REVIEWER IN FAR AND AFAR

1. The first entry in the accounting in the accounting cycle is to

a. Record transaction in a journal
b. Analyze transaction from source documents
c. Post journal entries to general ledger accounts
d. Adjust the general ledger accounts
2. Which is done first in the accounting process?
a. Financial statements are prepared
b. Adjusting entries are recorded
c. Nominal accounts are closed
d. A postclosing trial balance is prepared
3. Which is an optional step in the accounting cycle?
a. Adjusting entries
b. Closing entries
c. Financial statements
d. Postclosing trial balance
4. Factors that shape an accounting information system include
a. Nature of business
b. Size of the entity and nature of business
c. Volume of data to be handled and size of entity
d. Nature of business, size of entity and volume of data to be handled
5. Which accounts measure economic flows over a period of time?
a. Real accounts
b. Nominal accounts
c. Mixed accounts
d. Contra accounts
6. What function do ledgers serve in the accounting process?
a. Reporting
b. Summarizing
c. Classifying
d. Recording
7. Equity is not affected by all
a. Cash receipts
b. Dividends
c. Revenue
d. Expenses
8. Numerous errors may exist even though the trial balance column agree. Which is not one of
the errors?
a. A transaction is not journalized
b. Transposition error
c. A journal entry is posted twice
d. A transaction is recorded and posted at an incorrect amount
9. A trial balance may prove that debits and credits are equal, except
a. An amount could be entered in the wrong account
b. A transaction could have been entered twice
c. A transaction could have been omitted
 d. All of these may prove that debits and credits are equal
10. An unadjusted trial balance
a. Provides information that is helpful when making adjusting entries
b. Proves that no errors have been made
c. Usually contains the account balances that should appear in the financial statements
d. Is a summary taken directly from the general journal

AA Company provided the following data on December 31, 2021:

Checkbook balance 4,000,000
Bank statement balance 5,000,000
Check drawn on AA’s account, payable to supplier,
dated and recorded on December 31, 2021 but
not mailed until January 15, 2022 500,000
Cash in sinking fund 2,000,000
11. On December 31, 2021, what amount should be reported as “cash” under current assets?
a. 5,500,000
b. 4,500,000
c. 3,500,000
d. 6,500,000
At year-end, AA Company reported cash and cash equivalents which comprised the following:
Cash on hand 500,000
Demand deposit 4,000,000
Certificate of deposit 2,000,000
Postdated customer check 300,000
Petty cash fund 50,000
Traveler’s check 200,000
Manager’s check 100,000
Money order 150,000
12. What total amount should be reported as “cash” at year-end?
a. 7,000,000
b. 5,000,000
c. 6,800,000
d. 5,800,000
AA Company had the following account balances at year-end:
Cash in bank 2,000,000
Cash on hand 125,000
Cash restricted for addition to plant end
expected to be disbursed next year 1,600,000
Cash in bank included 500,000 of compensating balance against short-term borrowing
arrangement.
The compensating balance is not legally restricted as to withdrawal.
13. What total amount of cash should be reported under current assets at year-end?
a. 1,625,000
b. 2,125,000
c. 2,000,000
d. 3,725,000
AA Company reported petty cash fund which comprised the following:
Coins and currency 3,300
Paid vouchers:
Transportation 600
Gasoline 400
Office suppliers 500
Postage stamps 300
Due from employees 1,200 3,000
 Manager’s check returned by bank marked “NSF” 1,000
Check drawn by the entity to the order of petty cash custodian 2,000
14. What is the current amount of petty cash fund for statement presentation purposes?
a. 10,000
b. 7,000
c. 6,000
d. 5,300
AA Company provided the following information relating to accounts receivable for the current
year:
Accounts receivable- January 1 1,000,000
Credit sales 5,000,000
Collections from customers, excluding recovery 4,000,000
Accounts written off 100,000
Collection of accounts written off in prior years ( customer
Credit was not reestablished) 20,000
Estimated uncollectible receivables per aging of receivables at
December 31 200,000
15. What is the balance of accounts receivable before the allowance for doubtful accounts on
December 31?
a. 1,900,000
b. 1,880,000
c. 1,700,000
d. 2,000,000

Airborne Company used the average cost retail inventory method. The entity provided
the following information for the current year:
Cost Retail
Beginning inventory 1,650,000 2,200,000
Net purchases 3,725,000 4,950,000
Departmental transfer - credit 200,000 300,000
Net markup 150,000
Inventory shortage - sales price 100,000
Employee discounts 200,000
Sales, including sales of P400,000 of items which
were marked down from P500,000 4,000,000
16. What is the estimated cost of ending inventory?
a. 1,950,000
b. 2,600 000
c. 1,924,000
d. 2,250.000

Tower Company made the following acquisitions during the year:

Purchased for P5,400,000, including appraiser fee of P50,000, a warehouse building and
the land on which it is located.
The land had an appraised value of P2,000,000 and original cost ofP1,400,000. The
building had an appraised value of P3,000,000 and original cost of P2,800,000.
Purchased an office building and the land on which it is located for P7,500,000 cash and
assumed an existing P2,500,000 mortgage. For realty tax purposes, the property is
assessed at P9,600,000, 60% of which is allocated to the building.
17. What is the total cost of land?
a. 6,160,000
b. 5,840,000
c. 6,000,000
d. 5,000,000
 18. What is the total cost of building?
a. 8,760,000
b. 9,240,000
c. 9,200,000
d. 7,760,000
At the beginning of current year, Lem Company bought machinery under a contact that
required a down payment of P100,000, plus 24 monthly payments of P50,000 each, for
total cash payments of P1,300,000.
The cash price of the machinery was P 1,100,000. The machinery has a useful life of 10
years and residual value of P50,000. The entity used straight line depreciation.
19. What amount should be reported as depreciation for the current year?
a. 105,000
b. 110,000
c. 125,000
d. 130,000
King Company made the following expenditures:
Continuing and frequent repairs 400,000
Repainted the plant building 100,000
Major improvements to the electrical wiring system 300,000
Partial replacement of roof tiles 140,000
20. What amount should be charged to repair and maintenance expense?
a. 960,000
b. 820,000
c. 640,000
d. 540,000
21. ST1 A written partnership contract is required to be prepared whenever a partnership is
formed.
ST2 All partnerships are subject to income tax.
a. True, True
b. False, False
c. True, False
d. False, True
22. ST1 All partnerships have at least one general partner.
ST2 Each partner generally has the authority to enter into contracts which are binding upon
the partnership.
a. True, True
b. False, False
c. True, False
d. False, True

On March 1, 2024, AA and BB formed a partnership with each contributing the following
assets:
AA BB
Cash 30,000 70,000
Machinery and equipment 25,000 75,000
Building - 300,000
Furniture and Fixtures 10,000 -

The building is subject to a mortgage of loan of P95,000, which is to be assumed by the

partnership. The partnership agreement provides that AA and BB share profits and losses 30% and
70%, respectively.
23. On March 1, 2024 the balance in BB’s capital account should be:
a. 445,000
b. 350,000
c. 378,500
d. 380,000
 On July 1,2024, AA and BB form a partnership, agreeing to share profits and losses in the ratio of 4:6,
respectively. AA contributed a parcel of land that cost him, P25,000. BB contributed P50,000 cash.
The land was sold on July 1, 2024 four hours after formation of partnership.
24. How much should be recorded in AA’s capital account on formation of the partnership?
a. 50,000
b. 25,000
c. 20,000
d. 10,000
AA. BB and CC form a partnership on May 1, 2024. They agree that AA will contribute office
equipment with a total fair value of P40,000; BB will contribute delivery equipment with a fair value
of P80,000; and CC will contribute cash.
25. If CC wants a one third interest in the capital and profits, he should contribute cash of:
a. 40,000
b. 60,000
c. 120,000
d. 180,000

CC and DD have just formed a partnership, CC contributed cash of P126,000 and computer equipment
that cost P54,000. The computer had been used in his sole proprietorship and had been depreciated to
P24,000. The fair value of the equipment if P36,000. CC also contributed a note payable of P12,000 to be
assumed by the partnership. CC is to have 60% interest in the partnership. DD contributed only P90,000
cash.

26. CC should make an additional investment (withdrawal) of:

a. (76,800)
b. (15,000)
c. 96,000
d. 84,000
27. When shares with par value are sold, the proceeds shall be credited to the

a. Share capital account

b. Share premium
c. Retained earnings
d. Share capital account to the extent of the par value of the shares issued with any
excess being reflected in share premium
28. The cost of treasury shares acquired for non-cash consideration is usually measured by:

a. Fair value of the noncash considerations

b. Carrying amount of the noncash asset surrendered
c. Par value of the shares
d. Book value of the shares
29. If treasury shares are reissued for noncash consideration, the proceeds shall be measured by

a. Fair value of the treasury shares

b. Fair value of the noncash consideration
c. Carrying amount of the noncash consideration
d. Cost of the treasury shares.
30. The residual interest in a corporation belongs to

a. Management
b. Creditors
c. Ordinary shareholders
d. Preference shareholders
31. What is the only underlying assumption mentioned in the Conceptual Framework for Financial
Reporting?
 a. Going concern
b. Accounting entity
c. Time period
d. Monetary unit
32. Which statement best describes the term “going concern”?
a. When current liability of an entity exceeds current assets.
b. The ability of the entity to continue in operation for the foreseeable future.
c. The potential to contribute to the flow of cash and cash equivalents to the entity.
d. The expenses exceed income.
33. Which of the following is not 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 and noncurrent classification of assets and liabilities is justifiable and
significant.
d. Amortizing research and development costs over several periods is justifiable and
appropriate.
34. The relatively stable economic, political and social environment supports:
a. Conservatism
b. Materiality
c. Timeliness
d. Going concern
35. Which basic assumption may not be followed when an entity in bankruptcy reports financial
results?
a. Economic entity assumption
b. Going concern assumption
c. Time period assumption
d. Monetary unit assumption
36. The financial statements of the business entity are separate and distinct from the financial
statements of the owners.
a. Going concern assumption
b. Matching principle
c. Economic entity assumption
d. Accounting period assumption
37. 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.
38. Which underlying assumption serves as the basis for preparing financial statements at regular
arbitrary or artificial points in time?
a. Accounting entity
b. Going concern
c. Accounting period
d. Stable monetary unit
39. Which basic accounting assumption is threatened by the existence of severe inflation in an
economy?
a. Monetary unit assumption
b. Periodicity assumption
c. Going concern assumption
d. Economic entity assumption
 40. Which is not an important characteristic of the financial statements that accountants currently
prepare?
a. The information in financial statements is expressed in units of money adjusted for
changing purchasing power.
b. Financial statements articulate with one another because measuring financial position is
related to measuring changes in financial position.
c. The information in financial statements is summarized and classified to help meet users’
needs.
d. Financial statements can be justified only if the benefits exceed the costs.
41. Exchange rate is
a. The ratio of exchange for two currencies
b. The spot exchange rate at the end of the reporting period
c. The exchange rate for immediate delivery
d. The difference resulting from translating once currency into another currency at
different rates

42. For reporting purposes, currencies are defined as

a. International and functional
b. Foreign, functional, and presentation
c. Domestic and international
d. Operating, international, and presentation
43. The functional currency is the currency in which
a. The entity reports earnings
b. The entity primarily conducts banking activities
c. The entity primarily operates
d. The entity presents the financial statements

44. How is presentation currency defined?

a. The currency of the primary environment in which the entity operates
b. The currency in which the financial statements are presented.
c. A currency other than functional currency
d. The currency that uses the current rate
45. Initially, a foreign currency transaction shall be recorded by applying to the foreign
currency amount
a. The spot exchange rate at the date of transaction
b. The closing rate at the end of the reporting period
c. The average exchange rate during the year
d. The spot rate at the date of the settlement
46.Foreign currency monetary items are subsequently translated at
a. Closing rate
b. Historical rate
c. Forward rate
d. Spot exchange rate
47. Nonmonetary items that are measured in terms of the historical cost denominated in a
foreign currency shall be reported using the
a. Exchange rate at the date of transaction or historical rate
b. Closing rate
c. Average rate
d. Spot exchange rate
48. Exchange difference arising from foreign currency transactions shall
a. Be recognized in profit or loss of the reporting period
b. Be recognized as component of other comprehensive income
c. Be deferred and amortized over a reasonable period
d. Not be recognized
49. It is a subsidiary, associate, joint venture or a branch of a reporting entity whose activities
are based or conducted in a country or currency other than that of the reporting entity.
a. Multinational entity
b. Foreign operation
c. Foreign entity
d. Affiliated entity
50. In translating financial statements of a foreign operations into the presentation currency of
the reporting entity, assets, and liabilities are translated at
 a. Closing rate
b. Spot rate
c. Forward rate
d. Historical rate

The following data were presented in the statement of affairs for BW Company:

Unsecured liabilities without priority 900,000

Stockholders’ equity 360,000
Loss on realization of assets 450,000
Estimated administrative expenses that have not been recorded 45,000
Unsecured liabilities with priority 100,000
51. Based on the foregoing data, what percentage of their claims should UNSECURED , WITH
PRIORITY CREDITORS expect to receive on the liquidation of BW Company?
a. 85% c. 16.5%
b. 90% d. 100%

The First Family Bank loaned P4M to Belle Corporation. The loan is secured by a land with a
book value and fair value of P5,000,000, and P3,000,000, respectively.
52. What amount will the bank received if the unsecured creditors received 25% of their claims?
a. P1,000,000 c. P3,230,000
b. P3,000,000 d. P4,000,000

Lucky Company has filed for liquidation. The following data are available.

Free assets at net realizable value 100,000

Liabilities per books (unsecured) 160,000
Unrecorded liabilities:
Liquidation expenses 6,000
Unpaid wages with priority claim 10,000
53. What percentages of their claims should the unsecured creditors received in liquidation?
a. 62.5% c. 55.29%
b. 56.82% d. 52.5%
The ABU Company in liquidation provided the following data:

Assets at book value 100,000

Assets at net realizable value 75,000
Liabilities at book value 85,000
Unrecorded liabilities: Interest on bank notes 250
Liquidation expenses 4,000
54. Assuming the assets are sold at realizable values, what is the balance of the Estate Equity account
at the end of the period?
a. P14,250 c. P13,850
b. P15,750 d. P14,000
 When the Insolvent Company filed for bankruptcy, it prepared the following balance sheet:

Current assets (net realizable value, P5,000,000) P 800,000

Land and building (fair market value, P2,400,000) 2,000,000
Goodwill 400,000
Total P3,200,000
Accounts payable (unsecured) P1,600,000
Mortgage payable (secured by land and building) 2,000,000
Common stock 1,000,000
Retained earnings (deficit) (1,400,000)
Total P3.200,000
55. What percentage of their claims will the unsecured creditors likely to get?
a. 43.75% c. 56.25%
b. 50% d. 100%

The following are data presented by Ilocos Company:

Assets at book value P1,000,000
Assets at net realizable value 750,000
Liabilities at book value:
Fully secured mortgage 400,000
Unsecured accounts and notes payable 450,000
Unrecorded liabilities:
Interest on bank notes 2,500
Estimated administrative expenses 40,000

56. The Statement of Affairs at this time should include an estimated deficiency to unsecured
creditors of:
a. P350,000 c. P142,500
b. P310,000 d. P100,000

Sayap Company signed a note payable to its bank for P2,000,000. Accrued interest on the note
on February 29, 2024 amounts to P50,000. The note is secured by the inventory with a book
value of P2,300,000. The inventory is sold for P1,600,000 and unsecured creditors receive 30%
of their claims.

57. What amount should the bank receive in settlement of the note and interest?
a. P2,050,000 c. P1,705,000
b. P2,000,000 d. P1,600,000

The Rizal Company provides the following information on November 13, 2024:

Office building at original cost P 1,000,000

Accumulated depreciation on office building 200,000
Land at original cost 300,000
Office building and land at net realizable value 1,500,000
Mortgage payable, secured by office building and land 850,000
Interest accrued on mortgage payable to November 13, 2024 5,000

58. The estimated amount available from the building and land for the settlement of unsecured
creditors is:
a. P650,000 c. P500,000
b. P645,000 d. P300,000

The relevant data from the record of the Down Company are:

Equipment: at original cost P750,000

At book value 550,000
at net realizable value 410,00
Notes payable: Principal amount 400,000
Accrued interest 12,000

59. On the statement of affairs, the company equipment should be shown as:
a. an asset pledged with fully secured creditors, leaving P50,000 for unsecured creditors
b. an asset pledged with fully secured creditors, leaving P138,000 for unsecured creditors
c. an asset pledged with fully secured creditors, leaving P10,000 for unsecured creditors
d. an asset with partially secured creditors; an unsecured liability of P2,000 should also be
disclosed
The Statement of Affairs for the Failed Company contained the following relevant information:

Assets pledged with fully secured creditors P1,000,000

Assets pledged with partially secured creditors 500,000
Free assets 600,000
Liabilities with priority 100,000
Fully secured liabilities 800,000
Partially secured liabilities 750,000
Unsecured liabilities 900,000
All assets are sold at net realizable value.
60. The unsecured creditors should receive what percentage of their claims in liquidation?
a. 60.87% c. 74.29%
b. 64% d. 82.35%

61. ST1 Government accounting encompasses the processes of analysis recording, classifying,
summarizing, and communicating all transactions involving the receipt and disposition of
government funds and property, and interpreting the results thereof.
ST2 Like the accounting for business entities, government accounting is also a process of
producing information that is useful in snaking economic decisions.
a. True, True c. True, False
b. False, False d. False, True
62. Which of the following is not one of the objectives of government accounting?
a. To produce information concerning past operations and present conditions.
b. To provide a basis for guidance for future operations.

c. To provide for control of the acts of public bodies and officers in the receipt,
disposition and utilization of funds and property.
d. To report on the financial position and the results of operations of the business entity
for the information of all persons concerned.

63. Which of the following is not correct about the responsibility, accountability, and liability
over the government funds?

a. Government resources shall be utilized efficiently and effectively in accordance with

the law.
b. The head of a government agency is directly responsible in implementing this policy
and is primarily responsible for government resources entrusted to his agency.
c. All those who are exercising authority over a government agency shall share fiscal
responsibility.
d. Those who are entrusted with the possession of government resources are indirectly
responsible to the head of the agency.

64. Which of the following is incorrect about the accountability over government funds and
property.
a. A government officer entrusted with the possession of government resources is
responsible for the safekeeping therefor in accordance with the law.
b. Every accountable officer shall be properly bonded.
 c. The transfer of government funds from one officer to another shall, except as allowed
by law, be made only after the authorization of the COA.
d. The transfer shall be properly documented in a memorandum entry only.
65. Which of the following is not correct about the liability over government funds and
property.
a. The unlawful use of government resources shall be the personal liability of the
employee found to be directly responsible, therefore.
b. Every accountable officer shall be liable for all losses resulting from the unlawful use
or negligence in the safekeeping of government resources.
c. No accountable officer shall be relieved from liability merely because he has acted
under the direction of a superior officer in unlawfully utilizing the government resources
entrusted to him, unless before that act, he has notified the superior officer, in writing,
that the utilization is illegal.
d. An accountable officer shall immediately notify the COA for any loss of
government funds from unforeseen events (force majeure) within 60 days.
66. Which of the following is not a responsibility of the Commission on Audit (COA)
a. Has the exclusive authority to promulgate accounting and auditing rules and
regulations.
b. Receive and keep national funds and manage and control the disbursements thereof
c. Keeps the general accounts of the government, supporting vouchers, and other
documents.
d. Submits financial reports to the President and Congress.

67. Responsible for the formulation and implementation of the national budget with the
goal of attaining the nation's socio-economic objectives.
a. Commission on audit
b. Bureau of Treasury
c. Department of Budget and Management
d. Government agencies

68. It refers to any department, bureau or office of the national government, or any of its
branches and instrumentalities, or any political subdivision, as well as any
government owned or controlled corporation (GOCC), including its subsidiaries, or
other self-governing board or commission of the government.
a. Commission on audit
b. Government agencies
c. Bureau of Treasury
d. Department of Budget and Management

69. It functions under the Department of Finance and is the cash custodian of the
government.
a. Commission of audit
b. Bureau of Treasury
c. Department of Budget and Management
d. Government agencies
70. It encompasses the processes of analyzing, recording, classifying, summarizing, and
communicating all transactions involving the receipt and disposition of government funds and
property, and interpreting the results thereof.
a. Government auditing
b. Government reporting
c. Government accounting
d. Government analyzing
71. Unacceptable units of production that are subsequently repaired and sold as good units are
a. Reworked units
b. Scrap
c. Waste
d. Spoilage
72. It is a service allocation method that allocates service department costs without considering
the service rendered to other service departments.
 a. Direct
b. Indirect
c. Reciprocal
d. Step
73. The work in process inventory should be debited with the cost of rework that is
a. Scrap
b. Abnormal
c. Normal and common to all jobs
d. Normal and specific to a job
74. Under job-order costing system, the use of indirect materials would usually be recorded as
an increase in
a. Materials
b. Work in process
c. Factory Overhead Applied
d. Factory overhead Control
75. Which transaction should be recorded in the job cost sheet?
a. Purchase of direct materials
b. Payment of direct labor
c. The payment of factory expenses
d. None of the above
76. Which of the following is not relevant in determining weighted average unit cost in process
costing?
a. cost of beginning inventory
b. equivalent unit production in beginning inventory
c. equivalent unit production in inventory
d. units completed
77. The numerator of weighted- average unit cost calculations is
a. current period costs
b. cost of beginning inventory
c. current cost plus cost of beginning inventory
d. cost of goods sold
78. In a FIFO process costing system, which of the following are assumed to be completed first
in the current period?
a. units started this period
b. units started last period
c. units transferred out
d. units still in process
79. Which is irrelevant in determining the equivalent unit production of FIFO method?
a. equivalent unit production of ending inventory
b. beginning inventory units
c. equivalent unit production of completed units
d. cost of beginning inventory
80. Transferred-in cost represents the cost from
a. the last department only
b. the last production cycle
c. all prior departments
d. the current period only

Cebu branch submitted the following data to its home office in Manila for 2024, its first year of
operation:
Sales P2,300,000
Shipments from home office 1,850,000
Operating expenses 235,000
Home Office 480,000
 Shipments to the branch are billed at cost. The December 31 inventory of the branch was
P255,500.
81. What is the balance of the Investment in Branch account on December 31, 2024?
a. P950,500 c. P950,000
b. P470,500 d. P480,000
The Home Office in Quezon City ships and bills merchandise to its provincial branch at cost. The
branch carries its own accounts receivable and makes its own collections. The branch also pays
its expenses.
The transactions for 2024 are reflected in the branch trial balance that follows:
Cash P20,000
Accounts receivable 80,000
Home Office P180,000
Shipments from Home Office 250,000
Sales 225,500
Expenses 55,500
Total P405,500 P405,500
December 31, inventory P65,000
82. Assuming all the transactions are properly recorded, what is the balance of the Investment
in Branch account in the Home Office book?
a. P 180,000 c. P 165,000
b. P195,000 d. P 175,000
The following pertain to the shipments of merchandise from home office to branch during
2024:
Home office’s cost of merchandise P 350,000
Inter-office billings 420,000
Sales by branch to outsiders 520,000
Merchandise inventory, 12/31 50,000
83. In the combined statement of comprehensive income of the Home Office and the Branch
for the year ended December 31, 2024, what amount of the above transactions should be
included as sales?
a. P570,000 c. P470,000
b. P520,000 d. 350,000

Nike Corporation operates a number of branches in the provinces. On December 31 of the

current year, its Davao branch showed a Home Office account balance of P54,700 and the home
office books showed an investment in Davao Branch account balance of P51,100.
The following information may help In reconciling both accounts.
1. A P24,000 shipment, charged by Home Office to Davao Branch was actually sent and
retained by Cebu branch.
2. A P30,000 shipment, intended and charged to Aklan branch was shipped to Davao branch
and returned by the latter.
3. A P4,000 emergency cash transfer from Cebu branch was not taken up in the Home Office
books.
4. Home Office collects a Davao Branch accounts receivable of P7,200 and fails to notify
the branch.
5. Home Office was charged for P2,400 for merchandise returned by Davao Branch on
December 30. The merchandise is in transit.
Home Office erroneously recorded Davao Branch’s net income for the current year at P 32,550.
The branch reported a net income of P23,550.

84. What is the adjusted balances of the Home Office and Davao Branch reciprocal accounts of
the current year?
a. P40,300 c. P47,500
b. P54,700 d. P43,500

The branch manager of Tower Cosmetics in Cebu submitted a report as of May 31 of the current
year containing the following information
Petty cash fund P 1,500
 Sales 198,720
Sales returns 3,600
Accounts written off 1,920
Shipments from Home Office 136,080
Accounts receivable, beg 43,800
Accounts receivable, end 49,140
Inventory, beg 37,170
Inventory, end 41,370
Expenses (reimbursed by HO) 57,930

85. Assuming all cash collected by the branch is transmitted to Tower Cosmetics’ Home
Office,the remittances for the period amounted to:
a. P 187,860 c. P195,120
b. 189,780 d. P 198,720

On December 31, the Investment in Branch account in the home office books shows a balance of
P50,000. The following facts are ascertained:
1. Merchandise billed at P12,500 is in transit on December 31 from home office to the branch.
2. The branch collected a home office accounts receivable for P3,500. The branch did not notify
the home office of such collection.
3. On December 30, the home office sent cash of P7,500 to the branch, but this was charged to
General Expense; the branch has not received the cash as of December 31.
4. Branch profit for December was recorded by the home office at P2,400 instead of P2,040
5. The branch returned supplies of P1,500 to the home office but the home office had not yet
recorded the receipt of the supplies.
Assume all other transactions have been properly recorded

86. What is the unadjusted balance of the home office account on the branch books on
December 31?
a. P64,140 c. P14,000
b. P39,140 d. P13,000

A reconciliation of the Dagupan branch account of Mandaluyong Company and the Home Office
account carried in the branch’s books shows the following discrepancies at December 31, 2024:
1. A credit for merchandise allowance for P300 was taken by the branch as P360.
2. A charge by the branch of P550 for an advance taken by the president when he visited the
branch has not yet been recorded by the home office.
3. The branch has not taken up P900 covered by a debit memo from the home office as share in
advertising expense.
The Investment in Dagupan branch account on the home office books had a debit balance of
P43,000 at December 31, 2024. The reciprocal accounts were in agreement at the beginning of
the year.

87. The unadjusted balance of the home office account in the branch’s books at December
31, 2024 was
a. P43,500 c. P41,990
b. P 42,950 d. P 41,490

The following were found in your examination of the interplant accounts between the Home
Office and the Butuan Branch
a. Transfer of fixed assets from Home Office amounting to P53,960 was not booked by the
branch
b. P10,000 covering marketing expense of another branch was charged by the Home Office
to Butuan.
c. Butuan recorded a debit note on inventory transfers from Home Office of P75,000 twice
d. Home Office recorded cash transfer of P65,700 from Butuan branch as coming from Davao
branch
 e. Butuan reversed a previous debit memo from Cagayan De Oro branch amounting to P10,500 .
Home Office decided that the charge is appropriately Davao branch’s cost.
f. Butuan recorded a debit memo from Home Office of P4,650 as P4,560.
88. The net adjustment of DR (CR) to the Investment in Butuan Branch account and to the
Home Office account are:
Investment in Butuan Home Office
a. P(75,700) P20,950
b. 75,700 (20,950)
c. (55,700) 75,000
d. (65,700) (74,000)

After examining on a comparative basis the inter-office account of the Bulacan Company with
the suburban branch and the similar account carried on the latter’s books, the following
discrepancies at the close of the business on June 30, 2024 were seen:
a. A charge for the labor by the Home Office, P500 was recorded twice by the branch.
b. A charge of P895 was made by the Home Office for freight on merchandise, but the amount
was recorded by the branch as P89.50
c. A charge of P980 (furniture and fixture) on the Home Office books was taken up by the
branch as P890.
d. A credit by the Home Office for P350 (merchandise allowance) was taken up by the branch
as P400
e. The Home Office charged the Branch P425 for interest on open account which the branch
failed to take up in full, instead, the branch sent to the Home Office a wrong adjusting memo,
reducing the charge by P100 and set up a liability for the net amount.
f. the Home Office received P5,000 , from the sale of truck which it erroneously credited to the
branch. The branch did not charge the Home Office therewith
g. The branch by mistake sent the home office a debit note for P370 representing its proportion
of a bill for repairs of truck ; the Home Office did not record it.
h. The branch inadvertently received a copy of the Home Office entry dated July 19, 2021
correcting item (f) and entered a credit in favor of the Home Office as of June 30, 2024.
At June 30, 2024, the unadjusted balance of the Investment in Branch account on the Home
Office books showed P175,520. At the beginning of the year, the inter-office account were in
balance.

89. What is the unadjusted balance of the Home Office account on the branch’s books on
July 30, 2024?
a. P184,279.50 c. P184,729.00
b. P160,725.50 d. P165,279.50

On September 1, Star Company opened a branch in Daguan City, shipping to it merchandise

billed at P60,000. During the month, additional shipments were made at a billed price of
P24,000. Returns by the branch of bad order goods were credited for P1,680. At the end of the
month, the branch reported its inventory of P33,600 and its net loss for the month of P5,200.
Shipments to and from the branch were consistently billed at 120% of cost.
90. On September 30, the branch inventory at cost and the branch income (loss) as far as the
Home Office is concerned are:
a. P28,000 and P2,920, respectively
b. P28,000 and (P5,200), respectively
c. P33,600 and P2,920, respectively
d. P 33,600 and P5,200, respectively

91. The two categories of joint arrangement recognized by PFRS 11 are:

a. Joint operations and Joint assets
b. Joint venture and Joint entities
c. Joint venture and Joint operations
d. Joint operations and Joint contracts
92. An example of debit in Investment in Joint Venture account.
a. share in net loss
 b. dividend received
c. share in other comprehensive loss
d. initial investment
93. An example of a credit to Investment in Joint Venture account.
a. dividends receive
b. initial investment
c. share in net income
d. All of the above
94. If the joint arrangement has no separate vehicle. The arrangement is a:
a. Joint operation
b. Joint venture
c. partnership
d. corporation
95. It arises where two or more entities have an arrangement between each other such that
these entities have joint control mover the arrangement.
a. Joint arrangement
b. Joint venture
c. Joint operation
d. Joint account

96 Dividend received from a joint venture shall be treated in the investor’s book as:
a. Return of investment
b. Other comprehensive income
c. Income
d. Expense
97. When the contractual arrangement establishes that the parties to the joint arrangement are
liable to the arrangement only to the extent of their respective investment only. The
arrangement is a:
a. Joint arrangement
b. Joint venture
c. Joint operation
d. Joint account
98. Is the contractually agreed sharing of control of an arrangement which exists only when
decisions about the relevant activities require the unanimous consent of the parties sharing
control.
a. Joint control
b. Separate vehicle
c. both a and b
d. neither a nor b
99. Is a separately identifiable financial structure, including separate legal entities recognized by
statute, regardless of whether those entities have a legal personality.
a. Joint control
b. Separate vehicle
c. both a and b
d. neither a nor b
100. What is the method of accounting for investment in joint venture?
a. Cost method
b. Equity method
c. Consolidation method
d. Fair value method