Accountancy Department

College of Business and Accountancy

Notre Dame University, Cotabato City 9600

2021 Institutional Mock CPA Board Examination

FUNDAMENTALS OF ACCOUNTING (FOA)
GENERAL INSTRUCTIONS: The following exam is good for three (3) hours only. Select the best answer from the choices given.

PART 1 – THEORY

1. Which of the following statement is not true regarding income statement?

A. The heading indicates the length of time the report covers.
B. It shows the changes in the entity’s cash balance for the period.
C. If expenses exceed income than a loss has been incurred for the period.
D. An alternative name is the statement of financial performance.

2. An entity shall classify a liability as current when under all of the following conditions, except.
A. The entity expects to settle the liability within the entity's normal operating cycle.
B. The entity has an unconditional right to defer settlement of the liability for at least twelve months after the
reporting period.
C. The entity holds the liability primarily for the purpose of trading.
D. The liability is due to be settled within twelve months after the reporting period.

3. In the Philippines, the common practice is to present in the statement of financial position
A. Current assets before noncurrent assets, current liabilities before noncurrent liabilities and equity after
liabilities.
B. Current assets before noncurrent assets, noncurrent liabilities before current liabilities and equity after
liabilities.
C. Noncurrent assets before Current assets, current liabilities before noncurrent liabilities and equity after
liabilities.
D. Noncurrent assets before current assets, noncurrent liabilities before current liabilities and equity after
liabilities.

4. When a work sheet is complete, the adjustment columns should have

A. total credits greater than total debits if a net income was earned
B. total debits grater than total credits if a net loss was incurred
C. total debits greater than total credits if a net income was earned
D. total debits equal total credits

5. Statement 1: Liquidity refers to the ability of an enterprise to pay its debts as they mature.
Statement 2: The account form and the report form of the balance sheet are both acceptable under GAAP.
A. Only statement 2 is correct
B. Only statement 1 is correct
C. Both statements are correct
D. Both statements are not correct

6. Preparing tax returns and engaging in tax planning is performed by

A. public accountants only. C. private accountants only.
B. both public and private accountants. D. IRS accountants only.

7. Communication of economic events is part of the accounting process that involves

A. identifying economic events.
B. quantifying transactions into pesos and cents.
C. preparing accounting reports.
D. recording and classifying information.
E. Interpretation of the financial statements

8. Which is not required to be represented in the FRSC?

A. Bangko Sentral ng Pilipinas C. Bureau of Internal Revenue
B. Commission on Audit D. Department of Budget and Management

9. Financial accounting can be broadly defined as the area of accounting that prepares
A. General purpose financial statements to be used by parties internal to the entity only.
B. Financial statements to be used by investors only.
C. General purpose financial statements to be used by parties both internal and external to the entity.
D. Financial statements to be used primarily by management.

10. Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period when
purchased is an example of the application of the
A. consistency characteristic. C. expense recognition principle.
B. materiality characteristic. D. historical cost principle

11. A company has a factory building that originally cost the company P250,000. The current fair value of the factory
building is P3 million. The president would like to report the difference as a gain. The write-up would represent a
violation of which accounting assumption or principle?
A. Revenue recognition. C. Going concern.
B. Historical cost. D. Monetary unit.
 College of Business and Accountancy 2nd Semester, SY 2020-2021

12. Normally, revenue is recognized__.

A. When the customer's order is received.
B. When the customer's order is accompanied by a check.
C. Only if the transaction will create an account receivable.
D. When the title to the goods changes.

13. One element of the objective of financial reporting is to provide information

A. That is useful in assessing cash flow prospects.
B. About the investors in the entity.
C. About the liquidation value of the resources of the entity.
D. That will attract new investors.

14. What provides “the why”-the goal and purpose of accounting?

A. Measurement and recognition concepts such as assumptions, principles and constraints
B. Qualitative characteristics of accounting information
C. Elements of financial statements
D. Objective of financial reporting

15. The chart of accounts is designed to

A. alphabetized the accounts to make reading easier for its financial statement users.
B. analyze the accounts and organize them in order of peso amount to simplify the accounting information for
users.
C. summarize the transactions and determine their ending balances.
D. meet the information needs of a company and other financial statement users.

16. Which of the following is the best description of accounting’s role in business?
A. Accounting provides stockholders with information regarding the market value of the company’s stocks.
B. Accounting provides information to managers to operate the business and to other stakeholders to make
decisions regarding the economic condition of the company.
C. Accounting provides creditors and banks with information regarding the credit risk rating of the company.
D. Accounting is not responsible for providing any form of information to stakeholders. That is the role of the
Information Systems Department.

17. Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the economy?
A. Monetary unit assumption. C. Periodicity assumption.
B. Going-concern assumption. D. Economic entity assumption.

18. The economic entity assumption

A. is inapplicable to unincorporated businesses.
B. recognizes the legal aspects of business organizations.
C. requires periodic income measurement.
D. is applicable to all forms of business organizations.

19. According to Revised Conceptual Framework, neutrality is an ingredient of the primary quality of Relevance and
Faithful Representation, respectively:
A. Yes, Yes
B. No, Yes
C. Yes, No
D. No, No

20. They are interested in information about the stability and profitability of the enterprise.
A. Investors B. suppliers C. Lenders D. employees

21. The recognition of bad debts expense is an example of

A. Direct matching C. Systematic and rational allocation
B. Immediate recognition D. All of these

22. Which of the following in the most precise sense means the process of converting noncash resources and rights into
cash or claims to cash?
A. Allocation C. Recognition
B. Collection D. Realization

23. Which of the following is an implication of the going concern assumption?

A. The historical cost principle is credible.
B. Depreciation and amortization policies are justifiable and appropriate.
C. The current-noncurrent classification of assets and liabilities is justifiable and significant.
D. All of these.

24. The accrual basis means that

A. The financial statements are normally prepared on the assumption that an enterprise will continue in operation
for the foreseeable future.
B. The financial statements should be stated in terms of a common financial denominator.
C. The effects of transactions and other events are recognized when they occur and not as cash or its equivalent
is received or paid and they are recorded in the accounting records and reported in the financial statements of
the periods to which they relate.
D. Where parent and subsidiary relationship exists, consolidated statements for the affiliates are prepared because
the parent and the subsidiary are a “single economic entity”.

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25. Which of the following is not true of accounting principles?

A. Following GAAP allows users to compare one company to another.
B. A new accounting principle can be adopted with stockholder’s approval.
C. The Financial Accounting Standards Board (FASB) has primary responsibility for developing accounting
principles.
D. Accounting principles develop from research, accepted accounting practices, and pronouncements of
authoritative bodies.
26. Which of the following is true regarding normal balances of accounts?
A. All accounts have a normal debit balance.
B. The normal balance of all accounts will have either a positive or negative balance.
C. Accounts that have a normal debit balance will only have debit entries, never credit entries.
D. The normal balance is the side of the account that increases the account.

27. The double-entry accounting system is responsible for each of the following, except:
A. Maintains the accounting equation in balance.
B. The sum of all debits is always equal to the sum of all credits in each journal entry.
C. Each business transaction will have only two entries.
D. All these are correct.

28. The post reference columns are used to trace transactions from the journal to the accounts. What will be posted on
the post reference column of (a) the journal and (b) on the account?
A. (a) the amount of the debit or credit (b) the journal page number
B. (a) the journal page number (b) the date of the transaction
C. (a) the journal page number, (b) the account number
D. (a) the account number, (b) the journal page number

29. If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of
the following describes the effect of the credit portion of the entry?
A. decreases the balance of an stockholders’ equity account
B. increases the balance of an liability account
C. increases the balance of an asset account
D. decreases the balance of an expense account

30. At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was
omitted. Which of the following statements is true?
A. Total assets at the end of the year will be understated.
B. Stockholders’ equity at the end of the year will be understated.
C. Net income for the year will be overstated.
D. Insurance Expense will be overstated.

31. On the statement of cash flows prepared by the indirect method, a P50,000 gain on the sale of investments would be
A. deducted from net income in converting the net income reported on the income statement to cash flows from
operating activities
B. added to net income in converting the net income reported on the income statement to cash flows from
operating activities
C. added to dividends declared in converting the dividends declared to the cash flows from financing activities
related to dividends
D. deducted from dividends declared in converting the dividends declared to the cash flows from financing
activities related to dividends

32. Closing entries are dated in the journal as of

A. the date they are actually journalized, although they are generally prepared after the end of the accounting
period
B. the last day of the accounting period, although they are actually journalized after the end of the accounting
period
C. the first day of the accounting period, although they are actually journalized after the end of the accounting
period
D. the first day of the subsequent accounting period

33. The proper sequence for the steps in the accounting cycle is a follows
A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial
statements, journalize closing entries, analyze adjustment data and prepare adjusting entries
B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements,
journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the
ledger
C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment
data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger
D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record
transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare
adjusting entries

34. Freight-out is part of the computation of?

A. Selling expense
B. Administrative expense
C. Net sales
D. Cost of sales

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

35. This form of presentation classifies expenses as part of cost of goods sold, distribution costs, administrative
expenses, and other expenses:
A. Natural form C. Report form
B. Functional form D. Account form

36. Statement 1: An entity classifying expenses by function is exempted to disclose additional information on the
function of expenses.
Statement 2: Under natural form, expenses are aggregated according to their nature and not allocated among the
various functions within the entity.
A. Statement 1 is true and statement 2 is false.
B. Statement 1 is false and statement 2 is true.
C. Both statements are true.
D. Both statements are false.

37. Under a perpetual inventory system, which accounts would be closed to income summary as credits?
A. sales returns and allowances, sales revenue and inventory
B. sales discounts, sales returns and allowances and cost of goods sold
C. sales revenue and cost of goods sold
D. sales returns and allowances and sales revenue

38. The buyer is responsible for the shipping costs when the shipping terms are:
A. FOB destination
B. COD destination
C. FOB shipping point
D. COD shipping point

39. Which item would be included in the computation of cost of goods sold?
A. Amounts charged by raw materials from suppliers.
B. Amount paid for the delivery of merchandise to customers.
C. Salaries of Board of Directors
D. Rent on office buildings

40. Which of the following employees of a commercial printer/publisher would be classified as direct labor?
A. Book binder.
B. Plant security guard.
C. Sales representative.
D. Plant supervisor.

41. First step in liquidation process is to:

A. Absorb debit balances in capital accounts of the partners
B. Off set loans in partners' capital balances
C. Pay and satisfy liabilities to creditors
D. Sell all non-cash assets and allocate the resulting gain or loss to the pratners

42. Which of the following observations is true of an S corporation?

A. It elects to be taxed in the same manner as a corporation.
B. It does not have the burden of double taxation of corporate income.
C. Its shareholders have personal liability for the corporation's obligations.
D. Its primary income source should be passive investments.

43. When the old partners receive a bonus upon admission of a new partner into a partnership, the bonus is allocated to:
I. all the partners in their profit and loss sharing ratio.
II. the existing partners in their profit and loss sharing ratio.
A. I only
B. II only
C. Either I or II
D. Neither I nor II

44. Partnership capital and drawing accounts are similar to the corporate
A. Paid-in capital, retained earnings, and dividend accounts.
B. Retained earnings account.
C. Paid-in capital and retained earnings accounts.
D. Preferred and common stock accounts

45. Prior to partnership liquidation, a schedule of possible losses is frequently prepared to determine the amount of cash
that may be safely distributed to the partners. The schedule of possible losses
A. Consists of each partner’s capital account plus loan balance, divided by that partner’s profit-and-loss sharing
ratio.
B. Shows the successive losses necessary to eliminate the capital accounts of partners (assuming no contribution
of personal assets by partners).
C. Indicates the distribution of successive amounts of available cash to each partner.
D. Assumes contribution of personal assets by partners unless there is a substantial presumption of personal
insolvency by the partners.

46. The final cash distribution to the partners in a partnership in liquidation should be made in accordance with
A. Balances of the partners’ capital accounts.
B. Partners’ profit and loss sharing ratio.
C. Ratio of capital contributions made by the partners.
D. Ratio of capital contributions less withdrawal made by the partners.

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

47. In a limited partnership, a general partner

A. is excluded from management.
B. is not entitled to a bonus at the end of the year.
C. has limited liability for partnership debit.
D. has unlimited liability for partnership debit.

48. Which of the following procedures is acceptable when accounting for a deficit balance in a partner’s capital account
during partnership liquidation?
A. A partner with a negative capital balance must contribute personal assets to the partnership that are sufficient
to bring the capital account to zero.
B. If a partner with a negative capital balance is personally insolvent, the negative capital balance may be absorbed
by those partners having a positive capital balance according to the residual profit and loss sharing ratios that
apply to all the partners.
C. If a partner with a negative capital balance is personally insolvent, the negative capital balance may be
absorbed by those partners having a positive capital balance according to the residual profit and loss sharing
ratios that apply to those partners having positive balances.
D. All the above procedures are acceptable.

49. A partnership dissolution differs from a liquidation in that

A. payments are made to creditors before partners receive value.
B. periodic payments to partners are made when cash becomes available.
C. a partner withdraws from the business and the enterprise continues to function.
D. full payment is made to all outside creditors before remaining cash is distributed to partners in a final lump sum
payment.

50. In partnership liquidation, how are partner salary allocations treated?

A. Salary allocations take precedence over creditor payments.
B. Salary allocations take precedence over amounts due to partners with respect to their capital interests, but not
profits.
C. Salary allocations take precedence over amounts due to partners with respect to their capital profits, but not
capital interests.
D. Salary allocations are disregarded.

51. Treasury shares should be reported as

A. Other Asset C. Reduction of shareholders' equity
B. Addition to Shareholders’ Equity D. Investment

52. Which statement about the statement of financial position is not true?
A. Biological assets should be reported in the statement of financial position.
B. A revaluation surplus on a noncurrent asset in the current year should be recognized in the income statement.
C. The number of shares authorized for issue should be reported in the statement of financial position or the
statement of changes in equity or in the notes.
D. Provisions should be recognized in the statement of financial position.

53. The following are included as a component of comprehensive income, except

A. Revenues C. Distribution to owners
B. Revaluation Surplus D. Gain

54. Which of the following shareholder rights is most commonly enhanced in an issue of preference shares?
A. The right to vote for the board of directors
B. The right to maintain proportional interest in the entity
C. The right to receive a full cash dividend before dividends are paid to ordinary shares
D. The right to vote on major corporate issues
55. Which of the following is not a characteristic of a corporation?
A. Corporations are organized as a separate legal taxable entity
B. Ownership is divided into shares of stock.
C. Corporations experience an ease in obtaining large amounts of resources by issuing stock.
D. A corporation’s resources are limited to their individual owners’ resources.

56. In computing basic earnings per share, if the preference shares are cumulative, the amount that should be deducted
as an adjustment to the numerator is the
A. Preference dividends in arrears
B. Preference dividends paid during the year
C. Annual preference dividend
D. Annual ordinary dividend

57. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one is to
close ____, and the last one is to close ____.
A. Revenues, expenses, income summary, dividends account
B. Expenses, assets, income summary, capital stock account
C. Capital stock account, dividends account, income summary, assets
D. Dividends account, income summary, expenses, revenues

58. The features most frequently associated with preference shares include all the following, except
A. Callable at the option of the shareholder
B. Convertible into ordinary shares
C. Nonvoting
D. Preference as to assets in the event of liquidation

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

59. When preparing the Statement of Retained Earnings the beginning balance should be followed by ____ to arrive and
the ending balance of retained earnings.
A. investments plus net income (loss)
B. investments less dividends
C. net income (loss) less dividends
D. investments plus net income (loss) less dividends

60. Which of the following is not a true statement about the accounting equation and its elements?
A. The accounting equation is Assets = Liabilities - Stockholders’ Equity.
B. Stockholders’ equity are the rights of the stockholders.
C. Liabilities represent debts of a business.
D. Assets are the resources a business possesses.

PART 2 - PROBLEMS
61) The balance in the office supplies account on June 1 was P5,200, supplies purchased during June were P2,500, and the
supplies on hand at June 30 were P2,000. The amount to be used for the appropriate adjusting entry is___.
A. P4,500
B. P2,500
C. P9,700
D. P5,700

62) The balance in the prepaid insurance account before adjustment at the end of the year is P10,000. If the additional data
for the adjusting entry is (1) "the amount of insurance expired during the year is P8,500," as compared to additional data
stating (2) "the amount of unexpired insurance applicable to a future period is P1,500," for the adjusting entry:
A. the debit and credit amount for (1) would be the same as (2) but the accounts would be different
B. the accounts for (1) would be the same as the accounts for (2) but the amounts would be different
C. the accounts and amounts would be the same for both (1) and (2)
D. there is not enough information given to determine the correct accounts and amounts

63) A business pays weekly salaries of P20,000 on Friday for a five-day week ending on that day. The adjusting entry
necessary at the end of the fiscal period ending on Thursday is
A. debit Salaries Payable, P16,000; credit Cash, P16,000
B. debit Salary Expense, P16,000; credit Dividends, P16,000
C. debit Salary Expense, P16,000; credit Salaries Payable, P16,000
D. debit Drawing, P16,000; credit Cash, P16,000

64) The net income reported on the income statement for the current year was P275,000. Depreciation recorded on fixed
assets and amortization of patents for the year were P40,000 and P9,000, respectively. Balances of current asset and
current liability accounts at the end and at the beginning of the year are as follows:

End Beginning
Cash P 50,000 P 60,000
Accounts receivable 112,000 108,000
Inventories 105,000 93,000
Prepaid expenses 4,500 6,500
Accounts payable (merchandise creditors) 75,000 89,000

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the
indirect method?
A. P198,000
B. P324,000
C. P352,000
D. P296,000

65) The current period statement of cash flows includes the flowing:

Cash balance at the beginning of the period P410,000

Cash provided by operating activities 185,000
Cash provided by investing activities 43,000
Cash used in financing activities 97,000
The cash balance at the end of the period is
A. P45,000
B. P735,000
C. P455,000
D. P541,000

66) Sales for the year were P600,000. Accounts receivable were P100,000 and P80,000 at the beginning and end of the year.
Cash received from customers to be reported on the cash flow statement using the direct method is
A. P700,000
B. P600,000
C. P600,000
D. Some other answer

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

67) The following is the adjusted trial balance for Steely Company.

Mr. Sunshine Enterprise

Adjusted Trial Balance
For the Year ended December 31, 20x8

Cash 6,130
Accounts Receivable 2,300
Prepaid Expenses 750
Equipment 13,400
Accumulated Depreciation 1,200
Accounts Payable 1,700
Notes Payable 5,000
Sunshine, Capital 12,000
Sunshine, Withdrawal 870
Fees Earned 6,600
Wages Expense 1,450
Rent Expense 900
Utilities Expense 475
Depreciation Expense 150
Miscellaneous Expense 75
Totals 26,500 26,500

Determine the current assets.

a. P22,580
b. P9,180
c. P21,380
d. P26,500

68) The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:
Accumulated Depreciation P 2,000
Fees Earned 15,000
Depreciation Expense 1,000
Insurance Expense 500
Prepaid Insurance 4,500
Supplies 1,200
Supplies Expenses 3,500
Net income for the period is
A. P2,300
B. P10,000
C. P4,300
D. P5,000

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

69) Based on the following trial balance, the entry to close income summary would be:
Man Entity
Worksheet
For the Year Ended December 31, 20x8

Adjusted Trial Income Balance Sheet

Balance Statement
Account Title Debit Credit Debit Credit Debit Credit
Cash 16,000 16,000
Accounts Receivable 6,000 6,000
Supplies 2,000 2,000
Equipment 19,000 19,000
Accumulated Dep.- 6,000 6,000
Equip
Accounts Payable 10,000 10,000
Wages Payable 2,000 2,000
Man, Capital 11,000 11,000
Man, Withdrawal 1,000 1,000
Fees Earned 47,000 47,000
Wages Expense 21,000 21,000
Rent Expense 6,000 6,000
Depreciation Expense 5,000 5,000
Totals 76,000 76,000 32,000 47,000 44,000 29,000
Net Income (Loss) 15,000 15,000
47,000 47,000 44,000 44,000

a. debit Income Summary P15,000; credit Man Capital P4,000

b. debit Income Summary P47,000; credit Man, Capital P47,000
c. debit Income Summary P15,000, Man, Capital credit P15,000
d. debit Retained Earnings P4,000; credit Income Summary P4,000

70) A company using the periodic inventory system has the following account balances: Merchandise Inventory at the
beginning of the year, P4,000; Transportation-In, P450; Purchases, P12,000; Purchases Returns and Allowances, P2,300;
Purchases Discounts, P220. The cost of merchandise purchased is equal to
A. P13,930
B. P9,930
C. P9,489
D. P14520

71) Using the following information, what is the amount of cost of merchandise sold?
Purchases P28,000 Purchases discounts P800
Merchandise inventory, April 1 6,500 Merchandise inventory, April 30 7,800
Sales returns and allowances 750 Sales 57,000
Purchases returns and allowances 1,000 Transportation In 880
A. 25,780
B. 23,270
C. 31,220
D. 24,020

72) Using the following information, what is the amount of gross profit?
Purchases P28,000 Purchases discounts P800
Merchandise inventory, April 1 6,500 Merchandise inventory, April 30 7,800
Sales returns and allowances 750 Sales 57,000
Purchases returns and allowances 1,000 Transportation In 880

A. 31,970
B. 30,470
C. 25,780
D. some other answer

73) Silver Co. sold merchandise to Bronze Co. on account, P23,000, terms 2/15, net 45. The cost of the merchandise sold is
P18,500. Silver Co. issued a credit memorandum for P2,500 for merchandise returned that originally cost P1,900. The
Bronze Co. paid the invoice within the discount period. What is amount of net sales from the above transactions?
a. P20,090
b. P20,500
c. P3,490
d. P23,000

74) Merchandise subject to terms 1/10, n/30, FOB shipping point, is sold on account to a customer for P15,000. The seller
paid transportation costs of P1,000 and issued a credit memorandum for P5,000 prior to payment. What is the amount of
the cash discount allowable?
a. P160
b. P150
c. P140
d. P100

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75) Based on the following information, what would be recorded as net purchases amount after all of the transactions have
been recorded?
1. P5,000 of merchandise inventory was ordered on April 2, 2007
2. P2,000 of this merchandise was received on April 5, 2007
3. On April 6, 2007, an invoice dated April 4, 2007, with terms of 2/10, net 30 for P2,150 which
included a P150 prepaid freight cost, was received.
4. On April 10, 2007, P500 of the merchandise was returned to the seller.

a. P2,000
b. P2,150
c. P1,620
d. P1,470

76) Orange Co. sold Red Co. merchandise on account FOB shipping point, 2/10, net 30, for P10,000. Orange Co. prepaid the
P200 shipping charge. Using the perpetual inventory system, which of the following entries will Red Co. make if Red
Co. pays within the discount period?
a. Accounts Payable-Orange Co., debit P10,000; Transportation In, credit P200; Cash, credit P9,800
b. Accounts Payable-Orange Co., debit P10,200; Merchandise Inventory, credit P200; Cash, credit P10,000
c. Accounts Payable-Orange Co., debit P10,000; Transportation In, debit P200; Cash, credit P10,200
d. Accounts Payable-Orange Co., debit P10,200; Merchandise Inventory, debit P200; Cash, credit P10,400

77) A sales invoice included the following information: merchandise price, P4,000; transportation, P300; terms 1/10, n/eom,
FOB shipping point. Assuming that a credit for merchandise returned of P600 is granted prior to payment, that the
transportation is prepaid by the seller, and that the invoice is paid within the discount period, what is the amount of
cash received by the seller?
A. P3,366
B. P3,400
C. P3,666
D. P3,950

78) Norwood Appliance produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period
were corporate executives, P100,000; assembly-line workers, P80,000; security guards, P18,000; and plant supervisor,
P30,000. The total of Norwood's direct labor cost was:
A. P110,000.
B. P128,000.
C. P80,000.
D. P98,000.

79) The accounting records of Westcott Company revealed the following costs:
Factory utilities P 35,000
Wages of assembly-line personnel 170,000
Customer entertainment 45,000
Indirect materials used 19,000
Depreciation on salespersons' cars 51,000
Production equipment rental costs 110,000
Costs that would be considered in the calculation of manufacturing overhead total:
A. P430,000.
B. P385,000.
C. P215,000.
D. P164,000.

80) The accounting records of Bronco Company revealed the following information:
Raw materials used P 60,000
Direct labor 125,000
Manufacturing overhead 360,000
Work-in-process inventory, 1/1 50,000
Finished-goods inventory, 1/1 189,000
Work-in-process inventory, 12/31 76,000
Finished-goods inventory, 12/31 140,000
Bronco's cost of goods manufactured is:
A. P519,000.
B. P522,000.
C. P568,000.
D. P571,000.

81) For the year just ended, Cole Corporation's manufacturing costs (raw materials used, direct labor, and manufacturing
overhead) totaled P1,500,000. Beginning and ending work-in-process inventories were P60,000 and P90,000,
respectively. Cole's balance sheet also revealed respective beginning and ending finished-goods inventories of P250,000
and P180,000. Based on this information, how much would the company report as cost of goods manufactured (CGM) and
cost of goods sold (CGS)?
A. CGM, P1,430,000; CGS, P1,460,000.
B. CGM, P1,470,000; CGS, P1,540,000.
C. CGM, P1,530,000; CGS, P1,460,000.
D. CGM, P1,570,000; CGS, P1,540,000.

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

82) Leggio Industries reported the following data for the year just ended: sales revenue, P950,000; cost of goods sold,
P420,000; cost of goods manufactured, P330,000; and selling and administrative expenses, P170,000. Leggio's gross
margin would be:
A. P30,000.
B. P200,000.
C. P360,000.
D. P530,000.

83) Leggio Industries reported the following data for the year just ended: sales revenue, P950,000; cost of goods sold,
P400,000; cost of goods manufactured, P330,000; and selling and administrative expenses, P170,000. Leggio's net profit
be:
A. P50,000.
B. P30,000.
C. P360,000.
D. P530,000.

84) The following information were taken from the following records of STB Music Co for 2019:
Increase in Raw materials inventory P45,000
Decrease in finished goods inventory 150,000
Raw materials purchase 1,290,000
Direct labor payroll 600,000
Factory overhead 900,000
Freight out 135,000
The cost of Raw materials used during the period amounted to
A. P1,245,000
B. P1,290,000
C. P1,335,000
D. P1,380,000

85) The following costs were incurred in July:

Direct materials ............................. P35,000
Direct labor .................................. P13,000
Manufacturing overhead ................... P15,000
Selling expenses ............................ P14,000
Administrative expenses ................... P30,000
Prime costs during the month totaled:
A. P48,000
B. P28,000
C. P107,000
D. P63,000

86) Abel Company's manufacturing overhead is 20% of its total conversion costs. If direct labor is P38,000 and if direct
materials are P47,000, the manufacturing overhead is:
A. P152,000
B. P11,750
C. P21,250
D. P9,500

87) The CBS partnership provide a 10% bonus to partner B that is based upon partnership income, after deduction of the
bonuses. If the partnership’s income is P121000, how much is the Partner’s B bonus allocation?
A. P11,000
B. P11,450
C. P11,650
D. P12,100

88) The Henry, Isaac, and Jacobs partnership was about to enter liquidation with the following account balances:
Cash P90, 000 Liabilities P60, 000
Noncash Assets 300, 000 Henry, capital 80, 000
Isaac, capital 110, 000
Jacobs, capital 140, 000
Total P390, 000 Total P390, 000

Estimated expenses of liquidation were P5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of
2:4:4. Before liquidating any assets, the partners determined the amount of cash for safe payments and distributed
it. The noncash assets were then sold for P120,000, and the liquidation expenses of P5,000 were paid. How much
of the P120,000 would be distributed to Henry?
A. P23,000.
B. P40,000.
C. P27,000.
D. P28,000.

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

89) Harding, Jones, and Sandy is in the process of liquidating and the partners have the following capital balances; 20,000,
22,000, and (10,000) respectively. The partners share all profits and losses 50%, 35%, and 15%, respectively. Sandy has
indicated that the (10,000) deficit will be covered with a forthcoming contribution. The remaining partners have
requested to receive P18,382 in cash that is available. How should this cash be distributed?
A. Harding P7,500; Jones P18,882.
B. Harding P10,813; Jones P7,569.
C. Harding P8,000; Jones P18,382.
D. Harding P7,000; Jones P19,382.

90) Lo, Mo and No are partners in an accounting firm. Their capital account balances at year-end were: Lo, P90,000; Mo,
P110,000; No, P50,000. They share profits and losses in a 4:4:2 ratio, after the following special terms:
a. Partner No 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 Lo and No, respectively.
Assuming a net income of P44,000 for the year, the total profit share of partner No would be:
A. P 7,800
B. P16,800
C. P19,400
D. P19,800

91) CC and DD as a partner in business. Accounts in the ledger for CC on November 30,2012, just before the admission of DD,
how the following balances:
Cash P6,800
Accounts receivable 14,200
Merchandised inventory 20,000
Accounts payable 8,000
CC, capital 33,000

It is agreed that for the purpose of establishing CC’s interest, the following adjustments shall be made:
• An allowance for doubtful accounts of 4% of accounts receivable is to be established.
• The merchandise inventory is to be valued at P23,000
• Prepaid salary expenses of P600 and accrued rent expense of P800 are to be recognized.
DD is to invest sufficient cash to obtain a 1/3 interest in the partnership.
Compute for CC’s adjusted capital before the admission of D; and the amount of cash investment by DD:
A. P35,347; P11,971
B. P36,374; P18,487
C. P35,374; P17,687
D. Some other answer

92) Nick and Miguel are partners who share profits and losses in the ratio of 7:3, respectively. Their respective capital accounts
are as follows:
Nick P35, 000 Miguel P30,000

They agreed to admit Brian as a partner with a one-third interest in the capital and profits and losses, upon an investment
of P25,000. The new partnership will begin with a total capital of P90,000. Immediately after Lee’s admission, what are
the capital balances of Nick, Miguel, and Lee, respectively?
A. P30,000; P30,000; P30,000
B. P31,500; P28,500; P30,000
C. P31,667; P28,333; P30,000
D. P35,000; P30,000; P25,000

93) The partnership of Rick and Morty shares profits and losses in the ratio of 60% to Rick and 40% to Morty. For the year
2018, partnership income was double Rick’s withdrawals. Assume Rick’s beginning capital was P70,000, and ending
capital balance of P140,000. Partnership income for the year was?

A. P350,000
B. 370,000
C. 380,000
D. 700, 000

94) Bloom and Carnes share profits and losses in a ratio of 2:3, respectively. Bloom and Carnes receive salary allowances of
P10,000 and P20,000, also respectively, and both partners receive 10% interest based upon the balance in their capital
accounts on January 1. Partners’ drawings are not used in determining the average capital balances. Total net income
for 2006 is P60,000. If net income after deducting the interest and salary allocations is greater than P20,000, Carnes
receives a bonus of 5% of the original amount of net income.

Bloom Carnes
January 1 capital balances P 200,000 P 300,000
Yearly drawings (P1,500 a month) 18,000 18,000

What are the total amounts for the allocation of interest, salary, and bonus, and how much over-allocation is
present?
A. P60,000 and P0.
B. P80,000 and P20,000.
C. P83,000 and P0.
D. P83,000 and P23,000.

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

95) Davis has decided to retire from the partnership of Davis, Eiser, and Foreman. The partnership will pay Davis P200,000.
A summary balance sheet for the Davis, Eiser, and Foreman partnership appears below. Davis, Eiser, and Foreman share
profits and losses in a ratio of 1:1:3, respectively.

Assets
Cash P 75,000
Inventory 82,000
Marketable securities 38,000
Land 150,000
Building-net 255,000
Total assets P 600,000

Equities
Davis, capital 160,000
Eiser, capital 140,000
Foreman, capital 300,000
Total equities P 600,000

What partnership capital will Eiser have after Davis retires?

A. P100,000.
B. P140,000.
C. P130,000.
D. Some other answer

96) “Stop COVID19” Company had the following capital during 2018 and 2019:
Preference share capital, P100 par, 10% noncumulative P10,500,000
Ordinary share capital, P100 par P40,000,000

“Stop COVID19” reported loss of P8,000,000 for the year ended December 31, 2019. “Stop COVID19” paid no preference
share dividends during 2018 and paid P1,500,000 preference share dividends during 2019.

In its 2019 income statement, what amount should “Stop COVID19” report as basic earnings per share?
A. P17.50
B. P16.25
C. P22.63
D. P14.77

97) The following is the adjusted trial balance for Steely Company.

Steely Company
Adjusted Trial Balance
For the Year ended December 31, 20x8

Cash 6,130
Accounts Receivable 2,300
Prepaid Expenses 750
Equipment 13,400
Accumulated Depreciation 1,200
Accounts Payable 1,700
Notes Payable 5,000
Capital Stock 12,000
Dividends 870
Fees Earned 6,600
Wages Expense 1,450
Rent Expense 900
Utilities Expense 475
Depreciation Expense 150
Miscellaneous Expense 75
Totals 26,500 26,500

Determine the stockholders’ equity ending balance for the period.

A. P14,680
B. P11,130
C. P15,550
D. P2,680

98) If stockholders’ equity at the beginning of the period was P65,000, ending balance is P43,000, and the dividends were
paid in the amount of P16,000, the amount of net income or net loss was
A. net income of P37,000
B. net income of P8,000
C. net loss of P22,000
D. net loss of P6,000

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 College of Business and Accountancy 2nd Semester, SY 2020-2021

99) The stockholder’s equity of Willpower Corporation showed the following data on December 31, 20x4:
12% preferred stock, P30 par, 135,000 shares issued and outstanding P4,050,000
Common stock, P50 par, 180,000 shares issued and outstanding 9,000,000
Premium on preferred stock 1,080,000
Premium on common stock 3,240,000
Retained earnings 1,395,000

The 20x5 transactions of the company affecting its stockholders’ equity are summarized chronologically as follows:
1. Issued 27,000 shares of preferred stock at P40.
2. Issued 94,500 shares of common stock at P70.
3. Retired 5,400 shares of preferred stock at P45.
4. Purchased 13,500 shares of its common stock at P80.
5. Split common stock two for one (par value reduce to P25).
6. Reissued 13,500 shares of treasury stock – common at P50.
7. Stockholders donated to the company 9,000 shares of common stock when shares had a market price of P52. One half
of these shares were subsequently issued for P54.
8. Dividends were paid at the end of the calendar year on the common stock at P2 per share and on the preferred stock
at the preferred rate.
9. Net income for the year was P2,520,000.
Based on the above and the result of your audit, determine the Preferred stock of December 31, 20x5:
A. P4,617,000
B. P4,968,000
C. P4,698,000
D. P4,860,000

100) The stockholders equity of Willpower Corporation showed the following data on December 31, 20x4:
12% preferred stock, P30 par, 135,000 shares issued and outstanding P4,050,000
Common stock, P50 par, 180,000 shares issued and outstanding 9,000,000
Premium on preferred stock 1,080,000
Premium on common stock 3,240,000
Retained earnings 1,395,000

The 20x5 transactions of the company affecting its stockholders’ equity are summarized chronologically as follows:
1. Issued 27,000 shares of preferred stock at P40.
2. Issued 94,500 shares of common stock at P70.
3. Retired 5,400 shares of preferred stock at P45.
4. Purchased 13,500 shares of its common stock at P80.
5. Split common stock two for one (par value reduce to P25).
6. Reissued 13,500 shares of treasury stock – common at P50.
7. Stockholders donated to the company 9,000 shares of common stock when shares had a market price of P52. One half
of these shares were subsequently issued for P54.
8. Dividends were paid at the end of the calendar year on the common stock at P2 per share and on the preferred stock
at the preferred rate.
9. Net income for the year was P2,520,000.

Based on the above and the result of your audit, determine the Unappropriated retained earnings as of December 31,
20x5:
A. P1,749,240
B. P1,711,440
C. P2,251,440
D. P1,684,440

. . . END OF THE EXAMINATION. . .

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