Current Assets

Current Assets/Liabilities (Theories)
1. A current asset is:

a. An item that was acquired by a company.
b. An item that a company has and will receive benefits in the future.
c. An item that a company plans to convert into cash or consume within one
year.
d. None of these can be considered as a current asset.
2. Which of the following is not classified as a current asset?

a. Inventory
b. Temporary Investments
c. Trademark
d. Prepaid Expenses
3. Notes Payable could appear on the balance sheet in which classification?

a. Current Liabilities
b. Long-Term Liabilities
c. Both a and b
d. Current Assets
4. On December 20, 2018, Keating Legal Services Co. performed services for Rebecca Sutter and
billed ₱30,000, payable within 15 days. Keating Legal Services Co. applies the accrual basis of
accounting. 10 days later, Keating Legal Services Co. received full payment for the bill. The
latter event will have a debit to Cash and a credit to:
a. Service Revenue
b. Unearned Revenue
c. Accounts Receivable
d. Accounts Payable
5. Mafias Co. received ₱200,000 on October 6, 2018 as advance payment for their hitman services
set to be executed on October 31, 2018. The payment is classified as Cash and:
a. Accounts Receivable
b. Service Revenue
c. Unearned Revenue
d. Accounts Payable
6. It is a line item for accounts payable, notes payable, accrued interest on note payable, dividends
payable and accrued expenses
a. Current Payables
b. Trade Payables
c. Payable Accounts
d. Trade and Other Payables
7.It is an economic resources controlled by an entity as a result of a past event.
a. Equity
b. Revenue
c. Asset
d. Liability
8. The items trading securities and other investments in quoted equity instrument is an example
of what line item under current assets?
a. Financial assets at fair value

b. Financial assets at book value
c. Other current assets
d. Noncurrent assets
9. If the agreement to refinance or to reschedule payment on a long term basis is completed after
the reporting period, the said liability will be considered as
a. Current Liability
b. Noncurrent Liability
c. Either current or noncurrent liability based on discretion of the lender
d. Either current or noncurrent liability based on discretion of the entity
10. The residual amount upon deducting the current liabilities from current assets is called
a. Equity
b. Working Capital
c. Retained Earning
d. Cash Flow
11. Which of the following is not classified as a current liability?

a. Current provisions
b. Possible obligations
c. Dividend payables
d. Accrued expenses
12. In the statement of financial position, the current assets are usually listed in order of
a. Liquidity
b. Solvency
c. Carrying amount
d. Fair market value
13. The term “net assets” represents

a. Retained earnings
b. Total assets less total liabilities
c. Noncurrent assets less noncurrent liabilities
d. Current assets less current liabilities
14. Which of the following should never be classified as current assets?

a. Accrued revenue
b. Goodwill arising in a business combination
c. Premium paid on a bond investment
d. Current tax asset
15. In which section of the statement of financial position should employment taxes that are due
for settlement in 15 months’ time be presented?
a. Current asset
b. Noncurrent asset
c. Current liability
d. Noncurrent liability
16. Which of the following should be included in current assets?

a. Machinery
b. Inventory
c. Goodwill
d. Patents
17. Which of the following should be included in current liabilities?

a. Trade notes payable
b. Short-term zero-interest bearing note payable
c. Unearned revenue
d. All of these are included in current liabilities
18. Which of the following is a current liability?

a. Bond payable due in two years for which there is an adequate sinking fund
b. Bond payable due in three years expected to be refinanced
c. Bond payable due in eleven months for which there is an appropriation of
retained earnings
d. Bond payable due in eight months and refinanced on a long-term basis at the end of
reporting period
19. What is the relationship between current liabilities and an operating cycle?
a. Liquidation of current liabilities is reasonably expected within the operating cycle
or one year, whichever is longer
b. Current liabilities are the result of operating transactions
c. Current liabilities cannot exceed the amount incurred in one operating cycle
d. There is no relationship between the two
20. Which of the following is not an acceptable presentation of current liabilities?

a. Listing current liabilities in the order of maturity
b. Listing current liabilities according to amount
c. Offsetting current liabilities against assets that are to be applied to their
liquidation
d. Showing current liabilities in the order of liquidation preference
21. An entity has a loan in 12 months. In which section of the balance sheet should this loan be
presented?
a. Current Liabilities c. Non-

Current Liabilities
b. Current Assets d. Non-Current Assets
22. On March 31, 2021 AA Company purchased an equipment on account for P550,000. Payable
in one year. The transaction would include a debit to equipment and a credit to:
a. Accounts Payable c. Accrued Expenses
b. Notes Payable d. Deferred

Expenses
23. Bank overdraft generally should be:

a. Reported as a deduction from current assets.
b. Reported as an expense.
c. Reported as current liability.
d. None of the above.
24. Trade receivables are classified as current assets if these are reasonably expected to be
collected:
a. Within one year.
b. Within the normal operating cycle.
c. Within one year or within the operating cycle, whichever is shorter.
d. Within one year or within the operating cycle, whichever is longer.
25. The common practice to present assets section on the balance sheet is:
a. Current assets before noncurrent assets.
b. Noncurrent assets before current assets.
c. Either both a or b.
d. Neither both a nor b.
26. The entity shall classify an asset as current under all of the following conditions, except
A. The entity holds the asset primarily for the purpose of trading.
B. The entity expects to realize the asset within twelve months after the reporting period.
C. The entity expects to realize the asset or intends to sell or consume it within the entity's
normal operating cycle.
D. The asset is a cash or cash equivalent that is restricted to settle liability for more than
twelve months after the reporting period.
27.An entity shall classify a liability as current when under all of the following conditions,
except
A. The entity expects to settle the liability within the entity's normal operating cycle
B. The entity hold the liability primarily for the purpose of trading
C. The liability is due to be settled within 12 months after the reporting period.
D. The entity has an unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
28. Which of these classification 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
B. I and III only
C. II and IV only
D. I, II and III only
29.It presents the obligation of an entity to transfer an economic resources as a result of a past
event.
A. Liability
B. Expense
C. Equity
D. Asset
30.Which of the following item is not an element of working capital

A. Goodwill
B. Dividends Payable
C. Supplies
D. Raw materials Inventory
31. Which is not a current asset?
(a) office supplies inventory
(b) short-term investment
(c) petty cash (undeposited) cash
(d) cash surrender value of life insurance

32. A trading security is:
(a) a security which has been purchased recently
(b) a security held in the account of a brokerage firm
(c) a security which is held for resale in the near future
(d) a security which will be transferred in exchange for another security
33. The principal classifications of liabilities are:
(a) current liabilities and noncurrent liabilities.
(b) current liabilities, noncurrent liabilities and deferred revenue.
(c) current liabilities and deferred revenue.
(d) noncurrent liabilities and deferred revenue.
34. A company records an accounts receivable:
(a) each time an exchange transaction occurs.
(b) each time a cash sale is made.
(c) when another company extends credit to it.
(d) when an exchange has taken place, the earning process is complete, and
payment has not yet been received.
35. Short-term non-interest bearing notes receivable are usually recorded at their:
(a) present value
(b) principal value
(c) net realizable value
(d) maturity value

36. The major financial statements include all, except
a. Statement of financial position
b. Statement of changes in financial position
c. Statement of Comprehensive Income
d. S tatement of Changes in Owner's Equity
Answer: b
37.Financial Statements must be prepared at least

a. Annually
b. Quarterly
c. Semi-annually
8d. Every Two Years
Answer: a
38. In the Philippines, the common practice is to present in the statement of financial position, in
what manner?
a. Current assets before noncurrent assets, current liabilities before noncurrent liabilities and
equity after liabilities
b.Noncurrent assets before Current assets, noncurrent liabilities before current liabilities and
c. Current assets before noncurrent assets, noncurrent liabilities before current liabilities and
d.Noncurrent assets before Current assets, current liabilities before noncurrent liabilities and
Answer: a
39. The statement of financial position

a. Omits many items that are of financial value
b. Makes very limited use of judgement and estimate
c.Uses fair value for most assets and liabilities
d. All of the choices are correct
Answer: a
40. Which is a limitation of the statement of financial position?

a. Many items that are of financial value are omitted
b. Judgement and estimate are used
c. Current fair value is not reported
d. All of these are a limitation of the statement of financial position
Answer: d
41.) Which of 41.) Which of the following is not considered as a current asset?
A) Prepaid Expense
B) Accounts Receivable
C) Machinery
D) Cash
42.) Current assets can be used to compute these items, except?
A) Current ratio
B) Working capital
C) Quick ratio
D) Operating Ratio
43.) Bruno purchases a building and finances it with a 15-year mortgage. The payments
Bruno will make in the next 6 months are considered:
A) a long term liability
B) a current liability
C) interest expense only
D) payments to principal only
44.) In which of the following financial statements would be the Unearned Revenues
included?
A) on the income statement
B) on the balance sheet as an asset
C) on the balance sheet as a liability
D) on the income statement as revenue

45.) Working Capital can be defined as:
A) cash on hand
B) cash in a savings account
C) current assets - current liabilities
D) current assets/current liabilities
46. An entity shall classify an asset as current, except when

a. the entity holds the asset primarily for the purpose of trading
b. the entity expects to realize the asset within twelve months after the reporting period
c. the entity holds the asset for use in production, expected to be used during more
than one period
d. the asset is cash and cash equivalent, not restricted from being exchanged or used to
settle a liability
47. Which of the following is not classified as current liability?

a. Portion of long-term debt within twelve months after the reporting period
b. Warranty liability
c. Income tax payable
d. Deferred tax liability
48. A liability which is due to be settled within twelve months after the reporting period is
classified as current, even if
a. the original term was for a period longer than twelve months
b. an agreement to refinance or to reschedule payment on a long-term basis is completed
after the reporting period and before the financial statements are authorized for issue
c. the refinancing on a long-term basis is completed on or before the end of the reporting
period
d. both a and b
49. Which of the following is not included under the line item of current assets?
a. Prepaid expenses
b. Trade receivables
c. Financial assets through profit or loss
d. Financial assets through other comprehensive income
50. The following are characteristics of an asset, except

a. the asset is controlled by the entity
b. the asset is the result of a future transaction
c. the asset provides future economic benefits
d. the cost of the asset can be measured reliably
Current Assets/Liabilities (Problems)
1. Umbrella Academy was involved in a lawsuit regarding complaints in their teaching

practices. The academy consulted its lawyer and found out that they may lose in the court.
The lawyers calculated that they have approximately 60% chance of losing. In this matter,
their lawyer made an estimate of any payment as ₱700,000. After the lawsuit, the required
journal entry would be:
a. Debit Legal Expense for 420,000 and credit Accrued Legal Liability for
420,000.
b. Debit Legal Expense for 700,000 and credit Accrued Legal Liability for
700,000.
c. No journal entry is required.
d. Debit Legal Expense for 280,000 and credit Accrued Legal Liability for
280,000.
2. During 2010, Riverdale Co. acquired new machineries that carry a four-year warranty against
defects. Warranty costs are approximately 1% of sales in the year of sale, 3% in the year after
sale, 5% in the second year after sale, and 7% in the third year after sale. Sales and actual
warranty expenses for the periods were:
Sales Actual Warranty Expenses
2010 500,000 8,000

2011 700,000 20,000
2012 1,000,000 50,000
2013 1,500,000 100,000
Total 3,700,000 178,000
How much should Riverdale report as liability at December 31, 2013?
a. 218,000
b. 578,000
c. 414,000
d. 0
3. Quindecim Corporation estimates that its annual warranty expense as 12% of its annual net
sales. The following data relate to year 2019:
Net Sales 2,500,000
Warranty liability account
Balance, December 31, 2019 35,000 debit before adjustment
Balance, December 31, 2019 75,000 credit after adjustment
The journal entry to record the 2019 estimated warranty expenses will include:
a. Debit to Warranty Expense of 110,000 and credit to Warranty Liability of

110,000.
b. Debit to Warranty Expense of 40,000 and credit to Warranty Liability of

40,000.
c. Debit to Warranty Expense of 300,000 and credit to Warranty Liability of

300,000.
d. Debit to Warranty Expense of 190,000 and credit to Warranty Liability of

190,000.
4. A Note Payable to the Banco De Oro for ₱3,000,000 is outstanding on December 31, 2019.
The note of dated July 1, 2018, has an interest of 16% and is payable in three equal
installments of ₱1,000,000 annually. The first interest and principal payment was made on
July 1, 2019. What amount should be recorded as a current liability?
a. ₱480,000 b. ₱1,184,000 c. ₱1,160,000 d. ₱840,000
5. Nairobi Heist became involved in a lawsuit in October 2019. The legal matter is being
discussed, and Nairobi’s attorney assumes that it is possible that Nairobi might be held liable
for damages approximately between ₱3,000,000 and ₱5,000,000. What amount should
Nairobi report as a current liability?
a. ₱5,000,000 b. ₱4,000,000 c. ₱0 d.
₱3,000,000
6. Sasuke Corporation provided the following information at year-end:
Cash 5,000,000
Accounts Receivable 2,500,000
Inventory (including goods out on consignment
amounting to P250,000) 1,800,000
Available-for-sale securities 700,000
Equipment held for sale 1,000,000
Deferred tax asset 350,000
What amount should be reported as current asset at year-end?
a. 10,300,000
b. 10,050,000
c. 10,750,000
d. 11,100,000
7. Berlin Company reported the following current assets on December 31, 2019:
Cash 23,000,000
Inventory (including goods held on consignment P350,000) 1,650,000
Prepaid expenses, including deposit of P50,000 made on
inventory to be delivered in 18 months) 150,000
Equipment held for sale 750,000
What total amount of current assets should be reported on December 31,2019?
a. 30,150,000
b. 30,500,000
c. 30,550,000
d. 30,400,000
8. Cincinnati Inc. showed the following current assets at April 30, 2019
Cash 4,500,000
Inventory 1,750,000
Cash account consists of the following:
Customer postdated check 1,350,000
Employee IOU 500,000
Cash in bank per bank statement 2,650,000
4,500,000
What total amount should be reported as total current assets?
a. 9,050,000
b. 7,700,000
c. 7,200,000
d. 8,150,000
9. Minato Corporation provided the following information on December 31, 2019
Accounts Payable 650,000
Note Payable, 8% unsecured, due April 1, 2020 4,000,000
Accrued expense 250,000
Contingent liability 450,000
Deferred tax liability 250,000
Senior bonds payable, 7%, due September 30,2020 5,000,000
The contingent liability is an accrual for possible loss on a P1,000,000 lawsuit filed
against the entity.
The deferred tax liability is not related to an asset for financial reporting and is expected
to reverse in 2020,
What amount of total current liabilities should be reported at December 31, 2019?
a. 9,900,000
b. 10,150,000
c. 10,600,000
d. 10,350,000
10. The following information about Murillo Company is available at year-end
Cash balance at Bank of Spain 3,800,000
Cash overdraft at Royal Mint 950,000
Accounts receivable with credit balances 700,000
Employee income taxes withheld 800,000
Estimated expenses of warranties on merchandise sold 500,000
Estimated damages of unsatisfactory performance 450,000

Accounts payable 1,500,000
Deferred serial bonds issued at par and bearing interest of 8%,
payable in semiannual installments of P700,000
due March 1 and October 1 of each year.
Interest is paid semiannually 5,000,000
The year-end balance sheet should report current liabilities at
a. 5,000,000
b. 17,500,000
c. 12,500,000
d. 13,200,000
11. Pure Gold Company’s December 31, 2020 balance sheet reported the following assets:
Cash 3,500,000
Cash in Bank 2,100,000
Deferred Tax Asset 500,000
Accounts Receivable 750,000
Trading Securities 225,000
Available-For-Sale Securities 100,000
How much current assets should be shown in the balance on December 31, 2020?
a. 7,175,000 b. 6,675,000 c. 6,575,000 d. 6,350,000
12. Shoe Market Company trial balance reflected the following liabilities at December 31,
2020:
Accounts Payable 500,000

Bonds Payable, due 2022 1,000,000
Premium on bonds payable 350,000
Unsecured Note, 10% due March 1, 2021 750,000
Accrued Expenses 665,000
Senior Bonds, 10% due April 1, 2021 3,100,000
What amount should be included in the current liabilities section of Shoe Market’s December 31,
2020 balance sheet?
a. 5,015,000 b. 5,700,000 c. 2,600,000 d. 3,265,000
13. The following information shows the account balances of Deli Company at December 31
of the current year:
Cash and Cash Equivalents 1,655,000
Allowance for Doubtful Accounts 800,000
Patent 150,000
The cash and cash equivalents include the following:
Cash on hand 550,000
Cash set aside by the Board of Directors for the 1,100,000
purchase of equipment
Petty cash 5,000
1,655,000
In Deli Company’s December 31, 2020 balance sheet, the current assets total is
b. 4,605,000 b. 4,455,000 c. 1,755,000 d. 1,905,000

14. Metal Gear Company provided the following information at December 31, 2019
Cash 3,000,000
Financial asset held for trading 1,300,000
Inventory, including goods received on consignment P500,000 1,500,000
Deferred Tax Asset 900,000
What amount of current assets should be reported on December 31, 2019?
a. 7,800,000 b. 7,300,000 c. 8,200,000 d. 8,300,000
15. Dove Company reported the following liabilities at year-end
Accounts Payable 4,500,000
Short-term borrowings 1,000,000
Mortgage Payable, current portion 800,000 1,300,000
Bonds Payable 400,000
Stock Dividends Payable 700,000
What amount of current assets should be reported on December 31, 2019?
a. 7,400,000 b. 7,000,000 c. 6,100,000 d. 6,300,000
16. Do Corporation’s trial balance reflected the following account balances at December 31,
2019:
Assets
Accounts receivable Php 200,000
Accumulated depreciation 300,000

Cash in bank 150,000
Inventory 500,000
Equity Securities – current 200,000
Machinery 1,500,000
Leasehold 50,000
Prepaid Expense 30,000
Equipment retired from use and held for sale 250,000
Treasury bill acquired in 2019 but will mature after two months 100,000
Petty Cash (Coins and Currency) 12,000
Total assets Php 2,692,000
The current assets on December 31, 2019:

a. Php 1,192,000
b. Php 1,320,000
c. Php 1,400,000
d. Php 1,442,000
17. Byun Company provided the following information on December 31, 2019:
Cash on hand Php 1,200,000
Petty cash fund 30,000
LandBank current account 750,000
BPI Current account no. 1 1,500,000
BSP treasury bill – 120 days 200,000
Php 3,680,000
The cash on hand included a customer postdated check of P150,000 and postal money order of
Php 50,000. What total amount of cash and cash equivalents should be reported on December 31,
2019?
a. Php 3,330,000
b. Php 3,680,000
c. Php 3,480,000
d. Php 3,630,000
18. Park Corp. had the following liabilities at December 31, 2020:
Account payable Php 550,000
Unsecured note, 8%, due January 1, 2022 135,000
Accrued expenses 350,000
Contingent liability 450,000
Senior bonds, 7%, due March 31, 2021 5,000,000
Balance at BPI (Overdraft) 600,000
Discount on bonds payable 75,000
The contingent liability is an accrual for possible loss on a P1,000,000 lawsuit filed against Park
Corp. Park’s legal councel expects the suit to be settled in 2021 and has estimated that Park will
be liable for damages in the amount of 450,000. The deferred tax liability is not related to an
asset for financial reporting and is expected to reverse in 2021. What amount should Park Corp
report in its December 31, 2020 balance sheet for current liabilities?
a. Php 8,860,000
b. Php 7,425,000
c. Php 7,025,000
d. Php 6,425,000
19. The contents of Oh Enterprise’s liabilities disclosed the following

Accounts payable, before deducting debit balances
In suppliers’ accounts amounting to P200,000
Php 4,000,000
Accrued expenses 1,500,000
Credit balances of customers’ accounts 765,000

Stock dividends payable 1,455,000
Claims for increase in wages and allowance by

Employees of the company, covered in a
pending lawsuit
655,000
Estimated expenses in redeeming prize coupons
presented by customers 255,000
Total Liabilities Php 8,630,000
How much should be presented as total current liabilities on the balance sheet?
a. Php 7,775,000
b. Php 7,120,000
c. Php 6,920,000
d. Php 6,520,000
20. The following amounts are recorded in Zhang Corporation’s trial balance
Assets
Cash in bank Php 950,000
Accounts receivable 2,000,000
Allowance for doubtful accounts 12,000

Inventory 500,000
Equipment, Php 250,000 of which is retired from use and held for sale
750,000
Machinery 1,500,000
Accumulated depreciation 75,000
Leasehold 24,000
Liabilities
Accounts payable 450,000
Bonds payable, due December 30, 2021 1,000,000
Discount on bonds payable 50,000
Cash dividends payable 65,000
Stock dividends payable 400,000
Income tax payable 375,000
What is the working capital of Zhang Corporation on December 31,2020?

a. Php 2,547,000
b. Php 2,147,000
c. Php 2,223,000
d. Php 1,613,000
21. The cash account in Huskar’s Company’s ledger showed a balance at December 31,
201X of P2,207,500, which consisted of the following:
Undeposited receipts, including a postdated check for P35,000 610,000(575,000)
Cash per bank statement, with a check for P20,000 still outstanding 1,122,500(1,102,500)
Bond sinking fund 425,000

Vouchers paid out of collections, not yet recorded 21,500
IOUs signed by employees, taken from collections 16,500
At what amount should cash be reported in the December 31, 201X statement of
financial position?
(a) 1,689,500
(b) 1,709,500
(c) 1,744,500
(d) None of the above
22. At the end of January, the unadjusted trial balance of Shadow Fiend Inc. included the
following accounts:
Debit Credit
Sales (90% represent credit sales) P800,000
Accounts receivable P550,000
The company uses the income statement approach in estimating uncollectible accounts expense,
and uncollectible accounts expense is estimated to be 2% of credit sales. The net realizable
value of the company’s accounts receivable in the January 31, balance sheet is:
(a) P705,600
(b) P535,600
(c) P529,720
(d) P531,320 (800 * .90 = 720 credit sales) (720 * .02 = 14.4 bad debts expense) (14.4 + 4.28
AFDA = 18.68) (550 – 18.68 = 531.32 NRV)
23. Rice Company’s salaried employees are paid biweekly. Advances made to employees are
paid back by payroll deductions. Information relating to salaries follows:
12/31/2001 12/31/2002
Employees advances 240,000 360,000
Accrued salaries payable 400,000 ?
Salaries expense during the year 4,200,000
Salaries paid during the year (gross) 3,900,000
In Rice’s December 31, 2002 balance sheet, accrued salaries payable was
(a) P940,000
(b) P820,000
(c) P700,000 (4,200 – 3,900 = 300) (400 + 300 = 700)
(d) P300,000
24. The accounts and balances shown below were gathered from Voljin Corporation's trial
balance on December 31, 2007. All adjusting entries have been made.
Wages Payable ........................................... P

25,600
Cash .................................................... 17,700
Mortgage Payable ........................................ 151,600
Dividends Payable ....................................... 14,000
Prepaid Rent ............................................ 13,600
Inventory ............................................... 81,800
Sinking Fund Assets ..................................... 52,400
Short-Term Investments .................................. 15,200
Premium on Bonds Payable ................................ 4,600

Stock Investment in Subsidiary .......................... 102,400
Taxes Payable ........................................... 22,800
Accounts Payable ........................................ 24,800
Accounts Receivable .....................................
See information for Paynter Corporation above. The amount that should be reported
as current liabilities on Paynter Corporation's balance sheet is?
(a) P164,900
(b) P87,200
(c) P251,200
(d) P91,800
25. Dazzle prepared a draft of its 2014 balance sheet. The draft statement reported current
liabilities totaling P200,000. However, none of the following items were included in this
preliminary total at December 31, 2014:
Accounts payable ........................................ P30,000
Bonds payable, due 2015 ................................. 50,000
Discount on bonds payable, due 2015 ..................... 6,000
Dividends payable on January 31, 2015 ................... 16,000
Notes payable, due 2016 ................................. 40,000

The amount that should be reported as current liabilities on the balance sheet is?
(a) 290,000 (200 + 30 + 50 – 6 + 16 = 290)
(b) 336,000
(c) 230,000
(d) 136,000
26. Merlin Corporation provided the following information for 2019:
Cash 1,500,000
Inventory, excluding inventory expected in the
ordinary course of operations to be
sold beyond 12 months amounting 700,000 1,000,000
Financial assets held for trading 300,000
Equity investment at fair value through
other comprehensive income 800,000
What amount should be reported as total current assets at 2019?
a. PHP 6,700,000
b. PHP 6,000,000
c. PHP 6,950,000
d. PHP 4,800,000
27.BT Company was incorporated on January 1, 2018 with PHP 15,000,000 from the issuance of
share capital and borrowed funds of PHP 1,500,000. During the first year, net income was PHP
2,700,000. On December 15, the entity paid a PHP 100,000 cash dividend. On December 31,
2018, the liabilities had increase to PHP 2,800,000. On December 31, 2018, what amount should
be reported as total assets?
a. PHP 6,700,000
b. PHP 20,400,000
c. PHP 19,300,000
d. PHP 8,800,000
28. JPIAN Incorporation reported the following current asset for the year 2019:
Cash PHP 6,500,000

Notes Receivable, net of discounted note PHP 500,000 2,000,000
Inventory 4,000,000
Defered Charges 1,000,000
PHP 21,400,000
Accounts Receivable compromised the following:
Trade Accounts Receivable PHP 5,000,000
Allowance for doubtful accounts ( 500,000)
Claim against shipper for goods lost in transit 400,000
Selling Price of JPIAN Incorporation Unsold goods
sent to BSA Company on consignment at 150% of
cost and excluded from JPIAN Incorpotation
inventory 3,000,000
PHP 7,900,000
What amount should be reported as total current assets for the year 2019?
a. PHP 19,700,000
b. PHP 19,400,000
c. PHP 17,950,000
d. PHP 18,800,000
29. EVE Company Reported the following liability account balances on December 31, 2018:

Bonds payable, Due December 31, 2019 3,400,000
Discount on bonds Payable 200,000
Deferred tax Liability 400,000
Dividends Payable 500,000
Income Tax Payable 900,000
Note Payable, Due on January 1, 2020 600,000
On December 31, 2018, what should be the total amount of the Current Liability to be reported?
a. PHP 6,700,000
b. PHP 6,000,000
c. PHP 6,900,000
d. PHP 6,500,000
30. Grace Company reported the following liabilities bon December 31, 2018:

Short-Term Borrowings 1,500,000
Bonds Payable, due on 2020 3,000,000
Premium Bonds Payable 1,500,000
Mortgage Payable, Current portion PHP 1,00,000 3,500,000
Bank Loan, due on June 30, 2020 1.000,000
The PHP 1,000,000 bank loan was refinanced with a 10 year loan on December 31, 2019. The
financial statements were issued on May 1, 2020.
What is the total amount of current liability to be reported on December 31, 2019?
a. PHP 6,700,000
b. PHP 9,000,000
c. PHP 6,900,000
d. PHP 9,500,000
31.) Solve for the current asset in the flowing data
Cash = Php 3000, Debtors = Php 2000, Land = Php 10000, Building = Php 5000, Raw material =
Php 1000, Short term investments = Php 500 and Machinery = Php 2000
A) Php 5500
B) Php 7500
C) Php 9500
D) Php 6500
32.) Karrie borrows Php 120,000 on a 6% 3 month note payable. The money is borrowed on
January 1. What is the interest expense for January?
A) Php 7200
B) No interest expense because the note is due in 3 months
C) Php 600
D) None of these
33.) A company provided a year end report below:
Cash Php10,000
Accounts Receivable Php20,000
Equipment , including a 50% held for sale Php500,000
Inventory , including Php100,000 to be sold in the next 2 years Php1,000,000
Compute for the total current assets at year end?
A) Php1,530,000
B) Php1,280,000
C) Php1,180,000
D) Php1,430,000
34.) A company provided a year end on 2019 report below:
Accounts Payable Php2,000,000
Bonds Payable , due December 31, 2020 Php1,000,000
Discount on Bonds Payable Php300,000
Notes payable , due December 31, 2021 Php2,600,000
Discount on Notes Payable Php600,000
Compute for the total current liabilities at year end?
A) Php6,500,000
B) Php5,900,000
C) Php2,700,000
D) Php3,000,000
35.) Cyclops borrows Php1,000,000 on a 10% 2 year note payable. The money is borrowed on
January 1 year 1. What is the interest expense for June 30 year 1?
A) Php50,000
B) Php150,000
C) Php0
D) Php1,050,000
36. Arial Company reported the following current assets on December 31, 2019:
Cash 542,500
Accounts receivable 750,000
Inventory, including 200,000 cost of goods
held on consignment 550,000
Prepaid expenses 80,000
Total current assets 2,047,500
Cash on hand 50,000

Customers' checks 10,000
Traveler's checks 50,000
Money order 75,000
Bills and coins 7,500
Sinking fund 350,000
Total Cash 542,500
What total amount of current assets should be reported on December 31, 2019?
a. 1,447,500
b. 1,797,500
c. 1,247,500
d. 1,597,500
37. Times New Roman Company reported the following liability account balances
on December 31, 2019:
Accounts payable, net of creditors' debit 1,300,000
balances P300,000
Bonds payable due on December 31, 2020 825,000
Bonds payable due on December 31, 2021 975,000
Notes payable due on January 1, 2022 1,150,000
What total amount of current liabilities should be reported on December 31, 2019?
a. 3,325,000
b. 3,975,000
c. 3,625,000
d. 3,675,000
38. Cambria Company provided the following the following information on December
31, 2019:
Bank note payable, 11% 3,850,000
Bank note payable, 12% 4,250,000
The 3,850,000, 11% note was issued February 28, 2019, payable on demand
Interest is payable semi-annually.
The 12% note was issued October 1, 2019, with a term of 5 years. Interest is
payable monthly.
What amount should be reported on December 31, 2019 as accrued interest payable in
its current liabilities?
a. 268,067
b. 141,167
c. 127,500
d. 268,667
39. Gothic Company reported the following liability balances on December 31, 2019:
10% Notes payable 3,750,000
12% Notes payable 6,250,000
The 2019 financial statements were issued on March 31, 2020.
The loan agreement for the 10% note payable states that the entity has the discretion to
refinance the obligation for at least twelve months after December 31, 2019.
On March 1, 2020, the 12% note payable was refinanced through issuance of a long-
term
obligation, as lump sum.
What amount of the notes payable should be classified as current on December 31,
2018?
a. -
b. 3,750,000
c. 6,250,000
d. 10,000,000
40. Cooper Company provided the following information at year-end:

Cash 2,250,000
Trade installment receivables 250,000
Equity investment - FVPL 375,000
Equity investment - FVOCI 425,000
Bond sinking fund 3,000,000
What should presented as total current assets at year-end?

a. 6,550,000
b. 6,125,000
c. 9,800,000
d. 9,550,000
41. The following information pertains to CJ Company on December 31 of the current

year:
Property, plant and equipment 35,000,000
Prepaid insurance 1,500,000
Short-term note payable 3,000,000
Cash 7,000,000
Bonds payable 40,000,000
Total assets 101,500,000
Land 20,000,000
Allowance for doubtful accounts 1,000,000
Merchandise inventory 8,000,000
Available for sale securities – to be held indefinitely 7,000,000
Wages payable 2,000,000

Total liabilities 47,000,000
Premium on bonds payable 3,000,000
The December 31 working capital is

a. 49,500,000
b. 36,500,000
c. 29,500,000
d. 38,500,000
42. Darwin Corporation has ₱1,800,000 of short-term debt it expects to retire with
proceeds from the sale of 60,000 ordinary shares. If the shares are sold for ₱20 per
share subsequent to the statement of financial position date, but before the
statement of financial position is issued, what amount of short-term debt could be
excluded from current liabilities?
a. ₱1,200,000
b. ₱1,800,000
c. ₱600,000
d. ₱0
43. On December 31, 2018, Nino Co. has ₱2,000,000 of short-term notes payable due
on February 14, 2019. On January 10, 2019, Nino arranged a line of credit with PS
Bank which allows Nino to borrow up to ₱1,500,000 at one percent above the prime
rate for three years. On February 2, 2019, Nino borrowed ₱1,200,000 from PS Bank
and used ₱500,000 additional cash to liquidate ₱1,700,000 of the short-term notes
payable. The amount of the short-term notes payable that should be reported as
current liabilities on the December 31, 2018 statement of financial position which is
issued on March 5, 2019 is
a. ₱0
b. ₱300,000
c. ₱500,000
d. ₱800,000
44. Renz newspapers sold 4,000 of annual subscriptions at ₱125 each on September 1.
How much unearned revenue will exist as of December 31?
a. ₱0
b. ₱333,333
c. ₱166,667
d. ₱500,000
45. The trial balance of Keff Company included the following account balances at
December 31, 2019:
Notes payable, due 2020 4,500,000
Discounts on notes payable 2020 1,300,000
Wages payable 800,000
Bonds payable, due 2021 2,000,000
What amount should be included in the current liability section of Keff’s December
31, 2019 balance sheet?
a. 5,500,000
b. 6,100,000
c. 7,500,000
d. 8,800,000
46. The following information belongs to Aubrey Company's on September 30, 2022
Cash including sinking fund of 250,000. 825,000
Accounts receivable, net 1,350,000
Notes Receivable. 2,500,000
Notes Receivable Discounted 500,000
Inventory. 4,675,000
Prepaid Expense. 950,000
How much current asset should be shown in the balance sheet on September 30,
2022?
A. P 9,500,000
B. P 10,300,000
C. P 10,050,000
D. P 9,550,000
47. The following data presented below are part of Alexa Company on August 31, 2025
Cash 790,000
Notes Receivable (P 450,000-pledge) 1,650,000
Accounts Receivable - assigned. 2,300,000
Accounts Receivable - unassigned. 1,500 000
Trading Securities. 2,350,000
Inventory 925,000
Equity of assignee in accounts receivable assigned. 800,000
How much current asset should be part in the balance sheet of Alexa Company on
August 31 2025?
A. P 9,265,000
B. P 10,315,000
C. P 9,515,000
D. P 7,165,000
48. The trial balance of Rosette Company represents the following liability account
balances at October 31, 2023
Accounts Payable. 1,800,000
Bonds Payable. 2,750,000
Dividends Payable. 925,000
Income Payable. 480,000
Deferred Tax liability. 250,000
Discount on bonds Payable. 125,000
How much current liability should be part of the balance sheet of Rosette Company on
October 31 2023?
A. P 6,080,000
B. P 6,205,000
C. P 3,205,000
D. P 3, 080,000
49. The trial balance of Zymon Company reflected the following liability account
balances on December 31, 2026
Bonds Payable, due March 15 2027 1,750,000

Deferred Tax liability. 150,000
Notes Payable, January 26, 2027. 430,000
Premium on bonds Payable. 75,000
How much current liability should be shown in the balance sheet on December 31,
2026?
A. P5,140,000
B. P 3,315,000
C. P 3,465, 000
D. P 5,290, 000
50. Angeline Company had the following liabilities at December 31, 2021
Accounts Payable. 755,000
Accrued Expense. 235,000
Income Tax Payable. 120,000
Deffered Tax liability. 215,000
Unsecured note, 10%, due, April 14, 2022. 525,000
Bonds Payable. 980,000
Discount on bonds Payable. 125,000

How much current liability should be part in the balance sheet of Angeline Company's
on December 31 2021?
A. P 1,850,000
B. P 1,635,000
C. P 2,830,000
D. P 2,705,000
DITO YUNG NEXT PROBLEM SOLVING
Answer Key:
Current Assets/Liabilities (Theories)
1. C
2. C
3. C
4. C
5. C
6. C
7. C
8. C
9. A
10. B
11. B
12. A
13. D
14. B
15. C
16. B
17. D
18. C
19. A
20. C
21. A
22. A
23. C
24. D
25. A
26. D
27. D
28. C
29. A
30. A
31. D
32. C
33. A
34. D
35. B
36. B
37. A
38. A
39. A
40. D
41.C
42.D
43.B
44.C
45.C
Current Assets/Liabilities (Problems)
1. C
2. C
3. C
4. C
5. C
6. A
7. A
8. A
9. A
10. A
11. C
12. A
13. C
14. B
15. D
16. D
17. A
18. D
19. D
20. C
21.A
22. D
23. C
24. B
25. A
26. A
27.B
28.B
29.D
30. B.
31.D
32.C
33.B
34.C
35.A
36. C
37. C
38. D
39. C
40. B
41. C
42. D
43. D
44. B
45. A
46. D
47. C
48.C
49.A
50.B
Solutions (Problems)
1. Only a disclosure is required because it is only possible that we may lose, therefore
no journal entries are required.
2. For four years, estimated expense will be 16% of total sales (1+3+5+7). 16% of
3,700,000 is 592,000. For four years, the actual expense was 178,000. 592,000 minus
178,000 is 414,000.
3. 2,500,000 x 12% = 300,000
4. 3 equal installments = 1,000,000
Interest = 480,000/3 = 160,000
As of Dec. 31, 2019, Accrued Interest = 160,000 x 6/12 x 2 = 160,000
Installment for 2019 =1,000,000
Total = 1,600,000
5. It is only possible that she will be held for the damages, therefore, no amount will be
recorded as current liability, only a disclosure.
6. Cash 5,000,000
Inventory 1,800,000
Total current asset: 10,300,000
7. Cash 23,000,000
Inventory (1,650,000 – 350,000) 1,300,000
Prepaid Expense (150,000 – 50,000) 100,000
Equipment held for sale ___750,000
Total current asset 30,150,000
8. Cash (4,500,000 – 1,350,000 – 500,000) 2,650,000
Accounts Receivable (2,800,000 + 1,350,000 + 500,000) 4,650,000
Inventory 1,750,000
9. Accounts payable 650,000
Note payable 4,000,000
Accrued expense 250,000
Senior bonds payable 5,000,000
Total current liabilities 9,900,000
10. Cash overdraft at Royal Mint 950,000
Accounts receivable with credit balances 700,000
Employee income taxes withheld 800,000
Estimated expenses of warranties on merchandise sold 500,000
Estimated damages of unsatisfactory performance 450,000
Deferred serial bonds (5,000,000 x 8% x 3/12) 100,000
11. Cash 3,500,000
Cash in Bank 2,100,000
Accounts Receivable 750,000
Trading Securities 225,000
Total Current Assets 6,575,000
12. Accounts Payable 500,000
Unsecured Note, 10% due March 1, 2021 750,000
Accrued Expenses 665,000
Senior Bonds, 10% due April 1, 2021 3,100,000

Total Current Liabilities 5,015,000
13. Cash and Cash Equivalents (1,655,000 – 1,100,000) 555,000
Allowance for Doubtful Accounts (800,000)
Patent 150,000
14. Cash 3,000,000
Financial asset held for trading 1,300,000
Inventory (1,500,000 – 500,000) 1,000,000
15. Accounts Payable 4,500,000
Short-term borrowings 1,000,000
Mortgage Payable - current portion 800,000
Total Current Liabilities 6,300,000
16. D
Current Assets
Petty Cash (Coins and Currency) 12,000

Inventory 500,000
Equipment retired from use and held for sale 250,000
Total current assets Php 1,442,000
17. A
Cash and Cash Equivalents
Cash on hand Php 1,200,000
Less: Postdated Check (150,00)
LandBank current account 750,000
BPI Current account no. 1 1,500,000
Total Cash and Cash Equivalents Php 3,330,000
18. D
Account payable Php 550,000
Senior bonds, 7%, due March 31, 2021 5,000,000

Discount on bonds payable (75,000)
Balance at BPI (Overdraft) 600,000
19. D
Accounts payable(debit balance from supplier did not affect accounts Php
payable) 4,000,000
Accrued expenses 1,500,000
Credit balances of customers’ accounts 765,000
Estimated expenses in redeeming prize coupons

presented by customers
255,000
20. C
Assets
Allowance for doubtful accounts (12,000)
Inventory 500,000
Equipment retired from use and held for sale

250,000
Total current assets Php 4,063,000
Liabilities
Accounts payable Php 450,000
Bonds payable, due December 30, 2021 1,000,000
Discount on bonds payable (50,000)
Cash dividends payable 65,000
Total liabilities Php 1,840,000
Current assets Php 4,063,000
Less: Current liabilities 1,840,000
Working capital, December 31,2020 Php 2,223,000
26.
Solution:
Cash PHP 1,500,000
Inventory (1,000,000 + 700,000) 1,700,000
Financial Asset hed for trading 300,000
Equipment held for Sale 2,000,000
Total Current Assets PHP 6,700,000
27.
Solution:
Assets=Liabilities + Equity
Liabilities PHP 2,800,000

Share Capital 15,000,000
Retained Earnings (PHP 2,700,000 less dividends PHP 100,000) 2,600,000
Total Liabilities and Shareholder’s Equity PHP 20,400,000
28.
Solution:
Cash PHP 6,500,000
Allowance for Doubtful Accounts ( 500,000)
Notes Receivable 2,000,000
Claim Recievable 400,000
Inventory ( PHP 4,000,000 + ( 3,000,000/150%)) 6,000,000
Total Current Assets PHP 19,400,000
29.
Solution:
Accounts Payable PHP 1,900,000
Dividends Payable 500,000
Income Tax Payable 900,000
Bonds Payable 3,400,000
Discount on Bonds Payable (200,000)
Total Current Liability PHP 6,500,000
30.
Solution:
Account Payable PHP 2,000,000
Short-term Borrowings 1,500,000
Bonds Payable 3,000,000
Premium on Bonds Payable 1,500,000
Mortgage Payable- Current Portion` 1,000,000
Total Current Liabilities PHP 9,000,000
31.) Cash Php3000,
Debtors Php2000,
Raw material Php1000

Short term investments Php500
Php6,500
32.) Php120,000x6% Php7,200
Php7,200x1/12 Php600
33.) Cash Php10,000
Accounts Receivable Php20,000
Equipment Php250,000
Inventory Php1,000,000
Php1,280,00
0
34.) Accounts Payable Php2,000,000
Bonds Payable , due December 31, 2020 Php1,000,000
Discount on Bonds Payable

(Php300,000)
Php2,700,000
35.) Php1,000,000x10% Php100,000

Php100,000x6/12 Php50,000
36. c
Cash 192,500
Inventories 350,000
Prepaid expenses 80,000
37. c
Bonds payable 825,000
38. d
Interest accrued on the 11% note, from September 1
to December 31, 2019
(3,850,000*11%*4/12) 141,167
Interest accrued on the 12% note, from October 1
(4,250,000*12%*3/12) 127,500
Accrued interest payable - December 31, 2019 268,667
39. c
An agreement to refinance or to reschedule payment on a long-term basis is completed after the
reporting period and before the financial statements are authorized for issue.
40. b
Cash 2,250,000
Trade installment receivables 250,000
Equity investment - FVPL 375,000
41. C
Cash 7,000,000
Allowance for doubtful accounts (1,000,000)

Prepaid insurance 1,500,000
Merchandise inventory 8,000,000
Accounts payable (5,000,000)
Short-term note payable (3,000,000)
Wages payable (2,000,000)
Working capital 29,500,000
42. D
Refinancing not completed by financial reporting date.
43. D
₱2,000,000 – ₱1,200,000 = ₱800,000
44. B
(4,000 × ₱125) × 8/12 = ₱333,333
45. A
Notes payable, due 2020 4,500,000
Discounts on notes payable 2020 (1,300,000)
Wages payable 800,000
46.
Cash including(825,000-250,000). 575,000
Accounts receivable, net 1,350,000

Notes Receivable. 2,500,000
Notes Receivable Discounted (500,000)
Inventory. 4,675,000
Prepaid Expense. 950,000
Current Asset. 9,550,000
Answer: D
47.
Cash 790,000
Notes Receivable 1,650,000
Accounts Receivable - assigned. 2,300,000
Accounts Receivable - unassigned. 1,500 000
Trading Securities. 2,350,000
Inventory 925,000
Current Asset. 9,515,000
Answer: C
48.
Current Liability. 3,205,000
Answer:C
49.
Bonds Payable. 1,750,000
Notes Payable. 430,000
Premium on bonds Payable. 75,000
Current liability 5,140,000
Answer:A
50.
Accounts Payable. 755,000
Accrued Expense. 235,000
Income Tax Payable. 120,000
Unsecured note. 525,000
Current liability. 1,635,000
Answer:B
DITO YUNG SUSUNOD NA SOLUTION

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Current Assets/Liabilities (Theories)

1. A current asset is:

2. Which of the following is not classified as a current asset?

3. Notes Payable could appear on the balance sheet in which classification?

a. Financial assets at fair value

11. Which of the following is not classified as a current liability?

13. The term “net assets” represents

14. Which of the following should never be classified as current assets?

16. Which of the following should be included in current assets?

17. Which of the following should be included in current liabilities?

18. Which of the following is a current liability?

20. Which of the following is not an acceptable presentation of current liabilities?

a. Current Liabilities c. Non-

b. Current Assets d. Non-Current Assets

a. Accounts Payable c. Accrued Expenses

b. Notes Payable d. Deferred

23. Bank overdraft generally should be:

I. expected to be settled beyond the entity's normal operating cycle

30.Which of the following item is not an element of working capital

31. Which is not a current asset?

(a) office supplies inventory

(b) short-term investment

(c) petty cash (undeposited) cash

(d) cash surrender value of life insurance

(a) a security which has been purchased recently

(b) a security held in the account of a brokerage firm

(c) a security which is held for resale in the near future

(d) a security which will be transferred in exchange for another security

33. The principal classifications of liabilities are:

(a) current liabilities and noncurrent liabilities.

(b) current liabilities, noncurrent liabilities and deferred revenue.

(c) current liabilities and deferred revenue.

(d) noncurrent liabilities and deferred revenue.

34. A company records an accounts receivable:

(a) each time an exchange transaction occurs.

(b) each time a cash sale is made.

(c) when another company extends credit to it.

(a) present value

(b) principal value

(c) net realizable value

(d) maturity value

37.Financial Statements must be prepared at least

39. The statement of financial position

40. Which is a limitation of the statement of financial position?

42.) Current assets can be used to compute these items, except?

A) a long term liability

C) interest expense only

D) payments to principal only

A) on the income statement

B) on the balance sheet as an asset

C) on the balance sheet as a liability

D) on the income statement as revenue

B) cash in a savings account

C) current assets - current liabilities

D) current assets/current liabilities

46. An entity shall classify an asset as current, except when

47. Which of the following is not classified as current liability?

50. The following are characteristics of an asset, except

1. Umbrella Academy was involved in a lawsuit regarding complaints in their teaching

c. No journal entry is required.

Sales Actual Warranty Expenses

2010 500,000 8,000

2012 1,000,000 50,000

2013 1,500,000 100,000