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INTEGRATED ACCOUNTING COURSE
3 – PART 2 SET A QUIZ
FINANCIAL ACCTG & REPORTING (THEORY & PROBLEMS) OCT 29,
2025; 830-1130AM
NAME: ___________________________________ CAMPUS:
____________________
INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one
answer for each item by shading the corresponding letter of your choice on the answer sheet
provided. STRICTLY NO ERASURES ALLOWED. Use Pencil No. 1 or No. 2 only.
1. Which is not within the scope of the Revised Conceptual Framework?
a. Objective of financial statements
b. Qualitative characteristics of financial statements
c. Recognition and measurement of basic elements
d. Generally accepted accounting principles
2. Under the Revised Conceptual Framework of Financial Reporting,
users of financial information may be classified into
a. Heavy users (management) and slight users (public, government)
b. Primary users (existing and potential investors and creditors) and
other users
c. Internal users (employees, customers) and external users
(investors, creditors)
d. Main users (existing investors, creditors) and incidental users
(potential investors, creditors)
3. What is the new definition of liability under the Revised Conceptual
Framework?
a. A present obligation of the entity arising from past event the
settlement of which is expected to result in an inflow of economic
benefit
b. A present obligation of the entity arising from present event
c. A present obligation of the entity to transfer an economic
resource as a result of past event
d. An obligation that the entity has practical ability to avoid
4. It is the process of incorporating in the balance sheet or income
statement an item that meets the definition of an element of financial
statements.
a. Recognition
b. Allocation
c. Realization
d. Summarization
5. This is an assumption by accountants that a business will continue to
operate indefinitely unless specific evidences to the contrary exist, as
for example, an impending bankruptcy
a. Matching principle
b. Going concern principle
c. Cost principle
d. Objectivity principle
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6. Which underlying concept serves as the basis for preparing financial
statements at regular intervals?
a. Accounting entity
b. Going concern
c. Accounting period
d. Stable monetary unit
7. The financial statements should be stated in terms of a common
financial denominator
a. Accrual
b. Going concern
c. Time period
d. Monetary unit
8. “Freedom from error” relates to which qualitative characteristic of the
Revised Conceptual Framework?
a. Faithful representation
b. Relevance
c. Understandability
d. Verifiability
9. Which of these statements regarding the IFRS and US GAAP is
correct?
A. US GAAP is considered to be rules-based” and less detailed than
IFRS
B. IFRS is considered to be “principles-based” and less detailed than
US GAAP
C. US GAAP is considered to be “principles-based” and less detailed
than IFRS
D. Both US GAAP and IFRS are considered “rules-based”, but US GAAP
tends to be more complex
10. Which of these statements regarding IFRS is NOT CORRECT?
A. The IFRS considers the economic differences of country
jurisdictions.
B. One indication that the IFRS is principles-based is the fact that the
Philippine Financial Reporting Standards Council (issued the PFRS
for Small Entities as a third financial reporting framework for
implementation FR by Philippine reporting enterprises
C. An IFRS – adopting country is allowed to create its own
Interpretation Committee in order to address controversial or newly
emerging accounting – related issues peculiar to its jurisdiction.
D. All IFRS-adopting countries are currently adopting three
frameworks of Financial Reporting, i.e., Full IFRS and IFRS for
SMEs and IFRS for SEs
11. The Philippine Accountancy Profession opted for adoption of IFRS
since Year 2000. Which of the following has no equivalent in
international accounting standard issuances?
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A. Philippine Accounting Standards
B. Philippine Financial Reporting Standards
C. Philippine Financial Standards for Small and Medium – sized
entities
D. Philippine Financial Reporting Standards for Small Entities
12. The role of the Securities and Exchange Commission in the formulation
of accounting principles can be best described as
A. consistently primary, sometimes secondary
B. sometimes primary and sometimes secondary
C. consistently secondary.
D. non-existent
13. What is the objective of financial reporting as indicated in the
conceptual framework?
A. provide information that is useful to those making investing and
credit decisions.
B. provide information that is useful to management.
C. provide information about those investing in the entity.
D. All of the above.
14. The Financial Accounting Standards Board employs a "due process"
system which
a. is an efficient system for collecting dues from members.
b. enables interested parties to express their views on issues under
consideration.
c. identifies the accounting issues that are the most important.
d. requires that all accountants must receive a copy of financial
standards.
15. This FSRSC standing committee was created to assist in establishing
standards on sustainability reporting and disclosure pertaining to a
reporting entity’s adherence to
A. Financial accounting standards and principles
B. Economic, social and governance principles
[Link] and climate change principles
[Link] and auditing standards and principles
16. Which of the following has a seat in the Philippine Sustainability
Reporting Committee but is not represented in the Financial and
Sustainability Reporting Standards Council?
A. Bureau of Internal Revenue
B. Insurance Commission
C. Commission on Audit
D. Climate Change Commission
17. The Financial Accounting Standards Board employs a "due process"
system which
A. is an efficient system for collecting dues from members.
B. enables interested parties to express their views on issues under
consideration.
C. identifies the accounting issues that are the most important.
D. requires that all accountants must receive a copy of financial
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standards.
18. Which of the following is not a benefit associated with the IASB
Conceptual Framework Project?
A. A conceptual framework should increase financial statement users'
understanding of and confidence in financial reporting
B. Practical problems should be more quickly solvable by reference to
an existing conceptual framework
C. A coherent set of accounting standards and rules should result.
D. Business entities will need far less assistance from accountants
because the financial reporting process will be quite easy to apply
19. Which one of the following is NOT among the approaches to address
the effects of inflation in financial reporting under current GAAP?
A. Fair value measurement
B. Revaluation of property
C. Conversion of foreign currency to local currency units
D. Accounting for hyper-inflationary economy
20. Which of the following is not a reliable basis in the use of estimates in
financial accounting?
A. Provision for doubtful accounts based on an aging of receivables
B. Goodwill estimated by management based on the financial
performance of the entity as reflected in the books of account and
the financial statements
C. Provision for retirement benefits based on actuarial computations of
actuaries
D. Revaluation of property based on the certified opinion by an
independent appraisal expert
21. Which of the following is NOT a limitation of financial accounting and
reporting?
A. Use of facts and estimates
B. Price – level changes are not reflected
C. Significant non-financial information can be reflected only in the
notes to financial statements
D. Centered only on quantifiable information
22. Within the statement of financial position companies should separately
report all of the following except
A. Assets and liabilities with different general liquidity characteristics.
B. Assets and liabilities that have been financed with different types of
instruments.
C. Assets that differ in their expected function in the company’s central
operations.
D. Liabilities that differ in their amounts, timing, and nature.
23. Which ONE of the following terms best describes financial statements
whose basis of accounting recognizes transactions and other events
when they occur?
A. Accrual basis of accounting
B. Going concern basis of accounting
C. Cash basis of accounting
D. Invoice basis of accounting
24. Non-financial measurements include all of the following except:
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A. backlog information.
B. customer satisfaction indexes.
C. reject index on goods purchased.
D. None. All of the choices are non-financial measurements.
25. Which of the following assets can, directly and singly, generate
cashflows for the entity?
A. Accounts receivable
B. Machinery
C. Bearer Trees
D. Franchise
26. Inventories shall be measured at
a. Cost
b. Lower of cost and net realizable value
c. Net realizable value
d. Higher of cost and net realizable value
27. Which of the following in relation to the recognition of inventory true?
a. Goods in transit under fob shipping point should still be included by
the seller in its books as its inventory
b. Goods in transit under fob destination shall be included by the buyer
in its books as inventory
c. Goods in transit under fob prepaid shall be included by the buyer in
its books as inventory
d. Goods in transit under fob collect shall still be included by the seller
in its books as inventory
28. The primary objective of inventory accounting is
a. to allocate the cost of goods available for sale between inventory
and cost of sales
b. to value inventory at the lower of cost or net realizable value
c. to match appropriate costs against revenues in order that there
may be a proper determination of net income.
d. to determine the peso amount of inventory
29. Goods on consignment should be included in the inventory of
a. The consignor but not the consignee
b. The consignee but not the consignor
c. Both the consignor and consignee
d. Neither the consignor nor the consignee
30. During January 2020 Blind Company., which maintains a perpetual
inventory system, recorded the following information pertaining to its
inventory:
Units Cost
Balance on 1/1/2020 1,000 P 1
Purchased on 1/7/2020 600 3
Sold on 1/20/2020 900
Purchased on 400 5
1/25/2020
All units are sold at a P15 each.
Under weighted-average, the inventory at January 31, 2020 is
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a. 2,640
b. 3,225
c. 3,300
d. 3,900
31. During January 2020 Blind Company., which maintains a perpetual
inventory system, recorded the following information pertaining to its
inventory:
Units Cost
Balance on 1/1/2020 1,000 P 1
Purchased on 600 3
1/7/2020
Sold on 1/20/2020 900
Purchased on 400 5
1/25/2020
All units are sold at a P15 each.
Under moving-average, the inventory at January 31, 2020 is
a. 2,640
b. 3,225
c. 3,300
a. 3,900
32. An entity included the following items in inventory at year – end:
Goods out on consignment at sale price, including 1,400,
40% markup on cost 000
Goods purchased in transit, shipped FOB destination 1,200,
000
Goods held on consignment by the entity 900,00
0
At what amount should the inventory at year – end be reduced?
a. 1,460,000
b. 2,660,000
c. 1,300,000
d. 2,500,000
33. On June 1, 2020, an entity sold merchandise with a list price of
P5,000,000 to a customer. The entity allowed trade discounts of 20%
and 10%. Credit terms were 5/10, n/30 and the sale was made FOB
shipping point. The entity prepaid P100,000 of delivery cost for the
customer as an accommodation: On June 11, 2020, what is the full
remittance from the customer?
a. 3,600,000
b. 3,420,000
c. 3,700,000
d. 3,520,000
34. On July 1, 2020, an entity recorded purchases of P3,000,000 and
P2,000,000 under credit terms of 2/15, net 30. The payment on
P3,000,000 purchase remitted on July 16. The payment on the
P2,000,000 purchase was remitted on July 31.
The amount of purchases included in the determination of cost of goods
available for sale under the gross method is
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a. 5,000,000
b. 4,900,000
c. 4,940,000
d. 4,960,000
35. On July 1, 2020, an entity recorded purchases of P3,000,000 and
P2,000,000 under credit terms of 2/15, net 30. The payment on
P3,000,000 purchase remitted on July 16. The payment on the
P2,000,000 purchase was remitted on July 31.
The amount of purchases included in the determination of cost of goods
available for sale under the net method is
a. 5,000,000
b. 4,900,000
c. 4,940,000
d. 4,960,000
36. On April 1, 2020, Toronto Company had 6,000 units of merchandise on
hand that cost P120 per unit. During the month, Toronto Company had
the following entries with regard to the merchandise:
April 5 Purchase on account 15,000 units at P140 per unit
8 Returned 1,000 units from the April 5 purchase.
29 Sold on account 16,000 units at P200 per unit.
Toronto Company uses a periodic inventory system and an Average
cost flow.
The cost of goods sold for April is
a. 2,120,000
b. 2,144,000
c. 2,340,000
d. 2,632,000
37. Gambit Company acquired the following:
Machinery G having a selling price of P400,000. A 6% discount
was available which Gambit Company failed to avail.
Machinery M in which Gambit Company paid P280,000 inclusive
of the 12% VAT. Safety platform, P25,000. Cooling devices
P10,000.
The total initial measurement of the machines is
a. 661,000
b. 685,000
c. 691,000
d. 715,000
38. Hawkeye Company acquired the following
Machinery H on which Hawkeye Company paid P800,000. Import
duties amounted to P45,000. Freight and insurance P25,000.
Installation cost totaled P15,000. During installation the machine
blade was partially damaged in which P5,000 was incurred to
sharpen it
Machine E was purchased by issuing to the seller a three-year,
non-interest bearing note with a face amount of P500,000. In
recent borrowings, Hawkeye Company has paid a 6% interest for
this type of a note.
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The total initial measurement of the machines is
a. 1,305,000
b. 1,310,000
c. 1,385,000
d. 1,390,000
39. Nightcrawler Company acquired the following during the year:
On September 1, 2020. Nightcrawler Company issued 80,000 treasury
shares, the par value of which was P20 for a parcel of land to be used
as a future plant site. Nightcrawler Company acquired the treasury
shares at a cost of P26 per share. On September 1, 2020, Nightcrawler
Company shares have a fair value of P30.
On October 1, 2020, Nightcrawler Company exchanges an old labeling
machine, which cost P1,200,000 and was 60% depreciated, for another
used machine and paid a cash difference of P160,000. The fair value of
the old labeling machine was determined to be P550,000.
The total gain included in the P&L section for 2020 is
a. 0
b. 70,000
c. 320,000
d. 390,000
40. On January 1, 2020, Iceman Company obtained a loan for P4,000,000
to specifically finance the construction of its building. The loan carries
a rate of 12%. The loan was taken in equal amounts every quarter
starting in January 1. Prior to the disbursement, proceeds of the loan
were temporarily invested and earned interest of P52,000. Completion
was on December 31, 2020.
The amount of borrowing cost to be capitalized is
a. 248,000
b. 300,000
c. 428,000
d. 480,000
41. Brock Company and Venom Company are fuel oil distributors. Brock
Company exchanged a carrier truck for Venom Company’s dump truck
Brock Company paid Venom Company P30,000. It is reliably
determined that the exchange lacks commercial substance. On the date
of the exchange, book value and fair value of the carrier truck and
dump truck were as follows:
Brock Venom
Company Company
Book value 1,000,000 1,400,000
Fair value 1,200,000 1,500,000
Brock Company shall initially record the carrier truck at
a. 1,030,000
b. 1,230,000
c. 1,430,000
d. 1,530,000
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42. Peter Company and Parker Company are fuel oil distributors. Peter
Company exchanged a carrier truck for Parker Company’s dump truck
Peter Company paid Parker Company P30,000. It is reliably determined
that the exchange lacks commercial substance. On the date of the
exchange, cost and fair value of the carrier truck and dump truck were
as follows:
Peter Parker
Company Company
Cost 1,000,000 1,400,000
Fair value 1,200,000 1,500,000
Parker Company shall initially record the carrier truck at
a. 970,000
b. 1,170,000
c. 1,370,000
d. 1,470,000
43. Jean Company and Grey Company are fuel oil distributors. Jean
Company exchanged a carrier truck for Grey Company’s dump truck
Jean Company paid Grey Company P30,000. It is reliably determined
that the exchange has commercial substance. On the date of the
exchange, cost and fair value of the carrier truck and dump truck were
as follows:
Jean Grey Company
Company
Cost 1,000,000 1,400,000
Fair value 1,200,000 1,500,000
Grey Company shall initially record the carrier truck at
a. 970,000
b. 1,170,000
c. 1,370,000
d. 1,470,000
44. Xavier Corporation purchased a machine in January 2015 for P
600,000. The machine was being depreciated on the straight-line
method over an estimated useful life of 10 years, with no salvage value.
At the beginning of 2020, the Xavier Corporation paid P 196,000 to
overhaul the machine. As a result of this improvement, Xavier
Corporation estimated that the useful life of the machine would be
extended for an additional 3 years.
The depreciation expense for 2020 should be
a. 37,500
b. 60,000
c. 62,000
d. 99,200
45. When payment for item of property, plant equipment is deferred
beyond normal credit terms, the difference between the cash price
equivalent and the total payments should be recognized as
a. Interest expense of the current year
b. Component of cost of the property, plant and equipment
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c. Interest expense over the credit period
d. Interest expense over the life of the asset
46. I. The amount of borrowing costs eligible for capitalization in relation
to funds that are borrowed specifically for the purpose of obtaining a
qualifying asset shall be determined by applying a capitalization rate to
the expenditures on that asset
II. The amount of borrowing costs eligible for capitalization in relation
to funds that are borrowed generally and used for the purpose of
obtaining a qualifying asset shall be the actual borrowing costs
incurred on that borrowing less any investment income on the
temporary investment of those borrowings
a. True, true
[Link], false
c. False, true
[Link], false
47. An entity purchased certain plant assets under a deferred payment
contract. The agreement was to pay P10,000 at the time of purchase
and P10,000 at the end of each of the next five years. The plant assets
should be valued at
a. The present value of a P10,000 ordinary annuity for five years
b. P60,000
c. P60,000 plus imputed interest
d. P60,000 less imputed interest
48. Widow Company had purchased equipment for P2,800,000 on January
1, 2017. The equipment had an 8-year life and residual value of
P400,000. Spawn depreciated the equipment using the straight line
method. In August 2018, Widow Company questioned the
recoverability of the carrying amount of this equipment. On August 31,
2020, the undiscontinued expected net future cash inflows related to
the continued use and eventual disposal of the equipment amounted to
P1,600,000. The equipment’s fair value on August 31, 2020 is
P1,500,000.
After any loss on impairment has been recognized, the carrying amount
of the equipment is
a. 1,300,000
b. 1,500,000
c. 1,600,000
d. 1,700,000
49. On January 1, 2020, Moira Company has a machinery with cost of
P5,000,000 and accumulated depreciation of P1,500,000.
The machinery was acquired on January 1, 2017 and has been
depreciation using the straight line method with useful life of 10 years
and no residual value.
On December 31, 2020, Moira Company has properly tested the
machinery to be impaired.
The machinery has a remaining life of 5 years and is expected to
generate undiscounted net cash inflows of P 800,000 per year. The fair
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value of the machinery on December 31, 2020 is P3,000,000. The
appropriate discount rate is 8%. The present value of an ordinary
annuity of 1 at 8% for 5 periods is 3.99.
Impairment loss in the 2020 income statement is
a. 0
b. 308,000
c. 500,000
d. 808,000
50. Powerform Co. sells its product costing P32,000 for P35,000 per unit.
The estimated costs to complete and sell are P3,200 and P1,500
respectively. On December 31, 2025, Powerform Co. reported 2,000
units of this product in its warehouse. At what amount should
Powerform Co. report as inventory in its December 31., 2025 statement
of financial position?
A. P60,600,000
B. P63,600,000
C. P64,000,000
D. P67,000,000
/cde