Accounting Genius

Easy

1. A listing of all general ledger accounts in a systematic form is called _________.

Answer: Chart of Accounts

2. Which of the following is an essential characteristoc of an asset?

A. The claim to an asset's benefits are legally enforceable.

B. An asset is intangible.

C. An asset is obtained at cost.

D. An asset provides future benefits.

Answer: D

3. A cause and effect relationship is implicit in the

A. Revenue Recognition Principle

B. Asset recognition principle

C. Liability recognition principle

D. Expense recognition principle

Answer: D

4. On January 1, 2016, an entity purchased for P4 800 000 a machine with a 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, 2018 and the residual value did not change.
What is the depreciation expense for 2018?

A. 287 200

B. 384 000

C. 460 000

D. 359 000

Answer: D
5. The entry to record the receipt of payment within the discount period on a sale of P750 with terms of
2/10, n/30 will include a credit to

A. Sales Discount for P15

B. Cash for P735

C. Accounts Receivable for P750

D. Sales for P750.

Answer: C

Average

1. A Statement of Assets and Liabilities (SALN), which government officials are required to file for public
scrutiny in the name of transparency reporting is comparable to an entity's

A. Statement of Cash Flows

B. Statement of Changes in Equity

C. Statement of Financial Position

D. Statement of Comprehensive Income

Answer: D

2. Under the Revised Securities Act, Securities and Exchange Commission requires certain companies to
file

A. Monthly interim reports within 10 days after the end of each month

B. Monthly interim reports within 15 days after the end of each month

C. Quarterly interim reports within 30 days after the end of each quarter

D. Quarterly interim reports within 45 days after the end of each quarter

Answer: D

3. Which of the following is not true with regard to appropriations of retained earnings?

A. They will restrict the amount of possible cash dividends.

B. They may be required because of contractual obligations.

C. They may be made at the discretion of the board of directors.

D. They require setting aside a reserve of cash for the appropriations.

Answer: D

4. On January 1 of the current year a group of stockholders set up AB corporation. They contributed
cash of P4 250 000 and borrowed P950 000. During the year, revenues from sales totaled P1 400 000,
while total costs and expenses were P750 000. AB Corporation declared cash dividend of P300 000 on
December 20, payable to the stockholders on January 30 of the following year. There were no additional
activities affecting stockholders' equity. By December 31 of current year, liabilities decreased to P880
000. Total assets at the end of the current year is

A. 4 670 000. B. 5 480 000. C. 5 780 000. D. 6 430 000

Answer : B

5. 5. Melissa Company provided the following information for the current year:

Beginning inventory. 400 000

Freight in. 300 000

Purchase Returns. 900 000

Ending Inventory. 500 000

Distribution costs. 1 250 000

Sales Discount. 250 000

The cost of goods sold is six times the distribution costs.

What is the amount of gross purchases?

a. 6 500 000

b. 6 700 000

c. 8 000 000

d. 8 200 000

Answer: D

Difficult:

1. According to PAS 1, circumstances that would give rise to the separate disclosure of items of income
and expense include
A. Litigation settlements

B. write downs of inventories to net realizable value or of investment property to recoverable amount as
well as reversals of such write down

C. Disposals of items in property, plant and equipment

D. Disposal of investments

E. Gains on changes in fair value of investments measured at fair value

F. Discontinued operations

G. Other reversals of provision

Write the letter(s).

Answers: A, B, C, F, G

2. The accountancy profession has recently developed a process of encouraging reductions in green
house gas emissions. This scheme whereby participating entities are issued rights to a specific level of
emission is known as:

A. Emission scheme

B. Cap and trade scheme

C. Greenhouse Accounting

D. Carbon Accounting

Answer: B

3. It is the accounting standard setting body created Professional Regulation Commission upon
recommendation of the Board of Accountancy to assist them in carrying out its powers and functions
under RA No. 9298.

Answer: Financial Reporting Standards Council

4. Natasha Company showed cost of goods sold of P4 320 000 in its statement of comprehensive income
after the first year of operations. The total manufacturing costs comprised 50% materials used, 30%
direct labor incurred and 20% manufacturing overhead.

Goods in process at year-end totaled 10% of the total manufacturing cost. Finished goods at the year-
end amounted to 20% of the cost of goods manufactured.

What is the direct labor cost incurred?

Answer: 1 800 000

5. What is the title of PAS 1?

Answer: Presentation of Financial Statements

Clincher:

1. How many members, including the chairman, compose the Financial Reporting Standards Council?

A. 12

B. 13

C. 15

D. 18

Answer: C

2. What is the role of the IFRS Advisory Council?

A. It is an independent, not-for-profit foundation based in the United States, whose trustees appoint
members of the IASB, IFRIC and IFRS Advisory Council.

B. It is the standard setting body of the IFRS Foundation that replaced IASC

C. It is to advise the IASB on what particular topics or accounting issues that the IASB should be looking
at.

D. It is to come up with guidelines known as "Interpretations" in case existing financial reporting

standards are being interpreted in unsatisfactory or conflicting ways.

Answer: C

3. What function do accounting ledgers serve in the accounting process?

A. Recording

B. Classifying

C. Summarizing

D. Reporting

Answer: B

4. What special journal is used to record a cash purchase transaction?

A. Sales Journal

B. Purchase Journal

C. Cash Receipts Journal

D. Cash Disbursements Journal

Answer: D

5. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the
accounting process?

A. Identification

B. Communication

C. Recording

D. Analysis

Answer: C

6. Company A has a simple capital structure of P100 000 shares of P10 par common shares, no preferred
shares, and retained earnings of P750 000. The company made no sales or purchases of its common
shares. The earnings per share was P. 75. What was the amount of net income?

A. 750 000

B. 75 000

C. 100 000

D. 50 000

Answer: B

7. Andrew, Avon and Allen form a partnership on May 1, 2013. They agree that Andrew will contribute
office equipment with a fair value of P40 000. Avon will contribute delivery equipment with a fair value
of P80 000 and Allen will contribute cash.

If Allen wants a one third interest in the capital and profits he should contribute cash of

A. 40 000

B. 60 000

C. 120 000
D. 180 000

Answer: B

8. Which of the following accounts would not be classified as contributed capital account?

A. Contributed Capital, Common Shares

B. Treasury Shares, Common

C. Stock Dividends Distributable

D. Contributed Capital, Preferred Shares

Answer: B

9. Accountants employed in entities in various capacity as accounting staff, chief accountant or controller
are said to be engaged in

A. Public Accounting

B. Private Accounting

C. Government Accounting

D. Financial Accounting

Answer: B

10. An understatement in reported net income may result from failure to record

A. Amortization of discounts on bonds payable.

B. An accrued liability

C. A prepaid expense

D. A deferred revenue

Answer: C

11. The freight in account

A. Increases the cost of merchandise purchased.

B. Is contra to the Purchase account

C. Is a permanent account

D. Has a normal credit balance

Answer: A

12. Which of the following is a monetary asset?

A. Cash in Bank

B. Inventory

C. Equipment

D. Available-for-sale Securities

Answer: A

13. Which of the following is not an advantage to the corporate form of ownership?

A. Separate legal entity

B. Limited liability to the owners.

C. Mutual Agency exists.

D. Continuity of the life of the entity.

Answer: C

14. Which of the following is an asset but not an economic resource?

A. Investment property

B. Machinery

C. Deferred Tax Asset

D. Inventories

Answer: C

15. It is the approach under PFRS 8 that looks into an entity's organizational structure and internal
reports that are regularly reviewed by the chief operating decision maker in identifying operating
segments.

A. Management approach

B. Business Segment approach

C. Matrix Presentation Approach

D. Geographical Segment Approach

Answer: A