Easy Round

Practical Accounting 1

1. The accountant of Review Company made the following adjusting entry on December 31, 2012.

Prepaid Rent P1,800

Rent Expense P1,800

If annual rent is paid in advance every October 1, the original transaction entry made was
a. Debit Prepaid Rent and credit Cash, P1,800.
b. Debit Rent Expense and credit Cash, P1,800.
c. Debit Rent Expense and credit Cash, P2,400.
d. Debit Rent Expense and credit Cash, P7,200.

MAS

2. Which of the following measures of performance encourages continued expansion by an investment

center so long as it is able to earn a return in excess of the minimum required return on average
operating assets?
A) return on investment

B) transfer pricing

C) the contribution approach

D) residual income

Taxation

3. The following data are presented to you by the administrator of the Estate of Mr. X:

Gross sales . . . . . . . . . . . . . . . . . . . . P 500,000

Cost of sales . . . . . . . . . . . . . . . . . . . 200,000
Business expenses . . . . . . . . . . . . . . . . . 50,000
Distribution of year’s income to the heirs. . . . . 30,000

How much is the taxable income using optional standard deduction?

a. P280,000 c. P200,000
b. P250,000 d. None of the choices

Literature

4. Theodore Geisel is a famous American writer who was famous on his children’s books that were often
characterized by imaginative characters. He is well known as

a. Hans Cristian Andersen b. Aesop

c. Dr. Seuss d. Lewis Caroll

Biology

5. A change of the DNA in an organism that results in a new trait is known as a?

a. Mutation b. Genetic Engineering

c. Regeneration d. Reproduction

Theory of Accounts

6. Under PAS 23, borrowing costs incurred in constructing a qualifying asset should be capitalized when they
are incurred

a. Before the construction period

b. During the construction period

c. After the construction period

d. During and after the construction period

Current Events

7. According to World Health Organization, what’s the world’s fastest-spreading tropical disease?
A: Rabies C: Dengue
B: HIV/AIDS D: Amoebiais

Average Round

Practical Accounting 2

1. Hartwell Company distributes the service department overhead costs to producing departments and
the following information for the month of January is presented as follows:

Maintenance Utilities

Overhead costs incurred P18,700 P 9,000

Services provided to:

Maintenance department - 10%

Utilities department 20% -

Producing department A 40% 30%

Producing department B 40% 60%

The company distributes service department costs based on the reciprocal method, what would be
the formula to determine the total maintenance costs?
A. M = P18,700 + .10U C. M = P18,700 + .30U + .40A + .40B
B. M = P9,000 + .20U D. M = P27,700 + .40A + .40B
Religion
2. All the following animals were mentioned in the Bible, except ?
a.dog b. cat
c. chicken d. lion

Auditing Theory
3. Recto is a CPA and a senior auditor for Nam & Partners, CPAs. Nam is conducting an external audit of
Nacks Inc. The audit is taking longer than expected as supporting documents are not made available
to the audit team in a timely manner, and Recto has found errors when testing the internal controls,
which were known to management but not disclosed to the auditors prior to the test. How would
this situation affect the auditor’s risk assessments?
a. The assessed level of control risk should be decreased.
b. The assessed level of audit risk should be decreased.
c. The assessed level of inherent risk and control risk should be increased.
d. The assessed level of detection risk should be increased.

Auditing Problem
4. Troop Co. frequently borrows from the bank to maintain sufficient operating cash. The following
loans were at a 12% interest rate, with interest payable at maturity. Troop repaid each loan on its
scheduled maturity date.

Date of Note Maturity Date

Payable
Amount Term

11/1/10 P10,000 10/31/11 1 year

2/1/11 30,000 7/31/11 6 months

5/1/11 16,000 1/31/12 9 months

Troop records interest expense when the loans are repaid. Accordingly, an interest expense of P3,000
was recorded in 2011. If no correction is made, by what amount would 2011 interest expense be
understated?
a. P1,080 c. P1,280
b. P1,240 d. P1,440

Idiomatic Expression

5. When someone says it costs an arm and a leg, it is?

a. very dangerous b. very frustrating

c. very interesting d. very expensive

Food

6. Which vegetable was originally color “purple” during the 16 th century?

a. carrot b. turnip

c. raddish d. pumpkin

7. M issued a promissory note to payable to the order of P. P indorsed it specially to A. Without the
knowledge of A, X took the note and forged A’s signature and then delivered it to B, who specially indorsed it
to C, C to D, D to E, and E to H, a holder in due course. Against whom can H demand payment of the note?
a. M and P because their signatures are genuine and had not been forged
b. A because he is negligent in keeping the promissory note
c. Against all parties because H is a holder in due course
d. B, C, D and E because their signatures appear after the forgery

Difficult

MAS
1. The following information was extracted from the May Cash Budget of Hair Stars, a groom pad for men
and women:
Budget of Hair Stars, a groom pad for
men and women:

Excess of cash available over P 800

disbursements

Cash balance, May 1 10,100

Total cash disbursement for May 32,500

The business can only borrow money in round figures of P1,000 amounts. If the business is required to
maintain a minimum cash balance of P10,000, how much money should be borrowed in May?
Answer: P 10, 000

2. What is the name of the First winner of the Apprentice Asia?

Answer: Jonathan Allen Yabut

Practical Accounting 1

3. The information below pertains to Jelo Company for 2012.

Profit for the year P1,200,000

8% convertible bonds issued at par (P1,000 per bond). Each bond

is convertible into 40 ordinary shares
2,000,000
 6% convertible, cumulative preference shares, P100 par value.
Each share is convertible into 3 ordinary shares.
3,000,000

Ordinary shares, P10 par value 6,000,000

Share options (granted in aprior year) to purchase 50,000

ordinary shares at P20 per share
500,000

Tax rate 40%

Average market price of ordinary shares P25 per share

There were no changes during 2012 in the number of ordinary shares, preference shares, or convertible
bonds outstanding. There is no treasury share.

Compute diluted earnings per share for 2012.

Answer: P 1. 62

Practical Accounting 2

4. Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay 1/3 of the
sales price of a jet ski when they initially purchase the ski, and then pay another 1/3 each year for the
next two years. Because Lake has little information about collectibility of these receivables, they use the
installment method for revenue recognition. In 2010 Lake began operations and sold jet skis with a total
price of P900,000 that cost Lake P450,000. Lake collected P300,000 in 2010, P300,000 in 2011, and
P300,000 in 2012 associated with those sales. In 2011 Lake sold jet skis with a total price of P1,500,000
that cost Lake P900,000. Lake collected P500,000 in 2011, P400,000 in 2012, and P400,000 in 2013
associated with those sales. In 2013 Lake also repossessed P200,000 of jet skis that were sold in 2011.
Those jet skis had a fair value of P75,000 at the time they were repossessed.
In 2012, Lake would recognize realized gross profit of:

Answer: P 310, 000

Taxation

5. The accounting period of Corporation A is .fiscal year ending on October 31. For the year 2010,
Corporation A filed its annual tax return on March 15, 2011. The last day for BIR to assess is on:
a. February 16, 2014 c. March 15, 2014
b. March 14, 2014 d. April 16, 2014

Space

6. The most recognized model of how the universe begun is known as the?
Answer: Big Bang
Algebra

7. The ratio of two numbers is 5 to 1. The sum is 18. What are the two numbers?

Answer: 3 and 15

Final Round

Theory of Accounts

1. Under PFRS 10, an investor controls an investee if and only if the investor has:
I) Power over the investee
II) Exposure, or rights, to variable returns from its involvement with the investee
III) The ability to use its power over the investee to affect the amount of the investor’s returns
a. I, II and III

b. I, II or III

c. II and III

d. I and II

Business Law

2. A issued a check in the amount of ₱20,000 payable to B. B endorsed the check but only to the extent
of ₱10,000. Which statement is most accurate?

a. The partial indorsement is not a valid indorsement, although will result in the
assignment of that part.
b. The partial indorsement will invalidate the whole instrument.
c. The endorsee will be considered as a holder in due course.
d. The partial indorsement is valid indorsement up to the extent of the ₱10,000.

Auditing Theory

3. Valmid, CPA, had not agreed to a change in audit engagement due to lack of a reasonable basis for the
change. Upon returning to the client’s premises the next day, client management informed him that he will
not be permitted to continue the original engagement. Valmid in this case should:
A. Report the day’s developments immediately to the client’s board of directors for consideration and
proceed with the original engagement

B. Issue a qualified opinion due to a scope limitation and consider whether there is any obligation,
either contractual or otherwise, to report to other parties, such as the board of directors or
shareholders, the circumstances necessitating the qualified opinion

C. Issue an adverse opinion due to a material departure from GAAS and consider whether there is
any obligation, either contractual or otherwise, to report to other parties, such as the board of
directors or shareholders, the circumstances necessitating the adverse opinion

D. Withdraw from the engagement and consider whether there is any obligation, either contractual
or otherwise, to report to other parties, such as the board of directors or shareholders, the
 circumstances necessitating the withdrawal (X)

4. What are substances that control the rates of chemical reactions?

Answer: Catalyst

5. What is the literal Greek translation of Sarcophagus?

Answer: Flesh Eater

Practical Accounting 2

6. As of July 1, 2007, FF and GG decided to form a partnership. Their balance sheets on this date are as

follows:

FF GG

Cash P 15,000 P 37,500

Accounts receivable 540,000 225,000

Merchandise inventory -0- 202,500

Machinery and equipment 150,000 270,000

Total P705,000 P735,000

Accounts payable P135,000 P240,000

FF, capital 570,000 -0-

GG, capital -0- 495,000

Total P705,000 P735,000

The partners agreed that the machinery and equipment is underdepreciated by P15,000 and that of GG by

P45,000. Allowance for doubtful accounts is to be set up amounting to P120,000 for FF and P45,000 for

GG. The partnership agreement provides for a profit and loss ratio and capital interest of 60% to FF and
 40% to GG. How much cash FF must invest to bring the partner’s capital balances proportionate to their

profit and loss ratio?

Answer: P172, 500

MAS

7. At the beginning of the year, Basilica initiated a quality improvement program. The program was
successful in reducing scrap and rework costs. To help assess the impact of the quality improvement
program, the following data were collected for the current and preceding years:
Current year Preceding year

Quality training 10,000 15,000

Materials inspection 20,000 35,000

Scrap 200,000 180,000

Rework 250,000 200,000

Product inspection 40,000 60,000

Product warranty 300,000 250,000

Basilica’s internal failure cost must have increased by around

Answer: 18%

AP

7. You are the risk management partner of RT & Company. The following issues relating to property and
equipment were brought to your attention. For each of the following issue, determine the amount of
depreciation expense that should be recognized each year.

1. As part of their remuneration package an entity provides each senior manager with the private use of
a luxury motor vehicle of the manager’s choice. The executive motor vehicles cost P2,000,000 each
and are replaced every two years irrespective of usage. The entity sells its motor vehicles at 25% if
its original price after two years when the vehicles are expected to be economically usable by other
users for at least another three years.
2. An entity bought an equipment for P300,000. An entity does not service its equipment regularly.
With regular servicing the equipment would be available for use for five years. However, the
expected equipment servicing pattern is expected to render the equipment unusable in three years.
3. An entity’s equipment used to manufacture a patented drug is expected to be capable of producing
the drug for ten years. However, the entity expects to stop manufacturing the drug and scrap the
equipment after five years of production when its patent expires and low cost generic drugs are
 expected to render the entity’s manufacturing of this drug unprofitable. The cost of this equipment is
P4,000,000.
4. An entity has the right to use an item of equipment in accordance with the terms of a finance lease.
The equipment is capable of operating for 15 years. However, the lease term is 10 years and the
entity is required to return the equipment to the lessor at the end of the lease term. The fair value of
the equipment at the inception of the lease is P600,000.

How much should be recognized as depreciation expense for the luxury motor vehicle?
Answer: P 750, 000

Practical Accounting 1

8. In December 2011, Judith Company began including one coupon in each package of candy that it sells and
offers a toy in exchange for P5 and 5 coupons. The toys cost P12 each and an additional P4 to deliver it to
customers. Eventually, 80% of the coupons will be redeemed. During December, Judith Company sold
220,000 packages of candy, 70,000 coupons were already sent for redemption of which 20,000 is still
under processing by year end..
The amount of estimated liability in the December 31, 2011 balance sheet of Judith Company is

a. 233,200 b. 277,200 c. 330,000 d. 387,200

9. What is the next number in the Fibonacci Sequence: 5 4 6 5 7 6 8 7 ?

Answer: 9

10. What animal was executed for a murder of a child in France?

a. Dog b. Lion
c. Pig d. Monkey

11. What do you call the white part on your fingernails?

Answer: Lunula

12. A 20 million year-old “Sirena Fossil” was found in the Puerto Princesa Underground River that was a
remain of which sea creature?
Answer: Sea cow

Business Law

13. What is the nature of the remedies under Article 1484 of the Civil Code, namely: exact fulfillment,
cancellation of the sale and foreclosure of the chattel mortgage on the thing sold?
a. Cumulative c. Facultative

b. Alternative d. Speculative

Practical Accounting 2

14. The approved appropriation of Department U for 2011 is P 15,000,000. Eighty five percent of this
appropriation was released by the Department of Budget and Management (DBM) accompanied by Notice
 of Cash allocation (NCA). During the year, the amount of obligations incurred was equivalent to ninety
percent of the NCA but only seventy percent of these obligations were paid by checks.
Determine which of the following is incorrect
A. Department U records the receipt of NCA by debiting an a amount equivalent to P 12,750,000.
B. The receipt of the allotment is recorded by means of a memorandum entry
C. At the end of the year, Subsidy Income from National Government would be credited P 6,967,500
D. None of the above

15. What is the full name of Ms. World 2013?

Answer: Ms. Megan Lynne Young

MAS

16. Rochelle Block Co. produces cement blocks used in the foundation for buildings. The process takes place
in two sequential departments. The following data pertain to the month of October.
Pouring Dept. Finishing Dept.
Direct materials entered into production P 70,000 P 25,000
Direct labor 340,000 280,000
Applied manufacturing overhead 680,000 420,000
Cost of goods completed and transferred out 900,000 ± 400,000 +
± cost of goods transferred to the Finishing Department.
+ cost of goods transferred to finished goods.
The amount of work in process inventory of Rochelle Block at the end of October must be:
Answer: P 1, 415, 000
17. The process of identifying, measuring and relating revenue and expenses of an enterprise for an
accounting period is known as
Answer: Income Determination

18. “The best and most beautiful things in the world cannot be seen or even touched- they must be felt with the
heart.” Is the quote of which famous author?
Answer: Helen Keller

Practical Accounting 1

20. Lyn Company introduced in 2011 a new TV model with a two-year warranty against defect. Lyn
Company estimates the warranty costs at 2% of sales within 12 months following the sales and 4% in the
second 12 months following the sale. Sales and actual warranty costs for the year ended December 31, 2011
are P3,000,000 and P45,000 respectively. Lyn Company should report an estimated warranty liability in its
December 31, 2011 balance sheet of
Answer: P 135, 000

Practical Accounting 1
21. On January 1, 2011 Ply Company purchased a 30% interest in Wood Company for P300,000 which gave
Ply Company significant influence over Wood Company. The excess of the acquisition cost over the net assets
acquired was attributed to goodwill in the amount of P30,000 since the carrying amounts of the identifiable
assets and liabilities of Wood Company were equal to their fair values.
In 2011 Wood Company reported income of P400,000 and declared dividends of P120,000. At December 31,
2011, the fair value of the investment in Wood Company was P305,000 while the estimated cost to sell the
holdings was P15,000.

Assuming that Ply Company does not have any public accountability and was considered an SME, the
investment income for 2011 and the investment in Wood account at December 31, 2011, assuming further
that Ply Company chose to use the cost method
Answer: Investment in income-36,000; Investment in Wood-290,000

22. What is the first brand name used as a logo in a garment?

Answer: Lacoste

MAS

23. N Company has total fixed assets of P100,000 and no current liabilities. The table below displays its wide
variations in current assets components:
1Q 2Q 3Q 4Q

Cash P 20,000 P 10,000 P 15,000 P 20,000

Accounts receivable 66,000 25,000 47,000 88,000

Inventory 20,000 65,000 59,000 10,000

Total P106,000 P100,000 P121,000 P118,000

If N’s policy is to finance all fixed assets and half the permanent current assets with long-term financing
and rest with short-term financing, what is the level of long-term financing?

Answer: P 150, 000

24. Which country gave the Statue of Liberty to the USA as a gift?

Answer: France

Taxation

25. During 2011, Philip, a resident citizen, received the following income:

Interest from Philippine treasury certificates P4,000

Refund pertaining to 2010 income tax 500

The total amount of income subject to tax in Philip’s 2011 income tax return was:

Answer: Zero