RFBT Second Drills Results for STEPHANIE M.
COSTALES
Score for this quiz: 101 out of 120
Submitted May 17 at 10:38am
This attempt took 158 minutes.
Question 1
1 / 1 pts
The directors must officially establish by electing the following
necessary corporate officials, immediately following their election,
except
Corporate secretary
President
Treasurer
Correct!
Vice-president
Question 2
1 / 1 pts
The meal time (lunch break) for the dining crew in Glorious
Restaurant is either from 10 a.m. to 11 a.m. or from 1:30 p.m. to
2:30 p.m., with pay. But the management wants to change the
mealtime to 11: a.m. to 12 noon or 12:30 p.m. to 1:30 p.m., without
pay. Will the change be legal?
Correct!
Yes, absent an agreement to the contrary, the management
determines work hours and, by law, meal break is without pay.
No, because lunchbreak regardless of time should be with pay.
No, because existing practice cannot be discontinued unilaterally.
Yes, the management has control of its operations.
Question 3
1 / 1 pts
Which of the following is not part of the process of acceptance of
applications or requests?
The receiving officer or employee shall issue an acknowledgement
receipt.
All officers or employees shall accept written applications,
requests, and/or documents being submitted by applicants or
requesting parties of the offices or agencies
Correct!
The receiving officer or employee shall perform a final assessment
of the application or request
The receiving officer or employee shall assign a unique
identification number to an application or request
Question 4
1 / 1 pts
The time consumed by an LGU or National Government Agency
(NGA) from the receipt of an application or request with complete
requirements, accompanying documents and payment of fees to
the issuance of certification or such similar documents approving
or disapproving an application or request.
Documented time
Completed time
Approved time
Correct!
Processing time
Question 5
1 / 1 pts
I. The Report Card Survey shall be a holistic tool that will measure
effectiveness of the Citizen's Charter in reducing regulatory
burdens and the impact of the human resource systems and
programs in delivering efficient government service.
II. The Report Card Survey shall be used to obtain information
and/or estimates of hidden costs incurred by applicants or
requesting parties to access government services which may
include, but is not limited to, bribes and payment to fixers.
Both are false
Only I is true
Only II is true
Correct!
Both are true
Question 6
1 / 1 pts
It is the right of existing stockholders to purchase or subscribe to
all issuances or disposition of shares of any class, in proportion to
their respective stockholders, before such shares are offered to
the public.
Correct!
Pre-emptive right
Dissenting right
Subscription right
Appraisal right
Question 7
1 / 1 pts
How many years of service is the underground mine employee
required to have rendered in order to be entitled to retirement
benefits?
15
Correct!
5
10
20
Question 8
1 / 1 pts
I. The SSS is exempt from all kinds of taxes, fees or charges
II. The assets of SSS are exempt from attachment, garnishment,
levy or seizure
Both statements are false
Only Statement II is true
Only Statement I is true
Correct!
Both statements are true
Question 9
0 / 1 pts
Which of the following is an automatic ground for dissolution of
general partnership?
Correct Answer
A partner is civilly interdicted.
You Answered
A partner has been guilty of such conduct as tends to affect
prejudicially the carrying on of the business.
The business of the partnership can only be carried on at a loss.
A partner is shown to be of unsound mind.
Question 10
1 / 1 pts
Which of the following statements is false in relation to denials of
application or request for access to government service?
Correct!
The denial shall be dated.
The denial shall be fully explained in writing.
The grounds upon which such denial is based shall be stated.
The denial shall state the name of the person making the denial.
Question 11
Which of the following is NOT a requisite for entitlement to
paternity leave?
The employee is lawfully married to his wife.
Correct!
The employee is a regular or permanent employee.
1 / 1 pts
The employee is cohabiting with his wife when she gave birth or
had a miscarriage.
The wife has given birth or suffered a miscarriage.
Question 12
1 / 1 pts
The following are violations under the Ease of Doing Business and
Efficient Government Service Delivery Act of 2018.
Fixing and/or collusion with fixers in consideration of economic
and/or other gain or advantage.
Imposition of additional requirements other than those listed in the
Citizen's Charter.
Failure or refusal to issue official receipts.
Correct!
All of the above.
Question 13
1 / 1 pts
How much of an interlocking director's interest is deemed
substantial?
At least 20%
At least 50%
Correct!
More than 20%
More than 50%
Question 14
1 / 1 pts
Statement 1: Material Non-Public Information is information that is
not available to the public that will affect the price of a security or
influence a person's decision to acquire, sell, or hold a security.
Statement 2: Insider trading occurs when an insider with
substantial non-public information purchases or sells a security.
True; False
False; True
False; False
Correct!
True; True
Question 15
1 / 1 pts
Which of the following statements is not correct in terms of
appraisal right?
In case of an amendment or articles of incorporation which in
effect of changing, restricting the rights of any stockholder
In case of merger or consolidation
In case of sale, lease, mortgage or other disposal of all corporate
assets
Correct!
In case of incurring, creating or increasing bonded debts
Question 16
1 / 1 pts
I. Issuance of the certification of fire incident for fire insurance
purposes shall in no case be longer than 20 working days, and
may be extended only once for another 20 working days.
II. The BFP or any of its officials or employees may recommend
specific brands of fire extinguishers and other fire safety
equipment to any applicant or requesting party or business entity.
Both are false
Correct!
Only I is true
Both are true
Only II is true
Question 17
1 / 1 pts
What is the agency principally designated to implement the Ease
of Doing Business Act?
Philippine Competition Commission
Correct!
Anti-Red Tape Authority
Department of Trade and Industry
Securities and Exchange Commission
Question 18
1 / 1 pts
The following are violations under the Ease of Doing Business and
Efficient Government Service Delivery Act of 2018,
Failure to attend to applicants or requesting parties who are within
the premises of the office or agency concerned prior to the end of
official working hours and during lunch break.
Failure to render government services within the prescribed
processing time on any application or request without due cause.
Refusal to accept application or request with complete
requirements being submitted by an applicant or requesting party
without due cause,
Correct!
All of the above.
Question 19
1 / 1 pts
Gian, a married regular employee of Marupok Corporation for 20
years, died. He left his spouse, two minor children, ages 10 and 8,
and his widowed mother who had been living with him and his
family for so many years. Who is entitled to claim the death
benefits from the SSS?
Only the spouse of Gian
Only the widowed mother of Gian
All of Gian’s heirs
Correct!
Both the spouse of Gian and the minor children
Question 20
1 / 1 pts
The following entities cannot be organized as one-person
corporation, except
Correct!
Retail business
Public and publicly-listed companies
Non-chartered government-owned and controlled corporations
Insurance
Question 21
0 / 1 pts
Which of the following claims shall be paid last in the liquidation of
general partnership?
Those owning to the creditors other than partners
Those owing to partners in respect of capital
Correct Answer
Those owing to partners in respect of profits
You Answered
Those owing to partners other than capital and profits
Question 22
1 / 1 pts
It is the process by which all of the corporation's assets are turned
into liquid assets in order to expedite the fulfillment of creditors'
obligations, with any residual balance being dispersed to
stockholders or members.
Consolidation
Correct!
Corporate liquidation
Corporate dissolution
Merger
Question 23
1 / 1 pts
Taylor Swift did not report for work without leave of absence on
March 31, 2021, or Holy Wednesday, because she will be leaving
for her province to celebrate the rest of the Holy Week there.
Which of the following statements is the most accurate?
Taylor will only be paid holiday pay for Good Friday but not for
Maundy Thursday
Taylor is entitled to 200% of her regular wage as holiday pay
because Maundy Thursday and Good Friday are regular holidays
Taylor will not be paid for Wednesday but will receive holiday pay
for both Maundy Thursday and Good Friday
Correct!
Taylor will not be paid for Wednesday, Maundy Thursday and
Good Friday
Question 24
1 / 1 pts
If the application or request for license, clearance, permit,
certification or authorization shall require the approval of the local
Sanggunian, how many days is given to the Sanggunian to act on
the application or request?
Ten (10) working days
Twenty (20) working days
Thirty (30) working days
Correct!
Forty five (45) working days
Question 25
1 / 1 pts
An application which requires the use of technical knowledge,
specialized skills and/or training in the processing and/or
evaluation thereof.
Simple transactions
None of the above
Correct!
Highly technical application
Complex transactions
Question 26
1 / 1 pts
What is the prescriptive period of all criminal offenses penalized
under the Labor Code and the Rules Implementing the Labor
Code?
10 years
Correct!
3 years
4 years
5 years
Question 27
1 / 1 pts
The following are the requisites of Immunity under the Ease of
Doing Business and Efficient Government Service Delivery Act of
2018, except:
There is absolute necessity for the testimony of the
respondent/accused-informant whose discharge is requested.
The testimony of said respondent/accused- informant can be
substantially corroborated in its material points.
Correct!
The respondent/accused-informant appears to be the most guilty.
There is no other direct evidence available for the proper
prosecution of the offense committed, except the testimony of said
respondent/accused- informant.
Question 28
1 / 1 pts
This cooperative principle means that cooperatives are voluntary
organizations, open to all persons able to use their services and
willing to accept the responsibilities of membership, without
gender, social, racial, cultural, political or religious discrimination.
Democratic member control
Concern for community
Autonomy and independence
Correct!
Voluntary and open membership
Question 29
1 / 1 pts
A subscribed to 10,000 shares of stock of ABC Corporation. She
paid 25% of the said subscription. During the stockholders
meeting, can A vote all her subscribed shares?
No, as to the unpaid percentage of subscription.
No, because A’s shares have become delinquent which cannot be
voted.
Correct!
Yes, because unpaid shares not delinquent can be voted.
No, because the subscription has not yet been fully paid.
Question 30
1 / 1 pts
Any individual whether or not officially involved in the operation of
"government office or agency who has access to people working
therein, and whether or not in collusion with them, facilitates
speedy completion of transactions for pecuniary gain or any other
advantage or consideration.
Commissioner
Agent
Broker
Correct!
Fixer
Question 31
1 / 1 pts
Any director of a corporation may be removed from office by a
vote of the shareholders of:
Majority of the outstanding capital stock entitled to vote
Correct!
2/3 of the outstanding capital stock entitled to vote
Majority of the stockholders present
2/3 of the stockholders present
Question 32
1 / 1 pts
Who has the authority to break the deadlock in a close
corporation?
Corporate secretary
Correct!
SEC upon petition by any stockholder
Chairman of the board upon petition by any stockholder
President upon petition by any stockholder
Question 33
1 / 1 pts
An insider may refer to any of the following, except:
Correct!
A person who learns such material non-public information by a
communication from a publication.
A director or officer of the issuer or a person controlling the issuer.
A person whose relationship or former relationship to the issuer
gives or gave him access to material non-public information.
A government employee, or director, or officer of an exchange,
clearing agency, and/or self-regulatory organization who has
access to material non-public information.
Question 34
1 / 1 pts
It is defined as any regulation, rule, or administrative procedure or
system that is ineffective or detrimental in achieving its intended
objectives and, as a result, produces slow, suboptimal, and
undesirable social outcomes.
Blue tape
Black tape
Green tape
Correct!
Red tape
Question 35
1 / 1 pts
Joefferlyn, a receptionist at Barista Café, and is covered by the
SSS. She was pregnant with her fourth child when she slipped in
the bathroom of her home and had a miscarriage. Meanwhile,
Barista Café neglected to remit the required contributions to the
SSS. Joefferlyn claims maternity leave benefits and sickness
benefits. Which of these two may she claim?
Only sickness benefits.
Correct!
Only maternity leave benefits;
Either one of them;
None of them;
Question 36
1 / 1 pts
The following transactions are exempt from the mandatory tender
offer, except:
Purchases through an open market at the prevailing market price.
Correct!
Purchases in connection with privatization undertaken by a
publicly-listed corporation.
Purchases in connection with corporate rehabilitation under court
supervision.
Any purchase of shares from an increase in authorized capital
stock.
Question 37
1 / 1 pts
Kimidoro owns a convenience store with 8 employees. On August
30, National Heroes Day, one of his employees did not report for
work. As a result, Kimidoro did not give that employee his pay for
that day. Is Kimidoro correct?
No, because employees have a right to receive their regular daily
wage during regular holidays;
Correct!
Yes, because he employs less than ten (10) employees.
Yes, because August 30 is not regular holiday;
Yes, because of the principle of "a fair day’s wage for a fair day’s
work";
Question 38
1 / 1 pts
For purposes of the Ease of Doing Business Act, a transaction is
considered simple if:
It requires the use of technical knowledge.
Correct!
It only requires ministerial actions.
It presents consequential issues
It only requires discretionary actions.
Question 39
When should 13th month pay be paid?
Correct!
Not later than December 24 of every year
Not later than December 31 of every year
Not later than December 15 of every year
Not later than May 31 of every year
1 / 1 pts
Question 40
1 / 1 pts
REO Corporation's articles of incorporation stipulate for 15
directors. Which of the following provisions in the bylaws is
invalid??
That the quorum in the meeting of the board of directors be at
least 10 directors.
That the quorum in the meeting of the board of directors be at
least 8 directors.
Correct!
That the quorum in the meeting of the board of directors be at
least 7 directors.
That by-laws do not mention anything about the quorum in the
meeting of directors.
Question 41
0 / 1 pts
Which of the following is not covered by the Mandatory Tender
Offer Rule as to X Corporation stockholders:
A, B and C plans to acquire 40% of the shares of X corporation
Correct Answer
E, who owns 18% of X corporation, plans to acquire 50% of Y
corporation which in turn owns 64% of X corporation
None of the above
You Answered
D, who owns 20% of the shares of X corporation plans to acquire
an additional 20%
Question 42
1 / 1 pts
Statement 1: No management contract shall be entered into for a
period longer than five years for any term.
Statement 2: The power to amend the articles of incorporation lies
with the stockholders or members directly or indirectly by
delegating said power to the board of directors of trustees.
Only the second is true
Correct!
Both are false
Only the first is true
Both are true
Question 43
1 / 1 pts
No proxy shall valid and effective for a period longer than ____
years at any one time.
2
Correct!
5
3
10
Question 44
0 / 1 pts
A and B capitalist partners in AB partnership by contributing
P50,000 each on June 1, 2020. On July 1, 2020, the partnership
contracted an obligation to pay Z in the amount of P180,000 on
August 31, 2020, On August 10, 2020, C was admitted as a new
partner. C contributed P50,000. How will the obligation be paid?
Correct Answer
A P65,000; B P65,000; C P50,000
A P60000; B P60,000; C P60,000
You Answered
A P180,000 or B P180,000 and C P50,000
A P90,000; B P90,000; C None
Question 45
1 / 1 pts
The AFP wants to purchase a sophisticated defense equipment.
There are only limited and available suppliers in the country that
sells that equipment. What alternative method of procurement can
AFP avail?
Direct contracting
Shopping
Correct!
Limited source bidding
Emergency procurement
Question 46
1 / 1 pts
What is the minimum amount of the 13th month pay?
Correct!
1/12 of the total basic salary earned by an employee within a
calendar year
Highest monthly salary received by the employee during the year
Average monthly salary of an employee
Equivalent to one month pay of an employee
Question 47
0 / 1 pts
All offices and agencies providing government services shall be
subjected to a Report Card Survey which shall be used to obtain
feedback on the following:
I. Compliance with the provisions in the Citizen's Charter, of the
Act and its Rules.
II. Agency performance.
Correct Answer
Both are true
Both are false
Only I is true
You Answered
Only Il is true
Question 48
Which of the following is not a regular holiday?
lndependence Day.
Correct!
Father's Day;
New Year's Eve;
1 / 1 pts
Eidil Fitr;
Question 49
1 / 1 pts
Shakespeare worked overtime from 9 pm to 1 am to finish all his
deadlines. His hourly rate is 300 pesos per hour. How much will
Shakespeare receive for his overtime work?
Correct!
1,612.50
1,200.00
1,500.00
1,575.00
Question 50
0 / 1 pts
Which of the following is not a privilege of a person with
disability under the Magna Carta for disabled persons?
Correct Answer
At least 20% discount on purchase of medicines in all drugstores;
You Answered
Free transportation in public railways;
At least 20% discount on purchase of medicines in all drugstores,
and free transportation in public railways
Educational assistance in public and private schools through
scholarship grants;
Question 51
1 / 1 pts
Who among the following is not entitled to 13th month
pay?
Mark, a cook employed by and who lives with an old maid and
who also tends the sari-sari store of the latter;
Correct!
Raymund, the secretary of a Senator;
Darrel, a probationary employee of a cooperative bank who
rendered six (6) months of service during the calendar year before
filing her resignation;
Nickolai, a house gardener who is required to report to work only
thrice a week.
Question 52
1 / 1 pts
Which of the following is NOT a requisite for entitlement to
paternity leave?
The employee is cohabiting with his wife when she gave birth or
had a miscarriage.
The employee is lawfully married to his wife.
Correct!
The employee is a regular or permanent employee.
The wife has given birth or suffered a miscarriage.
Question 53
0 / 1 pts
Which of the following is a mandate of the Ease of Doing Business
Act to Local Government Units and National Government
Agencies?
All LGs and NGAs undertake to hold themselves solidarily liable
with government employees who engage in red tape activities
Correct Answer
All LGs and NGAs are directed to initiate review of existing
policies and operations and commence with the reengineering of
their systems and procedures.
You Answered
All LGs and NGAs are required to create an Anti-Red Tape Subunit within their respective local governments and agencies.
All LGs and NGAs are required to designate an Anti-Red Tap
Officer who shall be primarily responsible for the investigation and
prosecution of fixers.
Question 54
0 / 1 pts
The Securities Regulation Code (SRC) provides that securities
shall not be sold or offered for sale or distribution within the
Philippines, without a registration statement duly filed with and
approved by the PDIC.
The purpose of the SRC is to protect the investing public primarily
through a system of disclosure and provision of punishment for
fraudulent practices.
Correct Answer
False; True
True; True
True; False
You Answered
False; False
Question 55
1 / 1 pts
Purely ultra vires acts of the officers of a corporation to invest
corporate funds in another business or corporation, i.e., acts not
contrary to law, morals, public policy may be ratified by:
Stockholders with ½ of voting power
Majority vote of all members of the board
Majority vote of the board present
Correct!
Stockholders holding 2/3 of the voting power
Question 56
1 / 1 pts
Which of the following statements is true?
Neither
Both
Correct!
Insurance company, corporations vested with public interest, oil
company, mining company, educational institutions, banks, stock
exchanges and public utility company cannot be incorporated as
close corporation.
Under the Revised Corporation Code, a close corporation is one
whose members belong to the same family. In other words, it is a
family corporation.
Question 57
1 / 1 pts
Statement 1: A foreign corporation doing business in the
Philippines without a license may be sued but it cannot sue.
Statement 2: A written demand for payment of the fair value of the
shares made in the exercise of the appraisal right will suspend the
stockholder’s rights.
First statement is false but second statement is true
First statement is true but second statement is false
Correct!
Both are true
Both are false
Question 58
0 / 1 pts
The following are violations under the Ease of Doing Business and
Efficient Government Service Delivery Act of 2018, except:
Imposition of additional requirements other than those listed in the
Citizen's Charter.
Failure to give the applicant or requesting party a written notice on
the disapproval of an application or request,
Correct Answer
Refusal to accept application or request with complete
requirements being submitted by an applicant or requesting party.
You Answered
Imposition of additional costs not reflected in the Citizen's
Charter.
Question 59
1 / 1 pts
A certificate of stock is distinguished from share of stock in that a
share of stock
May not be issued if the subscription has not been duly paid
Correct!
Is one of the units into which the capital stock is divided
Is tangible personal property
Is the written evidence of a stockholder’s interest in the assets and
management of corporation
Question 60
1 / 1 pts
What is the status of a contract entered into by a foreign entity
conducting business in the Philippines without the requisite
license?
Correct!
Valid and enforceable
Unenforceable
Rescissible
Null and void
Question 61
1 / 1 pts
Cholo worked from 8 am to 5 PM on April 9,2021, which happens
to be his rest day as well. Cholo’s daily rate is 1,000 per day. How
much is Cholo’s pay on that day?
1,300
Correct!
2,300
2,000
2,330
Question 62
1 / 1 pts
Leni Robredo, an executive assistant at Company BTS is covered
by SSS. She was pregnant with her fifth child when she fell from
the stairs and suffered a miscarriage. Meanwhile, Company BTS
failed to remit the required contributions to the SSS. Leni claims
from SSS maternity leave benefit and sickness benefit. Which of
the following is Leni entitled to claim?
Sickness benefit only
Correct!
Maternity benefit only
Both maternity and sickness benefit
None of them
Question 63
1 / 1 pts
A tender offer is an offer by a person or group of persons to the
stockholders of a corporation to tender their shares for purchase.
Mandatory Tender Offer applies to any person who intends to
acquire at least 25% over a period of 12 months of any class of
any equity security of a listed corporation.
False; True
False; False
Correct!
True; False
True; True
Question 64
1 / 1 pts
For shopping, the request for quotations must be posted in the
PHILGEPS website with ABCs exceeding:
100,000
1,000,000
350,000
Correct!
50,000
Question 65
1 / 1 pts
Madonna is an active member of the SSS and has been remitting
contributions for the past 24 months. Madonna married in April
2020 and became pregnant with her first child the following month.
Unfortunately, her husband died because of COVID in October
2020 and is left alone with her unborn child. She gave birth to a
healthy baby boy on February 14, 2021. What is the period of
maternity leave that Madonna may avail?
105 days and she may extend it for an additional 30 days without
pay
60 days
105 days
Correct!
120 days
Question 66
1 / 1 pts
ABC Corporation is a stock corporation that has a principal office
located in Quezon City. What are the possible venues for the
upcoming regular stockholder’s meeting?
Correct!
Any place in Quezon City only
Any place in Luzon only
Any place in Metro Manila only
Any place in the Philippines only
Question 67
1 / 1 pts
As a general rule, the procurement process from the opening of
bids up to the award of contract shall not exceed:
2 months
6 months
4 months
Correct!
3 months
Question 68
1 / 1 pts
The following transactions are exempt from the requirement of
registration, except:
The sale of securities by an issuer to fewer than twenty (20)
persons in the Philippines during any twelve-month period
Broker's transaction, executed upon customer's orders, on any
registered Exchange or other trading market.
Correct!
The sale of capital stock of a corporation to its own shareholders
and to prospective shareholders.
Any judicial sale, or sale by an executor, administrator, guardian or
receiver or trustee in insolvency or bankruptcy.
Question 69
1 / 1 pts
If not used by the end of the year, the service incentive leave shall
be
carried over to the next year.
Correct!
converted to its money equivalent.
converted to cash and paid when the employee resigns or retires.
forfeited.
Question 70
1 / 1 pts
In the following cases, an employee may be compelled to render
overtime work, except:
When the work is necessary to prevent loss or damage to
perishable goods
Correct!
When a machine needs to be repaired to save from costs.
When overtime work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.
When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the
Chief Executive
Question 71
0 / 1 pts
Which of the following statements is true in case that a
government office or agency fails to approve or disapprove an
original application or request for issuance of license, clearance,
permit, certification or authorization within the prescribed
processing time?
The application or request is deemed denied
Correct Answer
The application or request is deemed approved only if all required
documents have been submitted and all required fees and
charges have been paid.
The application or request is deemed to be held in abeyance and
shall continue until a final resolution has been made by the
concerned LGU or NGA
You Answered
The application or request is deemed approved.
Question 72
1 / 1 pts
Shares of stock cannot be issued if the consideration received is
(are)
Property
Previous services rendered
Money
Correct!
Promissory notes
Question 73
1 / 1 pts
The failure of the employer to remit the contributions to SSS will
have the following consequences, which is the exception?
Correct!
The covered employee cannot claim any benefits under SSS
The employer may be held criminally liable
The employer will be liable for a penalty of 2% per month from the
date the contribution falls due until paid
The SSS may issue a Warrant of Levy against the employer
Question 74
1 / 1 pts
Night differential is differentiated from overtime pay in that
while overtime pay is 25% additional to the employee's hourly
regular wage, night differential is 10% of such hourly wage without
overtime pay.
while overtime pay is paid to an employee whether on day shift or
night shift, night shift differential is only for employees regularly
assigned to night work.
while overtime pay is for work done beyond eight hours, night
differential is added to the overtime pay if the overtime work is
done between 6:00 p.m. and 12 midnight.
Correct!
while overtime pay is given for overtime work done during day or
night, night differential is given only for work done between 10:00
p.m. and 6:00 a.m.
Question 75
1 / 1 pts
What is the nature of employment of househelpers?
Correct!
Fixed-term;
Seasonal;
Regular;
Probationary.
Question 76
1 / 1 pts
Work may be performed beyond eight (8) hours a day provided
that:
Correct!
Employee is paid for overtime work an additional compensation
equivalent to his regular wage plus at least 25% thereof.
Employee is paid for overtime work an additional compensation
equivalent to his regular wage plus at least 30% thereof;
Employee is paid for overtime work an additional compensation
equivalent to his regular wage plus at least 20% thereof;
None of the above. ‘
Question 77
1 / 1 pts
Which of the following is not a requirement to be entitled to the
sickness benefit under the SSS Law?
Correct!
The member must have paid at least 6 months of contributions
within the 12-month period immediately before the semester of
sickness or injury
The member filed a sickness benefit application with the SSS
The member is unable to work due to sickness or injury and is
confined either in a hospital or at home for at least 4 days
The member must have used up all company sick leaves with pay
for the year and has duly notified his employer
Question 78
0 / 1 pts
Which of the following is not considered an employer by the terms
of the Social Security Act?
You Answered
A foreign corporation.
A natural person, domestic or foreign, who carries on in the
Philippines, any trade, business, industry, undertaking or activity of
any kind and uses the services of another person who is under his
orders as regards the employment;
A self-employed person;
Correct Answer
The government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by
the government;
Question 79
0 / 1 pts
Which of the following statements is true about a fixer?
A fixer is necessarily a person who is involved in the operation of a
government office.
Correct Answer
A fixer facilitates speedy completion of transactions
Collusion with people working in a government office is
indispensable to become a fixer.
You Answered
Without pecuniary gain, a person cannot be considered as fixer.
Question 80
1 / 1 pts
Securities include the following, except:
Investment contracts, certificates of interest or participation in a
profit sharing agreement, certifies of deposit for a future
subscription.
Shares of stocks, bonds, debentures, notes evidences of
indebtedness, asset-backed securities.
Derivatives like option and warrants.
Correct!
Certificates of assessments, certificates of participation, or similar
instruments.
Question 81
1 / 1 pts
Which of the following are not entitled to 13th month pay under the
13th month pay law?
Correct!
Kasambahays
Employees paid on purely commission basis
Government employees
Employees payable on a boundary basis
Question 82
1 / 1 pts
The LGU of Marara will conduct 10 consecutive seminars for the
barangay officials of 50 barangays for the topic “The Role of
Barangays in Nation Building” on January 5-15,2021. The LGU of
Marara conducted small value procurement for each training, the
total amount of which totaled 2,345,678. Did the LGU Marara
violate any provision of RA 9184?
No, because small value procurement is allowed for procurements
below 1,000,000
Correct!
Yes, because the LGU splitted contracts to avoid public bidding
No, as long as the suppliers are qualified
Yes, because they should have conducted the training in one day
only
Question 83
1 / 1 pts
Rexy is the President's secretary at REO Corporation, which
intends to buy ZPAR Corporation, with the forecasted cash inflows
increasing by P10,000,000 per year due to the increased market
share. Rexy knew about the merger through his job, but he
resigned before it happened. He then purchased 10,000 shares
when the stock was priced at P10 a share. Following the merger,
REO Corporation's shares grew to P80 per share, and X sold the
10,000 shares. In this instance,
Rexy is not guilty of insider trading because he is in no position to
acquire material non-public information
Rexy is not guilty of insider trading because he did not acquire the
shares of REO Corporation
Rexy is not guilty of insider trading because he is not an insider
since he is already resigned from REO Corporation
Correct!
Rexy is guilty of insider trading
Question 84
1 / 1 pts
Which of the following employees is not under the compulsory
coverage of SSS Law?
Temporary employee of a private employee
Employee of a non-profit charitable organization
Kasambahay who rendered at least 1 month of service
Correct!
OFWs
Question 85
1 / 1 pts
The Department of Education needs to purchase office supplies
amounting to a total of 526,500 that are not available in the DBMPS. What alternative method of procurement can the Department
of Education adopt?
Limited source bidding
Direct contracting
Small value procurement
Correct!
Shopping
Question 86
1 / 1 pts
In case of death or permanent incapacity of the single stockholder
of one-person corporation, up to what period of time may the
nominee take over the management of the OPC?
In perpetuity
For a period of 50 years
For a period of 5 years
Correct!
Until the legal heirs of the single stockholder have been lawfully
determined and the heirs have agreed among themselves who will
take the place of the deceased or incapacitated single stockholder.
Question 87
1 / 1 pts
Carl Balita is an employee of MDM Corporation. In his
employment contract, he noticed that they were only granted 10
days of vacation leave and 10 sick leave credits per year. He told
the HR department that all employees who rendered at least 1
year of service should also be provided with a yearly service
incentive leave of 5 days with pay as provided in the Labor Code.
Is Carl Balita correct?
Yes, because the Labor Code expressly mandates the provision of
service incentive leave for all employees covered
No, because the grant of service incentive leave is merely optional
for the employer
Yes, because service incentive leave should be granted in addition
to vacation and sick leaves
Correct!
No, because the employees of MDM Corporation are already
enjoying a vacation leave of 10 days
Question 88
Business permits shall be valid for a period of:
Three years
Four years
Two years
Correct!
One year
1 / 1 pts
1 / 1 pts
Question 89
Which of the following is not a regular holiday?
Rizal Day
Correct!
Ninoy Aquino Day
New Year’s Day
Labor Day
0 / 1 pts
Question 90
Dadeh files for a seven-day paternity leave for the
purpose of lending support to his wife, Mameh, who
suffered
a
miscarriage
through
intentional
abortion.
Mameh also filed for maternity leave for five weeks.
Dadeh and Mameh are legally married but the latter is
with her parents, which is a few blocks away from
Dadeh's house. Which of the following statements is the
most accurate?
Correct Answer
Paternity leave is denied because Mameh is with her parents;
Paternity leave is denied because it does not cover aborted
babies;
You Answered
Maternity leave is denied because the grant of paternity leave
precludes the claim for maternity leave.
Maternity leave is denied because it does not cover aborted
babies; and
Question 91
1 / 1 pts
Which of the following may not be considered as a solo parent
entitled to solo parent leave?
A woman who gives birth as a result of rape and keeps and raises
the child
The relative of an orphan who solely supports and provides
parental care to the child
Correct!
A wife left alone by his husband who is an OFW
Parent left solo or alone with the responsibility of parenthood due
to death of spouse
Question 92
1 / 1 pts
Which of the following statement is not correct?
The sale of delinquent stock at public auction can be stopped if
the board of directors stop the sale for valid reasons.
Payment of unpaid subscription may not be enforced by applying
cash dividends to delinquent stockholders.
In delinquency sale at public auction the highest bidder is one who
offers to pay the full amount of the balance of the subscription plus
interest and expenses of the sale for the least number of shares.
Correct!
In delinquency sale at public auction the highest bidder is one who
offers to pay the full amount of the balance of the subscription plus
interest and expenses of the sale for the highest number of
shares.
Question 93
1 / 1 pts
An employee may work beyond 8 hours a day provided that:
Correct!
Employee is paid for overtime work an additional compensation
equivalent to his regular wage plus at least 25% thereof;
None of the above.
Employee is paid for overtime work an additional compensation
equivalent to his regular wage plus at least 30% thereof;
Employee is paid for overtime work an additional compensation
equivalent to his regular wage plus at least 20% thereof;
Question 94
1 / 1 pts
A corporation may acquire its own shares for a legitimate purpose
provided it has unrestricted retained earnings. In which of the
following acquisition is the requirement of unrestricted retained
earnings not imposed?
Correct!
When redeemable shares are repurchased in accordance with the
terms provided in the articles of incorporation
When delinquent shares are acquired in a delinquency sale
When shares are acquired from stockholders who exercise their
appraisal right
When the acquisition is made to eliminate fractional shares
Question 95
0 / 1 pts
The process or transaction between applicants or requesting
parties and government offices or agencies involving applications
for any privilege, right, reward, license, clearance, permit or
authorization, concession, or for any modification, renewal or
extension of the enumerated applications or requests which are
acted upon in the ordinary course of business of the agency or
office concerned
Citizen's Charter
Civil Service
Correct Answer
Government Service
You Answered
Front Line Service
Question 96
1 / 1 pts
It is a single common site or location, or a single online website or
portal designated for the Business Permits and Licensing System
(BPLS) of an LGU to receive and process applications, receive
payments, and issue approved licenses, clearances, permits, or
authorizations.
Business Operational Stationary Shop
Business Permit and Licensing Shop
Correct!
Business One Stop Shop
Business Omnibus Security System
Question 97
1 / 1 pts
The following are the requisites of Immunity under the Ease of
Doing Business and Efficient Government Service Delivery Act of
2018.
Correct!
All of the above.
The respondent/accused-informant has not been previously
convicted of a crime involving moral turpitude.
The respondent/accused-informant does not appear to be the
most guilty.
The testimony of said respondent/accused- informant can be
substantially corroborated in its material points,
Question 98
Which of the following is not an SSS benefit?
Unemployment benefit
Disability benefit
Correct!
Paternity benefit
Maternity benefit
1 / 1 pts
Question 99
1 / 1 pts
The following are the requisites except one, for valid declaration
and/or issuance of stock dividend.
Existing unrestricted retained earnings
Correct!
It is issued to increase the authorized capital
Dividends declaration by the Board of Directors and approved by
2/3 vote of the outstanding capital stock
Existence of the original and unissued shares
Question 100
1 / 1 pts
Night differential is differentiated from overtime pay in
that
while overtime pay is paid to an employee whether on day shift or
night shift, night shift differential is only for employees regularly
assigned to night work.
Correct!
while overtime pay is given for overtime work done during day or
night, night differential is given only for work done between 10:00
p.m. and 6:00 a.m.
while overtime pay is for work done beyond eight hours, night
differential is added to the overtime pay if the overtime work is
done between 6:00 p.m. and 12 midnight.
while overtime pay is 25% additional to the employee's hourly
regular wage, night differential is 10% of such hourly wage without
overtime pay.
Question 101
1 / 1 pts
Which type of employee is entitled to a service incentive leave?
Correct!
part-time workers
government workers
managerial employees
field personnel
Question 102
1 / 1 pts
A complex transaction is required to be transferred for a period of
not longer than:
Fourteen (14) working days from date of receipt
Five (5) working days from date of receipt
Ten (10) working days from date of receipt
Correct!
Seven (7) working days from date of receipt
Question 103
0 / 1 pts
The following are not included from the coverage of the Labor
Code provisions on minimum terms and conditions of employment
except:
Correct Answer
Supervisors;
You Answered
Field personnel;
Employees of government-owned and controlled corporations
Managers;
Question 104
1 / 1 pts
Rihanna is single and living in with Gadon, a married man.
Rihanna became pregnant with her fifth child with Gadon. She
applied for maternity leave but her employer refused the
application because she is not married and the father of her child
is a married man. Who is correct?
Rihanna’s employer because the Expanded Maternity Leave Law
requires that the pregnant woman must be legally married
Neither of them is correct.
Rihanna's employer because the maternity leave benefit is only
available for the first four deliveries
Correct!
Rihanna, because the Expanded Maternity Leave Law does not
require that the relationship between the father and mother of the
child is legitimate
Question 105
1 / 1 pts
Which of the following employees is entitled to service incentive
leave?
Correct!
Part-time employees
Field personnel
Government employees
Managerial employee
Question 106
0 / 1 pts
The following securities are exempt from registration, except:
You Answered
Any security or its derivatives the sale or transfer of which, by law,
is under the supervision and regulation of the Office of the
Insurance Commission, Housing and Land Use Rule Regulatory
Board, or the Bureau of Internal Revenue.
Certificates issued by a receiver or by a trustee in bankruptcy duly
approved by the proper adjudicatory body.
Correct Answer
Any security issued by a bank including its own shares of stock.
Any security issued or guaranteed by the Government of the
Philippines.
Question 107
0 / 1 pts
Which of the following reasons for a vacancy on the board of
directors may be replaced by the remaining directors if a quorum
is still present?
Removal of a director
Expiration of the term of directors
Correct Answer
Disqualification of a directors
You Answered
Increase in the number of directors
Question 108
The following are the qualifications of directors of a stock
corporation, EXCEPT:
0 / 1 pts
You Answered
Such share of stock must stand in their names in the book of the
corporation during their term as directors.
Correct Answer
The majority of the directors must be residents of the Philippines.
Each director must be the owner of at least 1 share of stock.
The number of directors should not be more than 15.
Question 109
1 / 1 pts
Under the Ease of Doing Business Act, the number of signatories
in any document shall be limited to a maximum of:
Two signatures
Five signatures
Four signatures
Correct!
Three signatures
Question 110
1 / 1 pts
If, the bidder fails to post the required performance security within
the period stipulated in the Bidding Documents, the BAC shall:
Blacklist the bidder
Correct!
Disqualify the said bidder and shall undertake post-qualification for
the next-ranked Lowest Calculated Bid or Highest Rated Bid
Reduce the amount of bid
Impose penalties to the winning bidder
Question 111
1 / 1 pts
The rule is that no stock dividend shall be issued without the
approval of stockholders representing at least 2/3 of the
outstanding capital stock at a regular or special meeting called for
the purpose. As to other forms of dividends
Correct!
A mere majority of the quorum of the Board of Directors applies.
The same rule of 2/3 vote applies.
A mere majority of the votes of stockholders representing the
outstanding capital stock applies.
A mere majority of the entire Board of Directors applies.
Question 112
1 / 1 pts
Which of the following is not excluded in the computation of basic
pay?
Night differential pay
Vacation Leave
Holiday Pay
Correct!
Monthly internet allowance integrated in the regular salary
Question 113
1 / 1 pts
This is where bid opportunities and information on suppliers and
contracted goods, consulting services and civil work projects are
posted.
Correct!
PHILGEPS website
DBM-PS website
Citizen’s charter
GPPB website
Question 114
0 / 1 pts
All of the following must be contained on the acknowledgment
receipt to be issued by the receiving officer, except:
You Answered
Seal of the agency
Date and time of receipt of the application or request
Unit and designation of the responsible officer or employee
Correct Answer
Name and designation of the approving officer
Question 115
1 / 1 pts
A person employed in a government office or agency required to
perform specific duties and responsibilities related to the
application or request submitted by an applicant or requesting
party for processing.
Fixer
Appointee
Contract of Service
Correct!
Officer or employee
Question 116
1 / 1 pts
Which of the following is not a primary beneficiary under the SSS
Law?
Correct!
Dependent parents
Adopted child
Dependent spouse
Illegitimate child
Question 117
1 / 1 pts
Typhoon Lungkot ravaged the LGU of Wasak and caused massive
destruction. The Sangguniang Panlalawigan declared a state of
calamity. In dire need of relief goods and medical supplies for the
constitutents of LGU Wasak, the Mayor authorized the BAC to
directly negotiate with Move On General Merchandising for the
purchase of the needed goods and supplies amounting to a total
of 1,430,600. Is the act of the Mayor allowed under RA 9184?
Correct!
Yes, as long as Move On General Merchandising is a legally,
technically and financially capable supplier
No, since the amount exceeded 1,000,000, the contract should
have been the subject of competitive bidding
No, the LGU should have sent out at least 3 requests for
quotations from different suppliers
Yes, since it is within the power of the Mayor
Question 118
1 / 1 pts
May the employer and employee agree that overtime pay will not
be paid if the employee is late for more than an hour?
Yes, provided there is a written agreement knowingly and entered
into by the employees and that the total pay of the employee does
not go below the legally required minimum wage
Correct!
No, the employer and employee cannot stipulate that overtime can
be offset by undertime
Yes, provided there is a written agreement knowingly and entered
into by the employees
Yes, provided that the total pay of the employee does not go below
the legally required minimum wage
Question 119
The Zero-Contact Policy provides that.
Correct!
1 / 1 pts
No government officer or employee shall have any contact, in any
manner, unless strictly necessary, with any requesting party
concerning an application or request
No government officer or employee shall be able to receive any
money or gift from any requesting party concerning an application
or request
No government officer or employee shall provide their personal
contact numbers to any requesting party
No government officer or employee shall be contacted by LGUs or
NGAs if they have been previously convicted of a violation of Ease
of Doing Business Act.
Question 120
1 / 1 pts
ABC Corporation is a stock corporation that has a principal office
located in Quezon City. What are the possible venues for the
upcoming regular stockholder’s meeting?
Correct!
Any place in Quezon City only
Any place in Metro Manila only
Any place in Luzon only
Any place in the Philippines only
Quiz Score: 101 out of 120
AFAR Second Drills Results for STEPHANIE M.
COSTALES
Score for this quiz: 19 out of 40
Submitted May 17 at 1:37pm
This attempt took 96 minutes.
Question 1
0 / 1 pts
Johnny Depp acquired 90% of the shares of Caribbean Company
(fair value of net assets equals P1,000,000) for P1,200,000 cash.
It is further agreed that Depp shall pay additional P1,000,000 to
the shareholders of Caribbean if the sales of Caribbean Company
exceed P10,000,000 within 1 year from the date of acquisition. It
was not determinable at the date of acquisition whether the target
sales would be achieved hence the contingency was estimated a
fair value of P200,000. Depp shall
include the P200,000 as additional consideration and increase its
equity for the same amount.
include the P200,000 as expense and recognize a liability for the
same amount.
Correct Answer
include the P200,000 as additional consideration and recognize a
liability for the same amount.
You Answered
ignore the contingent obligation as it is not yet a past event in
accordance with PAS 37.
Question 2
0 / 1 pts
BDO purchased a 35 percent non-controlling equity interest in
Metrobank for P3,000,000 on December 31, 2021, and was listed
as available for sale investments. BDO obtains an additional 40%
investment in Metrobank for P7,000,000 on December 1, 2029,
giving BDO control of the bank. BDO's available for sale
investments have a fair value of P5,000,000 and a carrying
amount of P4,500,000 as of December 1, 2029. The gain or loss
to recognize in profit and loss is
P 500,000
Correct Answer
P2,000,000
P0
You Answered
P1,500,000
Question 3
1 / 1 pts
Mazda transferred its own equity shares with par value of
Php4,000,000 and fair value of Php5,000,000 to obtain the net
asset of Ford Company with fair value of Php4,800,000. The
Php1,000,000 between the par value and fair value of
consideration given is
Either A or B to be fixed by Mazda’s accounting policy
Correct!
gain recognized in equity
a gain recognized in profit or loss
Ignored in the consolidated financial statements
Question 4
1 / 1 pts
An increase in the provisional amount recognized for an
identifiable asset within the measurement period shall _________
goodwill.
not affect
either A or B
Correct!
decrease
Increase
Question 5
1 / 1 pts
KIT Corporation has the following accounts in its December 31,
2019 trial balance: Php240,000 Current assets; Php300,000 Land;
Php1,000,000 Net Plant and equipment; Php410,000 90%
Investment in KAT Corporation; Php1,000,000 Cost of sales;
Php250,000 Other expenses; Php100,000 Dividends. It has total
debit balance of Php3,300,000. It also has Php225,000 Current
liabilities; Php1,000,000 Common stocks; Php500,000 Retained
earnings; Php1,500,000 Sales; and Php45,000 Dividend income;
thereby, arriving at the total credit balance of Php3,300,000.
KAT Corporation has the following accounts in its December 31,
2019 trial balance: Php130,000 Current assets; Php50,000 Land;
Php450,000 Net Plant and equipment; Php300,000 Cost of sales;
Php120,000 Other expenses; Php50,000 Dividends. It has total
debit balance of Php1,100,000. It also has Php100,000 Current
liabilities; Php300,000 Common stocks; Php200,000 Retained
earnings; and Php500,000 Sales; thereby, arriving at the total
credit balance of Php1,100,000.
KIT obtained a ninety percent interest in KAT Corporation for the
amount of Php410,000 paid in cash on January 1, 2015 when the
shareholders equity of KAT composed of capital shares of
Php300,000 and a retained earnings of Php100,000. Should there
be difference between the investment cost and book value
acquired, it relates to equipment with a ten-year life from January
1, 2015.
Dividend to the minority shareholders for 2019 must be:
10,000
50,000
20,000
Correct!
5,000
Question 6
0 / 1 pts
An acquirer's interest in the fair value of the net assets acquired in
a business combination exceeds the consideration transferred in
the transaction. Under PFRS3 Business combinations, the
acquirer should
recognize the excess immediately in other comprehensive income
You Answered
recognize the excess immediately in profit or loss
re-assess the recognition and measurement of the net assets
acquired and the consideration transferred, then recognize any
excess immediately in other comprehensive income
Correct Answer
reassess the recognition and measurement of the net assets
acquired and the consideration transferred, then recognize any
excess immediately in profit or loss
Question 7
0 / 1 pts
On 1 October 20X7 The Apple Company acquired 100% of The
Samsung Company when the fair value of Samsung’s net assets
was Php116 million and their carrying amount was Php120 million.
A total of Php200 million in cash was transferred at the acquisition
date, with additional Php60 million in cash to be transferred 11
months later if Samsung met a profit target. The possibility of
meeting the profit target was low at the acquisition date, thus the
fair value of the additional consideration liability was P10 million. In
the event, the profit target was met and the Php60 million cash
was transferred. What amount should Apple present for goodwill in
its statement of consolidated financial position at 31 December
20X8, according to PFRS3 Business combinations?
P80 million
You Answered
P84 million
Correct Answer
P94 million
P144 million
Question 8
1 / 1 pts
A decrease in the provisional amount recognized for a liability
assumed within the measurement period shall _________ gain on
bargain purchase.
not affect
decrease
either A or B
Correct!
increase
Question 9
1 / 1 pts
The Shakey’s Company acquired a 70% interest in The Max’s
Company for P1,960,000 when the fair value of Max’s identifiable
assets and liabilities was P700,000 and elected to measure the
non-controlling interest at its share of the identifiable net assets.
Annual impairment reviews of goodwill have not resulted in any
impairment losses being recognized. Max’s current statement of
financial position shows share capital of P100,000, a revaluation
reserve of P300,000 and retained earnings of P1,400,000. Under
PFRS3 Business combinations, what figure in respect of goodwill
should now be carried in Shakey’s consolidated statement of
financial position?
P700,000
P160,000
P1,260,000
Correct!
P1,470,000
Question 10
0 / 1 pts
The Zebra Company and the Bird Company agreed to merge their
operations contractually. Zebra's net asset fair value is
P5,000,000, whereas Bird's is P3,500,000. Calculate the
combined goodwill and non-controlling interest, correspondingly.
P0; P1,500,000
P1,500,000; P1,500,000
Correct Answer
P0; P3,500,000
You Answered
P1,500,000; P3,500,000
Question 11
1 / 1 pts
Chowking Corp. is an 80% owned subsidiary by Jollibee, Inc. On
January 1, 2021, Chowking paid P100,000 for a truck with an
expected economic life of 10 years and no anticipated residual
value. Chowking sold the truck to Jollibee Inc., on January 1,
2027. While putting together the consolidated workpaper for 2027,
entry was done to remove the effects acquired from the sale of the
intercompany truck: Debit Truck Php48,000; Debit Gain on sale of
truck Php12,000; Credit Depreciation expense Php3,000; Credit
Accumulated depreciation Php57,000.
If Chowking reports net income of P50,000 in 2027, how much
income will be assigned to the non-controlling interest in the 2027
consolidated income statement?
Correct!
8,200
11,800
10,000
10,600
Question 12
0 / 1 pts
The National Bookstore Company acquired 80% of The Pandayan
Bookshop Company for a consideration transferred of Php100
million. The consideration was estimated to include a control
premium of Php24 million. Pandayan’s net assets were Php85
million at the acquisition date. Are the following statements true or
false, according to PFRS3 Business combinations?
I. Goodwill should be measured at Php32 million if the noncontrolling interest is measured at its share of Pandayan’s net
assets.
II. Goodwill should be measured at Php34 million if the noncontrolling interest is measured at fair value.
Correct Answer
True True
False True
You Answered
True False
False False
Question 13
0 / 1 pts
Burger King Corp. acquired an 80% interest in Pancake House
Corp. for P900,000. The carrying amounts and fair values of
Pancake’s identifiable assets and liabilities at the acquisition date
were as follows (amounts in thousands):
Carrying
Fair
Amounts
value
Tangible non-current assets P 375
Intangible non-current assets
Current assets
Liabilities
Contingent liabilities
P
350
0
200
400
350
( 300)
0
P 475
( 300)
(
30)
P 570
Compute the goodwill and prepare journal entry to record the
acquisition assuming the acquirer recognize the non-controlling
interest at fair value (non-controlling interest was valued at P120)
You Answered
444
440
350
Correct Answer
450
Question 14
0 / 1 pts
Disney Company acquired the assets (except for cash) and
assumed the liabilities of Marvel Company on January 2, 2018 and
Marvel Company is dissolved. As compensation, Disney Company
gave 24,000 shares of its common stock, 12,000 shares of its 8%
preferred stock, and cash of P 240,000 to the stockholders of
Marvel Company. On the date of acquisition, Disney Company had
the following characteristics: Common, par value P 5; fair value, P
20 Preferred, par value P 100; fair value, P 100.
Immediately prior to acquisition, Marvel Company’s balance sheet
was as follows: Cash – P132,000; Accounts receivable (net of
P4,000 allowance) – P170,000; Inventory @ LIFO cost –
P200,000; Land – P384,000; Buildings and Equipment (net) –
P1,032,000; resulting to total of P1,918,000. It also has Current
liabilities – P228,000; 10% Bonds payable – P400,000; P5 par
value common shares – P600,000; Additional paid-in capital –
P380,000; Retained earnings – P310,000; resulting to a total of
P1,918,000.
An appraisal of Marvel company showed that the fair values of its
assets and liabilities were equal to their book values except for the
following, which had fair values as follows: P158,000 Accounts
receivable; P412,000 Inventory; P540,000 Land; and P448,000
Bonds Payable.
How much must be the goodwill recognized as a result of this
business combination?
P 94,000
You Answered
P 322,000
Correct Answer
P 454,000
P0
Question 15
0 / 1 pts
KIT Corporation has the following accounts in its December 31,
2019 trial balance: Php240,000 Current assets; Php300,000 Land;
Php1,000,000 Net Plant and equipment; Php410,000 90%
Investment in KAT Corporation; Php1,000,000 Cost of sales;
Php250,000 Other expenses; Php100,000 Dividends. It has total
debit balance of Php3,300,000. It also has Php225,000 Current
liabilities; Php1,000,000 Common stocks; Php500,000 Retained
earnings; Php1,500,000 Sales; and Php45,000 Dividend income;
thereby, arriving at the total credit balance of Php3,300,000.
KAT Corporation has the following accounts in its December 31,
2019 trial balance: Php130,000 Current assets; Php50,000 Land;
Php450,000 Net Plant and equipment; Php300,000 Cost of sales;
Php120,000 Other expenses; Php50,000 Dividends. It has total
debit balance of Php1,100,000. It also has Php100,000 Current
liabilities; Php300,000 Common stocks; Php200,000 Retained
earnings; and Php500,000 Sales; thereby, arriving at the total
credit balance of Php1,100,000.
KIT obtained a ninety percent interest in KAT Corporation for the
amount of Php410,000 paid in cash on January 1, 2015 when the
shareholders equity of KAT composed of capital shares of
Php300,000 and a retained earnings of Php100,000. Should there
be difference between the investment cost and book value
acquired, it relates to equipment with a ten-year life from January
1, 2015.
Minority interest in KAT at December 31, 2019 is:
Correct Answer
55,777
50,000
You Answered
45,777
58,000
Question 16
1 / 1 pts
Below is the consolidated income statement of BE GOOD
Company and its seventy-percent owned subsidiary:
Php 402,000 Sales; 246,000 Cost of goods sold; 156,000 Gross
profit; 81,000 Operating expenses; 75,000 Consolidated net
income; 6,000 Minority interest net income; 69,000 Profit
attributable to equity holders of parent.
How much is the Net income from own operations of the
subsidiary, and BE GOOD Company, respectively.
P 30,000; P 45,000
P 55,000; P 20,000
P 6,000; P 75,000
P 30,000; P 39,000
Correct!
P 20,000; P 55,000
Question 17
0 / 1 pts
BMW acquires Toyota on 30 September 2009. BMW seeks an
independent valuation for an item of property, plant and equipment
acquired in the combination, and the valuation was not complete
by the time BMW authorized for issue its financial statements for
the year ended 31 December 2009. In its 2009 annual financial
statements, BMW recognized a provisional fair value for the asset
of CU30,000. At the acquisition date, the item of property, plant
and equipment had a remaining useful life of five years. Five
months after the acquisition date, BMW received the independent
valuation, which estimated the asset’s acquisition-date fair value
as CU40,000. In its financial statements for the year ended 31
December 2010, BMW retrospectively adjusts the 2009 prior year
information as follows, except:
Correct Answer
Gain on bargain purchase is increased by P10,000.
Depreciation expense for 2009 is increased by CU500.
The carrying amount of property, plant and equipment as of 31
December 2009 is increased by CU9,500.
You Answered
The carrying amount of goodwill as of 31 December 2009 is
decreased by CU10,000.
Question 18
0 / 1 pts
BE HONEST Corporation obtained seventy percent of BE BRAVE
Corporation’s outstanding ordinary shares.
BE HONEST Corporation has the following book value of its
accounts: Cash of Php 32,000; Net receivables of 80,000;
Inventories of 70,000; Land of 100,000; Net building 110,000; Net
equipment of 80,000; Investment in BE BRAVE of 178,000;
Accounts payable of 90,000; Other liabilities of 10,000; Capital
stock (Php 10 par) of 500,000; and Retained earnings of 50,000.
BE BRAVE Corporation has the following book value of its
accounts: Cash of Php 20,000; Net receivables of 30,000;
Inventories of 30,000; Land of 50,000; Net building 70,000; Net
equipment of 40,000; Accounts payable of 80,000; Other liabilities
of 50,000; Capital stock (Php 10 par) of 100,000; and Retained
earnings of 10,000.
BE BRAVE Corporation has the following fair value of its accounts:
Cash of Php 20,000; Net receivables of 30,000; Inventories of
50,000; Land of 60,000; Net building 90,000; Net equipment of
30,000; Accounts payable of 80,000; and Other liabilities of
40,000.
How much is the Consolidated Total Assets on January 1, 2022:
Correct Answer
P 818,000
You Answered
P 712,000
P813,000
P930,000
Question 19
1 / 1 pts
100% of the equity share capital of The KFC Company was
acquired by Mcdo Company on 30 June 20X7. Mcdo issued
500,000 new P1 ordinary shares which had a fair value of P8 each
at the acquisition date. In addition the acquisition resulted in Mcdo
incurring fees payable to external advisers of P200,000 and share
issue costs of P180,000. In accordance with PFRS3 Business
combinations, goodwill at the acquisition date is measured by
subtracting the identifiable assets acquired and the liabilities
assumed from
P4.20 million
P4.38 million
P4.18 million
Correct!
P4.00 million
Question 20
0 / 1 pts
On January 1, 2018, Coca-cola Products Corp. issues 12,000
shares of its P 10 par value to acquire the net assets of Pepsi
shares of its P 10 par value to acquire the net assets of Pepsi
Company. Underlying book value and fair value information for the
balance sheet items of Pepsi Company at the time of acquisition
are as follows:
Balance Sheet Item
Book Value
Fair Value
Cash
P 60,000
Accounts Receivable
100,000
100,000
60,000
115,000
Inventory
Land
Buildings and Equipment
P 60,000
50,000
400,000
70,000
350,000
Less Accumulated Depreciation (150,000)
Total Assets
Accounts Payable
Bonds Payable
-
P 520,000
P 695,000
P 10,000
P 10,000
200,000
180,000
Common Stock (P 5 par value) 150,000
Additional Paid in Capital
Retained Earnings
Total Liabilities and Equities
70,000
90,000
520,000
Pepsi shares were selling at P 18 and Coca-cola Products shares
were selling at P 50 just before the merger announcement.
Additional cash payments made by Coca-cola Corporation in
completing the acquisition were:
Finder’s fee paid to firm that located Pepsi
P 10,000
Audit fee for stock issued by Coca-cola Products
3,000
Stock registration fee for new shares of Coca-cola Products
5,000
Legal fees paid to assist in transfer of net assets
9,000
Cost of SEC registration of Coca-cola Products shares
1,000
How much is the increase in the total net assets recorded by
Coca-cola Products?
P 591,000
You Answered
P 487,000
Correct Answer
P 572,000
P 310,000
Question 21
1 / 1 pts
Chowking Corp. is an 80% owned subsidiary by Jollibee, Inc. On
January 1, 2021, Chowking paid P100,000 for a truck with an
expected economic life of 10 years and no anticipated residual
value. Chowking sold the truck to Jollibee Inc., on January 1,
2027. While putting together the consolidated workpaper for 2027,
entry was done to remove the effects acquired from the sale of the
intercompany truck: Debit Truck Php48,000; Debit Gain on sale of
truck Php12,000; Credit Depreciation expense Php3,000; Credit
Accumulated depreciation Php57,000.
How much depreciation was recorded by Jollibee during 2027?
Correct!
13,000
3,000
10,000
16,000
Question 22
1 / 1 pts
On January 1, 2018, P&G Corporation issued 6,000 stocks of its
Php10 par value common shares to obtain the assets and
liabilities of Unilever Company. P&G Corporation stocks were
selling at Php90 on said date. Historical cost and fair value
balance sheet data for Unilever Company at the time of acquisition
were as follows:
Balance Sheet Item
Historical Cost
Cash and Receivables
Php50,000
Fair
Value
Php50,000
Inventory
120,000
200,000
Building & Equipment
400,000
300,000
Less: Accumulate Depreciation
(150,000)
Total Assets
Php550,000
Php420,000
Accounts Payable
Php50,000
Php50,000
-
Common Stock (Php20 par value) 200,000
Retained Earnings
Total Liabilities and Equities
170,000
420,000
P&G Corporation incurred but not paid listing fees of Php10,000
and audit fees of Php5,000 in issuing the new shares and paid a
finder’s fee of Php25,000 in locating the merger candidate. Under
the purchase of interest combination, how much goodwill must be
recognized in the books?
Correct!
P 40,000
P 65,000
P 55,000
P 80,000
Question 23
0 / 1 pts
BE HONEST Corporation obtained seventy percent of BE BRAVE
Corporation’s outstanding ordinary shares.
BE HONEST Corporation has the following book value of its
accounts: Cash of Php 32,000; Net receivables of 80,000;
Inventories of 70,000; Land of 100,000; Net building 110,000; Net
equipment of 80,000; Investment in BE BRAVE of 178,000;
Accounts payable of 90,000; Other liabilities of 10,000; Capital
stock (Php 10 par) of 500,000; and Retained earnings of 50,000.
BE BRAVE Corporation has the following book value of its
accounts: Cash of Php 20,000; Net receivables of 30,000;
Inventories of 30,000; Land of 50,000; Net building 70,000; Net
equipment of 40,000; Accounts payable of 80,000; Other liabilities
of 50,000; Capital stock (Php 10 par) of 100,000; and Retained
earnings of 10,000.
BE BRAVE Corporation has the following fair value of its accounts:
Cash of Php 20,000; Net receivables of 30,000; Inventories of
50,000; Land of 60,000; Net building 90,000; Net equipment of
30,000; Accounts payable of 80,000; and Other liabilities of
40,000.
On acquisition date, how much is the Minority Interests:
P72,000
You Answered
P 33,000
P45,000
Correct Answer
P 48,000
Question 24
0 / 1 pts
Mazda acquires all of the net assets of Fod Company by
transferring Php1,000,000 cash and a 10-hectare track of land
with carrying amount of Php3,000,000 and appraisal value of
Php4,000,000. The fair value of Ford Company’s net asset is
Php7,500,000. Compute the gain on exchange and amount of
goodwill (gain on bargain purchase) to be reported in the
consolidated financial statements after the combination.
P0; (P500,000)
You Answered
P1,000,000; (P500,000)
P0; P500,000
Correct Answer
P1,000,000; P500,000
Question 25
1 / 1 pts
All of the following are not measurement period adjustment?
Meeting an earnings target
Reaching a milestone in research and development project
Correct!
Finalization of valuation of an identifiable assets acquired
Reaching a specified share price
Question 26
0 / 1 pts
BE HAPPY Corp. bought a seventy-percent interest in BE FREE
Corp. on January 1, 2021 for Php15,000 when the shareholders
equity of BE FREE composed of common shares amounting to
Php3,000, additional paid-in capital amounting to Php10,000, and
retained earnings amounting to Php2,000. Income and dividend
information for BE FREE for 2021, 2022, and 2023 is as follows
(Any excess will be allocated to depreciable assets and will be
depreciated over twenty years.): 2021 net income of Php1,000;
2021 dividend of Php400; 2022 net income of Php200; 2022
dividend of Php100; 2023 net loss of Php500.
BE HAPPY Corp. reported separate income of P12,000,000 for
2023. Consolidate net income for 2023 is:
You Answered
P11,500.000
Correct Answer
P11,178.571
P11,537.500
P11,425.000
Question 27
0 / 1 pts
The Starbucks Company acquired 100% of The Krispy Kreme
Company for a consideration transferred of P112 million. At the
acquisition date the carrying amount of Krispy Kreme’s net assets
was P100 million and their fair value was P120 million. How
should the difference between the consideration transferred and
the net assets acquired be presented in Starbuck’s financial
statements, according to PFRS3 Business combinations?
You Answered
Gain on bargain purchase of P8 million recognized in other
comprehensive income
Correct Answer
Gain on bargain purchase of P8 million recognized in profit or loss
Goodwill of P12 million as an intangible asset
Gain on bargain purchase of P8 million deducted from other
intangibles assets
Question 28
1 / 1 pts
On 1 July 2009 Selecta Company acquired 100% of Nestle
Company for a consideration transferred of P160 million. At the
acquisition date the carrying amount of Nestle’s net assets was
P100 million. At the acquisition date a provisional fair value of
P120 million was attributed to the net assets. An additional
valuation received on 31 May 2010 increased this provisional fair
value to P135 million and on 30 July 2010 this fair value was
finalized at P140 million. What amount should Selecta present for
goodwill in its statement of financial position at 31 December
2010, according to PFRS3 Business combinations?
P20 million
P40 million
P60 million
Correct!
P25 million
Question 29
1 / 1 pts
KIT Corporation has the following accounts in its December 31,
2019 trial balance: Php240,000 Current assets; Php300,000 Land;
Php1,000,000 Net Plant and equipment; Php410,000 90%
Investment in KAT Corporation; Php1,000,000 Cost of sales;
Php250,000 Other expenses; Php100,000 Dividends. It has total
debit balance of Php3,300,000. It also has Php225,000 Current
liabilities; Php1,000,000 Common stocks; Php500,000 Retained
earnings; Php1,500,000 Sales; and Php45,000 Dividend income;
thereby, arriving at the total credit balance of Php3,300,000.
KAT Corporation has the following accounts in its December 31,
2019 trial balance: Php130,000 Current assets; Php50,000 Land;
Php450,000 Net Plant and equipment; Php300,000 Cost of sales;
Php120,000 Other expenses; Php50,000 Dividends. It has total
debit balance of Php1,100,000. It also has Php100,000 Current
liabilities; Php300,000 Common stocks; Php200,000 Retained
earnings; and Php500,000 Sales; thereby, arriving at the total
credit balance of Php1,100,000.
KIT obtained a ninety percent interest in KAT Corporation for the
amount of Php410,000 paid in cash on January 1, 2015 when the
shareholders equity of KAT composed of capital shares of
Php300,000 and a retained earnings of Php100,000. Should there
be difference between the investment cost and book value
acquired, it relates to equipment with a ten-year life from January
1, 2015.
Consolidated net income for 2019 is:
P 317,000
P 362,000
P 330,000
Correct!
P 324,444
Question 30
1 / 1 pts
Chowking Corp. is an 80% owned subsidiary by Jollibee, Inc. On
January 1, 2021, Chowking paid P100,000 for a truck with an
expected economic life of 10 years and no anticipated residual
value. Chowking sold the truck to Jollibee Inc., on January 1,
2027. While putting together the consolidated workpaper for 2027,
entry was done to remove the effects acquired from the sale of the
intercompany truck: Debit Truck Php48,000; Debit Gain on sale of
truck Php12,000; Credit Depreciation expense Php3,000; Credit
Accumulated depreciation Php57,000.
How much will be reported for trucks and accumulated
depreciation in the December 31, 2027, consolidated balance
sheet, respectively?
40,000; 10,000
Correct!
100,000; 70,000
52,000; 13,000
100,000; 73,000
Question 31
1 / 1 pts
Chowking Corp. is an 80% owned subsidiary by Jollibee, Inc. On
January 1, 2021, Chowking paid P100,000 for a truck with an
expected economic life of 10 years and no anticipated residual
value. Chowking sold the truck to Jollibee Inc., on January 1,
2027. While putting together the consolidated workpaper for 2027,
entry was done to remove the effects acquired from the sale of the
intercompany truck: Debit Truck Php48,000; Debit Gain on sale of
truck Php12,000; Credit Depreciation expense Php3,000; Credit
Accumulated depreciation Php57,000.
If Chowking reports net income of P60,000 in 2028, how much of
income will be assigned to the non-controlling interest in the 2028
consolidated income statement?
12,000
10,200
Correct!
12,600
11,400
Question 32
1 / 1 pts
Chowking Corp. is an 80% owned subsidiary by Jollibee, Inc. On
January 1, 2021, Chowking paid P100,000 for a truck with an
expected economic life of 10 years and no anticipated residual
value. Chowking sold the truck to Jollibee Inc., on January 1,
2027. While putting together the consolidated workpaper for 2027,
entry was done to remove the effects acquired from the sale of the
intercompany truck: Debit Truck Php48,000; Debit Gain on sale of
truck Php12,000; Credit Depreciation expense Php3,000; Credit
Accumulated depreciation Php57,000.
How much did Jollibee, Inc. pay Chowking for the truck?
28,000
60,000
Correct!
52,000
43,000
Question 33
0 / 1 pts
BE RESPECTFUL Company obtained 60% of the outstanding
common shares of BE COURAGEOUS Company on May 1, 2018,
at a total cost of Php2,730,000. BE COURAGEOUS’s capital
accounts at the acquisition date consisted of Php100,000 common
shares and Php2,400,000 retained earnings.
The patents of BE COURAGEOUS Company, which have a
remaining life of five years, had a current value of Php900,000 and
a book value of Php200,000 as of the acquisition date. The rest of
its assets and liabilities had current values equal to book values as
of date of acquisition.
For 2018, BE COURAGEOUS had the following earnings and
dividends: From January 1 to April 30 – Php250,000 Net income;
From May 1 to December 31 – Php550,000 Net income; From
January 1 to April 30 – Php150,000 Dividends paid; and From May
1 to December 31 – Php600,000 Dividends paid.
Compute the Minority interests in net income:
Correct Answer
P 182,667
You Answered
P 220,000
P 164,000
P 550,000
Question 34
0 / 1 pts
Differences between the acquisition-date fair value and carrying
amount of non-cash asset given as consideration in a business
combination is recognized as
You Answered
Adjustment to the cost of business combination
Direct equity adjustment
Correct Answer
gain or loss in profit or loss to the extent that the same is
transferred to the former owners of the acquiree
gain or loss in profit or loss to the extent that the same remains to
the acquiree after combination
Question 35
0 / 1 pts
Rose Corp. acquired a 70% interest in Cactus Co. in 2017. For the
year ended December 31, 2018 and 2019, Cactus Co. reported
net income of Php160,000 and Php180,000, respectively. During
2018, Cactus sold merchandise to Rose Corp. for Php20,000 at a
profit of Php4,000. The merchandise was later resold by Rose
Corp. to outsider for Php30,000 during 2019. For consolidation
purposes, what is the minority interest’s share of Cactus’s net
income for 2018 and 2019, respectively?
Correct Answer
P46,800; P55,200
You Answered
P48,000; P54,000
P49,000; P52,800
P53,200; P50,000
Question 36
0 / 1 pts
Johnny Depp acquired 90% of the shares of Caribbean Company
(fair value of net assets equals P1,000,000) for P1,200,000 cash.
It is further agreed that Depp shall pay additional P1,000,000 to
the shareholders of Caribbean if the sales of Caribbean Company
exceed P10,000,000 within 1 year from the date of acquisition. It
was not determinable at the date of acquisition whether the target
sales would be achieved hence the contingency was estimated a
fair value of P200,000. Goodwill shall be reported in the
consolidated financial statement as
Correct Answer
P500,000
P300,000
P400,000
You Answered
P200,000
Question 37
0 / 1 pts
The Moon Knight's Company acquired a 70% interest in Iron Man
Company for P1,420,000 when the fair value of Iron Man's
identifiable assets and liabilities was P1,200,000. Moon Knight
acquired a 65% interest in The Doctor Strange Company for
P300,000 when the fair value of Doctor Strange's identifiable
assets and liabilities was P640,000. Moon Knight measures noncontrolling interests at the relevant share of the identifiable net
assets at the acquisition date. Neither Iron Man nor Doctor
Strange had any contingent liabilities at the acquisition date and
the above fair values were the same as the carrying amounts in
their financial statements. Annual impairment reviews have not
resulted in any impairment losses being recognized. Under PFRS3
Business combinations, what figures in respect of goodwill and of
gains on bargain purchases should be included in Moon Knight's
consolidated statement of financial position?
Goodwill: Nil Gains on the bargain purchases: P116,000
Goodwill: Nil Gains on the bargain purchases: Nil
You Answered
Goodwill: P580,000 Gains on the bargain purchases: P116,000
Correct Answer
Goodwill: P580,000 Gains on the bargain purchases: Nil
Question 38
1 / 1 pts
Burger King Corp. acquired an 80% interest in Pancake House
Corp. for P900,000. The carrying amounts and fair values of
Pancake’s identifiable assets and liabilities at the acquisition date
were as follows (amounts in thousands):
Carrying
Fair
Amounts
value
Tangible non-current assets P 375
Intangible non-current assets
Current assets
Liabilities
Contingent liabilities
P
350
0
200
400
350
( 300)
0
P 475
( 300)
(
30)
P 570
Compute the goodwill and prepare journal entry to record the
acquisition assuming the acquirer recognize the non-controlling
interest on the basis of proportionate interest in the identifiable net
assets of the acquiree
350
440
Correct!
444
450
Question 39
1 / 1 pts
A parent entity is acquiring a majority holding in an entity whose
shares are dealt in on a recognized market.
Under PFRS3 Business combinations, which TWO of the following
measurement bases may be used in measuring the noncontrolling interest at the acquisition date?
I. The nominal value of the shares in the acquiree not acquired
II. The fair value of the shares in the acquiree not acquired
III. The non-controlling interest in the acquiree's assets and
liabilities at book value
IV. The non-controlling interest in the acquiree's assets and
liabilities at fair value
Correct!
II and IV
I and III
I and II
III and IV
II and III
Question 40
1 / 1 pts
Which of the following contracts is within the scope of IFRIC 12
Service Concession Arrangements?
XYZ, Inc., a private entity, wins a government bid to provide
internet access to all government offices and cellular phones and
plans to all government employees.
DEF Co., a private entity, wins a government bid to operate a
canteen in a government agency office.
ABC Co., a private entity, wins a government bid to provide
computer equipment to be used in the upcoming elections.
Correct!
GHI Co., a private entity, wins a government bid to construct,
operate and maintain for 25 years an expressway. At the end of
the contract, GHI Co. shall handover the express way to the
government.
Quiz Score: 19 out of 40
Auditing Second Drills Results for STEPHANIE
M. COSTALES
Score for this quiz: 70 out of 100
Submitted May 17 at 5:27pm
This attempt took 177 minutes.
Question 1
1 / 1 pts
When applying attribute sampling to test internal controls, the
needed sample size is most likely impacted LEAST by:
assessed level of control risk
risk of overreliance
Correct!
population size
tolerable deviation rate
Question 2
1 / 1 pts
Which of the following combinations results in a decrease in
sample size in a sample for attributes?
Risk of
assessing
Tolerable
deviation
control risk
rate
too low
Expected
population
deviation
rate
a. Increase
Decrease
Increase
b. Decrease
Increase
Decrease
c. Increase
Increase
Decrease
d. Increase
Increase
Increase
d
b
a
Correct!
c
Question 3
0 / 1 pts
During an audit, the auditor performed a substantive test of details
and decided that the sample results supported the conclusion that
the recorded account balance was materially misstated. It was not,
in fact, materially misstated. This example exemplifies the risk of
Correct Answer
Alpha risk.
Assessing control risk too low.
Assessing control risk too high.
You Answered
Beta risk.
Question 4
1 / 1 pts
An auditor provided a dual-dated audit report for a subsequent
event that occurred after the original date of the auditor's report
but before the issuance of the related financial statements. The
auditor's responsibility for events occurring subsequent to the
original report date was:
Limited to include only events occurring up to the date of the last
subsequent event referenced.
Extended to subsequent events occurring through the later date.
Correct!
Limited to the specific event referenced.
Extended to include all events occurring since the original report
date.
Question 5
0 / 1 pts
Attribute sampling would be most commonly used in which of the
following audit tests:
Selecting accounts receivable for confirmation of account
balances.
Making an independent estimate of the amount of a FIFO
inventory.
You Answered
Examining invoices in support of the valuation of fixed asset
additions.
Correct Answer
Inspecting employee time cards for proper approval by
supervisors.
Question 6
1 / 1 pts
In measuring sampling risk, the risk of incorrect rejection and the
risk of assessing control risk too high relate to the
Audit quality controls.
Effectiveness of the audit.
Selection of the sample.
Correct!
Efficiency of the audit.
Question 7
1 / 1 pts
When performing a dual purpose testing the sample size intended
must be
The smaller of the samples that would otherwise have been
designed for the two separate purposes.
The combined total of the samples that would otherwise have
been designed for the two separate purposes.
More than the larger of the samples that would otherwise have
been designated for the two separate purposes, but less than the
combined total of the samples that would otherwise have been
designed for the two separate purposes.
Correct!
The larger of the samples that would otherwise have been
designed for the two separate purposes.
Question 8
1 / 1 pts
In which of the following scenarios would an auditor most likely
add an explanation paragraph to the standard report without
influencing the auditor's opinion?
Correct!
There is substantial doubt about the entity's ability to continue as a
going concern.
The auditor is asked to report on the statement of financial
position, but not on the other basic financial statements.
Certain transactions cannot be tested because of management's
records retention policy.
Management's estimates of the effects of future events are
unreasonable.
Question 9
1 / 1 pts
Nivea, CPA, has been asked to provide an opinion on the
application of accounting principles to a certain transaction by an
entity being audited by another CPA. Nivea may accept this
engagement, but should:
Notify the entity that the report is for the general use of all
interested parties.
Disclaim any opinion that the hypothetical application of
accounting principles conforms with PFRS.
Correct!
Consult with the continuing CPA to obtain information relevant to
the transaction.
Report the engagement's findings to the entity's audit committee,
the continuing CPA, and management.
Question 10
1 / 1 pts
In a difference estimation sampling plan for a population of 1,500
items, an auditor found a total recorded and audited value for a
sample of 100 items to be P120,000 and P126,000, respectively.
What is the total projected monetary difference for the population?
NOT IN LIST
P6,000
Correct!
P90,000
P126,000
Question 11
1 / 1 pts
The lawyer representing a client should be approached by which
of the following parties?
Stockholders
Correct!
Client management
Auditor
Auditor's attorney.
Question 12
1 / 1 pts
In which of the following circumstances would an auditor not
express an unqualified opinion?
There has been a material change between periods in accounting
principles.
Quarterly financial data required by the SEC has been omitted.
Correct!
The auditor is unable to obtain audited financial statements of a
consolidated investee.
The auditor wishes to emphasize an unusually important
subsequent event.
Question 13
1 / 1 pts
The entity being audited has capitalizable leases but refuses to
capitalize them in the financial statements. Which of the following
reporting options is available to an auditor if the amounts
significantly affect the financial statements?
Unqualified opinion
Disclaimer opinion
Qualified opinion
Correct!
Adverse opinion
Question 14
0 / 1 pts
The management of Maybelline Inc. intends to disclose the
following uncertainty:
The entity is a defendant in a lawsuit alleging infringement of
certain patent rights and claiming damages. Discovery
proceedings are in progress. The ultimate outcome of the litigation
cannot presently be determined. Accordingly, no provision for any
liability that may result upon adjudication has been made in the
accompanying financial statements. The auditor is satisfied that
sufficient audit evidence supports management's assertions about
the nature and disclosure of the uncertainty. What type of opinion
should the auditor express under these circumstances?
"Except for" qualified
Disclaimer of opinion
Correct Answer
Unqualified without an explanatory paragraph
You Answered
Unqualified with an explanatory paragraph
Question 15
1 / 1 pts
Restrictions imposed by a client prohibit the observation of
physical inventories, which account for 35% of all assets.
Alternative audit procedures cannot be applied, although the
auditor was able to examine satisfactory evidence for all other
items in the financial statements. The auditor should issue a(an):
Correct!
Disclaimer of opinion.
"Except for" qualified opinion.
Unqualified opinion with an explanation in the scope paragraph.
Unqualified opinion with a separate explanatory paragraph.
Question 16
1 / 1 pts
An auditor should consider the likely rate of deviations, the
allowable risk of assessing control risk too low, and the following
factor when selecting the sample size for a test of controls:
Correct!
Tolerable deviation rate
Population size.
Nature and cause of deviations
Risk of incorrect acceptance.
Question 17
0 / 1 pts
When a test of 200 documents reveals four errors, how does an
auditor evaluate a statistical sample for attributes? if the tolerated
rate is 5%, the expected occurrence rate is 3%, and the sampling
risk allowance is 2%?
Do not decrease the assessed level of control risk because the
tolerable rate plus the allowance for sampling risk exceeds the
expected occurrence rate.
You Answered
Do not decrease the assessed level of control risk because the
sample occurrence rate plus the allowance for sampling risk
exceeds the tolerable rate.
Correct Answer
Accept the sample results as support for lowering the assessed
level of control risk because the sample occurrence rate plus the
allowance for sampling risk does not exceed the tolerable rate.
Accept the sample results as support for lowering the assessed
level of control risk because the tolerable rate less the allowance
for sampling risk equals the expected occurrence rate.
Question 18
1 / 1 pts
When an independent CPA assists in preparing the financial
statements of a publicly held entity, but has not audited or
reviewed them, the CPA should issue a disclaimer of opinion. In
such situations, the CPA has no responsibility to apply any
procedures beyond:
Correct!
Reading the financial statements for obvious material
misstatements.
Ascertaining whether the financial statements are in conformity
with PFRS.
Documenting that internal control is not being relied on.
Determining whether management has elected to omit
substantially all required disclosures.
Question 19
1 / 1 pts
An auditor is applying mean-per-unit estimation. Assuming
estimated audited value is P950,000, the achieved allowance for
sampling risk is P75,000, and recorded book value is P925,000,
what is the auditor's conclusion?
Recorded book value is not likely misstated by a material amount,
assuming the client records an adjusting journal entry equal to the
allowance for sampling risk.
There is insufficient evidence to reach a conclusion.
Correct!
Recorded book value is not likely misstated by a material amount.
Recorded book value is misstated by a material amount.
Question 20
1 / 1 pts
If certain forms are not consecutively numbered
Stratified sampling should be used.
Random number tables cannot be used.
Selection of a random sample probably is not possible.
Correct!
Systematic sampling may be appropriate.
Question 21
1 / 1 pts
Audit documentation serves mainly to:
Correct!
Provide the principal support for the auditor's report.
Monitor the effectiveness of the CPA firm's quality control
activities.
Satisfy the auditor's responsibilities concerning the Code of
Professional Conduct.
Document the level of independence maintained by the auditor.
Question 22
1 / 1 pts
CFAS Company changes its method of accounting for income
taxes, which has a material effect on comparability, the auditor
should refer to the change in an explanatory paragraph added to
the auditor's report. This paragraph should identify the nature of
the change and:
State the auditor's explicit concurrence with or opposition to the
change.
Explain why the change is justified under PFRS.
Describe the cumulative effect of the change on the audited
financial statements.
Correct!
Refer to the financial statement note that discusses the change in
detail.
Question 23
1 / 1 pts
If a publicly held company releases a financial statement that
intends to present its financial position and results of operations
but do not include a statement of cash flows, the auditor would
usually indicate a(an):
Correct!
Qualified opinion.
Unqualified opinion with a separate explanatory paragraph.
Disclaimer of opinion.
Review report.
Question 24
0 / 1 pts
Auditors often utilize sampling methods when performing tests of
controls. Which of the following sampling methods is most useful
when testing controls?
Variable sampling
Correct Answer
Attribute sampling
You Answered
Unrestricted random sampling with replacement
Stratified random sampling
Question 25
1 / 1 pts
Statistical sampling may be applied to test controls when a client's
control procedures
Are carefully reduced to writing and are included in client
accounting manuals.
Enable the detection of fraud.
Depend primarily on segregation of duties.
Correct!
Leave an audit trail as evidence of compliance.
Question 26
1 / 1 pts
Whenever an auditor uses nonstatistical attributes sampling on a
random sample, that auditor
Correct!
Should compare the deviation rate of the sample to the tolerable
deviation rate.
Need not consider the risk of assessing control risk too low.
Has committed a nonsampling error.
Will have to use discovery sampling to evaluate the results.
Question 27
1 / 1 pts
In an otherwise unmodified report, an auditor includes a separate
paragraph to highlight that the company being reported on has
significant transactions with related parties. The addition of this
separate paragraph:
Is considered an "except for" qualification of the opinion.
Necessitates a revision of the opinion paragraph to include the
phrase "with the foregoing explanation."
Violates PSA if this information is already disclosed in footnotes to
the financial statements.
Correct!
Is appropriate and would not negate the unqualified opinion.
Question 28
1 / 1 pts
According to PSA, which of the following is a mandatory
documentation for an audit?
A planning memorandum establishing the timing of the audit
procedures and coordinating the assistance of entity personnel.
An internal control questionnaire identifying controls that assure
specific objectives will be achieved.
Correct!
An audit plan setting forth in detail the procedures necessary to
accomplish the engagement's objectives.
A flowchart or narrative of the information system relevant to
financial reporting describing the recording and classification of
transactions for financial reporting.
Question 29
1 / 1 pts
When testing a control over cash receipts, an auditor may employ
a systematic sampling technique, beginning with any randomly
selected item. The biggest disadvantage of this method of
sampling is that the items in the population
Must be recorded in a systematic pattern before the sample can
be drawn.
May systematically occur more than once in the sample.
Correct!
May occur in a systematic pattern, thus destroying the sample
randomness.
Must be systematically replaced in the population after sampling.
Question 30
1 / 1 pts
If an auditor is examining for conditions and events that could
signal a company's ability to continue as a going concern, what is
the most likely auditing procedure?
Inspecting title documents to verify whether any assets are
pledged as collateral.
Reconciling the cash balance per books with the cut-off bank
statement and the bank confirmation.
Correct!
Confirming with third parties the details of arrangements to
maintain financial support.
Comparing the entity's depreciation and asset capitalization
policies to other entities in the industry.
Question 31
0 / 1 pts
For a company that does not receive governmental financial
assistance, an auditor's standard report on financial statements
generally would typically not include the following:
Management's responsibility for the financial statements.
Significant estimates made by management.
Correct Answer
The entity's internal control.
You Answered
An assessment of the entity's accounting principles.
Question 32
1 / 1 pts
How does an auditor assess a statistical sample for attributes
where a test of 50 documents shows 3 deviations if the tolerable
rate is 7%, the expected population deviation rate is 5%, and the
allowance for sampling risk is 2%?
Accept the sample results as support for the planned assessed
level of control risk because the sample deviation rate plus the
allowance for sampling risk exceeds the tolerable rate.
Accept the sample results as support for the planned assessed
level of control risk because the tolerable rate less the allowance
for sampling risk equals the expected population deviation rate.
Correct!
Modify the planned assessed level of control risk because the
sample deviation rate plus the allowance for sampling risk
exceeds the tolerable rate.
Modify the planned assessed level of control risk because the
tolerable rate plus the allowance for sampling risk exceeds the
expected population deviation rate.
Question 33
1 / 1 pts
For all newly acquired assets, CPALE Inc. shifted from the
straight-line method to the declining balance method of
depreciation. This adjustment has no material impact on the
current year's financial statements, but it is almost certain to have
a substantial impact in future years. If the change is disclosed in
the notes to the financial statements, the auditor shall submit a
report with a(an):
Correct!
Unqualified opinion.
Explanatory paragraph.
"Except for" qualified opinion.
Consistency modification.
Question 34
0 / 1 pts
Probability-proportional-to-size sampling will most likely lead in the
selection of a sample with characteristics similar to
Nonstatistical sampling
You Answered
A classical variable sampling plan stratified by peso amount
Correct Answer
Ratio estimation
Difference estimation
Question 35
1 / 1 pts
The principles used for a company's financial statements to be
presented fairly in accordance with PFRS should:
Be approved by the Auditing Standards Board or the appropriate
industry subcommittee.
Correct!
Reflect transactions in a manner that presents the financial
statements within a range of acceptable limits.
Be applied on a basis consistent with those followed in the prior
year.
Match the principles used by most other entities within the entity's
particular industry.
Question 36
1 / 1 pts
Sasha Sloan, CPA, was engaged to audit the financial statements
of Pagoda Co. after its fiscal year had ended. The timing of
Sloan's appointment as auditor and the start of fieldwork made
confirmation of accounts receivable by direct communication with
the debtors ineffective. However, Sloan applied other procedures
and was satisfied as to the reasonableness of the account
balances. Sloan's auditor's report most likely contained a(an):
Correct!
Unqualified opinion.
Qualified opinion due to a scope limitation.
Qualified opinion due to a departure from PSA.
Unqualified opinion with an explanatory paragraph.
Question 37
1 / 1 pts
An auditor desired to test credit approval on 10,000 sales invoices
processed during the year. The auditor designed a statistical
sample that would provide 1% risk of assessing control risk too
low (99% confidence) that not more than 7% of the sales invoices
lacked approval. The auditor estimated from previous experience
that about 2.5% of the sales invoices lacked approval. A sample of
200 invoices was examined and 7 of them were lacking approval.
The auditor then determined the upper deviation rate to be 8%.
The allowance for sampling risk was:
3.5%
5.5%
1%
Correct!
4.5%
Question 38
The cash account is involved in which cycle?
1 / 1 pts
Correct!
All of the given choices.
Revenue and collection.
Production and conversion.
Acquisition and expenditure.
Question 39
1 / 1 pts
Bardagulan Inc. uses the FIFO method of costing for its
international subsidiary's inventory and weighted average for its
domestic inventory. Under these circumstances, the auditor's
report on Bardagulan’s financial statements should express an:
Correct!
Unqualified opinion.
Opinion qualified because of a departure from PFRS.
Adverse opinion.
Opinion qualified because of a lack of consistency.
Question 40
0 / 1 pts
A practitioner in public practice is asked to submit a written report
on the application of accounting principles to a specific transaction
as part of a proposal to acquire a new client. In the practitioner's
report, it should be stated that:
Nothing came to the practitioner's attention that caused the
practitioner to believe that the accounting principles violated
PFRS.
You Answered
The guidance provided is for management use only and may not
be communicated to the prior or continuing auditors.
The engagement was performed in accordance with Standards for
Consulting Services.
Correct Answer
Any difference in the facts, circumstances, or assumptions
presented may change the report.
Question 41
1 / 1 pts
In general, the refusal of an attorney to disclose information
sought in an inquiry letter is viewed as:
Reason to withdraw from the engagement.
Correct!
A limitation on the scope of the audit.
Equivalent to a significant deficiency in internal control.
Grounds for an adverse opinion.
Question 42
1 / 1 pts
Which of the following statement does not pertain to stratification?
The strata must be explicitly defined so that each sampling unit
can belong to only one stratum.
This method involves dividing a population into subpopulations,
each of which is a group of sampling units which have similar
characteristics (often monetary value).
Correct!
It increases the effect of variance in the population.
This method enables the auditor to direct his efforts towards the
items he considers would potentially contain the greater monetary
error.
Question 43
1 / 1 pts
Which of the following is improper when using probabilityproportional-to-size sampling?
Using a sample selection technique in which the same account
balance could be selected more than once
Selecting a random starting point and then sampling every nth
peso unit
Correct!
Combining negative and positive peso error items
Defining the sampling unit as an individual peso and not as an
individual account balance
Question 44
0 / 1 pts
Audit documentation should be prepared in enough detail so that:
You Answered
An experienced auditor who has worked with the client in the past
can understand the procedures performed and the evidence
obtained.
Correct Answer
An experienced auditor who has no previous connection with the
audit can understand the procedures performed and the evidence
obtained.
A reader of the financial statements who has a background in
financial analysis can understand the procedures performed and
the evidence obtained.
A reader of the financial statements who has no previous
connection with the audit can understand the procedures
performed and the evidence obtained.
Question 45
0 / 1 pts
Using statistical sampling to assist in verifying the year-end
accounts payable balance, an auditor has accumulated the
following data:
Balance Determined
Number of Accounts Book Balance
by the Auditor
Population
4,100
P5,000,000
?
Sample
200
P250,000
P300,000
Using the mean-per-unit technique, the auditor's estimate of yearend accounts payable balance is
P6,025,000
P5,125,000
Correct Answer
P6,150,000
You Answered
P6,000,000
Question 46
1 / 1 pts
In performing test of controls, which of the following items cannot
be replaced with another sample (i.e., replacement sample)?
Correct!
Missing documents
Unused documents
Inapplicable or cancelled documents
Properly voided documents
Question 47
0 / 1 pts
When a qualified opinion results from a limitation on the scope of
the audit, the situation should be described in an explanatory
paragraph:
Correct Answer
Preceding the opinion paragraph and referred to in both the scope
and opinion paragraphs of the auditor's report.
Following the opinion paragraph and referred to in both the scope
and opinion paragraphs of the auditor's report.
You Answered
Following the opinion paragraph and referred to only in the scope
paragraph of the auditor's report.
Preceding the opinion paragraph and referred to only in the scope
paragraph of the auditor's report.
Question 48
1 / 1 pts
“In our opinion, internal control is effective, in all material respects,
based on suitable criteria.” – this statement is an example of
Non-assurance engagement
Correct!
Reasonable assurance engagement
Absolute assurance engagement
Limited assurance engagement
Question 49
1 / 1 pts
An auditor concludes that there is substantial doubt about an
entity’s ability to continue as a going concern during the next fiscal
year and the situation has not been adequately disclosed in the
entity’s financial statements. In this situation, what type of opinion
should the auditor issue?
Correct!
a qualified opinion
a “subject to” opinion
an unqualified opinion to avoid a “self-fulfilling prophesy” that the
entity will fail
a disclaimer of opinion
Question 50
1 / 1 pts
On February 27, Ballada, CPA, expressed an unqualified opinion
on the financial statements of Web Co. On October 27, during a
peer review of Ballada's practice, the reviewer informed Ballada
that engagement personnel failed to perform a search for
subsequent events for the Web engagement. Ballada should first:
Inquire of Web whether there are persons currently relying, or
likely to rely, on the financial statements.
Take no additional action because subsequent events have no
effect on the financial statements that were reported on.
Correct!
Assess the importance of the omitted procedures to Ballada's
present ability to support the opinion.
Request Web's permission to perform substantive procedures that
would provide a satisfactory basis for the opinion.
Question 51
0 / 1 pts
NESCIENCE IGNORANCE Co. has the following liabilities as of
December 31, 20x1.
a. Trade accounts payable net of debit balance in
supplier’s account of P20,000, net of unreleased
checks of P16,000, and net of postdated checks of 1,200,000
P8,000.
b. Credit balance in customers’ accounts
8,000
c. Financial liability designated at FVPL
200,000
d. Bonds payable maturing in 10 equal annual
installments of P400,000
4,000,000
e. 12%, 5-year note payable issued on October
1, 20x1
400,000
f.
20,000
Deferred tax liability
g. Unearned rent
16,000
h. Contingent liability
40,000
i.
100,000
Reserve for contingencies
How much is the total current liabilities?
Correct Answer
1,880,000
1,860,000
1,872,000
You Answered
1,868,000
Question 52
1 / 1 pts
PARADIGM EXAMPLE Co. has a 10%, P4,000,000 loan payable
as of December 31, 20x1 that is maturing on July 1, 20x2. Interest
on the loan is due every July 1 and December 31. On February 1,
20x2, PARADIGM Co. entered into a refinancing agreement with a
bank to refinance the loan on a long-term basis. Both parties are
financially capable of honoring the agreement’s provisions.
PARADIGM’s financial statements were authorized for issue on
March 15, 20x2. How much is presented as current liability in
relation to the loan in PARADIGM’s 20x1 year-end financial
statements?
0
4,200,000
200,000
Correct!
4,000,000
Question 53
0 / 1 pts
OBFUSCATE DARKEN Co. has the following liabilities as of
December 31, 20x1.
a. Trade accounts payable, including cost of goods
received on consignment of P40,000
1,200,000
b. Held for trading financial liabilities
200,000
c. Deferred revenue
80,000
d. Bank overdraft
40,000
e. Income tax payable
200,000
f. Accrued expenses
20,000
g. Share dividend payable
48,000
h. Advances from affiliates payable in 15 months
after
92,000
year-end
i. Loan of CONFUSE, Inc. guaranteed by
OBFUSCATE – it is possible that OBFUSCATE will
180,000
be held liable for the guarantee
How much is the total current liabilities?
1,800,000
Correct Answer
1,620,000
1,740,000
You Answered
1,660,000
Question 54
1 / 1 pts
Axe Company’s directors decided on November 1, 2018 to
restructure the entity’s operations as follows:
Factory A would be closed down and put on the market for
sale.
Employees working in Factory A would be retrenched on
November 30, 2018, and would be paid their accumulated
entitlements plus six months’ wages.
Some employees working in Factory A would be transferred to
Factory B, which would continue operating.
On December 31, 2018, the following transactions and events
had occurred:
The retrenched employees have left and their accumulated
entitlements have been paid. However, an amount of
₱1,000,000, representing a portion of the six months’
wages for the retrenched employees, has still not been
paid.
Costs of ₱300,000 are expected to be incurred in
transferring the remaining employees to their new work in
Factory B. The transfer is planned for January 5, 2019.
One employee, Crystal Maiden, remains in order to
complete administrative tasks relating to the closure of
Factory A and the transfer of employees to Factory B.
Crystal Maiden is expected to stay until January 31, 2019.
Her salary for January will be ₱50,000 and her
retrenchment package will be ₱150,000, all of which will be
paid on the day she leaves. Crystal Maiden would spend
60% of her time administering the closure of Factory A,
30% on administering the transfer of employees to Factory
B, and the remaining 10% on general administration.
What total amount should be recognized as restructuring provision
on December 31, 2018?
₱1,200,000
₱1,480,000
Correct!
₱1,180,000
₱1,500,000
Question 55
1 / 1 pts
QUIDDITY ESSENCE Co. has a 10%, P4,000,000 loan payable
as of December 31, 20x1 that is maturing on July 1, 20x2. Interest
on the loan is due every July 1 and December 31. On February 1,
20x2, QUIDDITY Co. entered into a refinancing agreement with a
bank to refinance the loan on a long-term basis. Both parties are
financially capable of honoring the agreement’s provisions.
QUIDDITY has the discretion to refinance or roll over the loan for
at least twelve months from December 31, 20x1 under an existing
loan facility. QUIDDITY’s financial statements were authorized for
issue on March 15, 20x2. How much is presented as current
liability in relation to the loan in QUIDDITY’s 20x1 year-end
financial statements?
4,200,000
Correct!
0
200,000
4,000,000
Question 56
0 / 4 pts
Winarak Company has asked your services to audit their financial
statement. During the course of your audit, you include the
following information in your working paper:
1. Winarak’ Article of Incorporation became effective on January
2, 2020 . It was stated in the AOI that 20,000 shares of ₱10
ordinary shares and 10,000 shares of 7% cumulative,
nonparticipating, preference shares were issued. Furthermore,
the ordinary shares were sold at ₱12 per share, and the
preference shares were sold at par value of ₱100 per share.
2. Winarak was unable to pay preference dividends at the end of
first year. The owners of preference share agreed to accept 2
3.
4.
5.
6.
ordinary shares for every 50 preference shares owned in
discharge of the preference dividends due on December 31,
2020. The shares were issued on January 2, 2021. The fair
market value was ₱30 for ordinary shares at the date of issue.
Winarak acquired all the outstanding shares of Marupok
Corporation on May 1, 2022 in exchange for 10,000 ordinary
shares of Winarak.
Winarak split its ordinary shares 3 for 2 on January 1, 2023,
and 2 for 1 on January 1, 2024.
Winarak offered to convert 20% of the preference shares to
ordinary shares on the basis of 2 ordinary shares for 1
preference share. The offer was accepted, and the conversion
was made on July 1, 2024.
No cash dividends were declared on ordinary until December
31, 2020. Cash dividends per share of ordinary share shares
were declared and paid as follows:
were declared and paid as follows:
JUNE 30 DEC.31
2022
-
₱3.20
2023
₱1.50
₱2.50
2024
₱1.25
₱1.00
Questions:
Based on the preceding information, determine the following:
1. The number of shares outstanding on December 31, 2023
[ Select ]
2. The number of shares outstanding on December 31, 2024
[ Select ]
3. The amount of cash dividend declared and paid to
shareholders in 2023 [ Select ]
4. The amount of cash dividend declared and paid to
shareholders in 2024 ₱217,200
Answer 1:
You Answered
O - 76,000; P - 10,000
Correct Answer
O - 45,600; P - 10,000
Answer 2:
Correct Answer
O - 95,200; P - 8,000
You Answered
O - 93,200; P - 7,840
Answer 3:
You Answered
₱83,600
Correct Answer
₱182,400
Answer 4:
Correct Answer
₱209,200
You Answered
₱217,200
Question 57
2 / 4 pts
Wade’s Music Emporium carries a wide variety of music promotion
techniques - warranties and premiums – to attract customers.
Musical instrument and sound equipment are sold in a one-year
warranty for replacement of parts and labor. The estimated
warranty cost, based on past experience, is 4% of sales.
The premium is offered on the recorded and sheet music.
Customers receive a coupon for two pesos spent on recorded
music or sheet music. Customers may exchange 200 coupons
and ₱20 for an AM/FM radio. Wade pays ₱34 for each radio and
estimates that 90% of the coupons given to customers will be
redeemed.
Wade total sales for 2018 were ₱2,000,000 from recorded music
Wade total sales for 2018 were ₱2,000,000 from recorded music
and sheet music. Replacement parts and labor for warranty work
totaled ₱164,000 during 2018. A total of 6,500 AM/FM radio used
in the premium program was purchased during the year and there
were 1,200,000 coupons redeemed in 2018.
The accrual method is used by Wade to account for the warranty
and premium costs for financial reporting purposes. The balance
in the accounts related to warranties and premiums on January 1,
2018, was shown below:
Inventory of Premium AM/FM radio
₱ 39,950
Estimated Premium Claims Outstanding
Estimated Liability from Warranties
44,800
136,000
Also on December 31, 2018, the estimated liability from warranties
show ₱212,000 balance.
Questions: (Please assume that the selling price of the recorded
music and sheet music is an even number)
Based on the above and the result of your audit, determine the
amounts that will be shown on the 2018 financial statements for
the following:
1. Sales from musical instrument and sound reproduction
equipment [ Select ]
2. Warranty expense ₱216,000
3. Inventory of AM/FM radio [ Select ]
4. Estimated liability for premiums [ Select ]
Answer 1:
Correct Answer
₱6,000,000
You Answered
₱5,400,000
Answer 2:
You Answered
₱216,000
Correct Answer
₱240,000
Answer 3:
Correct!
₱56,950
Answer 4:
Correct!
₱23,800
Question 58
4 / 4 pts
Marianne Corporation had the following shareholders’ equity
account balances at December 31, 2015:
10% Convertible preference shares (₱100 par
value; 100,000 shares authorized, 40,000 shares
issued and outstanding)
₱4,000,000
Ordinary shares (₱10 par value; 200,000 shares
authorized, 84,000 shares issued )
840,000
Subscribed ordinary shares
100,000
Subscribed ordinary shares
100,000
Subscriptions Receivable
52,000
Share Premium
968,000
Retained earnings
15,000,000
Total
₱20,948,000
Less: Treasury ordinary shares (4,000 shares)
44,000
Total Shareholders' Equity
₱20,904,000
The subscribed ordinary shares account is composed of 10,000
shares subscribed at ₱13 per share. The subscription contract
required a cash down payment equal to 60% of the subscription
price, with the balance due on February 1, 2016.
Transactions in 2016:
On February 1, 2016, the 8,000 ordinary shares were issued
according to subscription contract. Because of default by a
subscriber, 2,000 shares were not issued. All payments made
by the subscriber were forfeited in favor of the Company.
On March 1, 2016, 2,000 preference shares were converted to
ordinary shares. One preference share is convertible into two
ordinary shares. At the time of conversion, the preference
shares had a market value of ₱125 while the ordinary shares
had a market value of ₱25 per share.
On April 1, 2016, 92,000 share rights were issued to the
ordinary shareholders permitting the purchase of two new
shares of ordinary share in exchange for one right and ₱15
shares of ordinary share in exchange for one right and ₱15
cash. On April 25, 2016, 67,500 stock rights were exercised
when the market price of Marianne’s ordinary shares was ₱20
per share. Marianne issued new shares to settle the
transaction. The remaining 24,500 rights were not exercised
and thus expired.
On September 30, 2016, 3,000 treasury shares were reissued
at ₱20 per share.
On January 15, 2017, before the accounting records were
closed for 2016, Marianne became aware that the rent income
for the year ended December 31, 2015 was understated by
₱400,000. The after tax-effect on the 2015 net income was
₱280,000. The appropriate correcting entry was recorded the
same day.
After correcting the rent income, net income for 2016 was
₱2,500,000
Cash dividends are declared for preference and ordinary
shares on April 30 and October 31. Semi-annual cash
dividends for ordinary shares are ₱1 per share.
Questions:
Based on the above data, determine the following as of December
31, 2016:
1. Ordinary shares [ Select ]
2. Total share premium [ Select ]
3. Retained earnings – unappropriated
[ Select ]
4. Total shareholders’ equity [ Select ]
Answer 1:
Correct!
₱2,310,000
Answer 2:
Correct!
₱1,839,600
Answer 3:
Correct!
₱16,552,000
Answer 4:
Correct!
₱24,501,600
Question 59
2 / 4 pts
Luke Corporation had the following shareholders’ equity account
balances at December 31, 2015:
Ordinary shares (₱10 par value; 200,000 shares
authorized,
₱
840,000
84,000 shares issued )
Share Premium
420,000
Retained earnings
15,000,000
Total
₱
16,260,000
Total
16,260,000
Less: Treasury ordinary shares (4,000 shares)
Total Shareholders' Equity
44,000
₱
16,216,000
Transactions in 2016:
1. On January 15, 2016, the company reissued its 1,500 treasury
shares at ₱20 per share
2. On March 1, the company split the ordinary shares 2 for 1
share.
3. On April 1, 2016, Luke Company declared several equipment
as property dividends payable on August 15, 2016. The
carrying amount of the equipment is ₱648,000. Data relating to
the fair values of the equipment are as follows:
Date
Fair values (assume
that the costs to
distribute are
immaterial)
April 1, 2016 ₱700,000
August 15,
2016
₱650,000
On September 1, the company issued 4,000 shares of ₱50 par
preference shares with detachable warrants. The package sells for
₱150. The warrants enable the holder to purchase 2,000 ordinary
shares at ₱15 per share. Immediately after the issuance of the
share, the warrants are selling at ₱10 per share and the market
value of the preference without the warrants is ₱90.
On October 1, 80% of the warrants are exercised. The remaining
warrants were not exercised.
On November 2, 2,000 ordinary shares were retired at ₱20 per
share. These ordinary shares were originally issued previous year
at ₱15 per share.
On December 15, the company declared a ₱4 per share cash
dividends on the ordinary shares.
Net income for 2016 was ₱2,400,000.
Questions:
Based on the above data, determine the following as of December
31, 2016:
1. Preference shares [ Select ]
2. Total share premium [ Select ]
3. Retained earnings – unappropriated
[ Select ]
4. Total shareholders’ equity [ Select ]
Answer 1:
You Answered
₱260,000
Correct Answer
₱200,000
Answer 2:
Correct!
₱844,500
Answer 3:
Correct Answer
₱16,047,100
You Answered
₱16,062,100
Answer 4:
Correct!
₱17,929,600
Question 60
4 / 4 pts
Account balances and supplemental information for the
WandaVision Corporation as of December 31, 2021, are given
below:
P75,900 Accounts Payable; P141,600 Accounts Receivable;
P84,000 Accumulated Depreciation – Equipment; P300,000 Bonds
Payable; P243,900 Cash; P1,560,000 Ordinary stocks; P6,900
Deferred Income Tax Liability; P45,000 Dividends Payable;
P840,000 Equipment; P91,500 Income Tax Payable; P395,100
Inventory; P510,000 Investment in Land; P492,000 Investment in
Subsidiary; P120,000 Notes Payable; P150,000 Notes Receivable;
P7,200 Prepaid Insurance; P453,600 Retained Earnings; P42,900
Salaries and Wages Payable.
(a)
₱300,000 of twelve-percent bonds were sold on November
1, 2021, at par.
1, 2021, at par.
(b)
40,000 stocks of ₱30 par value ordinary stocks were sold
for ₱1,560,000.
(c)
All equipment was bought on January 2, 2020. The
depreciation rate is 10% per annum.
(d)
5% of accounts receivable are expected to be uncollectible.
(e)
A two-year insurance policy was bought on May 1, 2021,
amounting to ₱7,200.
(f)
Accrued interest on ₱150,000 of short-term notes
receivable from customers was ₱5,100 at December 31, 2021.
(g)
₱120,000 was borrowed from the bank on a 5-year, 10%
note payable dated December 31, 2021. The loan is to be repaid
in 10 semi-annual payments of ₱12,000 plus interest, with the first
payment due June 30, 2022.
Based on the above data, compute for the following:
1. Current Assets [ Select ]
2. Current Liabilities [ Select ]
3. Noncurrent liabilities 402,900
4. Total shareholders’ equity [ Select ]
Answer 1:
Correct!
933,420
Answer 2:
Correct!
285,300
Answer 3:
Correct!
402,900
Answer 4:
Correct!
2,607,420
4 / 4 pts
Question 61
You were able to obtain the following from the accountant of
Tuguegarao Company related to the company’s liabilities as of
December 31, 2018:
Current liabilities:
Accounts payable
₱1,350,000
14% note payable issued October 1, 2017, maturing
September 30, 2019
1,250,000
16% note payable issued April 1, 2016, due on April
3,000,000
2019
Interest payable
?
Noncurrent liability:
10% 2-year, note payable issued on July 1, 2018
2,000,000
10% 2-year, note payable issued on July 1, 2018
2,000,000
The following additional information pertains to these liabilities:
1. The accounts payable balance of ₱1,350,000 was before any
necessary year-end adjustments relating to the following:
Goods were in transit to Tuguegarao from a vendor on
December 31, 2018. The invoice cost was ₱75,000. The goods
were shipped FOB shipping point on December 29, 2018 and
were received on January 2, 2019.
Goods shipped FOB destination on December 21, 2018, from
a vendor to Tuguegarao, were received on January 6, 2019.
The invoice cost was ₱37,500.
On December 27, 2018, Tuguegarao wrote and recorded
checks totaling ₱60,000 which were mailed on January 10,
2019.
The interest of the 14% note payable is payable every
September 30.
On December 31, 2018, the company expects to refinance the
₱3,000,000 note by the issuance of a long-term note payable
in lump sum. The refinancing of the ₱3,000,000 is at the
discretion of the enterprise. Tuguegarao’s December 31, 2018
financial statements were issued on March 31, 2019. On
January 15, 2019, the entire ₱3,000,000 balance of the 16%
note was refinanced by issuance of a long-term obligation
payable. The interest is payable every April 1.
The note payable of ₱2,000,000 is payable to Baggao
Corporation. The interest is payable quarterly. The existing
loan agreement does not carry a provision to refinance. During
September, Tuguegarao was experiencing financial difficulty
and was unable to pay the periodic interest. Baggao Company
agreed at the reporting date to provide a grace period ending
at least twelve months to rectify the breach.
Questions:
Based on the above, answer the following:
1. In Tuguegarao’s December 31, 2018 statement of financial
position, how much should be the accounts payable?
₱1,485,000
2. Total interest expense for the year 2018
[ Select ]
3. Total current liabilities as of December 31, 2018 is ₱3,238,750
4. Total noncurrent liabilities as of December 31, 2018 is
[ Select ]
Answer 1:
Correct!
₱1,485,000
Answer 2:
Correct!
₱755,000
Answer 3:
Correct!
₱3,238,750
Answer 4:
Correct!
₱5,000,000
Question 62
3 / 3 pts
The shareholders equity section of WUHAN CORPORATION’s
statement of financial position as of December 31, 2009, is as
follows:
Ordinary share capital (P5 par, 250,000 share
Authorized, 137,500 issued and outstanding)
₱687,500
Share premium
275,000
Total paid in
capital
₱962,500
Unappropriated retained earnings
₱667,500
Appropriated retained earnings
250,000
Total retained
earnings
917,500
Total shareholder’s equity
₱1,880,000
WUHAN Corporation had the following shareholder’s equity
transactions during 2010:
Jan. 15 Completed the building renovation for which ₱250,000 of
retained earnings had been restricted.
Paid the contractor ₱242,500 all of which is capitalized.
Mar. 3
share.
Issued 50,000 additional ordinary shares for ₱8 per
May 18
Declared a dividend of ₱1.50 per share to be paid on
July 31, 2010, to shareholder’s of record on June 30,2010
June 19 Approved additional building renovation to be funded
internally. The estimated cost of the
Project is ₱200,000, and retained earnings are to be
restricted for that amount.
July 31
Paid the dividend
Dec. 31 Declared a property dividend to be paid on January
10,2011, to shareholder’s of record on
January 5,2011. The dividend is to consist of
equipment with a carrying value of ₱150,000.
The equipment’s fair value at Dec. 31, 2010, is
₱157,500
Dec. 31 Reported ₱442,500 of net income on Dec. 31,2010
income statement.
1. The balance in the ordinary share capital account at Dec.
31,2010, should be [ Select ]
2. The balance in the unappropriated retained earnings account
at Dec. 31,2010, should be [ Select ]
3. The total shareholder’s equity at Dec. 31,2010 should be
[ Select ]
Answer 1:
Correct!
₱937,500
Answer 2:
Correct!
₱721,25O
Answer 3:
Correct!
₱2,283,750
Question 63
3 / 3 pts
The ledger of NO REPLY Co. in 20x1 includes the following:
Jan. 1,
20x1
Dec. 31,
20x1
Current assets
1,200,000
?
Noncurrent assets
4,000,000
?
Current liabilities
Noncurrent liabilities
900,000
?
1,000,000
3,000,000
Additional information:
NO REPLY’s working capital as of December 31, 20x1 is twice
as much as the working capital as of January 1, 20x1.
Total equity as of January 1, 20x1 is ₱1,700,000. Profit for the
year is ₱2,400,000 while dividends declared amounted to
₱1,000,000. There were no other changes in equity during the
year.
1. How much is the total noncurrent liabilities as of January 1,
20x1? 2,600,000
2. How much is the total current assets as of December 31,
20x1? 1,600,000
3. How much is the total noncurrent assets as of December 31,
20x1? 5,500,000
Answer 1:
Correct!
2,600,000
Answer 2:
Correct!
1,600,000
Answer 3:
Correct!
5,500,000
Question 64
3 / 3 pts
David Company decided to offer a bonus to its branch manager at
20% of net income earned by the branch during the current year.
The income for the branch was ₱3,090,000 before tax and before
bonus for the current year. The income tax rate is 30%.
Questions:
Based on the above data, determine the following:
1. How much is the bonus if the bonus is based on the net
income before bonus and tax? [ Select ]
2. How much is the bonus if the bonus is based on the net
income after bonus but before tax? ₱515,000
3. How much is the bonus if the bonus is based on the net
income after bonus and tax? [ Select ]
Answer 1:
Correct!
₱618,000
Answer 2:
Correct!
₱515,000
Answer 3:
Correct!
₱379,474
2 / 6 pts
Question 65
You were able to gather the following in connection with your audit
of the Tuguegarao Corporation’s financial statements as of and for
the period ended December 31, 2021:
ASSETS
Cash and cash equivalents
₱325,000
Accounts receivable
275,000
Marketable securities, at FMV as of 12/31/2021
955,000
Prepayments
50,000
Land
900,000
Building
600,000
Machinery and equipment
330,000
Machinery and equipment
TOTAL
330,000
₱3,435,000
LIABILITIES AND CAPITAL
Current liabilities
₱325,000
Non-current liabilities
250,000
Ordinary shares, ₱25 par, 50,000 shares issued
1,250,000
Share premium
750,000
Reserve for depreciation – Building
50,000
Reserve for depreciation – Machinery and
equipment
Reserve for self-insurance
Accumulated profits
TOTAL
110,000
75,000
625,000
₱3,435,000
Audit findings:
1. Cash and cash equivalents were net of bank overdraft
amounting to ₱75,000.
2. Accounts receivable is net of a 6-months, 12% ₱100,000 loans
payable due on March 31, 2022 to which a ₱150,000
receivables were assigned. The accounts receivable is also net
receivables were assigned. The accounts receivable is also net
of ₱20,000 customer’s credit balance.
3. Marketable securities include 10,000 Tuguegarao shares
acquired by the company at ₱50 per share. Tuguegarao
shares were currently selling at ₱60 per share as of December
31, 2021. Increase in the securities’ value were charged to
current operations.
4. Current liabilities include a ₱50,000, deferred tax liabilities on
temporary non-taxable item expected to reverse in 2022.
5. Current liabilities also include a 10% share dividends payable
amounting to ₱100,000 (charged to accumulated profits)
declared on December 31, 2021 to stockholders as of the
same date distributable on February 1, 2022.
6. The company incorporated on January 1, 2021 and was
authorized to issue 100,000 ordinary shares at ₱25 par value.
50,000 of these shares immediately issued.
7. The company’s board of directors approved a plan to “selfinsure” for probable fire losses because of its previous safety
record and to avoid high insurance premiums. The company
debited insurance expense and credited reserve for self
insurance account for ₱75,000, the average annual premium
on applicable insurance policy.
8. On December 30, 2021, the board also approved the
retirement of half of its reacquired shares.
Determine the correct balance of the following:
1. Current assets [ Select ]
2. Current liabilities [ Select ]
3. Total contributed capital [ Select ]
4. Accumulated profits, unappropriated
[ Select ]
5. Total assets [ Select ]
6. Current ratio [ Select ]
Answer 1:
You Answered
1,180,000
Correct Answer
1,200,000
Answer 2:
You Answered
353,000
Correct Answer
373,000
Answer 3:
Correct!
2,040,000
Answer 4:
Correct!
82,000
Answer 5:
You Answered
2,850,000
Correct Answer
2,870,000
Answer 6:
Correct Answer
3.22
You Answered
3.34
Question 66
1 / 6 pts
The following trial balance relates to Marvel Studios Company at
March 31, 2021:
Debit balances: (₱’000)
Leased property (12 years) – at cost (note (ii)) – P48,000
Plant and equipment – at cost (note (ii)) – P47,500
Inventory at March 31, 2021 – P25,200
Trade receivables (note (iii)) – P28,500
Cost of sales – P298,700
Lease payments (note (ii)) – P8,000
Distribution costs – P16,100
Administrative expenses – P26,900
Bank interest – P300
Current tax (note (iv)) – P800
Suspense account (note (i)) – P13,500
Total Debit – P500,000
Credit balances: (₱’000)
Equity shares of 50 cents each (note (i)) – P45,000
Share premium (note (i)) – P5,000
Retained earnings at April 1, 2020 – P5,100
Accumulated amortization of leased property at April 1, 2020 –
P16,000
Accumulated depreciation of plant and equipment at April 1, 2020
– P33,500
Bank – P1,400
Deferred tax (note (iv)) – P3,200
Trade payables – P27,300
Revenue – P350,000
Total Credit – P500,000
The following notes are relevant:
The cash collected for a fully subscribed rights issue of equity
shares made on January 1, 2021 is credited to the suspense
account. The terms of the share issue were one new share for
every five existing shares, with each share costing 75 cents.
The company's equity shares were selling for P1.20 each just
before the IPO.
Non-current assets:
To reflect a marked increase in property prices, Marvel decided to
revalue its leased property on April 1, 2020.
The Board of Directors accepted an independent surveyor's report,
which valued the leased property at Php 36 million at the time. The
which valued the leased property at Php 36 million at the time. The
reassessment has yet to be recorded by Marvel Studios. At the
time of the revaluation, the rented property had eight years left on
its lease. To reflect the realization of the revaluation reserve,
Marvel Studios makes an annual transfer to retained earnings.
Revaluation does not result in a delayed tax liability in Marvel's tax
jurisdiction.
Marvel Studios acquired an item of plant on April 1, 2020, under a
finance leasing deal with an implicit financing cost of 10% per
year. The initial deposit of P2 million was paid on April 1, 2020,
and the first annual rental of P6 million was paid on March 31,
2021, according to the trial balance. For the next four years, the
leasing agreement mandates additional annual payments of P6
million on March 31. The factory would have cost P25 million to
buy outright for cash if it hadn't been leased.
Plant and equipment, other than the leased plant, is depreciated at
20% per year using the reducing balance method. No
depreciation/amortization has yet been charged on any noncurrent asset for the year ended March 31, 2021. Depreciation and
amortization are charged to cost of sales.
In March 2021, Marvel’s internal audit department discovered a
fraud committed by the company’s credit controller who did not
return from a foreign business trip. The outcome of the fraud is
that ₱4 million of the company’s trade receivables have been
stolen by the credit controller and are not recoverable. Of this
amount, ₱1 million relates to the year ended March 31, 2020
and the remainder to the current year. Marvel is not insured
against this fraud.
Marvel’s income tax calculation for the year ended March 31,
2021 shows a tax refund of ₱2.4 million. The balance on
current tax in the trial balance represents the under/over
provision of the tax liability for the year ended March 31, 2020.
At March 31, 2021, Marvel had taxable temporary differences
of ₱12 million (requiring a deferred tax liability). The income tax
rate of Marvel is 25%.
Questions:
Based on the above data, compute for the following:
1. Net profit (loss) for the year ended March 31, 2021
[ Select ]
2. Current assets [ Select ]
3. Non-current assets [ Select ]
4. Current liabilities [ Select ]
5. Non-current liabilities [ Select ]
6. Basic loss per share for Marvel for the year ended March 31,
2021 [ Select ]
Answer 1:
Correct Answer
(₱7.8M)
You Answered
₱7.8M
Answer 2:
You Answered
₱55.1M
Correct Answer
₱52.1M
Answer 3:
You Answered
₱42.7M
Correct Answer
₱62.7M
Answer 4:
Correct!
₱32.77M
Answer 5:
Correct Answer
₱18.23M
You Answered
₱22.3M
Answer 6:
Correct Answer
₱.0788
You Answered
₱.0722
Quiz Score: 70 out of 100