CONCEPTUAL FRAMEWORK AND REPORTING STANDARDS

MIDTERMS EXAMINATION QUESTIONAIRE

NAME: _________________________ DATE:_____________________

INSTRUCTIONS: WRITE YOUR FINAL ANSWER IN THE ANSWER SHEET IN BLUE OR BLACK INK. FRICTION PEN IS NOT ALLOWED. DO NOT
SHOW YOUR SOLUTION TO THE PROBLEMS. SUBMIT YOUR ANSWER SHEET TOGETHER WITH THE QUESTIONAIRE. FAILURE TO SUBMIT
THE QUESTIONAIRE CORRESPONDS A FIVE (5) POINTS DEDUCTION ON THE FINAL SCORE. FAILURE TO WRITE YOUR NAME ON BOTH
QUESTIONNAIRE AND ANSWER SHEET WILL LEAD TO AN AUTOMATIC ZERO (0) SCORE. GOOD LUCK!

I. TRUE OR FALSE

1. Assets classified as Property, Plant, and Equipment can be either acquired for use in operations, or acquired for resale.
2. Assets classified as Property, Plant, and Equipment must be both long-term in nature but does possess physical
substance.
3. The cost of acquiring a customer list from another company is recorded as an intangible asset.
4. Companies report the cash flows from purchases and sales of trading securities as cash flows from investing activities.
5. Depreciation is a matter of valuation and not a mean of cost allocation.
6. The three factors involved in the depreciation process are the depreciation base, the useful life, and the risk of
obsolescence.
7. The declining-balance method deduct the salvage value in computing the depreciation base.
8. A 3-year commercial T-bill due on March 31, 2019 can be considered as cash equivalents as of December 31, 2017.
9. In a period of rising prices, the inventory cost allocation method that tends to result in the highest reported net income is
specific identification.
10. The term of purchase FOB shipping point prepaid decreases the seller’s receivable.

II. MULTIPLE CHOICE QUESTIONS

11. PAS 16, PPE does not apply to:

a. property, plant and equipment classified as held for sale in accordance with IFRS 5 Non-current A s s e t s
H e l d f o r S a l e a n d D i s c o n t i n u e d Operations
b. biological assets related to agricultural activity
c. Mineral rights and mineral reserves such as oil, n a t u r a l g a s a n d s i m i l a r n o n - r e g e n e r a t i v e
resources
d. All of the above
12. The two primary qualities that make accounting information useful for decision making are
a. comparability and consistency.
b. materiality and timeliness.
c. relevance and reliability.
d. reliability and comparability.

13. Which of the following inventory costing methods reports most closely the current cost of inventory on the statement of
financial position?
a. First in, first out
b. Specific identification
c. Last in, first out
d. Weighted average
14. The term "depreciable cost," or "depreciable base," as it is used in accounting, refers to
a. the cost of the asset less the related depreciation recorded to date.
b. the total amount to be charged (debited) to expense over an asset's useful life.
c. the estimated market value of the asset at the end of its useful life.
d. the acquisition cost of the asset.
 Consider the following data in answering the next seven (7) questions: (2 points each)

Froehlich Tours Property Plant and Equipment is shown below as at January 1, 2019:

15. How much PPE should be presented in the balance sheet, net of depreciation as of January 1, 2019?
a. P259,900 b. P249, 360 c. P187,000 d. P139,360
16. How old is the machine as at January 1, 2019.
a. 1 year b. 1.8 years c. close to 3 years d. none of the above
17. Assuming the Froehlich tours employ straight line method in depreciating its PPE, how much depreciation expense
should be recorded on December 31, 2019?
a. P16,790 b. P15,760 c. P21,450 d. P20,678
18. Assuming Bus No.2 is sold on June 30, 2019 at P13,500:
a. Record gain of P6,200
b. Record loss of P6,200
c. Record gain of P4,500
d. Record loss of P4,500
19. The Company decided to shift from straight line method to double declining method on depreciating its building for tax
purposes, how much is the net book value of the building on its 20th year?
a. P4,563.90 b. -0- c. cannot be computed d. P12,000
20. Assuming no cost and disposal of property plant and equipment after 10 years, how much cost of the PPE should be
presented on the balance sheet?
a. -0- b. P40,000 c. P160,000 d. P307,000
21. How much depreciation should be recorded for land on June 30, 2019, assuming the Company used revaluation method?
a. -0- b. 60,000 c. P20,000 d. none of the above

Use the following data in answering the next five (5) questions – 2points each

Beginning Balance 2,000 units P4/unit

01/15 Purchases 10,000 units P4.5/unit
01/20 Purchases 5,000 units P3/unit
01/31 Purchases 4,500 P3.5/unit
01/16 Sale 3,000 P10 –selling price
01/18 Sale 4,000 P10-selling price

22. How much is to be recorded as sale at the end of the month?

a. P7,000 b. P21,000 c. P34,000 d. P70,000
23. Using FIFO, how much is the cost of ending inventory
a. P53,250 b. 56,482.56 c. P70,000 d. P34,000
24. How much is the average unit price of ending inventory using weighted average method?
a. 3.90 b. 4 c. 4.5 d. 4.9
25. How much is the cost of ending inventory using weighted average method?
a. P53,250 b. 56,482.56 c. P70,000 d. P34,000

26. Under IFRS, which of the following is not allowed to be used as basis for valuing inventories?
a. FIFO b. LIFO c. Specific identification d. none of the choices

27. The body authorized by law to promulgate rules and regulations affecting the practice of Accountancy in the
Philippines.
a. The Accounting Standards Council
b. The Philippine Institute Of Certified Public Accountants
c. The Board Of Accountancy
 d. The Auditing Standards And Practices Council

28. Republic Act 9298 is otherwise known as

a. Revised Accountancy Law
b. Revised Accountancy Act
c. Philippine Accountancy act of 2004
d. Code of Professional Ethics for CPAs

29. Which of the following would not be reported as inventory?

a. Land acquired for resale by a real estate firm
b. Agricultural produce held by a farm
c. Partially completed goods held by a manufacturing company
d. Machinery acquired by a manufacturing company for use in the production process

30. Which of the following is not an intangible asset?

a. Patent
b. Trademark
c. Goodwill
d. Office supplies

31. The following are direct cost related to intangible assets except:
a. Employee training
b. Professional fees
c. Employee benefits arising from benefits
d. Cost of testing

32. Proceeds from loan shall be classified as:

a. Operating
b. Investing
c. Financing
d. Equity

33. Provides information about the cash receipts and cash payments of an entity during a period:
a. Cash flow
b. Balance sheet
c. Income statement
d. Notes to FS

34. The process of identifying, measuring, analyzing, and communicating financial information needed by
management to plan, evaluate, and control an organization’s operations is called
a. financial accounting.
b. managerial accounting.
c. tax accounting.
d. auditing.

35. The quality of information that gives assurance that it is reasonably free of error and bias and is a faithful
representation is
a. relevance.
b. reliability.
c. verifiability.
d. neutrality

36. Users of financial reports include all of the following except

a. creditors.
b. government agencies.
c. unions.
 d. All of these are users.

37. The financial statements most frequently provided include all of the following except the

a. balance sheet.
b. income statement.
c. statement of cash flows.
d. statement of retained earnings.

38. Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the
economy?
a. Monetary unit assumption.
b. Periodicity assumption.
c. Going-concern assumption.
d. Economic entity assumption.

39. Allowing firms to estimate rather than physically count inventory at interim (quarterly) periods is an example of
a trade-off between
a. verifiability and reliability.
b. reliability and comparability.
c. timeliness and verifiability.
d. neutrality and consistency.

40. In matters of doubt and great uncertainty, accounting issues should be resolved by choosing the alternative
that has the least favorable effect on net income, assets, and owners' equity. This guidance comes from the
a. materiality constraint.
b. industry practices constraint.
c. conservatism constraint.
d. full disclosure principle.

41. The following statements are true except:

a. Current ratio shows the ability of a business to meet its short-term obligations
b. A current ratio of more than 1 means that business may not meet its short-term obligations.
c. Current assets can be presented before non-current assets or vice versa
d. Current assets includes trading investments

42. The following cost are not qualified for recognition of PPE except:
a. Cost of training
b. Cost of opening new facility
c. Delivery and handling cost
d. Initial operating loss

Use the following data in answering the following questions: ( 2 points each)
43. What is the net cash provided by operating activities?
a. 1.9Mn
b. 2.9Mn
c. 2.350Mn
d. 400,000
44. What is the net cash used in financing activities?
a. 3Mn
b. 2Mn
c. 1.8Mn
d. 4.2Mn
45. What is the cash balance at year-end?
a. 3.4Mn
b. 1.6Mn
c. 1.4Mn
d. 2.4Mn

Bonus:
Enumerate two of the direct cost for PPE (T2-PRIDE)

I KNOW IT IS HARD, BUT IT IS THE HARDSHIP THAT MAKES US GREAT.

-Anonymous