Lopez, Erica BS Accountancy 2
STATEMENT OF FINANCIAL POSITION (Balance Sheet)
I. Theories
1) Which of these classifications are needed for a liability to be considered under current
liability?
I. expected to be settled beyond the entity's normal operating cycle
II. Held for purpose of trading
III. Due to be settled after 12 months
IV. For which the entity does not have an unconditional right to defer settlement beyond
12 months (settlement by the issue of equity instruments does not impact
classification).
A. I and II only C. II and IV only
B. I and III only D. I, II and III only
2) The following are considered as identifiable intangible assets in the balance sheet except
A. Computer software C. Good will
B. Franchise D. Trademark
3) These are often attached to the borrowing agreement which represents undertaking by the
borrower.
A. Agreements C. Acknowledgement of
B. Promissory Note Borrowing
D. Covenants
4) Under PAS 1, paragraph 7, the holders of instruments classified as equity are simply known
as
A. Owners C. Proprietors
B. Entity D. Shareholders
5) Animals involved in recreational activities shall be classifies as
A. Property, Plant and C. Investments
Equipment D. Biological Asset
B. Inventory
STATEMENT OF FINANCIAL POSITION (Balance Sheet)
II. Problems
1) Using the data provided by Lucky One Company for December 31, 2019, determine the
company’s total current assets?
Accounts receivable Php 1,200,000
Financial asset at fair value through profit or loss 400,000
Financial asset at amortized cost 1,000,000
Cash 8,800,000
Inventory 600,000
Equipment and furniture 2,100,000
Accumulated depreciation 600,000
Patent 99,000
Prepaid expenses 700,000
Equipment classified as held for sale 10,000,000
A. Php 11,700,000
B. Php 21,400,000
C. Php 21,700,000
D. Php 22,700,000
Solutions:
Accounts receivable Php 1,200,000
Financial asset at fair value through profit or loss 400,000
Cash 8,800,000
Inventory 600,000
Prepaid expenses 700,000
Equipment classified as held for sale 10,000,000
TOTAL CURRENT ASSETS: Php 21,700,000
2) Monster Incorporated provided the following data on December 31, 2019:
Accounts payable Php 562,165
Accrued taxes 72,365
Dividends – ordinary share 2,000,000
Dividends – preference share 1,000,000
Income summary – credit balance 821,585
Mortgage payable (Php 500,000 due in 6 months) 5,500,000
Note payable, January 2021 457,645
Ordinary share capital 5,000,000
Preference share capital 3,500,000
Premium on notes payable 718,945
Retained earnings, December 31, 2018 545,425
Share premium 500,000
Unamortized issue cost on notes payable 85,465
Unearned rent income 354,815
What is the amount of noncurrent asset for 2019?
A. Php 6,091,125
B. Php 6,163,490
C. Php 6,334,420
D. Php 6,689,235
Solutions:
Mortgage payable (Php 500,000 due in 6 months) 5,500,000
Note payable, January 2021 457,645
Less: Unamortized issue cost on notes payable 85,465
Premium on notes payable 718,945
TOTAL NON-CURRENT ASSETS : Php 6,091,125
1) The following balance of Cloud 9 Corp. on December 31, 2019 has been adjusted except for
income tax
Cash 79,800
Accounts receivable (net) 282,100
Inventory 218,500
Property, plant and equipment (net) 1,029,150
Accounts payable 105,000
Accrued liabilities 75,000
Income tax payable 159,300
Deferred tax liability 87,600
Share capital 250,000
Share premium 300,000
Retained earnings, January 1, 2019 335,000
Net sales and other revenues 1,512,300
Costs and expenses 1,000,000
Income tax expense 214,650
2,824,200 2,824,200
During this year, estimated tax payment of Php 27,500 was charged to income tax expense.
The income tax rate is 30% on all types of income. On December 31, 2019, the retained
earnings will be reported with an amount of:
A. Php 297,650
B. Php 484,800
C. Php 592,900
D. Php 693,610
Solutions:
Net sales and other revenues Php 1,512,300
Costs and expenses 1,000,000
Income before income tax 512,300
Less: 30% income tax (153,960)
Net Income 358,610
Retained earnings, January 1, 2019 335,000
RETAINED EARNINGS, DECEMBER 31, 2019 Php 693,610
2) Heaven Finances carried a provision of Php 2,470,000 in its overdraft financial statement on
December 31, 2019 in relation to an unresolved court case. On January 31, 2020, when the
financial statement on December 31, 2019 had not yet been authorized for issue, the case
was settled and the court decided the final total damages payable by Heaven Finances to
be Php 3,650,000. What amount should be adjusted on December 31, 2019 in relation to
this event?
A. 0
B. Php 118,000
C. Php 2,470,000
D. Php 3,650,000
Solutions:
Damages payable Php 3,650,000
Less: Provision recognized prior to case settlement 2,470,000
Retained Earnings, December 31,2019 Php 118,000
3) One and Only Services was incorporated on June 9,2019, with Php 3,250,000 from the
issuance of share capital and borrowed funds of Php 1,500,000. During its first year of
operation, the entity recorded a net income of Php 984,871. On December 15, 2019, the
company has paid Php 212,500 cash dividends. No additional activities affected the
shareholder’s equity for 2019. At the end of the year, the liabilities had increased to Php
516,973. On December 31, 2019, what amount should be reported as total assets?
A. Php 1,289,344
B. Php 1,501,844
C. Php 4,539,344
D. Php 4,964,344
Solutions:
Liabilities Php 516,973
Share Capital 3,250,000
Retained Earnings
(Net income of Php 984,871 less Php 212,500 of cash dividends) 772,371
Assets= Total liabilities and shareholder’s equity Php 4,539,344
STATEMENT OF COMPREHENSIVE INCOME
(Income Statement)
III. Theories
1) What are the elements related to the measurement of financial performance?
A. Asset, Liabilities and Equity
B. Income and Expense
C. Revenues and Losses
D. Asset, Liabilities and Equity, Income Expense
2) The important data affecting the retained earnings are the following except
A. Profit or loss for the period
B. Comprehensive income for the period
C. Prior period errors
D. Effect of changes in accounting policy
3) The errors from the previous year will be included in the _______ of the next year.
A. Other comprehensive income
B. Net income
C. Prior period adjustments
D. Retained earnings
1) Administrative costs include
A. Selling and Administrative Expense
B. Selling, Advertising and Delivery of Goods to Customer CFAS 2019npage 183
C. Selling and other expenses
D. Selling expense only
2) These are amounts reclassified to profit or loss in the current period that were recognized in
other comprehensive income in the current or previous period.
A. Prior period errors
B. Reclassification adjustments
C. Unusual and irregular items
D. Correcting entries
1)
STATEMENT OF COMPREHENSIVE INCOME
(Income Statement)
IV. Problems
1) CMB Industries provided the following balances on December 31, 2019
Accounts payable Php 1,400,000
Accrued taxes 55,000
Ordinary share capital 7,700,000
Dividends – ordinary share 4,400,000
Dividends – preference share 1,600,000
Mortgage payable (Php 500,000 due in 6 months) 6,000,000
Notes payable, due on January 14, 2021 2,300,000
Preference share capital 3,250,000
Premium on notes payable 125,000
Income summary – credit balance 9,090,000
Retained earnings – January 1 8,080,000
Unamortized issue cost on note payable 65,000
Unearned rent income 35,000
What is the amount of retained earnings for the year ended?
A. Php 2,080,000
B. Php 11,170,000
C. Php 17,170,000
D. Php 22,120,000
Solutions:
Retained earnings – January 1 8,080,000
Income summary – credit balance 9,090,000
Dividends – ordinary share 4,400,000
Dividends – preference share (1,600,000)
Retained earnings, December 31,2019 Php 11,170,000
2) LMR Enterprises provided the following data for the current year:
Net income Php 2,014,000
Unrealized gain on derivative contract 507,000
Foreign currency translation adjustment – debit 51,500
Revaluation surplus 201,400
What is the comprehensive income for the current year?
A. Php 2,721,900
B. Php 2,670,900
C. Php 2,469,500
D. Php 2,521,000
Solutions:
Net income Php 2,014,000
Other comprehensive income:
Unrealized gain on derivative contract 507,000
Foreign currency translation adjustment (51,500)
Revaluation surplus 201,400 656,000
Comprehensive Income Php 2,670,900
3) EXODUS Trading accounts for noncurrent assets using cost model. On September 30,
2019, the entity classified a noncurrent asset as held for sale. At the date, the asset’s
carrying amount was Php 1,457,965, its fair value was estimated at Php 957,365, and the
cost of disposal at Php 68,500. On November 20, 2019, the asset was sold for net proceeds
of Php 875,000. What amount should be included as loss on disposal in the statement of
comprehensive income for the year ended, December 31, 2019?
A. Php 13,865
B. Php 82,365
C. Php 514,465
D. Php 582,965
Solutions:
Carrying amount Php 1,457,965
Fair value less cost of disposal (957,365-68,000) (888,865)
Impairment loss Php 569,000
Sale price 875,000
Carrying amount on the date of sale (888,865)
Loss on disposal Php (13,865)
