Answer

 

EASY 1. Which of the the following following account accounts s normally normally has a credit credit balanc balance? e? A. Prepaid Taxes B. Interest Income C. Rent Expense D. Equipment ANSWER  

:

2. If a transac transactio tion n ca causes uses total total liabil liabiliti ities es to decrea decrease se but does does not aect aect the owner’s equity, what change, if any, will occur in total assets? A. Assets will be increased B. No change in total assets C. Assets will be decreased D. None ANSWER :

3. A company company has assets of P45,000 P45,000,, no liabilitie liabilities, s, and stockhold stockholders’ ers’ equity equity of  P45,000. P45,0 00. It buys buys store xtures xtures worth worth P5,000 P5,000 on credit credit.. What eect eect would would this transaction have? A. Both assets and stockholders’ equity increase by P5,000 B. Both assets and stockholders’ equity decrease by P5,000 C. Assets remain the same and stockholders’ equity increases by P5,000 D. Both assets and liabilities increase by P5,000 ANSWER :

4. The income income summary summary accoun account: t: A. Generally Generally has a credit credit balance balance after after all the accounts accounts that should should be closed closed have closed. B. Summ Summar ariz izes es reven evenue ues, s, expen xpense ses, s, and and net net earn earnin ings gs or lo loss ss fo forr th the e accounting period. C. Summa Summarizes rizes changes changes in assets, assets, liabilities liabilities,, and net earnings earnings or loss for the accounting period. D. Is used to close close the retain retained ed earnings earnings account. account. ANSWER :

5. The essential essential characteri characteristics stics of an asset asset includ include e (choose (choose the incorrect incorrect one): one): A. The asset asset is the result result of past past transactio transaction n or event. event. B. The asset asset provide provides s future future economic economic benets. benets. C. The The asset costeto offis asset can be measured measured reliab reliably ly.. D. ass isthe tangi tangible ble.. can

 

 

ANSWER:

6. The “accounting “accounting policie policies s section” section” of the notes to nancial statement statements s should describe: A. Only the measurem measurement ent basis used used in preparing preparing the nancial nancial statement statements. s. B. Only the specic specic accountin accounting g policies policies followed followed by the the enterprise. enterprise. C. Both the mea measurem surement ent basis and account accounting ing policie policies s followed. followed. D. Nature Nature of the enterprise’s enterprise’s operations operations and its principal principal activit activities. ies. ANSWER :

7. In your examination examination with S. Gonzales Gonzales Travel Travel and Tours, Tours, you discover discovered ed that a bill documenting a service rendered to a customer on account in the amount of P10,000 which was held pending for recording as of December 31. Upon veric ver icati ation, on, you have have learne learned d that that the bookk bookkeep eeper er intent intention ionall ally y faile failed d to prepare the entry. The entry to record the revenue earned includes a? A. B. C. D.

Deb Debit it to Servic Service e Inco Income me Credi Creditt to Servic Service e Incom Income e Debi Debitt tto o Unearne Unearned d Servic Service e Income Income Credit Credit to Unearned Unearned Servic Service e Income Income

ANSWER :

8. An accrued accrued expense expense can be best best describ described ed as an amount amount A. B. C. D.

Paid Paid and matched matched with with earnings earnings for for the current current period period Paid Paid and not matche matched d with earning earnings s for the current current period period Not pai paid d and not matched matched with with earnings earnings for for the current current period period Not paid and and matched matched with earnings earnings for the curren currentt period period

ANSWER

: 9. Your company company performs performs work work for a customer, customer, but as of year end, has rec received eived no payment. If you do not record an adjusting entry at year end, how will the nancial statements be aected?

A. B. C. D.

Net income Overstated Overstated Understated Understated

ANSWER :

Assets Not Aected Overstated Not Aected Understated

Liabilities Understated Not Aected Overstated Not Aected

 

10. On November 1, 2014, you record a P20,000 note payable, debiting Cash and an d cr cred edit itin ing g Note Notes s Payab ayable le.. The The note note ma matu ture res s on May May 1, 2015 2015 when when principal and accrued interest of 6% a year is due. On December 31, 2014, your adjusting entry for accrued interest will include: A. a debit debit to Interest Interest Payab Payable le for P400 B. a debit debit to to Interest Interest Expense Expense for P200 C. a cr credit edit to Interes Interestt Payabl Payable e for P400 P400 D. no none ne of of the the abov above e ANSWER S: AVERAGE

1. The following following data data were compil compiled ed prior to prepari preparing ng the balance balance sheet of the Conviction Corporation as of December 31, 2015:

How much shareholders’ equity is to be presented in 2015 statement of  nancial position of Conviction Corporation? ANSWER :

2. The company company rents rents a space for Dream Dream Company. As of the beginning beginning of the period per iod,, the compan company y has not yet re recei ceived ved payment payment of P30,00 P30,000 0 from from last last year’s yea r’s servic service. e. This This period period,, Dream Dream Company Company used used the space and so the company earned P200,000 from rentals. At th the e end of th this is peri period od,, the bala balanc nce e of Rent ent Recei eceiva vabl ble e amou amount nted ed to P50,000.

 

What amount of cash was received by the company from Dream during the year?  

ANSWER:

3. Which of the follow following ing errors errors would would cause unequal unequal totals totals in the trial balance? balance? A. The Th e rm rmofreco regoods cord rds s as P21, P2a 1,00 000 0 rece re ived ed fr from omcash a custo cus tome mer r in adva ad nce e of  delivery debit ofceiv P1,000 to and a credit ofvanc P21,000 to sales. B. The The rm rm fail fails s to enter enter th the e cost cost of el elec ectr tric ic curre current nt used used during during the month as an expense and fails to recognize the P22,000 owed to DLPC. C. All the these se errors errors will cause cause unequal unequal trial trial balance balance totals. totals. D. None of these these errors errors will cause cause unequal trial trial balance balance totals. totals. ANSWER :

4. Adjus Adjusti ting ng entr entrie ies s th that at sh shou ould ld be reve revers rsed ed in incl clud ude e th thos ose e for for pr prep epai aid d or unearned items that: A. B. C. D.

create create an asset or a liability liability account account were origin originally ally entered entered in in a revenue revenue or expense expense account account were o origin riginally ally entered entered in in an asset or liabil liability ity account account create create an asset or a liability liability account and were were originally originally entered entered in a revenue or expense account

ANSWER :

5. A, B and C are partners partners in an accoun accounting ting rm. rm. Their capit capital al account account balance balances s at year-end year-end were: were: A, P90,000; B, P110,000; P110,000; C, P50,000. P50,000. They share prots prots and losses in a 4:4:2 ratio, after the following special terms: a. Partner C is to receive a bonus of 10% of the net income after the bonus. b. Interest of 10% shall be paid on that portion of a partner’s capital in excess of P100,000. c. Salaries of P10,000 and P12,000 shall be paid to partners A and C, respectively. Assuming a net income of P44,000 for the year, the total prot share of  partner C would be: ANSWER :

6. At December December 31, Miga Miga and Migo are are partner partners s with capital capital balances balances of P40,000 P40,000 and P20,0 20,00 00, and they hey shar share e prots ots and losses sses in the the ra rati tio o of 2: 2:1, 1, respectively.

 

On this date Ami invests P17,000 in cash for a one-fth interest in the capital and prot of the new partnership. Assuming that goodwill is not recorded, how much should be credited to Ami’s capital account on December 31? ANSWER :

7. Th The e acco accoun unts ts and and bala balanc nces es show shown n belo below w were ere gath gather ered ed fr from om Paynt aynter er Corporation's trial balance on December 31, 2015. All adjusting entries have been made.  The amount that should be reported as current assets on Paynter

Corporation's 2015 statement of nancial position is?

ANSWER :

8. Macy Corporat Corporation ion had the follow following ing purchase purchase and sale sale transactio transactions ns near the end of 2015:

Amount included in the inventory of Macy at December 31, 2015 is? ANSWER :

9. If a bonus bonus is tr trac acea eabl ble e to th the e pr prev evio ious us pa part rtne ners rs rath rather er th than an an in inco comi ming ng partner, it is allocated among the partners according to the:

 

A. B. C. D.

Prot-sha Prot-sharing ring percenta percentages ges of the previous previous partners partnership. hip. Prot-sha Prot-sharing ring percent percentages ages of the the new partnershi partnership. p. Capit Capital al percenta percentages ges of the the previous previous partners. partners. Capital Capital percenta percentages ges of the new partner partnership. ship.

ANSWER :

10. Immaterial amounts of similar nature and function should be grouped or condensed as one line item in the nancial statements. A. B. C. D.

Cons Consis iste tenc ncy y Ose Osett ttiing Ag Aggr greg egat atio ion n Co Comp mpar arab abil ilit ity y

ANSWER : DIFFICULT

1. Gl Glit itte ters rs Corp Corp.. is a newl newly y orga organi nize zed d busi busine ness ss fo forr a medi medica call prac practi tice ce to specialize in genecology. Transactions for the rst month are: • Invested in the business of P25,000 in exchange of common stock. • Paid cash for land costing P15,000. • Purchased a medical supplies for P2,000 on account. • Glitte Glitters rs treate treated d patien patients ts and earned earned service service revenue revenue of P8,000 P8,000,, receiving cash for half the revenue earned. • Business Business paid the following following expenses: salaries salaries P1,400, oce rent P1,000,Utilities P300. • Business sold the supplies to another physician for cost of P500. • Business borrowed P10,000 signing a note payable on the bank. • Paid P1,500 on account.  The total debits in the the trial balance of the business business is _____________. _____________. ANSWER :

2. The sharehold shareholders’ ers’ equity equity of the Albert Albert co. on June 30, 2015 2015 was as follows: follows: On July 1, the following actions were taken: taken:

 

a. Ordi Ordina nary ry sha sharehold holder ers s tur urn ned in thei theirr old ordi ordina nary ry shar shares es and and received in exchange new ordinary shares, 1 share of the new share being exchanged exc hanged for for every 4 shares of the old. old. New ordinary ordinary share share was given a stated value of P60 per share. b. OneOne-ha hallf sha share of the the new new ordi ordina nary ry sha sharre was was issu issued ed on on eac each share of preference share outstanding in liquidation of dividends in arrears on preference share. c. The decit from operations was applied against the share premium arising from the ordinary share sh are restatement.  Transactions  Transactions for the remainder of 2015 aecting the shareholders’ equity were as follows: What would be the total Shareholders’ Equity as of December 31, 2015?

ANSWER :

3. The The st stat atem ement ent of nanc nancia iall posi positi tion on of Toyot oyota a Pr Prod oduc ucts ts,, Inc. Inc. sho shows ws the the accounts receivable balance at Dec. 31, 2014 as follows:

During 2015, transactions relating to the accounts were as follows:

a. Sales on account, P4,800,000 b. Cash received from collection of cur urrrent receivable totaled P3,920,000 after discounts of P80,000 were allowed for prompt payment.

 

c. Cust Custom omers ers’’ acco account unts s of of P20, P20,00 000 0 wer were e asce ascert rtai aine ned d wort worthl hles ess s and and written o. d. Bad Bad acco accoun unts ts pre previ viou ousl sly y writ writte ten n o prio priorr to 201 2014 4 amou amount ntin ing g to P5,000 were recovered. e. Collections of P150,000 were made on the receivables (not included in the collections previously given) f. Base Based d on on asse assess ssme ment nt of of tthe he agi aging ng of of rec recei eiva vabl bles es,, it is esti estima mate ted d that allowance for uncollectible accounts should be P59,000 at Dec. 31, 2015. How much is the net realizable value of the accounts receivable at Dec. 31, 2015? ANSWER :

4. On July 1, 2015, Velasq Velasquez uez and Carlos Carlos decided decided to pool their assets assets and for form ma partnership. The rm is to take over business assets and assume business liabilities, and capitals are to be based on net assets transferred after the following adjustments: a) b)

Carl Carlo’ o’s s inve invent ntor ory y is is to be valu valued ed at P1 P14, 4,00 000. 0. An allo allow wanc ance for do doubtf ubtful ul acc acco ounts unts of of 5% is to be esta estab blish lished ed on. the accounts account s receivable of each party. party. c) Accrued liability of P800 is to be recogni niz zed on Velasquez’ books. d) Equi Equipm pme ent sho should uld be 50% 50% depr eprecia eciate ted d. e) Carl Carlos os is is to inv inves estt addi additi tion onal al cas cash h so his his inte interrest est will will 6 60% 0% in in the the rm. Financial position for Velasquez and Carlos on July 1 before the adjustments are given as follows:

How much is the additional cash contribution of Carlos? ANSWER : 5. Or Orti tiz, z, and and Ponce once are are part partne ners rs shar sharin ing g pro prots ts in th the e prop propor orti tion on of 5:3 5:3 resp respec ecti tive vely ly.. The The st stat atem ement ent nan nanci cial al posi positi tion on on Apri Aprill 1, sh show owed ed the the following:

 

     

On this date, they agreed to admit Chan as a partner. The terms of the agreement are summarized below: a. Al Allo lowa wanc nce e fo forr possi possibl ble e uncol uncolle lect ctib ible le acc accou ount nts s of P9,0 P9,000 00 sho shoul uld d be set up. b. Inven nvento tori ries es mus mustt be res resttat ated ed at at the the pres presen entt mark market et va valu lue e of P320,000. Ortiz, Ponce and Chan will divide prots in the ratio of 5:3:2 respectively respective ly.. Their. capital balances must be in proportion to this ratio. Chan will be investing cash of P150,000 for his interest. What is the capital balance of Ortiz immediately after the admission? ANSWER : 6. When When Mand Mandy y and and Moo Moore, part partne ners rs who shar share e ear earnin ing gs equa equallly, ly, wer ere e incapacitated in an airplane accident, a liquidator was appointed to wind up their business.  The accounts showed cash, P35,000; other assets, P110,000; liabilities, P20,000, Mandy, capital, capital, P71,000; P71,000; Moore, capital capital P54,000. Because of highly specia spe cializ lized ed nature nature of the non-ca non-cash sh assets assets,, the liquid liquidato atorr antici anticipa pated ted that that consid con sidera erable ble time would would be re requi quire red d to dispose dispose them. The expens expenses es of  liquidating the business are estimated at 10,000. How much cash can be distributed safely to Mandy at this point? ANSWER :

7. Sonic’s Sonic’s accounts accounts payable payable per general ledger ledger control control amounted to P5,440,0 P5,440,000, 00, net of P240,000 P240,000 debit balances balances in suppliers’ suppliers’ accounts. accounts. The unpaid voucher voucher

le included the following items that not had been recorded as of December 31, 2015:  

 

 

A Company – P224,000 merchandise shipped on December 31, 2015, FOB destination; received on January 10, 2016. B, Inc. Inc. – P192,0 P192,000 00 mercha merchandi ndise se shippe shipped d on Decemb December er 26, 2015, FOB shipping point; received on January 16, 2016. C Super Services – P144,000 janitorial services for the three-month period ending January 31, 2016.

 

 

MERALCO – P67,200 electric bill covering the period December 16, 2015 to  January 15, 2016. On December 28, 2015, a supplier authorized Sonic to return goods billed at P160,000 and shipped shipped on Decemb December er 20, 2015. The goods were returned by Sonic on December 28, 2015, but the P160,000 credit memo was not received until January 6, 2016.

What amount should be reported as current liability in Sonic’s December 31, 2015 balance sheet? ANSWER :

8. The The Evit Evita a Comp Compan any y us uses es ca cash sh basi basis s acco account untin ing g for for th thei eirr reco record rds. s. Du Duri ring ng 2016 20 16,, Evit Evita a coll collec ecte ted d P500 P500,0 ,000 00 fr from om its its cust custom omer ers, s, ma made de paym paymen entt of  P200,0 P20 0,000 00 to its suppli suppliers ers for invento inventory, ry, and paid paid P140,0 P140,000 00 for operat operating ing cost costs. s. Evit Evita a want wants s to pr prep epar are e accr accrua uall basi basis s stat statem emen ents ts.. In gath gather ering ing information for the accrual bass nancial statements, Evita discovered the following:

• Cust ustomers ow owed Evi Evita P50 P50,000 at th the beg beginni nning of of 201 2016 and and P35,000 at the end of 2016. • Evita owe owed sup suppliers P2 P20,000 at th the beg beginni nning of 20 2016 and and P 27,000 at the end of 2016. • Evita’s beginning inventory was P42,000 and its ending inventory was P44,000. • Ev ita a end had had of prep pr2016. epa aid exp expen ense ses s of P5 P5,000 ,000 at at the the begi beginn nnin ing g of 20 2016 and P7,400 atEvit the • Evit Evita a had had accr accrue ued d exp expen ense ses s of of P12 P12,0 ,000 00 at th the e beg begin inni ning ng of 2016 2016 and P 19,000 at the end of 2016. • Depreciation fo for 20 2016 wa was P5 P51,000. Determine the accrual basis net income of Evita Company for the year ended December 31, 2016 ANSWER :

9. Ja Jar, r, Ram, Ram, and and Milo Milo,, who who di divi vide de pro prots ts and and lo loss sses es,, 50%, 50%, 30% 30% and and 20%, 20%, respectively.. Have the following October 31, 2011 account balances: respectively

 

 The partnership’s assets are P211,200 (including cash of 64,200). The partnership is liquidated and Milo receives P33,000 in nal statement. How much is the total loss on realization? ANSWER :

10.Negros 10.Negr os Compan Company y was was incorp incorpora orated ted in Januar January y 1, 2017 2017 with with the follow following ing authorized capitalization:

During Duri ng 2017 2017,, th the e enti entity ty is issu sued ed 150, 150,00 000 0 or ordi dina nary ry sh shar ares es for for a to tota tall of  P18,000,000 and 50,000 preference shares at P60 per share. In additi addition, on, on Decemb December er 15, 2017, 2017, subscr subscript iption ions s for 20,000 20,000 pr prefe efere rence nce shares were taken at a purchase price of P100. These subscribed share were paid for on January 15, 2018. Net income for 2017 was P5,000,000. What amount should be reported as total contributed capital on December 31, 2017? ANSWER : CLINCHER

1. Which Which of the follow following ing is a genera generally lly accepte accepted d account accounting ing princip principle le that ill illustr ustrate ates s the practi practice ce of co conser nservat vatism ism during during a partic particula ularr re repor portin ting g period? A. Capitaliz Capitalization ation of resear research ch and developm development ent costs. costs. B. Accrual Accrual of a contingency contingency deemed deemed to be reasona reasonably bly possible. possible. C. Repor eporti ting ng inve invest stme ments nts wi with th appr apprec ecia iate ted d mark market et valu values es at mark market et value. D. Reporting Reporting invento inventory ry at the lower of cost cost or market market value. ANSWER :

2. The The Do It Corp Corpor orat atio ion n pr pres esen ente ted d th the e foll follow owing ing in inco come me stat statem ement ent and and statement of retained earnings for the year ended December 31, 2015 as developed by its bookkeeper who has completed 12 units of accounting.

 

 The corrected retained  ___________________.  ____________ _______.

earnings

as

of

December

31,

2015

is

ANSWER:

3. Changes Changes in all the account account balances balances of Camadi Camadillo llo Company Company for the curren currentt year, except for the retained earnings, are as follows:

 There are no entries in the retained earnings account except for net income and a dividend declaration of P190,000 which was paid in the current year.

 

What is the net income for the current year? ANSWER : BUZZER ROUND

1. On March March 1, 2012, II and and MM formed formed a partnership partnership with with each contributi contributing ng the following assets:

 The building is subject to mortgage loan of P800,000 which is to be assumed by the th e partnership agreement provides that II and MM share prots and losses 30% and 70%, respectively. On March 1, 2012 the balance in MM’s capital account should be: ANSWER: 2. JJ and KK are are partners partners who share share prots prots and losses losses in the ratio ratio of 60% :40%, :40%, respectively. JJ’s salary is P60,000 and P30,000 for KK. The partners are also paid interest on their average capital balances. In 2012, JJ Received P30,000 of interest and KK, P12,000.  The prot and loss allocation is determined after deductions for the salary and interest payments. If KK’s share in the residual income (income after deducting salaries and interests) was P60,000 in 2012, what was the total partnership income? ANSWER:

3. The The part partner nersh ship ip agre agreem emen entt of XX, XX, YY, YY, an and d ZZ pr prov ovid ides es for for th the e year year-en -end d allocation of net income in the following order: • First, XX is to receive 10% of net income up to P200,000 and 20% over P200,000 • Second, YY and ZZ is to receive 5% of the remaining income over P300,000 • The balance of income is to be allocated equally among the three partners  The partnership’s 2011 net income was P500,000 before any allocations to partners. What amount should be allocated to XX?

 

ANSWER:

4. The followi following ng condense condensed d balanc balance e sheet sheet is pr prese esente nted d to the partne partnersh rship ip of  AA, BB, and CC who share prot and losses in the ratio 4:3:3, respectively:

 The partners agreed to liquidate the partnership after selling the other assets for P200,000. Upon the liquidation of the partnership, AA should have received? ANSWER:

5. On January 2, 2011, 2011, BB and PP for formed med a partnership. partnership. BB contribu contributed ted capital capital of P175,000 and PP P25,000. They agreed to share prots and losses 80% and an d 20%, 20%, resp respec ecti tive vely ly.. PP is the gene genera rall mana manage gerr and and work works s in th the e partnership full time and is given salary of P5,000 a month; an interest of  5% in the beginning beginning capital capital (of both partner) partner) and a bonus bonus of 15% of net income before the salary, interest and the bonus.  The Prot and Loss statement of the partnership for the year ended December 31, 2011 is as follows:

 The amount of bonus to PP in 2011 2011 amounted to: ANSWER:

6. Selected Selected record records s from the accounting accounting rrecor ecords ds of Malakas Malakas Company Company are as follows:

 

What is the amount of gross margin? ANSWER:

7. RR and XX formed formed a partnership partnership and agreed agreed to to divide divide initial initial capital capital equally equally even eve n though though RR co contr ntribu ibuted ted P25,00 P25,000 0 and XX P21,00 P21,000 0 in identi identiab able le assets. Underr th Unde the e bonu bonus s appr pproac oach to adj djus ustt unidentiable assets should be debited for:

the the

ca cap pita ital

acco accoun unts ts,,

ANSWER:

8. Glenn Company Company provided provided the follow following ing informatio information n at year-end: year-end:

What is the amount of legal capital? ANSWER:

9. Mara Company Company provi provided ded the follow following ing data data at year-end: year-end:

XX’s

 

What total amount should be reported as shareholders’ equity? ANSWER:

10.. At th 10 the e begi beginn nning ing of th the e curr current ent year year,, Ri Ria a Comp Compan any y issu issued ed 100, 100,00 000 0 or ordin dinary ary share shares s of P20 par par value value and 20,000 20,000 conver convertib tible le pr prefe efere rence nce shares of P20 par value for a total of P800,000. At this date, the ordinary share was selling for P36 and the convertible preference share was selling for P27. What is the share premium from the issuance issuan ce of preference shares?

ANSWER:

11.. Duri 11 During ng th the e curr curren entt year year,, Hyat Hyattt Comp Compan any y issue issued d for for P110 P110 per per share share,, 15,000 convertible preference shares of P100 par value. One preference share may be converted into three ordinary shares of  P25 par value at the option of the preference shareholder. shareholder. At year year-end, -end, all the pr prefe efere rence nce shares shares were were conver converted ted into into ordina ordinary ry shares. The market value of the ordinary share at the conversion date was P40. What amount should be credited credited to share premium premium as a result of b conversion? ANSWER:

12.. At th 12 the e begi beginn nnin ing g of the curr current ent year year,, Rona ona Comp Compan any y issu issued ed 50,0 50,000 00 shares of P10 par value for P100 per share. During the year, the entity reacquired 2,000 shares at P150 per share and immediately cancelled these 2,000 shares. In connec connected ted with with the re retir tireme ement nt of shares shares,, wha whatt amount amount should should be debited to retained earning?

 

ANSWER:

13. During During the curre current nt year, year, Line Compan Company y re recei ceived ved a donati donation on of 2,000 2,000 shares with P650 par value from a shareholder. On that date, the share market value was P350. The shares were originally issued forP250 per share. What is the decrease in shareholders’ equity as a result of the donation? ANSWER:

14.. Ja 14 Janu nuar ary y 1, 2017 2017,, Vey Comp Compan any y had had 125, 125,00 000 0 shar shares es issu issued ed whic which h included 25,000 shares as treasury. • January 1 through Oct October 31 – 13,000 tre treasury sha shares wer were distributed to ocers as part of a share sh are compensation plan. • November 1 – A 3-for-1 share split took eect ect. • December 1 – the the entity pur purc chas hased 5, 5,000 of of it its o ow wn sha shares to to discourage an unfriendly un friendly takeover. takeover. These shares were not retired. How many shares were outstanding on December 31, 2017? ANSWER:

15. The December 31, 2017, balance sheet of Madden Inc., reported total assets ass ets of P1,050 P1,050,00 ,000 0 and total total liabil liabiliti ities es of P680,0 P680,000. 00. The fo follo llowin wing g information relates to the year 2018:

 The stockholders' equity section of the December 31, 2018, balance sheet would report a balance of? ANSWER:

16. A local partnership was considering the possibility of liquidation since one of the partners is solvent (Tilman) and the others are insolvent. Capital Balances at that time were as follows. Prots and Losses were divided on 4:2:2:2 bases, respectively.

 

Ding’s creditors led a P25,000 claim against the partnership’s asset. At that time, partnership held asset s reported at P360,000 and liabilities of  P120,000. If the assets could be sold for P228,000, what is the minimum amount that Ding’s creditors would have received? ANSWER:

17.The pre-emptive right of a common stockholder is the right to a. share proportionately in corporate assets upon liquidation. b. share proportionately in any new issues of stock of the same class. c. rece receiv ive e ca cash sh di divi vide dend nds s befo before re th they ey ar are e di dist stri ribu bute ted d to pr pref efer erre red d stockholders. d. exclude preferred stockholders from voting rights. ANSWER:

18.Wi .Windsor Company has has outs utstandi nding both common stock and nonparticipating, non-cumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaected by a. the declaration of a stock dividend on preferred payable in preferred stock when the market price of the preferred is equal to its par value. b. the declar declarati ation on of a stock stock divide dividend nd on commo common n stock stock pay payab able le in common stock when the market price of the common is equal to its par value. c. the payment of a previously declared cash dividend on the common stock. d. a 2-for-1 split of the common stock. ANSWER:

19.Watt Co.'s stockholders' equity at January 1, 2017 is as follows: Common stock, P10 par value; authorized 300,000 shares; Outstanding 225,000 shares P2,250,000 Paidaid-in in capi capita tall in exc xces ess s of par par 900, 900,00 000 0 Ret eta ained ned ear earning nings s 2,190 ,190,,000 000  Total  Total P5,340,000 During 2017, Watt had the following stock transactions: • Acquired 6,000 6,000 shares of its stock stock for P270,000. • Sold 3,600 treasury treasury shares at P50 a share. share. • Sold the remaining treasury shares at P41 per per share.

 

No other stock transactions occurred during 2017. Assuming Watt uses the cost method to record treasury stock transactions, the total amount of all additional paid-in capital accounts at December 31, 2017 is? ANSWER:

20.The occurrence which most likely would have no eect on 2017 net income (assuming that all amounts involved are material) is the a. sale in 2017 2017 of an oce oce buildi building ng contri contribut buted ed by a stockh stockhold older er in 2003. b. collection collection in 2017 of a receivable receivable from from a customer customer whose account was written o in 2016 by a charge to the allowance account. c. settlement settlement based on litigatio litigation n in 2017 of previousl previously y unrecognized unrecognized damages from a serious accident which occurred in 2015. d. wort rthl hles essn snes ess s det eter ermi mine ned d in 2017 2017 of sto stock pur urc cha hase sed d on a speculative basis in 2013. ANSWER:

21. Generally accepted accounting principles principles a. are fundamental truths or axioms that can be derived from laws of  nature. b. derive their authority from legal court proceedings. c. derive derive their credibilit credibility y and authority from general general recogniti recognition on and acceptance by the accounting profession. d. have been specied in detail in the conceptual framework. ANSWER:

22. Accounting information is considered to be relevant when it a. can be depended on to represent the economic conditions and events that it is intended to represent. b. is capable of making a dierence in a decision. c. is unde unders rsta tand ndab able le by reas reason onab ably ly in info form rmed ed us user ers s of acco account untin ing g information. d. is veriable and neutral. ANSWER:

 

23.On Octob October er 1, 2015, 2015, the ware warehous house e of ABC ABC Co. Co. and all invent inventori ories es contained therein was damaged by ood. O-site back up of database shows the following information:

Additional information: Goods in transit as of October 1, 2015 amounted to P2,000, cost of  goods out on consignment is P1,200, and materials damaged by ood can be sold at a salvage value of P500. How much is the inventory loss due to ood on October 1, 2015? ANSWER:

24. The Tan Company purchased machine on April 1, 2014 for P800,000.  The machine has the following following data:

During 2014 and 2015, the company used the machine for 4,500 and 5,500 5,5 00 hours, hours, re respe specti ctivel vely, y, and pr produ oduced ced 40,000 40,000 and 60,000 60,000 units, units, respectively. What is the balance of accumulated depreciation in December 31, 2015 assuming Tan Tan uses input method as depreciation depreciation method?

 

ANSWER:

25.. In 25 Info form rmat atio ion n conc concer erni ning ng th the e rst rst mont month h of oper operat atio ions ns of Avon von is presented below. below. (The periodic inventory inventory system is used.)

 The correct cost cost of goods sold is is ___________________. ___________________. ANSWER: