ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
PERIOD 1 QUIZ #1
This Quiz is composed of 50 items. Write your answers before the number. Erasures will be
automatically mark wrong.
1. Under IFRS 15, what is the recognition principle of revenue arising from contracts with customers?
a. The revenue shall be recognized by the entity when the contract price has already been received
and the period of refund has already expired
b. The revenue shall be recognized by the entity when it is probable that there will be inflow of future
economic benefits to the entity and the revenue can be measured reliably
c. The revenue shall be recognized by the entity at the time of perfection of the contract with the
customer
d. The revenue shall be recognized by the entity when or as the entity satisfies the performance
obligation by transferring the promised goods or services to the customer
2. According to IFRS 15, what is the accounting treatment of the transaction price when a contract with a
customer has multiple performance obligations?
a. The transaction price shall be recognized as revenue of the most important performance obligation
b. The transaction price shall be allocated equally to the different performance obligations
c. The transaction price shall be recognized as revenue only at the end of completion of all
performance obligations
d. The transaction price shall be allocated to the different performance obligations by reference to
their relative standalone selling prices
3. Under PFRS 15, the good or service is considered distinct if
Statement 1: The customer can benefit from it, either on its own or together with other resource that are
readily available to the customer
Statement 2: The good or service is separately identifiable from other goods or services
a. Only Statement 1 is correct
b. Only Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
4. General-purpose financial statements are the product of;
a. financial accounting
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
b. managerial accounting
c. both financial and managerial accounting
d. neither financial accounting nor managerial accounting
5. Which of the following statements is NOT an objective of financial reporting?
a. To provide information that is useful in investment and credit decisions.
b. To provide information about resources, claims against those resources and changes in them.
c. To provide information on the liquidation value of an entity.
d. To provide information that is useful in assessing cash flow prospects.
6. Which financial statement would a potential investor primarily use to assess the company’s liquidity and
financial flexibility?
a. Balance sheet
b. Income statement
c. Statement of retained earnings
d. Cash flow statement
7. Which of the following does not describe a current asset?
a. It is held primarily for the purpose of being traded
b. It is expected to be realized within twelve months after the balance sheet date
c. It is a cash or a cash equivalent restricted for more than 12 months from the balance sheet date
d. It is expected to be realized, sold or consumed within the entity’s normal operating cycle
8. Which of the following does not describe a current liability?
a. It is expected to be settled within the entity’s normal operating cycle
b. It is held primarily for the purpose of being traded
c. It is due to be settled within twelve months after the balance sheet date
d. The entity has an unconditional right to defer settlement of the liability for at least twelve months after the
balance sheet date.
9. The basis of classifying assets as current assets is
a. The accounting cycle or one year, whichever is longer
b. The accounting cycle or one year, whichever is shorter
c. The operating cycle or one year, whichever is longer
d. The operating cycle or one year, whichever is shorter
10. If the operating cycle of a business is fifteen months
a. Cash set aside for the purchase of an equipment will be shown as a current asset
b. Non-trade receivable that is due in one year and two months from the balance sheet date will be shown as a
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
current asset
c. Trade receivable that is due in 14 months from the balance sheet date will be shown as a current asset
d. A note that is payable by the business two years from the balance sheet date will be shown as current
liability
11. Which item below is not a current liability?
a. Unearned revenue
b. Share dividends distributable
c. Short-term bank loan
d. Accounts payable
12. An example of an item which is not an element of working capital is
a. Petty cash fund
b. Goodwill
c. Work in process
d. Short-term investments
13. Treasury shares should be reported as a(n)
a. Current asset
b. Investment
c. Other asset
d. Deduction from equity
14. Which one of the following is not required to be presented as minimum information on the face of the
balance sheet, according to PAS 1?
a. Biological assets
b. Investment property
c. Contingent liability
d. Investments accounted under equity method
15. Which of the following is NOT an acceptable presentation of the balance sheet?
a. Assets presented in the order of liquidity
b. Minority interest presented within equity
c. Deferred tax liabilities (assets), presented as part of current liabilities (current assets)
d. Provisions presented as part of the liability section
16. The income statement shows information about an entity’s
a. Liquidity
b. Cash flow
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
c. Performance
d. Financial structure
17. Increases in equity from peripheral or incidental transactions of an entity are called:
a. Revenues
b. Comprehensive income
c. Losses
d. Gains
18. Which of the following best describes a Revenue?
a. A decrease in an asset from primary operations
b. An increase in an asset from incidental transactions
c. An increase in a liability from incidental transactions
d. A decrease in a liability from primary operations
19. Which of the following is not a distribution cost?
a. Salesmen’s salaries
b. Freight-out
c. Depreciation of delivery equipment
d. Freight-in
20. Which of the following is not a general and administrative expense?
a. Depreciation of office building
b. Insurance expense
c. Advertising
d. Office salaries expense
21. Comprehensive income includes all changes in equity, except those resulting from distribution to and
contributions from owners. Which of the following is not a part of comprehensive income?
a. Share capital
b. Unrealized gains on FVPL
c. Unrealized gains on FVOCI
d. Loss on foreign exchange translation
22. It is the total of income less expenses, including the components of other comprehensive income.
a. Total comprehensive income
b. Profit or Loss
c. Other comprehensive income
d. Retained earnings
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
23. Which method of income measurement is used in the preparation of the income statement?
a. Capital maintenance approach.
c. cash flow approach
b. Transaction approach.
d. income components approach
24. Which of the following requires an adjustment to the beginning balance of retained earnings in the earliest
period of the comparative financial statements presented?
a. A change in the estimated useful life of machinery
b. A change in the expected residual value of a property
c. A change from straight-line to declining balance depreciation
d. A change from First-In, First-Out (FIFO) to weighted average inventory cost flow assumption
25. Prior period errors are
a. Errors committed and discovered in prior periods
b. Errors committed and discovered in the current period
c. Errors committed in prior periods but are discovered only in the current period
d. Errors committed only in the current period but are discovered in prior period
26.ABC Co., a seller of concrete aggregates, enters into the following contracts:
i. A contract with Delta Co. to deliver goods. Payment is due one month after delivery.
ii. A contract with Echo Co. for the sale of 300 units of each of Products X and Y. The contract states that the
price of Product Y will be retrospectively reduced by 50% if Echo Co. makes a cumulative purchase of at least
1,000 units of Product X within 6 months.
iii. A contract with Fafa Co. to deliver goods. At contract inception, Fafa Co. is broke. ABC Co. expects that it
can only collect 50% of the consideration.
iv. A contract with Gamma Co., an entity which is also engaged in the concrete aggregates business, to
exchange inventory to facilitate sales to customers in different geographical areas of operations.
Identify the contracts to which PFRS 15 Revenue from Contract with Customers may not be applied.
a. Delta and Echo
b. Fafa
c. Fafa and Gamma
d. Gamma
27. Certain criteria must be met before a contract with a customer is accounted for under PFRS 15. Which of
the following precludes a contract from being accounted for under PFRS 15?
a. The consideration is collected in advanced
b. The contract is made orally
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
c. The contract does not result to a change in the risk, timing or amount of the entity’s future cash flows.
d. The contract is neither oral nor written but rather implied by the entity’s business practices.
28. ABC Co. enters into a contract with XYZ, Inc. to deliver 2 apples, 3 mangoes, and 5 potatoes for a total
consideration of ₱100. In accounting for the contract, which of the following is probably not true?
a. ABC Co. identifies three performance obligations in the contract.
b. ABC Co. allocates the ₱100 transaction price over the promises to deliver the apples, mangoes and
potatoes on the basis of relative stand-alone selling prices of those goods.
c. The allocation of the transaction price may result to the identification of a discount.
d. No revenue is recognized until all of the 2 apples, 3 mangoes and 5 potatoes are delivered even though the
2 apples were delivered first before the mangoes and potatoes.
29. ABC Co., a manufacturer and dealer of printing machines, had the following transactions during the period:
I.ABC Co. receives an order for the manufacture of a customized machine for a customer. The customer pays
half of the consideration at contract inception. The manufacturing lead time is 1 year. ABC Co. subcontracts a
portion of the manufacturing to XYZ, Inc., another manufacturer.
II.ABC Co. receives an order for a standard machine. Payment is due only after ABC Co. has delivered and
installed the machine. Additionally, the contract requires ABC Co. to perform free maintenance services over a
3-month period after the machine is installed. ABC Co. completes the delivery and installation by the end of the
reporting period; however, the maintenance period is not yet over.
III.ABC Co. receives an order for 2 machines. The first machine is delivered at contract inception but the
second machine will be delivered after two months. Payment is due only after both machines are delivered. By
the end of the reporting period, the second machine is not yet delivered and the consideration is not yet
collected. Identify the contracts to which PFRS 15 Revenue from Contract with Customers may be applied.
a. Contract 1
b. Contracts 1, 2 and 3
c. Contract 3
d. None of these
30. It is an agreement between two or more parties that creates enforceable rights and obligations.
a. obligation c. revenue
b. contract d. any of these
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
31.
31. A. 2,440,000
700,000+930,000-20,000+30,000+800,000= 2,440,000
32.
****end***
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
32. A. 7,900,000
33-36
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
33. B. 5,400,000
34. A 900,000
35. C 8,600,000
36. C 8,200,000
37-39
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
37. C 3,200,000
38. A 1,800,000
39. B 7,700,000
40.
40. A 8,500,000
41.
41. A 11,000,000
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
42.
42. D 7,500,000
43.
43. C 3,900,000
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
44-46
44. A 2,250,000
45. A 650,000
46. A 2,550,000
47 to 50 are based on the following information:
Globemart, Inc., a telecommunications operator, entered into a contract with Kim Dorothy on March 1, 20x7. In
line with the contract, Kim Dorothy subscribes for Globemart's monthly plan for 12 months and in return Kim
Dorothy receives a free Apple I-Phone handset from Globemart. Kim Dorothy will pay a monthly fee of P1,200.
Kim Dorothy gets the handset immediately after contract signature. Globemart sells the same handsets for
P3,600 and the same monthly plans for P800 per month without handset.
47. Identify the contract with a customer – what kind of contract between Globemart, Inc. and Kim Dorothy?
a. Oral Contract
b. Written contract
This document is the property of PHINMA EDUCATION
ACC 109: Intermediate Accounting 4
Name: _________________________________________________________________ Class number: _______
Section: ____________ Schedule: ________________________________________ Date: ________________
c. Customary business practice
d. No contract
48. Identify the performance obligations (PO) – how many performance obligations?
a. 1-Performance Obligation: Network services (monthly/installment plan)
b. 1-Performance Obligation: Apple I-Phone Handset
c. 2- Performance Obligations: Network services (monthly/installment plan) and Apple I-Phone Handset
d. No performance obligation since there is no existing contract
49. Determine the transaction price – the total transaction price?
a. P3,600
c. P13,200
b. P9,600
d. P14,400
50. Allocate the transaction price to the performance obligations: the allocated transaction price to each
performance obligations?
a. None, since there is no contract
b. P9,600 network service and P3,600 for Apple I-Phone Handset
c. P0 for network service and P13,200 for Apple I-Phone Handset
d. P10,473 network service and P3,927 for Apple I-Phone Handset
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