01Multiple Choice

0/ 1
SHERWINPOGI Company has a cost card in relation to an item of goods manufactured as follows:

Materials                                                                    700

Storage costs of finished goods                             180

Delivery to customers (Freight out)                         40

Non-recoverable purchase taxes                             60

Php 760
Php 760


Php 880
Php 880


Php 940
Php 940


Php 980
Php 980

02Multiple Choice
0/ 1
Which of the following statements is incorrect regarding the use of cost formuals?


PAS 2 requires the use of specific identification of costs for inventories that are not ordinarily
interchangeable.
PAS 2 requires the use of specific identification of costs for inventories that are not ordinarily
interchangeable.


Only one formula shall be used for all inventories regardless of differences in their nature and use.
Only one formula shall be used for all inventories regardless of differences in their nature and use.


Different cost formulas may be used for each class of inventory with dissimilar nature and use.
Different cost formulas may be used for each class of inventory with dissimilar nature and use.

 Entities may choose between the FIFO and the Weighted Average cost formulas for inventories that
are ordinarily interchangeable
Entities may choose between the FIFO and the Weighted Average cost formulas for inventories that
are ordinarily interchangeable

03Multiple Choice
0/ 1
In 20x1, Entity A proposes an environmental clean-up project for a river. The government supports
this project and gives Entity A a ₱1M monetary grant conditioned that the money will only be spent
on the proposed project. The proposed project is expected to take about 2 years to complete. Entity
A starts the clean-up project in 20x2. How should Entity A recognize income from the government
grant?


In  full when Entity A receives the grant

In  full when Entity A receives the grant


Over the period of the project as expenses are incurred

Over the period of the project as expenses are incurred

Over 2 years starting in 20x1
Over 2 years starting in 20x1,

The grant is not recognized as income
The grant is not recognized as income,

04Multiple Choice
0/ 1
Entity A, a financial institution, received cash dividends from its investments in marketable securities
during the year. How will the dividends be presented in Entity A’s statement of cash flows?


As operating activity
As operating activity


As investing activity
As investing activity


As investing activity or operating activity

As investing activity or operating activity


As financing activity
As financing activity

05Multiple Choice
0/ 2
White farm supply's records for the first 3 months of its existence show purchases of Commodity A
as follows.

                                                  No. of Units                   Cost

August                                          5,500                  Php 280,500
September                                   8,000                  Php 416,000
October                                        5,100                  Php 270,300
Total                                             18,600                 Php 966,800

The inventory of Commodity A at the end of October using FIFO is valued at Php 363,900

Assuming that none of Commodity A was sold during August and September, What value would be
shown at the end of October if Average Cost was assumed?


Php 365,855
Php 365,855


Php 358,662
Php 358,662


Php 351,962
Php 351,962


Php 416,812
Php 416,812


Php 353,855
Php 353,855

06Multiple Choice
1/ 1
 How should trade discounts be dealt with when valuing inventories at the lower of cost and net
realisable value (NRV) according to PAS 2?


Ignored
Ignored


Deducted from cost

Deducted from cost


Deducted in arriving at NRV

Deducted in arriving at NRV


Added to cost
Added to cost

07Multiple Choice
0/ 1
Which of the following is not considered a government grant under PAS 20?


Financial aid
Financial aid


Forgivable loans
Forgivable loans


Benefit of subsidized loans

Benefit of subsidized loans


Tax breaks
Tax breaks

08Multiple Choice
2/ 2
Entity A, a trading entity, buys and sells Product Z. Movements in the inventory of Product Z during the period are as
follows:

Date Transaction Units Unit cost Total cost

Feb. 1 Beginning inventory 100 ₱15 ₱1,500
        7 Purchase 300   18  5,400
       12 Sale 320    
      21 Purchase 200  21 4,200
 

How much is the ending inventory under the Weighted Average cost formula? (The average is calculated as each
additional purchase is made, i.e., ‘moving average’.)

Php 5,680
Php 5,680


Php 5,380
Php 5,380


Php 5,860
Php 5,860


Php 5,580
Php 5,580

09Multiple Choice
0/ 2
S1: Depreciation does not cease when the asset becomes idle or is retired from active use.
S2: Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration
given to acquire an asset at the time of its acquisition or construction or where applicable, the
amount attributed to that asset when initially recognized in accordance with the specific
requirements of other PFRSs.
S3: Permanent differences are those that do not have future tax consequences
S4: Current tax expense are measured using enacted or substantially enacted tax rates that are
applicable to the periods of their expected reversals


All statements are true

All statements are true


3 statements are true

3 statements are true


2 statements are true

2 statements are true


Only 1 statement is true

Only 1 statement is true

10Multiple Choice
0/ 1
Deferred tax assets and deferred tax liabilities do not alter the tax to be paid in the current period.
However, they cause tax payments to either increase or decrease when they reverse in a future
period. The reversal of which of the following will cause an increase in tax payment?


Deferred tax asset

Deferred tax asset


Deferred tax expense

Deferred tax expense


Deferred tax liability

Deferred tax liability


Deferred tax benefit

Deferred tax benefit

11Multiple Choice
1/ 1
This type of difference will give rise to deferred tax asset


Taxable temporary difference

Taxable temporary difference


Deductible temporary difference

Deductible temporary difference


No difference
No difference


Permanent difference
Permanent difference
 12Multiple Choice
0/ 1
Which of the following is an example of a non-adjusting event?


Bankruptcy of a customer after the reporting period that indicates that the carrying amount of a trade
receivable at the end of the reporting period is impaired.
Bankruptcy of a customer after the reporting period that indicates that the carrying amount of a trade
receivable at the end of the reporting period is impaired.


Evidence indicating that an asset is impaired as at the end of the reporting period.
Evidence indicating that an asset is impaired as at the end of the reporting period.


Legal proceedings after the reporting period for an incident that occurred before the end of the
reporting period.
Legal proceedings after the reporting period for an incident that occurred before the end of the
reporting period.


Significant decline in foreign exchnage rates after the reporting period resulting to massive losses on
recognized foreign currency denominated instruments
Significant decline in foreign exchnage rates after the reporting period resulting to massive losses on
recognized foreign currency denominated instruments

13Multiple Choice
0/ 2
S1: A voluntary change in accounting policy is accounted for by the retrospective application.
S2: Early application of a PFRS is not a voluntary change in accounting policy.
S3: An accounting policy shall be changed only when it is required by PFRS.
S4: Investing activities include transactions that affect non current assets and other non-operating
assets.


All statements are true

All statements are true


3 statements are true

3 statements are true


2 statements are true

 2 statements are true


Only 1 statement is true

Only 1 statement is true

14Multiple Choice
0/ 2
The following information is available for Color Me Company for year 2020

Net Sales                         Php 3,600,000

Freight In                                      90,000
Purchase Discounts                    50,000
Ending Inventory                      240,000

The gross margin is 40% of net sales.

What is the cost of goods sold?



Php 2,400,000
Php 2,400,000


Php 1,680,000
Php 1,680,000


Php 1,920,000
Php 1,920,000


Php 2,440,000
Php 2,440,000


Php 2,160,000
Php 2,160,000

15Multiple Choice
0/ 2
S1: Change from the cost model to the revaluation model of measuring property, plant, and
equipment is an example of a change in accounting policy.
S2: When taxable temporary difference reverses in the future period, it results in higher tax payment.
 S3: Retrospective application means adjusting the opening balance of each affected component of
the asset account for the earliest prior period.
S4: According to PAS 7, the indirect method of presenting cash flows relating to operating activities
shows each major class of gross receipts and gross cash payments.


All statements are true

All statements are true


3 statements are true

3 statements are true


2 statements are true

2 statements are true


Only 1 statement is true

Only 1 statement is true

16Multiple Choice
0/ 1
Which of the following events after the reporting period are treated as adjusting events


A litigation arising from an accident that occurred after the reporting period.
A litigation arising from an accident that occurred after the reporting period.


Discovery of prior period fraud or error.

Discovery of prior period fraud or error.


A significant decline in the fair value of investments in stocks

A significant decline in the fair value of investments in stocks


declaration of dividends  after the reporting period

declaration of dividends  after the reporting period

17Multiple Choice
0/ 1
During the period, deferred tax assets increase by ₱400 while deferred tax liabilities increase by
₱500. The net change of ₱100 is a


Deferred tax expense

Deferred tax expense


Deferred tax asset

Deferred tax asset


Deferred tax liability

Deferred tax liability


Deferred tax income

Deferred tax income

18Multiple Choice
0/ 1
Which of the following is considered a government grant under PAS 20?


Free technical advice

Free technical advice


Award of major government contracts

Award of major government contracts


Public Improvements
Public Improvements


Cancellation of an existing loan from the egovernment

Cancellation of an existing loan from the egovernment

19Multiple Choice
0/ 2
S1: Reversals of inventory write downs may exceed the amount of the original writedown previously
recognized.
S2. The cost of factory management is included in the cost of inventory.
S3: The maintenance costs of a machine used in the manufacturing process are not included in the
cost of Inventory
S4: The maintenance costs of a machine used in the manufacturing process are not included in the
cost of PPE


Only 1 statement is true

Only 1 statement is true


2 statements are true

2 statements are true


3 statements are true

3 statements are true


All statements are true

All statements are true

20Multiple Choice
2/ 2
AA Company had the following consignment transactions during December 2020.

Inventory shipped on consignment to CC Company                Php 36,000

Freight paid by AA Company                                                                   1,800
Inventory received on consignment from DD                                   24,000
Freight paid by DD Company                                                                  1,000

No sales of consigned goods were made through December 31, 2020.

What amount of consigned inventory should be included in AA 's December 31, 2020 Balance
sheet?


Php 36,000
Php 36,000


Php 24,000
Php 24,000


Php 61,800
Php 61,800


Php 25,000
 Php 25,000


Php 37,800
Php 37,800

21Multiple Choice
0/ 2
The closing raw materials inventory of Webster Manufacturing Company amounted to Php 345,000
at December 31, 2020. This total includes an item of raw material (Material Zip) with a cost of Php
100,000 with an estimated net realizable value of Php 80,000. Immediately after the balance sheet
date, Material Zip was applied to production and the cost of the finished product where material zip
was applied revealed that its net selling price exceeds the cost of producing the finished goods.


Php 325,000
Php 325,000


Php 265,000
Php 265,000


Php 445,000
Php 445,000


Php 345,000
Php 345,000


Php 245,000
Php 245,000

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