1.

An entity shall classify a noncurrent asset or disposal group as held for sale
when
a. The carrying amount of the asset or disposal group is recovered through
continuing use.
b. The carrying amount of the asset or disposal group is recovered through a
sale transaction.
c. The noncurrent asset or disposal group is idle or retired from active use.
d. The noncurrent asset or disposal group is abandoned.

2. An entity shall measure a noncurrent asset or disposal group classified as

held for sale at
a. Carrying amount
b. Fair value less cost of disposal
c. Lower carrying amount and fair value less cost of disposal.
d. Higher carrying amount and fair value less cost of disposal.

3. Enron Company decided on August 1, 2020 to dispose of a component of a

business. The component was sold on November 30, 2020.
The net income for the current year included income of 5,000,000 from operating
the discontinued segment from January 1 to the date of disposal. The entity
incurred a loss on the November 30 sale of 1,000,000.
What amount should be reported as pretax income or loss from
discontinued operation for 2020?
a. 1,000,000 loss
b. 5,000,000 income
c. 4,000,000 loss
d. 4,000,000 income
4. Bunas Island Company provided the following information with respect to its cash
and cash equivalents on December 31, 2017:

Checking account at First Bank (200,000)

Checking account at Second Bank 3,500,000
Treasury saving bonds 1,000,000
Payroll account 500,000
Value added tax account 400,000
Foreign bank account - restricted (in equivalent pesos) 2,000,000
Postage stamps 50,000
Employee’s postdated check 300,000
 IOU from president’s brother 750,000
Credit memo from a vendor for a purchase return 80,000
Traveler’s check 300,000
Not-sufficient-fund check 150,000
Petty cash fund
(P20,000 in currency and expense receipts for P30,000) 50,000
Money order 180,000

What amount would be reported as unrestricted cash on the balance sheet

December 31, 2017?
a. 4,900,000
b. 5,000,000
c. 4,000,000
d. 4,900,000

5. Depending on the business model for managing financial assets, an entity

shall classify financial assets subsequent to initial recognition at
a. Fair value through profit or loss
b. Amortized cost
c. Fair value through other comprehensive income
d. All of these are used in measuring financial assets

6. A debt investment is measured at amortized cost

a. By irrevocable election
b. When the debt investment is managed and evaluated on a document
risk-management strategy.
c. When the debt investment is held for trading
d. When the business model is to collect contractual cash flows that are
solely payments of principal and interest.

7. The irrevocable election to present changes in fair value in other

comprehensive income is applicable only to
a. Investment in equity instruments not held for trading.
b. Investment in equity instruments held for trading.
c. Financial assets measured at amortized cost.
d. Financial assets measured at fair value.

8. A debt investment shall be measured at fair value through other

comprehensive income
a. When the debt is held for trading
 b. When the debt investment is not held for trading
c. By irrevocable designation
d. When the business model is to collect contractual cash flows and also to
sell the financial asset

9. Which is not a category of financial assets?

a. Financial assets at fair value through profit or loss
b. Financial assets at fair value through other comprehensive income
c. Financial assets at amortized cost
d. Financial asset held for sale

10. Under IFRS, the presumption is that equity investments are

a. Held for trading
b. Held to profit from price changes
c. Held for trading and held to profit from price changes
d. Held as financial assets at fair value through other comprehensive income

11. Entities are required to measure financial asset based on all of the
following, except
a. The business model for managing financial asset
b. Whether the financial asset is a debt or an equity investment
c. The contractual cash flow characteristics of the financial asset
d. All of the choices are correct

12. Debt investments that meet the business model and contractual cash flow
tests are reported at
a. Net realizable value
b. Fair value
c. Amortized cost
d. The lower of amortized cost and fair value

13. Debt investments not held for collection are reported at

a. Amortized cost
b. Fair value
c. The lower of amortized cost and fair value
d. Net realizable value

14. Debt investments at amortized cost

a. Managed and evaluated based on a documented risk management
strategy
 b. Trading debt investments
c. Held for collection debt investments
d. All of these are correct
a.
15. Equity investments irrevocably accounted for at FVOCI are
a. Non Trading investments of less than 20%
b. Trading investments of less than 20%
c. Investments of between 20% and 50%
d. Investments of more than 50%

16. What financial assets are assessed for impairment?

a. Equity investments at FVPL
b. Equity investments at FVOCI
c. Debt investments at FPVL
d. Debt investments at amortized cost and debt investments at FVOCI

17. Impairment of debt investments at amortized cost are

a. Based on discounted contractual cash flows
b. Recognized as component of OCI
c. Based on fair value for non trading investments
d. Evaluated at each reporting date

18. An impairment loss is the excess of the carrying amount of the debt
investment over
a. Expected cash flows
b. Present value of the expected cash flows
c. Contractual cash flows
d. Present value of the contractual cash flows

19. Under IFRS, an entity

a. Should evaluate every investment for impairment
b. Accounts for an impairment as component of OCI
c. Calculates the impairment loss on debt investment as the excess of
carrying amount over the expected discounted future cash flows
d. Should not recognize the impairment loss on all financial assets.

20. On January 1, 2020, Masbate Company purchased as trading investment a

P2,000,000 face value Catanduanes Company 8% bond for P1,850,000 plus
accrued interest to yield 10%. The bonds mature on January 1, 2025, and
pay interest annually on December 31. On December 31, 2020, the bonds
 had a market value of P1,890,000. On February 15, 2021, Masbate sold the
bonds for P1,900,000. In its December 31, 2020 balance sheet, what amount
should Masbate report for investment in trading securities?
a. 1,850,000
b. 1,875,000
c. 1,890,000
d. 1,900,000

21. Aguas, Bernal, and Coral are partners. On January, 3, 2007, their capital
balances and profit and loss ratio are as follows:

Capital Profit and Loss Ratio

Aguas 25,000 60%

Bernal 50,000 25%

Coral 60,000 15%

Coral withdrew P10,000 during the year. Net loss on December 31, 2007 totaled
P20,000. Hence the partners decided to liquidate the partnership. It is uncertain
how much of the assets will ultimately yield but favorable realization is expected.
It is, therefore, agreed to distribute cash as it becomes available. There are
unpaid liabilities of P5,000 and cash on hand of P700. The amount of noncash
assets before liquidation is _________.

a. 110,000
b. 104,300`
c. 109,300
d. 105,000
22. Using the information in number 1, the amount to be realized by the
partnership on the sale of its assets so Aguas will receive a total of P19,000 in
the final settlement of his interest is:
a. 103,300
b. 9,300
c. 119,300
d. 6,000
23. Using the information in number 1 and if Coral received a total of 33,000, the
amount that Bernal would have received at this point is:
a. None
b. 2,000
 c. 5,000
d. 21,667

24. Bruce Company runs a highly automated operation that measures its activity by machine
hours. Its managers have budgeted 300,000 machine hours for 2010. They budget
annual manufacturing overhead as

total budgeted overhead = P600,000 + (3 x machine hours).

The company had no beginning inventories.

At the end of 2022, the accountant collected the following information:

Total manufacturing overhead incurred 1,585,000

Machine hours on product sold 275,000

Machine hours on finished products in ending inventories 40,000

The predetermined overhead rate is ______.

a. P5 per MH
b. P2 per MH
c. P5.28 per MH
d. P3 per MH

25.
 During May, the following costs were incurred: a) raw materials purchased on
account, P5,000; (b) labor paid, P8,200; (b) manufacturing overhead paid,
P1,400. Overhead was charged to jobs on the basis of direct labor cost at the
same rate as in the previous month.

The products for customers Mandy, Jane and Marla were completed and
delivered during May at 75% above cost.

The total manufacturing costs to account for in the month of May is

a. 28,200
b. 16,000
c. 24,000
d. 32,300

26.
 The factory overhead application rate is
a. P1.20 of DL cost
b. P1.20 per DLH
c. P1.291 per DLH
d. P19.76 of DL cost

27. Obligations and rights arising from contracts are generally transmissible to
the parties' heirs and assigns. The following are considered
intransmissible, except
a. Those which are purely personal.
b. Those which are provided by law to be intransmissible.
c. Those which are stipulated by the party to be intransmissible.
d. Those which are based on commercial transactions.
28. As a general rule, no one may contract in the name of another without
being authorized by the latter or unless he has by law a right to represent
him. What is the status of a contract entered into in the name of another by
one who has no authority or legal representation, or who has acted beyond
his powers?
a. Rescissible
b. Unenforceable
c. Voidable
d. Null and void
29. The following persons cannot give consent to a contract, except
a. Unemancipated minors
b. Insane except during lucid interval
c. Demented persons
d. Deaf-mutes who do not know how to write
e. Blind persons who cannot speak
30. What is the status of a contract entered into wherein consent is given
through fraud, undue influence, mistake, intimidation or violence?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void
31. Which of the following vices of consent if committed by a third person who
did not take part in the contract may annul or make the contract voidable at
the judicial discretion of the court?
a. Fraud and undue influence
b. Intimidation and violence
c. Fraud, undue influence and violence
d. Intimidation, violence and undue influence
32. Which of the following statements is correct?
i. There is violence when in order to wrest consent, serious or
irresistible force is employed.
ii. There is intimidation when one of the contracting parties is
compelled by a reasonable and well-grounded fear of an imminent
and grave evil upon his person or property, or upon the person or
property of his spouse, descendants or ascendants, to give his
consent.
b. Both I and II
c. Neither I nor II
d. I only
e. II only
33. Which of the following statements is correct?
i. There is undue influence when a person takes improper advantage
of his power over the will of another, depriving the latter of a
reasonable freedom of choice.
ii. There is fraud when, through insidious words or machinations of
one of the contracting parties, the other is induced to enter into a
contract which, without them, he would not have agreed to.
b. Both I and II
c. Neither I nor II
d. I only
e. II only
34. What is the effect when both parties use fraud reciprocally?
a. Any of the parties may ask for annulment of contract.
b. The contract is voidable for both parties.
c. The fraud of one compensates that of the other, and neither party can ask
for annulment of the contract because they are in pari delicto.
d. Any of the parties may ask for damages.
35. Before Don Lasal dies, his heirs enter into an agreement for the partition of
the estate of their father. What is the status of the contract?
a. Voidable
b. Null and void because the subject matter is future inheritance
 c. Unenforceable
d. Rescissible
36. One of the parties has brought an action to enforce the instrument, may he
subsequently ask for its reformation?
a. Yes because the remedies are available as successive rights.
b. No because there has been an election as between inconsistent
remedies.
c. Yes because the injured party can never be estopped.
d. No if there is stipulation to that effect.
37. In case the debtor has the right of choice in alternative obligations and
through the fault of the debtor all the things which are alternatively the
object of the obligation have been lost or the compliance of the obligation
has become impossible, what shall be the right of creditor?
a. He shall have the right to indemnity for the value of the lost object with the
largest value plus damages.
b. He shall have the right to indemnity for the value of the lost object with the
smallest value plus damages.
c. He shall have the right to indemnity for the value of the last object plus
damages.
d. He shall have the right to indemnity for the value of the any object plus
damages.

38. In case the debtor has the right of choice in alternative obligations and
through the fault of the debtor only one object remains of the things which
are the objects of alternative obligation and before its performance, it has
been lost due to fortuitous event, what shall be the right of the creditor?
a. He may demand the value of any object lost due to debtor's fault.
b. He may demand indemnification for damages.
c. He may demand the value of the last object lost due to fortuitous event.
d. He has no right to demand anything.

39. It is a mode of extinguishing obligation that refers to the meeting in one

person of the qualities of creditor and debtor with respect to the same
obligation.
a. Compensation
b. Condonation
c. Confusion or merger
d. Novation
40. It is a mode of extinguishing obligation which refers to the fulfillment of the
prestation due.
a. Novation
b. Payment or Performance
c. Compensation
d. Merger

41. It is one of the two types of novation involving the change of original
debtor wherein the initiative does not emanate from the original debtor and
may be made even without his knowledge since it consists in a third
person assuming the obligation and it logically requires the consent of
third person and the creditor.
a. Expromission
b. Delegacion
c. Legal subrogation
d. Conventional subrogation

42. It is a mode of extinguishing the concurrent amount, the obligations of

those persons who in their own right are reciprocally debtors and creditors
of each other.
a. Novation
b. Compensation or Offset
c. Merger
d. Remission