QUIZ 1:
1. Which statement is correct?*
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The Board of Accountancy has the authority to establish the accounting framework to be
used by the companies under its jurisdiction
The Financial Reporting and Standards Council is required to have a chairman who had
been or presently a senior practitioner in public accountancy
The Insurance Commission is represented in the Auditing and Assurance Standards
Council
The Education Technical Council was created to assist the BOA in carrying out its power
and function to implement the continuing professional education program
Correct answer
The Insurance Commission is represented in the Auditing and Assurance Standards
Council
2. Which statement is correct regarding Philippine Interpretations Committee
(PIC) *
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Depending on the complexity of the issue, the PIC may decide to circulate the draft of
the Q&A to the public for comment, in which case the exposure period shall be not more
than 30 days
PIC Q&As are less authoritative than PFRSs.
The consensus in PIC Q&As normally takes effect upon publication
The Q&As approved by the PIC need not be forwarded to the FRSC for approval before
issuance to the public as final guidance
3. Physical assets and intangible assets are not financial assets. Why? *
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Control of such assets create an opportunity to generate an inflow of cash or another
financial assets but it does not give rise to the present right to receive cash or another
financial asset
The future economic benefit from these assets is the receipt of goods or services, rather
than the right to receive cash or another financial asset
Both a and b
Neither a nor b
Correct answer
Control of such assets create an opportunity to generate an inflow of cash or another
financial assets but it does not give rise to the present right to receive cash or another
financial asset
4. Which of the following will qualify as cash equivalent?
I. Three-month Treasury bill
II. Three-year Treasury bond purchased three months from maturity
III. Three-year Treasury bond, purchased one year ago, remaining term to
maturity is one month
*
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I, II and III
I and II only
I only
None of these
Correct answer
I and II only
5. The following are transactions related to a sinking fund being managed by the
entity itself. Which of the following will increase the sinking fund?
I. Purchase of securities
II. Sale of securities a gain
III. Receipt of dividends
*
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I, II and III
I and II only
II and III only
III only
6. Time value of money is the element of interest that provides consideration for
the *
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Passage of time
Risk that one party to a financial instrument will cause a financial loss for the other party
by failing to discharge an obligation
Risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities that are settled by delivering cash or another financial asset
Costs associated with holding the financial asset
7. Examples of techniques to estimate cost of inventories mentioned in PAS 2
include
I. Gross profit method
II. Retail inventory method
III. Standard cost method
IV. Most recent purchase price method
*
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I, II, III and IV
II, III and IV only
I and II only
II and III only
Correct answer
II and III only
8. On February 1, 2021, ABC Corporation factored receivables with a carrying
amount of P2,000,000 to DEF Corporation. ABC Corporation assesses a finance
charge of 3% of the receivable and retains 5% of the receivables. Assume the
ABC Corporation retained significant amount of risk and rewards of ownership
and had a continuing involvement on the factored financial asset, what amount of
loss from factoring should the company recognize?*
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None
P60,000
P100,000
P160,000
Correct answer
None
9. On December 31, 2021, ABC Company reported the following information
involving its biological assets: Biological assets, at cost on December 31, 2019
P3,000,000
Fair value surplus on initial recognition at fair value December 31, 2020 P
3,500,000
Change in fair value to December 31, 2021 P 500,000 Decrease in fair value due
to harvest during 2021 P450,000
What amount should the biological asset be reported in the December 31, 2021
balance sheet?
*
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P 3,050,000
P 3,550,000
P 6,050,000
P 6,550,000
10. On January 1, 2021, ABC Company purchased a large quantity of personal
computers. The cost of these computers was P3,000,000. On the date of
purchase, the management estimated that the computers would last
approximately 4 years and would have a residual value of P300,000. The entity
used the double declining balance method. During January 2022, the
management realized that technological advancements had made the computers
virtually obsolete and that they would have to be replaced. The residual value did
not change. Management proposed changing the remaining life of the computers
to 2 years. What amount should ABC report a depreciation for 2022?
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P 1,500,000
P 1,200,000
P 750,000
P 600,000
Correct answer
P 1,200,000
11. ABC Corporation’s properties included the following items:
• Land held for undetermined future use, P2,500,000.
• A vacant building to be leased out under an operating lease, P10,000,000.
• Property held for sale in the ordinary course of its business, P15,000,000.
• Property acquired exclusively with a view to subsequent disposal in the near
future, P2,000,000.
• Property occupied by employees paying market rent, P1,500,000
• Property occupied by employees paying below market rent, P500,000
Property held for administrative purposes, P5,000,000.
• A hotel owned and managed, P25,000,000.
• A building being leased out to a subsidiary, P4,000,000. • A building, which
cannot be sold or leased out separately, used in the production of goods and
around 2% of the area being leased out to canteen operators, P1,000,000.
• Property that is being constructed for use as an investment property,
P3,500,000.
How much should be reported as investment properties in ABC Corporation’s
separate financial statements?
*
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P 21,500,000
P 19,000,000
P 17,500,000
P 20,000,000
12. On January 1, 2021, ABC Company purchased bonds with face value of
P8,000,000 for P7,679,000 as a long-term investment. The stated rate on the
bonds is 10% but the bonds are acquired to yield 12%. The bonds mature at the
rate of P2,000,000 annually every December 31 and the interest is payable
annually also every December 31. The entity used the effective interest method
of amortizing discount.
What is the interest income for 2021?
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P 800,000
P 921,480
P 960,000
P 767,900
13. Financial accounting is concerned with
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General-purpose reports on financial position and financial performance
Specialized reports for inventory management and control
Specialized reports for income tax computation and recognition
General-purpose reports on changes in stock prices and future estimates of market
position
14. The process of establishing financial accounting standards
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Is a democratic process in that a majority of practicing accountants must agree with a
standard before it becomes implemented
Is a legislative process based on rules promulgated by government agencies
Is based solely on economic analysis of the effects each standard will have if it is
implemented
Is a social process which incorporates political actions of various interested user groups
as well as professional research and logic
15. The accrual basis of accounting is most useful for*
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Determining the amount of income tax an entity should pay
Predicting the short-term financial performance of an entity
Predicting the long-term financial performance of an entity
Determining the amount of dividends an entity should pay
QUIZ 2:
1. Realized revaluation surplus is transferred to retained earnings*
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at no instance
only during the period of use of the asset
only upon disposal or retirement of plant asset
upon disposal or retirement of the asset or during the period of use of the asset
2. Which is a financial liability?*
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Deferred revenue
A warranty obligation
A constructive obligation
An obligation to deliver own shares worth a fixed amount of cash
3. On January 1, 2020, Lourdes Corporation issued 5,000 of its 5-year, P1,000
face value, 11%bonds dated January 1 at an effective annual interest rate (yield)
of 9%. Interest is payable each December 31. Lourdes uses the effective interest
method of amortization. On December 31, 2021, the 3,000 bonds were
extinguished early through acquisition in the open market by Lourdes for
P2,970,000 plus accrued interest.
The gain on early retirement of bonds on December 31, 2021 is
*
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P0
P116,442
P181,785
P266,811
4. Which of the following is not a component of a post-employment benefit cost
under the defined benefit plan?*
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Contributions to the plan
Interest cost
Remeasurements
Service cost
5. Earnings per share disclosures are required only for*
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private companies.
publicly-held companies.
companies with complex capital structures.
companies that change their capital structures during the reporting period.
6. The equity section of Buffett Company revealed the following
informationonDecember31,2021:
Preference share capital, P100 par
P5,000,000
Share premium-preference shares
2,000,000
Ordinary share capital, P50
3,200,000
Share premium-ordinary shares
500,000
Subscribed ordinary share capital
800,000
Retained earnings-appropriated
250,000
Unrealized loss on available for sale securities
600,000
Subscription receivable-ordinary shares
400,000
Retained earnings- unappropriated
3,500,000
Treasury shares-ordinary
1,000,000
How much is the contributed capital of Buffett Company as of December 31,
2021?
*
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P10,100,000
P10,500,000
P11,100,000
P11,500,000
7. The December 31, 2021 balance sheet of Camille Corp. showed shareholders’
equity of P448,700. Transactions during 2011 which affected the shareholders’
equity were: (1) an adjustment to Retained Earnings for an overstatement of
depreciation in 2020 P10,000; (2) gain on the sale of treasury shares, P9,000; (3)
declared dividends of P60,000 of which P40,000 were paid during the year; and
(4) net income after tax of P75,500. The share capital balance of P300,000
remain unchanged during the year.
The retained earnings balance on January 1, 2021 was
*
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P114,200
P123,200
P132,300
P134,200
Correct answer
P114,200
8. Saucer Corp.has the following classes of shares outstanding at
December31,2021: Ordinary share capital, P100 par 6% Preference share
capital, P100 par, cumulative and fully participating P360,000 Dividends on
preference shares are in arrears for 2019 and 2020. P120,000
If P57,600 are to be distributed as dividends, the total dividends to be given on
preference shareholders would be
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P25,200
P26,400
P30,000
P32,400
Correct answer
P25,200
9. As of December 31, 2021, the shareholders’ equity of Grace Co. follows:
Authorized share capital, 500,000 shares at P10 par
value
P5,000,000
Unissued share capital (50,000)
shares)
00,000
Share premium
Treasury shares, 15,000 shares at cost
5
130,000
150,000
Deficit
277,000
The book value per share is
*
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P9.34
P9.36
P9.60
P9.66
Correct answer
P9.66
10. The principal concern with accounting for related-party transactions is:*
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The size of the transactions.
The absence of legally binding contract
The lack of accurate data to record transactions.
Differences between economic substance and legal form.
Correct answer
Differences between economic substance and legal form.
QUIZ 3: TAX
1. A tax is classified as ____________________, if the same is based on the
value of the property subject matter of the tax, and therefore may require the
expert judgment of assessors and appraisers.*
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ad valorem
specific
direct
indirect
None of the above
2. A non-resident alien not engaged in trade or business (NRANETB) shall
generally be subject to a 25% final tax on gross income received from all sources
within the Philippines. However, a NRANETB shall be exempt from tax on:*
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Philippine Charity and Sweepstakes Office (PCSO) winnings less than ₱10,000.
De minimis prizes of less than ₱10,000.
Interest income paid by a depositary bank under the foreign currency deposit system.
Interest income from a long-term deposit or investment certificate issued by a bank in
the Philippines and held for a period exceeding 5 years
3. The following are the features of the 8% optional income tax in the ITR,
except:*
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The qualified individual taxpayer is not required to file his financial statements with his
annual ITR
The qualified taxpayer is still required to comply with bookkeeping and invoicing
requirements
The qualified taxpayer, who is also a partner in a general professional partnership must
signify his choice of the 8% tax rate in the first quarterly ITR
The qualified taxpayer is exempt from paying the 3% OPT under Section 116 of the Tax
Code
Correct answer
The qualified taxpayer, who is also a partner in a general professional partnership must
signify his choice of the 8% tax rate in the first quarterly ITR
4. Which of the following benefits received by an employee may be included in
the employee’s ITR and be subject to the regular income tax?
(1) Use of employer’s Mercedes Benz by CEO for to attend business meeting
(2) Uniform and clothing allowance of ₱6,000 per year (3) Payment of tuition fee
of eldest child of a rank-and-file employee (4) Housing provided to a rank-and-file
employee
*
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(1) and (2)
(2) and (3)
(3) and (4)
None of the above
5. Statement 1: Estate tax is a proportional tax. Statement 2: A progressive tax
is a tax, the rate of which is directly proportional to tax base.*
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If only the first statement is correct.
If only the second statement is correct.
If both statements are correct.
If both statements are incorrect.
Correct answer
If both statements are correct.
6. Statement 1: There can be double taxation in the Philippines. Statement 2:
Double taxation is illegal if it violates the uniformity of taxation.*
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If only the first statement is correct.
If only the second statement is correct.
If both statements are correct.
If both statements are incorrect.
7. One of the following is not an accepted basis of relief from the MCIT.
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Prolonged labor dispute
Force majeure problems
Legitimate business reverses
Intercorporate dispute
8. An American living in Toronto, Canada, died intestate leaving the following
properties (denominated in Philippine pesos) in 2018: Tiny house in Toronto
P 3,000,000 Dodge caliber in Toronto P 2,000,000 Fixtures in the Tiny house
P500,000 Proceeds of life insurance with Sunlife of Canada Insurance, Inc.
P2,000,000 Which of the following may be deducted from the decedent’s gross
estate?
*
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Standard deduction
Medical expenses
Funeral expenses
Family home
9. Mr. Henry Salcedo made the following donations in 2018: February: To a
legitimate daughter who got married on Valentine’s day amounting to P300,000.
August: To legitimate son’s birthday celebration amounting to P200,000. To an
adopted child who got married amounting to P10,000. Compute the Donor’s tax
due for the month of August*
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Php 8,000
Php11,400
Php12,600
Php12,000
10. Which statement is correct? Under the system of conjugal partnership of
gains and absolute community of property:
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Property acquired during the marriage by inheritance or gift is exclusive property under
both systems
Property owned before the marriage is exclusive property under both systems.
Income of property under (a) is exclusive property under both systems.
Property under (a) may be conjugal or community when expressly declared by the
benefactor as conjugal or community
11. Manuel Rodriguez, CPA practitioner, is also employed with a medium-sized
manufacturing firm and receives the following for the year 2019:
Salary
P200,000
Overtime pay
50,000
13th month pay and other benefits
20,000
Deposit of client
100,000
Retainer fee of P25,000/month
300,000
Out-of-pocket charged to client
400,000
Dividend income from domestic corporation 30,000
How much is Manuel Rodriguez gross compensation income?
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Php 250,000
Php 270,000
Php 500,000
Php 550,000
12. With information from an obituary in a newspaper of general circulation on
the death of a well known Filipino politician, the BIR communicated with banks
asking them to give information on the bank deposits of the decedent. Can the
bank give information on the bank deposit?
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Definitely no.
Yes, at the option of the bank.
No, because of the restriction in the Bank Secrecy Law on deposits.
Yes, because this is one of the exceptions in the Secrecy of Bank Deposit Law
Correct answer
Yes, because this is one of the exceptions in the Secrecy of Bank Deposit Law
13. Which of the following statements is correct?
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If the family home is community property, the deduction for family home is ½ of its value,
and from the total of the net exclusive and community estate
If the family home is conjugal property, the deduction for family home is ½ of its value,
and from the gross conjugal estate to arrive at the net conjugal estate
If the family home is an exclusive property of the decedent, the deduction for family
home is 100% of its value, and from the gross exclusive estate to arrive at the net
exclusive estate
The standard deduction is against the total gross exclusive and conjugal or community
estate.
Correct answer
If the family home is community property, the deduction for family home is ½ of its value,
and from the total of the net exclusive and community estate
14. A non-stock, non-profit entity shuts down and transfers all its property in
favour of another entity. It will not be subject to tax if it meets the requirements of
the law, unless:
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The transferee is another non-stock, non-profit organization.
Not more than 30% of the donation is used for administrative purpose.
The transferee is a non-government organization.
The transferee is an educational, charitable, religious, cultural or social welfare,
philanthropic organization
15. ABC Corp. secured an income tax holiday for five (5) years as a pioneer
industry. On the 4th year of the tax holiday, ABC Corp. declared and paid cash
dividends to its stockholders, all of whom are individuals. Are the dividends
taxable? *
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The dividends are taxable; the tax exemption of ABC Corp. does not extend to
itsstockholders.
The dividends are tax exempt because of ABC’s income tax holiday.
The dividends are taxable if they exceed 50% of ABC’s retained earnings.
The dividends are exempt if paid before the end of ABC’s fiscal year