31, 20x1?
A. 112,000
B. 100,000
C. 94,000
D. 53,000
32. Which of the following will decrease the reciprocal accounts of the home office and the branch?
A. Closing of the net income of the branch
B. Expenses paid by the home office which are allocated to the branch

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C. Payment made by the branch for the accounts payable of the home office
D. Purchase of equipment by the home office for the use of the branch, with a policy that non-current assets are kept
in the books of the home office
33. Which of the following is false in relation to the Acquisition Method?
A. An acquirer may be absent in a business combination of equals or a merger
B. The acquisition date is the date the acquirer gains control over another business
C. Assets acquired and liabilities assumed are recognized and measured using their fair value on acquisition date
D. Either a goodwill or a gain from bargain purchase is recognized and measured on acquisition date, but never both
from the same business combination
34.
consideration:

The fair value of the contingent-

What is the total consideration transferred for this business combination?
A. 7,750,000
B. 7,550,000
C. 6,500,000
D. 2,550,000
35. On January 1, 20x1, Pampublikong and Sertipikadong Bank entered into a contract of merger wherein Pampublikong

Sertipikadong in exchange for the net assets of Sertipikadong Bank. Pampublikong paid ac
acquisition related cost of

has to

How much is the total assets of Pampublikong on January 1, 20x1 after the merger?
A. 54,100,000
B. 64,100,000
C. 55,100,000
D. 65,100,000
36. On 1 January 20x2 Problem Co.
date fair value of the identifiable net assets were as follows:
000
Plant and equipment 1,300
Inventory 425
Trade receivables 100
Trade payables and loans 500
The tax base of the above assets and liabilities was equal to their fair value. Solution Co disclosed a contingent liability
contingent as it was not probable that an outflow of

What amount is recognized for goodwill at 1 January 20x2?

A. 825,000
B. 780,000
C. 675,000
D. (220,000)
37.

were carried at amounts equivalent to fair value. At the time of the combination, a lawsuit was pending against Saint
Bernard, which Saint Bernard had not recorded in its books. It was felt at the time that Saint Bernard would win the
lawsuit, so no provision for it was made when Papillon recorded the asset acquisition.
Six months after the acquisition, new information reveals that the expected value of the lawsuit at the date of acquisition

A. Retained earnings 400,000

Estimated lawsuit liability 400,000

B. Loss on lawsuit 400,000

Estimated lawsuit liability 400,000

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C. Goodwill 400,000
Estimated lawsuit liability 400,000

D. No entry required.
38. Pampanga Corporation acquires all of
reported assets and liabilities are as follows:
Book value Fair value
Dr(cr) Dr(cr)
Current assets 5,000,000 7,000,000
Land, buildings and equipment (net) 60,000,000 80,000,000
Liabilities (40,000,000) (41,000,000)
Pampanga determines that Sabela has the following intangible assets, not reported on its statement of financial
position:
Fair value
Favorable leaseholds 4,000,000
In-process research & development 10,000,000
Skilled workforce 25,000,000
Advertising contracts 8,000,000
Pampanga also discovers that Sabela has not properly recorded the expected liability from a pending lawsuit, currently

A. 38,000,000
B. 28,000,000
C. 26,000,000
D. 13,000,000
39. The following accounts are as they appear on the separate company financial statements of Motivational Break-up, a
parent and its 100%-owned
owned subsidiary (created 5 years ago) at the end of 20x1:
Parent Subsidiary
Equity in net income (of subsidiary) 7,000
Investment in subsidiary 280,000
Common stock 100,000 25,000
Additional paid-in capital 900,000 175,000
Retained earnings 390,000 80,000
Dividends declared (55,000) (3,000)
cost method of accounting?
A. 196,000
B. 203,000
C. 197,000
D. 200,000
40. An investor must apply the requirements of PAS 36 in determining whether it is necessary to recognize any impairment
loss in the investment in a subsidiary. How is the impairment test carried out?
A. The goodwill is separated from the rest of the investment and is impairment tested individually.
B. The entire carrying amount of the investment is tested for impairment under PAS 36 by comparing its recoverable
amount with its carrying amount.
C. The carrying value of the investment should be compared with its market value.
D. The recoverable amounts of all investments in subsidiary should be assessed together to determine whether there
has been an impairment on all investments.
41. Pharmacy Corporation acquired a 70% interest in Shospital Corporation on January 1, 20x1, when Shospital's book
values were equal to their fair values. During 20x1, Pharmacy sold merchandise that cost 75,000 to Shospital for
110,000. On December 31, 20x1, three-
inventory. Separate incomes (investment income not included) of Pharmacy and Shospital are as follows:
Pharmacy Shospital
Sales Revenue 150,000 200,000
Cost of Goods Sold 90,000 70,000
Operating Expenses 12,000 15,000
Separate incomes 48,000 115,000
40,000.
Cost Method Equity Method
A. 28,000 62,125

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B. 28,000 80,500
C. 54,250 28,000
D. 28,000 54,250
42. On January 1, 20x1, Ragnar Co., a public entity, and Floki Co., a public entity, incorporated Bjorn Co. by investing

provided that the decisions on relevant activities of Bjorn Co. will require the unanimous consent of both entities. Ragnar
Co. and Floki Co. will have rights to the net assets of Bjorn Co.
The financial statements of Bjorn Co. provided the following data for 20x1.

were resold by Ragnar Co. to third persons during 20x1 and the remainder was resold to third persons during 20x2.

has remaining useful life of 2 years.

What is the investment income to be reported by Ragnar Co. for the year ended December 31, 20x1?
A. 603,000
B. 606,000
C. 594,000
D. 597,000
43. If the parent company uses the equity method to account for its investment in subsidiary, then its net income in its
own separate financial statements will be:
A. Equal to the consolidated net income
B. Equal to the separate net income if the cost method had been used
C. Equal to the consolidated net income attributable to controlling interest
D. Equal to the consolidated net income attributable to non-controlling
controlling interest
44. Pharmacy Corporation acquired a 70% interest in Shospital Corporation on January 1, 20x1, when Shospital's book
values were equal to their fair values. During 20x1, Pharmacy sold merchandise that cost 75,000 to Shospital for
110,000. On December 31, 20x1, three-
inventory. Separate incomes (investment income not included) of Pharmacy and Shospital are as follows:
Pharmacy Shospital
Sales Revenue 150,000 200,000
Cost of Goods Sold 90,000 70,000
Operating Expenses 12,000 15,000
Separate incomes 48,000 115,000
The consolidated income statement for Pharmacy Corporation and subsidiary for the year ended December 31, 20x1
will show consolidated cost of sales of?
A. 160,000
B. 133,750
C. 76,250
D. 50,000
45. Petron Corporation holds 70 percent ownership of Shell Enterprises. On January 1, 20x5, Shell Enterprises paid Petron
Corporation 400,000 for a truck that Petron Corporation had purchased for 450,000 on January 1, 20x1. The truck
has a 15-year total economic life and no residual value. Both companies use straight-line depreciation.
Give the eliminating entry in the consolidation workpaper prepared as of December 31, 20x5 to remove the effects of
the intercompany sale.
A. Gain on sale 70,000
Truck 70,000
B. Investment in S 63,636
Truck 50,000
Accum. Depreciation 107,272
Depreciation 6,364
C. Gain on sale 70,000
Truck 50,000
Accum. Depreciation 113,636
Depreciation 6,364
D. Gain on sale 70,000
Truck 50,000
Accum. Depreciation 20,000

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46. Preweek Company holds 60% of Shortcut

statements for 20x1, the following eliminating entry was made:
Retained earnings 6,000
Noncontrolling interest 4,000
Land 10,000
Which of the following statements is correct?
A. Preweek Company purchased land from Shortcut Company during 20x1.
B. Preweek Company purchased land from Shortcut Company before January 1, 20x1.
C. Shortcut Company purchased land from Preweek Company during 20x1.
D. Shortcut Company purchased land from Preweek Company before January 1, 20x1.
47.

investments in equity method),

- owned,
unconsolidated subsidiary of Pride).
In the current assets section of its December 31, 20x1 consolidated statement of financial position, Pride should report
accounts receivable from investees in the amount of:
A. 305,000
B. 275,000
C. 265,000
D. 225,000
48. All of the following are monetary items, except
A. Trade payables
B. Trade receivables
C. Administration costs paid in cash
D. Loan repayable at par value
49. Evaluate the following statements:
I. In converting the foreign currency units (FCU) to the local currency units (LCU), the indirect rate is divided from the
FCU to arrive at the LCU equivalent.
II. An increase in exchange rate will result in a loss if the company has a foreign currency denominated purchase
transaction (i.e., exposed liability position).
III. Financial asset at fair value through profit or loss (i.e., FVTPL) arising from a foreign currency denominated
transaction should be converted using the exchange rate when the fair value was determined.
IV. Exchange differences are always presented in the statement of comprehensive income.
V. In accounting for foreign currency denominated transactions, PAS 21 uses the two-transaction
two perspective in which
foreign exchange gain or loss is accrued at an intervening balance sheet date.
A. One statement is incorrect
B. One statement is correct
C. All statements are correct
D. Two statements are incorrect
50. On October 1, 20x1, Excusitis Co. purchased merchandise worth a total of 100,000 Swiss francs from its Swiss supplier,
payable within 30 days under an open account arrangement. Excusitis Co. issued 30-day, notes payable in Swiss
francs. On October 31, 20x1, Excusitis Co. paid the note. The following information on spot rates (P/SF) is provided:
Bid Offer
October 01, 20x1 24.03 24.15
October 31, 20x1 24.11 24.22
Excusitis
A. 8,000 loss
B. 7,000 loss
C. 7,000 gain
D. 8,000 gain
51. AFAM US is a subsidiary of AFAM Philippines. The functional currency of AFAM US is US$ while its presentation
currency is the Philippine Peso. The following items are translated at
Transaction rate Closing rate
Accounts receivable 2M 3M
Inventory 5M 4M
Sales 10M 15M

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Assuming the economy of US is experiencing hyperinflation, the following items shall be presented in the consolidated
financial statements of AFAM Philippines at
Accounts receivable Inventory Sales
A. 3M 4M 15M
B. 3M 4M 10M
C. 3M 5M 10M
D. 2M 5M 10M
52. On December 1, 20x1, a Philippine Company entered into a contract to sell FC 1,000,000 on March 1, 20x2. Relevant
exchange rates at various dates are as follows:
Spot Rate Forward Rate (to 3/1/20x2)
December 1, 20x1 0.44 0.42
December 31, 20x1 0.39 0.38
March 1, 20x2 0.37
Discount rate is 12%.
Based on the above data, evaluate the following statements:
I.
II. If the derivative is used to hedge a highly probable forecast sale transaction, the net effect on the P&L of the hedged
item and hedging instrument for the year 20x1 is nil.
III. If the derivative is used to hedge a firm commitment, no entry will be made during 20x1 for the hedged item.
IV. If the derivative is used to hedge a net investment in a foreign operation, the amount of gain on hedging instrument

V. The forward contract to sell is ordinarily used to speculate if the company expects that the direct exchange rate will
decrease.
A. One statement is incorrect.
B. Two statements are incorrect.
C. All statements are incorrect.
D. Three statements are incorrect.
53. On December 1, 20x1, Noypi Inc., which is operating in the Philippines, sold goods on account to USA company at a
price of $10,000
,000 collectible on March 2, 20x2. In order to hedge this exposed foreign currency denominated accounts
receivable, Noypi entered into a forward contract with BPI for the sale of $1
$10,000 to be delivered on March 2, 20x2. The
following direct exchange rates are provided by the bank:
12/1/20x1 12/31/20x1 3/2/20x2
Buying spot 40 37 38
Selling spot 41 43 45
Buying forward- 30 days 38 32 35
Selling forward- 30 days 34 31 36
Buying forward- 60 days 43 35 46
Selling forward- 60 days 40 41 43
Buying forward- 90 days 42 40 38
Selling forward- 90 days 34 40 36
What is the foreign currency gain or (loss) to be recognized by Noypi on hedged item for the year ended December 31,
20x1?
A. 20,000 gain
B. 30,000 loss
C. 10,000 gain
D. 40,000 loss
54. Tiniis Inc. operates in Japan where the functional currency is Yen (¥). However, the presentation currency of Tiniis Inc.
is Philippine Peso ( )
Yen as of December 31, 20x2:
Cash and cash equivalent ¥1,000,000 Accounts payable ¥3,000,000
Receivables 2,000,000 Notes payable 1,000,000
Investment 3,000,000 Common stock 3,000,000
PPE 4,000,000 Preferred stock 1,000,000
Retained earnings 2,000,000
Total assets ¥10,000,000 Total SHE and Liabilities ¥10,000,000

The following additional data are provided:

Tiniis Inc. reported net income for year 20x2 in the amount of ¥500,000 and declared cash dividends in the amount

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The following direct exchange rates are also given

o December 31, 20x1
o December 31, 20x2
o Average rate during 20x2
What is the total comprehensive income for the year 20x2?
A. 7,050,000
B. 5,100,000
C. 3,700,000
D. 3,350,000
55. On January 1, 20x1, Red Cross Inc., a non-
stipulated that the amount should be invested indefinitely in revenue producing investment. The deed of donation also
provides that the dividend income shall be used for the acquisition of computers of the NPO. On December 31, 20x1,

000 with useful life of 5 years without residual value. How

A.
B.
C.

D. There shall be no effect in total net asset.

56. Gota De Leche for Philippines, a private not-for-profit health-care
care entity located in Sampaloc, Manila, charged a patient
--party
party payor. The third
third-party payor submitted a
check for
statements is true?
A.
B. The health-care facility will rebill the third-
C. The health-
D. The third- -care facility at the start of the next fiscal
period.
57. Under the principles of the Government Accounting Manual (GAM), which of the following statements is incorrect?
A. An obligation incurred for electricity expense is recognized by a journal entry debiting the expense and crediting the
expense payable
B. Construction in Progress account is credited to recognize the Building account upon completion and turnover,
C. Cash MDS, Regular is debited upon receipt of the Notice of Cash Allocation from DBM
D. The remittance to the National Treasury of unused cash advances will be debited to the Subsidy Income from the
National Government and credited to Cash Cash-Collecting Officer.
58.
accounting entry to recognize reversion of unused NCA shall have a ________.
A.
B.
C.
D.
59. Avengers Corporation is a manufacturing company engaged in the production of a single special product known as
"Marvel". Production costs are accumulated with the use of a job-order-cost system.
The following information is available as of June 1, 20x1:
Work-in process 10,710
Direct materials inventory 48,600
In analyzing the job-order cost sheets, the records disclosed that the compositions of the working-process inventory on
June 1, 20x1 were as follows:
Direct materials used 3,960
Direct labor (900 hours) 4,500
Factory overhead applied 2,250
10,710

The following manufacturing activity occurred during the month of June 20x1:

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Purchased direct materials costing 60,000

Direct labor worked 9,900 hours at 5 per hour
Factory overhead of 2.50 per direct labor hour was applied to production.
At the end of June 20x1, the following information was gathered in connection with the inventories:
Inventory of work-in-process:
Direct materials used 12,960
Direct labor (900 hours) 7,500
Factory overhead applied 3,750
24,210
Inventory of direct materials 51,000
Compute the cost of goods manufactured:
A. 142,560
B. 118,350
C. 131,850
D. 108,600
60. Statement 1: The overapplied overhead is added to the cost of goods sold account if the amount is deemed immaterial
or insignificant.
Statement 2: The underapplied overhead is proportionately added to the work in process account, finished goods and
cost of goods sold account if the amount is deemed material or significant.
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.
61. LECPA Company manufactures electric drills to the exacting specifications of various customers. During April 20x1,
Job 403 for the production of 1,100 drills was complete at the following costs per unit:
Direct materials 10
Direct labor 8
Applied factory overhead 12
Total 30
Final inspection of Job 403 disclosed 50 defective units and 100 spoiled units. The detective drills were reworked at a
total cost of 500, and the spoiled drills were sold to a jobber for 1,500. What would be the unit cost of the good units
produced on Job 403?
A. 33
B. 32
C. 30
D. 29
62. What cost accounting system is ideal for just in time production system?
A. Actual costing system
B. Normal costing system
C. Standard costing system
D. Flexible costing system
63. Which of the following would guide you in distinguishing a main product from a by-product?
A. Number of units per processing period
B. Joint costs incurred up to the split-off point
C. Percentage of total sales value
D. Weight or volume of outputs per period
64. The Sa Pagkaka-alam Ko Company processes unprocessed milk to produce two products, Butter Cream and
Condensed Milk. The following information was collected for the month of June:
Direct Materials processed: 22,500 gallons (after shrinkage)
Production: Butter Cream 12,000 gallons
Condensed Milk 10,500 gallons
Sales: Butter Cream 11,500 gallons
Condensed Milk 10,000 gallons
Sales Price: Butter Cream 3.50 per gallon
Condensed Milk 9.00 per gallon
Separable costs in total: Butter Cream 15,000
Condensed Milk 35,800

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The costs of purchasing the unprocessed milk and processing it up to the split-off point to yield a total of 22,500 gallons
-margin percentage NRV method to allocate the
joint costs of production. What is the allocated joint costs of Condensed Milk? (Round intermediary percentages to the
nearest hundredth.)
A. 34,678
B. 35,800
C. 15,000
D. 16,324
65. Traditional overhead allocations result in which of the following situations?
A. Overhead costs are assigned as period costs to manufacturing operations.
B. High-volume products are assigned too much overhead, and low-volume products are assigned too little overhead.
C. Low-volume products are assigned too much, and high-volume products are assigned too little overhead.
D. The resulting allocations cannot be used for financial reports.
66. An entity employed the activity-based costing. The following data are provided:
Activity-Based Costing
Activity center Cost driver Amount of activity Center cost
Material handling Kilos handled 100,000 kg. 400,000
Painting Units painted 50,000 units 600,000
Assembly Machine hours 10,000 hours 1,000,000
Traditional Costing
Traditional Labor hours 100,000 hours 2,000,000
Job 1 contained 3,000 units, weighed 10,000 kilos and used 300 machine hours. The direct labor hours on the job
totaled 7,000 hours.
What amount should be reported as applied overhead under Activity Based Costing?
A. 106,000
B. 112,000
C. 90,000
D. 86,000
The next two questions are based on the following information:
The Precision Products Company manufactures a single product being used for heavy industrial machineries. It
operates in three shifts under two departments. Cutting Department and Soothing Department. Materials are added to
the product in each department. However, the number of units produced has not increased in the process.
The following records for each department were obtained from the books of Precision Company for the month of
January 20x1:
Cutting Smoothing
Department Department
Units in process, January 1, 20x1 - -
Units transferred from preceding department - 80,000
Units started in production 100,000 -
Units completed and transferred out 80,000 60,000
Units in process, January 31,20x1 20,000 18,000
Units spoiled in production - 2,000
Spoiled units are 50% complete as to materials, labor and overhead. Its cost is treated as a separate cost element
(expense) in the department where the spoilage occurs. Spoiled units have no recoverable value.
Percentage of completion of units in process on January 31, 20x1 follows;
Cutting Smoothing
Department Department
Materials 100% 100%
Labor 60% 80%
Overhead 20% 40%
The following charges were indicated in the cost records for the month of January 20x1:
Cutting Smoothing
Department Department
Materials 300,000 118,500
Labor 184,000 203,580
Overhead 100,800 75,020

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67. The total cost transferred to next department - Smoothing:

A. 496,000
B. 556,000
C. 584,800
D. 690,000
68. The cost of work-in-process ending in Smoothing Department:
A. 185,400
B. 111,600
C. 73,800
D. 138,600
69. On April 1, 20x1, Nomophobia Company issues a one-
Using the 24th method, the earned portion of the premium for the year ended December 31, 20x1
A. 36,000
70. The Philippine Government and St. Lukes Inc. entered into a concession arrangement for the construction and operation
of Pro-poor Hospital for a period of 10 years. On December 31, 20x1, the concession operator constructed the Hospital
a specified amount that will enable it to
recover the investment made provided that it has a pre-determined minimum order of hospital beds operating and
ctive interest
rate is 10%. What is the book value of the infrastructure asset on December 31, 20x2?
A. 44,100,000
B. 41,000,000
C. 45,900,000
D. 45,100,000
71. Cryptographic assets are transferrable digital representations that are designed in a way that prohibits their
copying or duplication. One subset of cryptographic asset is cryptocurrencies, which are digital tokens or
coins based on blockchain technology, such as Bitcoin, and currently operate independently of a central bank
and are intended to function
tion as a medium of exchange. Which of the following statements properly describes
the accounting treatment of cryptocurrency in accordance with PIC Q&A No. 2019 2019-02?
A. Cryptocurrencies held by an entity can be accounted as inventory under PAS 2 or intangible asset under
PAS 38, depending on the economic substance.
B. Cryptographic assets other than cryptocurrencies held by an entity such as AssetAsset-backed token, Utility
token, Security token and even hybrid token can be accounted under PAS 38, PFRS 9 or relevant
accounting standard.
C. Crypto tokens by the issuer is accounted depending if it qualifies as a financial liability, equity instrument
or prepayment for goods and services from a contract with a customer.
D. All of the choices.
Proverbs 16:3)

-- END OF PREWEEK --

Made by Jan, CPA

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