SVFC BS Accountancy - 3rd Set Online Resources SY20-19 2nd Semester PDF

SAINT VINCENT DE FERRER COLLEGE December 2019
BS ACCOUNTANCY (2nd semester SY 2020-2020) Part 3

ONLINE RESOURCES by Prof. Hector Santos Jr., CPA, MBA
AUDITING PROBLEMS
I. Topic(s):
AUDIT OF LIABILITIES & STOCKHOLDERS EQUITY
II. Learning Objective(s):

To learn how to obtain sufficient competent evidence about each significant financial assertion
that pertains to liabilities, stockholder’s equity and related transactions and balances.
III. Rundown
The audit of liabilities
Liabilities may be classified as follows:
Current liabilities (falling due within one year)
Non current liabilities (falling due after more than one year)
Trade payables
The main focus when testing accounts payable is to check for understatement and thus by default
for completeness.
Possible indicators of additional liabilities.
Does the creditors list at year and includes:
major suppliers the client dealt with during the year?
significant suppliers from creditors list of last year?
Audit programme-CAVEBOP
Completeness
Check balances extracted from purchase ledger balances to list of creditors: check a sample of
balances from purchase ledger to schedule/list of creditors.
Last year brought forward is correct: check whether last year’s closing balances have been
properly brought forward.
Last year significant suppliers that are not in current year list: investigate any supplier names
that were shown on last year’s payables listing but do not have a balance showing in this year’s list of
balances.
Cut off before and after year end: select a sample of goods received note just before and after the
year end, trace to invoices and purchases ledger.
Post balance sheet payments and invoices accounted: review after date invoices and payments
and ensure they have been provided for at the year end as appropriate.
Accuracy
Check balances extracted from purchase ledger balances to list of creditors: check a sample of
balances from the schedule to the purchase ledger.
Tally creditors list to creditors control a/c: check the total of the list to the purchases control a/c.
Vouch a sample of recorded creditors transactions to supporting documents: to agree the amount.
Perform cut off tests both before and after the year end: to ensure posting made in the correct
period.
Reconcile creditors with monthly suppliers statements.
Perform analytical procedures
Valuation
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Copyright of Prof. Hector U. Santos Jr., CPA, MBA
This online resource is intended solely to whom it is authorized to receive it. If you are not the intended recipient you are hereby notified that
any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be
unlawful.
Confirm with creditors through circularization: where balances are material, no suppliers
statement and internal control systems weakness.
Ensure adequacy of provision for accrual: invoices not yet received.
Letter of representation from management confirming all trade payables: have been included in
financial statement.
Aging list of creditors.
Check if there are set off: between receivable ledger and payable ledger.
Perform analytical procedures: on payables, comparing age analysis with previous periods and
payables days.
Existence
Carry out creditors circularization: where balances are material, no suppliers statement and
internal control weakness.
Vouch a sample of recorded creditors transaction to supporting documents. ( invoices, goods
received etc)
Check whether last year closing balance has been brought forward: e.g this year’s opening
balance exist in balance sheet.
Review payments to suppliers just after year end.
Beneficial ownership
Confirm with creditors- circularization.
Vouch to supporting documentation.
Occurrence
Select a sample of transactions from purchase ledger, trace to invoices, GRN, PO and ensure the
goods/services have been received
Presentation and disclosure

Compliance with accounting standards and companies act.
Creditors are properly classified as to type and expected date of realization.
Debit balances disclosed under current assets.
Related party transactions properly disclosed.
Note: additional evidence can be obtained from supplier statement reconciliation.

Accrued charges
Accruals occur where the expenditure has been incurred in the current period but where no invoice
has yet been paid.
Evidence will include:
Considering the client’s own system (if any) for capturing accruals.
Obtaining a schedule of accruals: ensuring that it is cast correctly, and comparing it with prior
year accruals and performing other analytical procedures.
Test checking a sample of accruals for correct calculation: referring to supporting invoices in the
next period.
Agree accruals to payments after year end.
Short term borrowings

No set off allowed for bank overdrafts: bank overdrafts are shown as liabilities, even though there
may be other bank balances shown as an asset.
Verifications of bank overdrafts is identical to the verification of cash balances
Litigation and claims

Audit evidence- additional considerations for specific items requires that auditors should carry out
procedures to become aware of material litigation or claims involving the entity.
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Procedures
Enquire with management.
Examine board minutes.
Examine correspondence with lawyers.
Obtain list of matters referred to lawyers and consider any liabilities.
Review the client’s system of recording claims.
Audit of Stockholders’ Equity

Please read the following links
https://cpahalltalk.com/auditing-equity/
https://philippinecpareview.blogspot.com/2016/07/audit-of-equity-internal-control.html
IV. Recommended Reference(s):

1. Auditing problem books
2. Internet
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TAXATION
I. Topic(s):
Business Taxation, Estate and Donor’s Tax, Other Taxes
II. Learning Objective(s)

(after studying the topic, you should be able to):
To learn about income taxation
III. Rundown
Please read
http://docshare01.docshare.tips/files/18218/182183198.pdf
Please read and download

https://philippinecpareview.blogspot.com/p/business-law-and-taxation.html

Local taxation books authored by Reyes, Tamayo, Litonjua etc.
BIR Website
Internet
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PRACTICAL ACCOUNTING 1
I. Topic(s):
Liabilities, Stockholder’s Equity, Other Topics
II. Learning Objectives:

To learn about the practical accounting of Liabilities, Stockholder’s Equity, Other Topics
III. Rundown
Watch below link
Financial Accounting for liabilities

https://www.youtube.com/watch?v=dtfDxPn3DME
https://www.youtube.com/watch?v=_-ZMtAGxuq0
https://www.youtube.com/watch?v=rtajrTqgZ8A
https://www.youtube.com/watch?v=cybEUWU_N40
https://www.youtube.com/channel/UC-
0aTImt5gVOgND70k8MCew/videos?shelf_id=1&view=0&sort=dd (watch all related to
liabilities)
Financial Accounting for Stockholder’s Equity

https://www.youtube.com/watch?v=UWQ6jpyzaGc
https://www.youtube.com/watch?v=1yc3DW_1HgY&list=PLauepKFT6DK_ZDcek4yH2jw15a
PvHzqlr&index=21
https://www.youtube.com/watch?v=j6qmTHU0IXI&list=PLauepKFT6DK_ZDcek4yH2jw15aPv
Hzqlr&index=22
https://www.youtube.com/watch?v=V9xxIjk1w8Y&list=PLauepKFT6DK_ZDcek4yH2jw15aPv
Hzqlr&index=23
stockholder’s equity)
Financial Accounting for statement of cash flows

https://www.youtube.com/watch?v=1C80HTdhJYQ&list=PLauepKFT6DK_ZDcek4yH2jw15aP
vHzqlr&index=24

Latest Edition - Financial Accounting by Conrado Valix
Philippine Accounting Standards/Philippine Financial Reporting Standards
Internet
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PRACTICAL ACCOUNTING 2
I. Topic(s):
 Business Combination
 Consolidation
 Foreign Currency Transaction
 Derivatives and Hedging
 Accounting for Government and Not-for-Profit Organization
II. Learning Objective(s):

To learn about the following:
 Consolidation
III. Rundown
https://www.youtube.com/watch?v=nIY3H_LEGek
https://www.youtube.com/watch?v=Fc3YXhRm9jw
https://www.youtube.com/watch?v=eQ_Q0AzaPzc
business combination)
 Consolidation
https://www.youtube.com/watch?v=Hyejt6RgTPs
consolidation)

https://www.youtube.com/watch?v=q3Ui3ShOmrw
foreign currency transaction)

https://www.youtube.com/watch?v=dn7HssQAmog
https://www.youtube.com/watch?v=kZky1jIiCN0
https://www.youtube.com/watch?v=92kmHlctjdk
https://www.youtube.com/watch?v=ffhm182jOdk

http://www.scribd.com/doc/76720732/The-New-Government-Accounting-System-Manual

Local and foreign author books.
Internet
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ONLINE ASSESSMENTS
1.Blitz Corporation, a manufacturer of cleaning products, is preparing annual financial
statements at December 31, 2011. Because of a recently proven health hazard in one of
its cleaning products, the U.K. government has clearly indicated its intentional of having
Blitz recall all cans of this paint sold in the last three months. The management of Ortiz
estimates that this recall would cost £5,800,000. What accounting recognition, if any,
should be accorded this situation?
a. No recognition.
b. Note disclosure only.
c. Expense of £5,800,000 and liability of £5,800,000.
d. Expense of £5,800,000, and retained earnings restriction of ₤5,800,000.
2.Rendina Inc. offers a cash rebate of Rs50 on each Rs200 package of biscuits sold during the
last three months of 2011. Historically, 30% of the company’s customers mail in the
rebate form. During the last three months of 2011, 7,700,000 packages of biscuits are
sold, and 1,470,000 Rs50 rebates are mailed to customers. What is the rebate expense
and liability, respectively, shown on the company’s 2011 financial statements?
a. Rs115,500,000; Rs42,000,000.
b. Rs115,500,000; Rs115,500,000.
c. Rs1,155,000; Rs735,000.
d. Rs$11,550,000; Rs4,550,000.
3. On January 1, 2010, Beyer Co. leased a building to Heins Corp. for a ten-year term at an
annual rental of $80,000. At inception of the lease, Beyer received $320,000 covering the
first two years' rent of $160,000 and a security deposit of $160,000. This deposit will not
be returned to Heins upon expiration of the lease but will be applied to payment of rent
for the last two years of the lease. What portion of the $320,000 should be shown as a
current and non-current liability, respectively, in Beyer's December 31, 2010 statement of
financial position?
Current Liability Non-current Liability
a. $0 $320,000
b. $80,000 $160,000
c. $160,000 $160,000
d. $160,000 $80,000
4.Stinson Corporation owned 30,000 shares of Matile Corporation. These shares were purchased
in 2009 for $270,000. On November 15, 2011, Stinson declared a property dividend of
one share of Matile for every ten shares of Stinson held by a shareholder. On that date,
when the market price of Matile was $14 per share, there were 270,000 shares of Stinson
outstanding. What gain and net reduction in retained earnings would result from this
property dividend?
Gain Net Reduction in
Retained Earnings
a. $0 $243,000
b. $0 $378,000
c. $135,000 $108,000
d. $135,000 $243,000
5. The following information pertains to Parsons Co.:

Preference shares, cumulative:
Par per share $100
Dividend rate 8%
Shares outstanding 5,000
Dividends in arrears none
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Ordinary shares:
Par per share $10
Shares issued 60,000
Dividends paid per share $2.70
Market price per share $48.00
Share premium—ordinary $200,000
Unappropriated retained earnings (after closing) $135,000
Retained earnings appropriated for contingencies $150,000
Ordinary treasury shares:
Number of shares 5,000
Total cost $125,000
Net income $370,000
Instructions
Compute (assume no changes in balances during the past year):
(a) Total amount of equity in the statement of financial position
6. On December 31, 2009, Add-On Company acquired 100 percent of Venus Corporation's common
stock for $300,000. Balance sheet information Venus just prior to the acquisition is given here:
At the date of the business combination, Venus's net assets and liabilities approximated fair value
except for inventory, which had a fair value of $60,000, land which had a fair value of $125,000, and
buildings and equipment (net), which had a fair value of $250,000.
Based on the information provided, what amount of inventory will be included in the consolidated
balance sheet immediately following the acquisition?
A. $60,000
B. $75,000
C. $15,000
D. $45,000
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7. Upon arrival in Chile, Karen exchanged $1,000 of U.S. currency into 4,80,000 Chilean Pesos. While
returning after her two month visit, she exchanged her remaining 50,000 Pesos into $100 of U.S.
currency. What amount of gain or a loss did Karen experience on the 50,000 pesos she held during her
visit and converted to U.S. dollars at the departure date?
A. Loss of $4.
B. Gain of $4.
C. Loss of $6.
D. No gain or loss.
8.
Picasso Co. issued 10,000 shares of its $1 par common stock, valued at $400,000, to acquire
shares of Bull Company in an all-stock transaction. Picasso paid the investment bankers
$35,000. Picasso will treat the investment banker fee as:
an expense for the current year.

a prior period adjustment to Retained Earnings.
additional goodwill on the consolidated balance sheet.
a reduction in paid-in capital.
9. On 12/31 investment account in HO Book = P347,000. Additional info:
a. 39,000 branch remittance to the HO initiated on 12/27 was recorded twice by the HO.
b. A HO inventory shipment to the branch of 45,000 on 12/29 was recorded by the branch on 12/31 at
54,000. The HO transfers merchandise to the branch at cost.
c. The Ho incurred 12,000 of advertising expense and allocateed 1/8 of this amount to the branch on
12/31. The branch inadvertenly recorded half of the advertising expense incurred by the HO during the
year.
d. A HO customer remitted 7000 to branch. The branch recorded this cash collection on 12/23.
Meanwhile back at the HO, no entry has been made yet.
e. Inventory costing 11500 was returned by the home office on 12/19. The billing was at cost. But the
HO recorded the transaction at 1150.
What is the Unadjusted Balance of the HO 12/31?
10. The allowable transitional input tax is:

a. The lower between 2% of the value of beginning inventory or actual VAT paid on such
inventory.
b. The higher between 2%of the value of beginning inventory or actual VAT paid on such
inventory.
c. The actual VAT paid on the beginning inventory.
d. 2% of the value of beginning inventory.
Should be submitted on or before April 30, 2020 exclusively to

svfconlinebsa@yahoo.com
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SAINT VINCENT DE FERRER COLLEGE December 2019

BS ACCOUNTANCY (2nd semester SY 2020-2020) Part 3

II. Learning Objective(s):

Presentation and disclosure

Related party transactions properly disclosed.

Note: additional evidence can be obtained from supplier statement reconciliation.

Short term borrowings

Verifications of bank overdrafts is identical to the verification of cash balances

Litigation and claims

Audit of Stockholders’ Equity

IV. Recommended Reference(s):

II. Learning Objective(s)

Please read and download

IV. Recommended Reference(s):

II. Learning Objectives:

Financial Accounting for liabilities

Financial Accounting for Stockholder’s Equity

Financial Accounting for statement of cash flows

IV. Recommended Reference(s):

II. Learning Objective(s):

 Foreign Currency Transaction

 Derivatives and Hedging

 Accounting for Government and Not-for-Profit Organization

IV. Recommended Reference(s):

5. The following information pertains to Parsons Co.:

an expense for the current year.

9. On 12/31 investment account in HO Book = P347,000. Additional info:

What is the Unadjusted Balance of the HO 12/31?

10. The allowable transitional input tax is:

Should be submitted on or before April 30, 2020 exclusively to

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