COLLEGE OF ACCOUNTANCY
BSA Mastery Program
Daily Drill No. 13
NAME: ____________________________________
DATE: _______________ SCORE: ___________
1
D
11
C
21
C
31
D
41
D
51
A
2
B
12
D
22
A
32
D
42
A
52
B
3
D
13
D
23
C
33
D
43
D
53
C
4
B
14
C
24
C
34
B
44
A
54
B
5
B
15
C
25
A
35
D
45
C
55
C
6
A
16
D
26
A
36
C
46
C
56
C
7
B
17
B
27
C
37
B
47
B
57
C
8
C
18
D
28
C
38
C
48
A
58
B
9
C
19
D
29
C
39
B
49
D
59
D
10
B
20
C
30
A
40
A
50
A
60
A
FINANCIAL ACCOUNTING AND REPORTING - BIOLOGICAL ASSETS
1. Which statement is true about biological assets?
a. Biological assets are measured at fair value less cost of disposal.
b. When fair value cannot be determined reliably, the biological asset shall be measured at cost less
accumulated depreciation and impairment loss.
c. There is a presumption that the fair value of biological asset can be measured reliably.
d. All of these statements are true about biological assets.
2. An entity had a plantation forest that is likely to be harvested and sold in 30 years. The income shall be
accounted for in which of the following?
a. No income shall reported annually until first harvest and sale in 30 years.
b. Income shall be measured annually and reported using a fair value approach that recognizes and
measures biological growth.
c. The eventual sale proceeds shall be estimated and recognized over the 30-year period.
d. The plantation forest shall be valued every 5 years and the increase in value shall be recognized as
component of other comprehensive income.
3. Which statement is true regarding agricultural produce?
a. In all cases, an entity shall measure agricultural produce at fair value less cost of disposal at the point of
harvest.
b. The prevailing view is that the fair value of agricultural produce at the point of harvest can always be
measured reliably.
c. The fair value measurement of agricultural produce stops at the time of harvest.
d. All of these statements are true regarding agricultural produce.
4. Which of the following information shall be disclosed in relation to biological asset and agricultural produce?
a. Separate disclosure of the gain or loss relating to biological asset and agricultural produce.
b. The aggregate gain or loss arising on the initial recognition of biological asset and agricultural produce
and from the change in fair value less cost of disposal of biological asset.
c. The total gain or loss from biological asset, agricultural produce, and from changes in fair value less cost of
disposal of biological asset.
d. There is no requirement in the standard to disclose separately any gain or loss.
5. Where there is a long aging or maturation process after harvest, the accounting for such products shall be
dealt with by
a. PAS 41, Agriculture
b. PAS 2, Inventories
c. PAS 16, Property, plant and equipment
d. PAS 40, Investment property
At the beginning of the current year, Honey Company had a herd of 10 2-year old animals.
One animal aged 2.5 years was purchased on July 1 for P108, and one animal was born on July 1.
No animals were sold or disposed of during the year.
Fair value less cost of disposal per unit
2-year old animal on January 1
2.5-year old animal on July 1
New born animal on July 1
2-year old animal on December 31
2.5-year old animal on December 31
Newborn animal on December 31
3-year old animal on December 31
0.5-year old animal on December 31
100
108
70
105
111
72
120
80
6 What is the fair value of the biological assets on December 31?
a. 1,400
b. 1,320
c. 1,440
d. 1,360
Solution:
3-yr old animal (11 x P120)
0.5-yr old animal (1 x P80)
total
1,320
80
1,400
7.What amount of gain from change in fair value of biological assets should be recognized in the current year?
a. 222
b. 292
c. 300
d. 332
Solution:
FV - Dec. 31
10 animals-Jan. 1 (10 x P100)
1 acquired animal-July 1
CA - Dec. 31, excluding new born
Gain from change in FV
1,400
1,000
108
(1,108)
292
Colombia Company is a producer of coffee. The entity is considering the valuation of harvested coffee beans..
Industry practice is to value the coffee beans at market value and uses as reference a local publication
"Accounting for Successful Farms”
On December 31, 2019, the entity has harvested coffee beans costing P3,000,000 and with fair value less cost of
disposal ofP3,500,000 at the point harvest. Because of long aging and maturation process after harvest, the
harvested coffee beans were still on hand on December 31, 2020.
On December 31, 2020, the fair value less cost of disposal isP3,900,000 and the net realizable value is P3,200,000.
8. What is the measurement of the coffee beans inventory on December 31, 2020?
a. 3,000,000
b. 3,500,000
c. 3,200,000
d. 3,900,000
Dairy Company provided the following information for the current year:
Cash
500,000
Trade and other receivables
1,500,000
Inventories
100,000
Dairy livestock - immature
50,000
Dairy livestock - mature
400,000
Property, plant and equipment, net
1,400,000
Trade and other payables
520,000
Note payable - long-term
1,500,000
Share capital
1,000,000
Retained earnings - beginning
800,000
Fair value of milk produced
600,000
Gain from change in fair value
50,000
Inventories used
140,000
Staff costs
120,000
Depreciation expense
15,000
Other operating expenses
190,000
Income tax expense
55,000
9. What is the net income for the current year?
a. 650,000
b. 600,000
c. 130,000
d. 185,000
Solution:
Fair value of milk produced
Gain from change in fair value
Total income
Inventory used
Staff Costs
Depreciation Expense
Other OPEX
Income before Income Tax
Income Tax Expense
Net Income
600,000
50,000
650,000
140,000
120,000
15,000
190,000
(465,000)
185,000
(55,000)
130,000
10. What is the fair value of biological assets at year-end?
a. 550,000
b. 450,000
c. 500,000
d. 400,000
Solution:
Dairy Livestock - immature
Dairy Livestock - mature
total
50,000
400,000
450,000
ADVANCED FINANCIAL ACCOUNTING AND REPORTING- CONSOLIDATION
11. Which of the following statements best describes the required accounting treatment with respect to income
taxes on intercompany profits?
a. These taxes can be ignored since an increase in income tax expense for one company is offset by an
equivalent reduction in Income Tax expense for the other.
b. They would be recognized as assets for the purchasing entity and liabilities for the selling entity.
c. They would be recognized as liabilities for the purchasing entity and assets for the selling entity.
d.
They would be charged to retained earnings during the preparation of Financial Statements.
12. Under the Cost Method,
a. the parent's investment in the subsidiary is recorded at cost, and never changed thereafter.
b. the parent records its pro rata share of the subsidiary's post-acquisition income as an increase to the
investment account and reduces the investment account with its share of the dividends declared by the
subsidiary.
c. the parent records its pro rata share of the subsidiary's cumulative earnings as an increase to the investment
account and reduces the investment account with its share of the dividends declared by the subsidiary.
d. the parent's investment in the Subsidiary is recorded at Cost and reduced by an excess dividends received
from the subsidiary.
13. The parent acquires Inventory from a subsidiary. On whose financial records is this intercompany transaction
recorded?
a. The books of the subsidiary only because the subsidiary made the sale and the consolidated financial
statements are prepared for the parent company stockholders
b. The books of the parent only because the parent knows the subsidiary's identity so the parent knows it is an
intercompany transaction
c. Neither the parent nor the subsidiary would record the transaction because it is an intercompany transaction
d. The parent and the subsidiary both record the transaction and it is eliminated during the consolidation
process
14. If the accountant fails to record, on the consolidation worksheet, amortization related to the an undervalued
truck:
a. The subsidiary's net income will be overstated
b. The parent's net income will be unaffected
c. Consolidated net income will be overstated
d. The parent's net income will be understated
15. If the fair value of a reporting unit with goodwill falls below its book value, which of the following statements
is true?
a. No additional impairment testing is required.
b. A goodwill impairment loss is recognized for the excess of book value over fair value of the reporting unit.
c. There is a potential impairment loss for the amount that the book value of the goodwill exceeds its implied
fair value.
d. Goodwill is removed from the consolidated balance sheet.
Items 16-20:
On January 1, 20x5, Par Company purchased 80% of the outstanding shares of Sub Company by paying P340,000,
the Sub Company's common stock and retained earnings on this date amounted to P150,000 and P230,000
respectively. Also on this date, an equipment is undervalued by P20,000 with a remaining life of 10 years. On
January 1, 20x7, Sub Company had P150,000 of capital stock and P300,000 of retained earnings. Also on the
same date. Par Company had P1,000,000 of capital stock and P700,000 of retained earnings. During the year,
Par Company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Intercompany sales of merchandise were made at the following gross profit rates:
Sales made by parents
Sales made by subsidiary
25% based on cost
20% based on sales
On December 31, 20x7, 30% of all inter-company sales remain in the ending inventory of the purchasing affiliate.
The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on
which Sub Company reported a profit of P1,000. While, the beginning inventory of Sub also includes P3,000 of
merchandise acquired from Par Company at 35% mark-up. Using cost method the following selected results of
operations for 20x7 were as follows:
Dividends paid
Par Company
P 60,000
Sub Company
P 10,000
Net Income from own operation
Add: Dividend Income
Net Income
P 100,000
8,000
P 108,000
P 30,000
P 30,000
16. the balance of Investment in Sub Company as of December 31, 20x7 should be:
a. P354,600
C. P350,330
b. P351,960
d. P340,000
*cost model (method) is used
17. the Profit Attributable to Equity Holders of Parent/Controlling Interest in Net Income for 20x7 should be:
a. P122,600
C. P118,570
b. P118,730
d. P118,330
Net Income from own operation:
Par
Sub
ADD:
Realized Profit in Beg-inventory - Parent
Realized Profit in Beg-inventory - Parent (3,000 x 35%)
LESS:
Unrealized Profit -Par
Unrealized Profit-Sub (60,000 x 30) x 25/125
Amortization of allocated excess (20,000 x 20%)/10yrs
Consolidated Net Income
Less: NCI (26,600 * 20%)
Controlling Interest Net Income
100,000
30,000
130,000
1,000
1,050
2,050
2,400
3,600
(6,000)
(2,000)
124,050
(5,320)
118, 730
18. the parent's portion of consolidated (for controlling interest / equity holders of parent) retained earnings on
December 31, 20x7:
a. P700,000
b. P752,000
C. P753,600
d. P809,680
RE - Parent 12/31/x7 @ cost (700k+108k-60K)
Less: URP-Sub
Adjusted RE-Parent @ cost
Retroactive Adjustment - Equity method
RE-Sub 1/1/x5
Less: RE -Sub 12/31/x7 (300k+20k-10k)
Increase in RE since acquisition
Accumulated Amortization (2 000 x 3yrs)
URP-Parent
Total (x 80%)
Consolidated RE
748,000
(3,600)
744,400
230,000
(320,000)
90,000
(6,000)
(2,400)
81,600
19. the consolidated retained earnings on December 31, 20x7:
a. P700,000
b. P752,000
C. P753,600
d. P809,680
65,280
809,680
20. the stockholders' equity of subsidiary on December 31, 20x7 should be:
a. P450,000
b. P481,600
c. P470,000
d. P484,000
Common Stock-Sub 12/31/x7
RE -Sub
RE 1/1/x7
300,000
Net income
30,000
Dividends
(10,000
SHE - Sub 12/31/x7
150,000
320,000
470,000
MANAGEMENT ADVISORY SERVICES - CVP
21 If all goes according to plan except that unit variable cost falls,
a. total contribution margin will be lower than expected.
b. the contribution margin percentage will be lower than expected.
c. profit will be higher than expected.
d. per-unit contribution margin will be lower than expected.
22. Which of the following decreases per-unit contribution margin the most of company that is currently earning
a profit?
a. 10% decrease in selling price.
b. 10% increase in variable cost per unit.
c. 10% increase in fixed costs.
d. 10% increase in fixed cost per unit.
23. If variable cost as a percentage of sales increases, the
A. contribution margin percentage increases.
B. selling price increases.
C. break-even point in pesos increases.
D. fixed costs decrease.
24. Introducing income taxes into cost-volume-profit analysis
A. raises the break-even point.
B. lowers the break-even point.
C. increases unit sales needed to earn a particular target profit.
D. decreases the contribution margin percentage.
25. If a company is earning a profit, its fixed costs
A. are less than total contribution margin.
B. are equal to total contribution margin.
C. are greater than total variable costs.
D. can be greater than or less than total contribution margin.
Items 26-30:
Due to erratic sales of its sole product - a high-capacity battery for laptop computers, Salcedo Company has
been experiencing difficulty for some time. The company's income statement for the most recent month is
given below:
Sales (19,500 units @ P300)
P5,850,000
Less: variable expenses
4,095,000
Contribution margin
1,755,000
Less: fixed expenses
1,800,000
Net loss
P (45,000
26.The break even in peso sales for Salcedo Company is:
a. P6,000,000
b.
c.
d.
P5,852,756
P2,571,429
P7,500,000
27. The president believes that a P160,000 increase in the monthly advertisinghadeet, combined with an
intensified effort by the sales staff, will result in anP800.000 increase in monthly sales. If the president is right, what
will be the effect on the company's monthly net income or loss?
a. P120,000 increase
b. P120,000 decrease
c. P 80,000 increase
d. P 80,000 decrease
28. Refer to the original data. The sales manager is convinced that a 10% reduction inthe selling price,
combined with an increase of P600,000 in the monthly advertising budget, will cause unit sales to double. What
will the new profit or loss if these changes are adopted?
a. P 60,000
b. P 45,000
c. P(60,000)
d. P(45,000)
29. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop
computer battery would help sales. The new package would increase packaging costs by P7.50 per unit.
Assuming no other changes,how many units would have to be sold each month to earn a profit of P97,500?
a. 21,818
b. 25,450
c. 23,000
d. 28,000
30. Refer to the original data. By automating certain operations, the company could reduce variable costs by
P30 per unit. However, fixed costs would increase byP720,000 each month.
How would the breakeven point in units change if the company automated the operations?
a. 1,000 units increase
b. 3,000 units increase
c. 1,000 units decrease
d. 3,000 units decrease
AUDITING
31. Which of the following most likely would give the most assurance concerning the valuation and allocation
assertions of accounts receivable?
A. Vouching amounts in the subsidiary ledger to details on shipping documents.
B. Comparing receivable turnover ratios with industry statistics for reasonableness.
C. Inquiring about receivables pledged under loan agreements.
D. Assessing the allowance for doubtful accounts for reasonableness.
32. An auditor's purpose in reviewing credit ratings of customers with delinquent accounts receivable most likely
is to obtain evidence concerning management's assertion about
A. Completeness
B. Existence
C. Rights and obligations
D. Valuation and allocation
33. Which of the following might be detected by an auditor's review of the client's sales cut-off?
A.Excessive goods returned for credit
B.Unrecorded sales discount
C.Lapping of year-ends accounts receivable
D.Inflated sales for the year
34. All of the following are examples of substantive tests to verify valuation of net accounts receivable except
the:
A.Recomputation if allowance for bad debts
B.Inspection of accounts for current versus non-current status in the statement of financial position
C.Inspection of aging schedule and credit records of past due accounts
D.Comparison of the allowance for bad debts with past records
35. An auditor who has confirmed accounts receivable may discover that the sales journal was held open past
year-end if
A. Positive confirmations sent to debtor are not returned
B. Negative confirmations sent to debtors are not returned
C. Most of the returned negative confirmations indicate that the debtor owes larger balance that the amount
being confirmed
D. Most of the returned positve confirmations indicate that the debtor owes a smaller balance that the
amount being confirmed.
Items 36-40:
You are auditing the Accounts receivable and the related Allowance for doubtful accounts of IKEBANA
COMPANY.
The following data are available:
General Ledger
Accounts Receivables
2023
Dec. 31
424,000
Allowance for Doubtful Account
2023
2023
July 31 GJ-Write off
8,000 Jan 1 Balance
Dec. 31 GJ-Provisions
10,000
24,000
Summary of Aging Schedule
The summary of the subsidiary ledger balances as of December 31, 2023, is shown below:
Debit Balances:
Under one month
P 180,000
One to six months
184,000
Over six months
76,000
P440,000
Credit Balances:
AA Co.
P 4,000 -OK; additional biiling in Jan. 2024
BB Co.
7,000 -Should have been credited to DD Co*
CC Co.
9,000 - Advance on Sales contract
*Account is in “one to six months” classification
The customers' ledger is not in agreement with the accounts receivable control. The client instructs the auditor
to adjust the control to the subsidiary ledger after corrections are made.
Allowance for Doubtful Accounts Requirements
It is agreed that 1 percent is adequate for accounts under one month. Accounts one to six months are
expected to require an allowance of 2 percent. Accounts over six months are analyzed as follows:
Definitely bad
P 24,000
Doubtful (estimated to be 50% collectible)
12,000
Apparently good, but slow (estimated to be 90% collectible)
40,000
Total
P 76,000
36. The adjusted balance of Ikebana's "1 to 6 months" accounts receivable is:
a.
b.
c.
d.
P164,000
P171,000
P177,000
P184,000
37. The adjusted balance of Ikebana's "over 6 months" accounts receivable is
a. P76,000
b. P52,000
c. P69,000
d. P45,000
38. The adjusted accounts receivable balance on December 31, 2023, should be:
a. P404,000
b. P420,000
c. P409,000
d. P45,000
39. The required balance of the allowance for doubtful accounts on December 31, 2023, is:
a. 47,340
b. 15,340
c. 15,480
d. 21,340
40. The entry to adjust the allowance for doubtful accounts is
a. Doubtful Account Expense …………..13,340
Allowance for Doubtful Account ………….13,340
b. Allowance for Doubtful Account……2,000
Doubtful Account Expense …………………2,000
c. Doubtful Account Expense …………..17,340
Allowance for Doubtful Account ………….17,340
d. Doubtful Account Expense …………..15,340
Allowance for Doubtful Account ………….15,340
Solution:
REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS - INTELECTUAL PROPERTY LAW
41. The function of trademark is:
a. To point out distinctly the origin or ownership of the goods to which it is affixed.
b. To secure to him, who has been instrumental in bringing into the market a superior article of merchandise,
the fruit of his industry and skill.
c. To protect the manufacturer against substitution and sale of an inferior and different article as his product.
d. All of the above
42. It is an intangible incorporeal right to certain literary, scholarly, scientific and artistic productions granted by
statute to the author or creator of the work, and giving him, his heirs and assigns economic rights.
a. Copyright
b. Trademark
c. Patent
d. Unfair Competition
43. To establish trademark infringement, the following elements must be shown:
I.
The validity of plaintiff's mark.
II. The plaintiff's ownership of the mark.
III. The use of the mark or its colorable imitation by the alleged infringer results in "likelihood of confusion."
a.
b.
c.
d.
Only I is true
Only II is true
Only III is true
I, II, and III are true
44. It is committed by any person who shall use original literary or artistic works, or derivative works without the
copyright owner's consent in such a manner as to violate the specified economic rights.
A. Copyright infringement
B. Trademark infringement
C. Patent infringement
D. Unfair Competition infringement
45. It provides that an infringement also takes place when a device appropriates a prior invention by
incorporating its innovative concept and, although with some modification and change, performs substantially
the same function in substantially the same way to achieve substantially the same result.
A. Doctrine of Appropriation
B. Doctrine of Incorporation
C. Doctrine of Equivalents
D. Doctrine of Innovation
46. I. In order to infringe a patent, a machine or device must perform the same function, or accomplish the same
result by identical or substantially identical means and the principle or mode of operation must be substantially
the same.
II. Trademark is a creation of use and, therefore, actual use is a prerequisite to exclusive ownership; registration is
only an administrative confirmation of the existence of the right of ownership of the mark, but does not perfect
such right; actual use thereof is the perfecting ingredients.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
47. Similarity in size, form, and color, while relevant is not conclusive. If the competing trademark contains the
main or essential features of another, and confusion takes is likely to result, infringement takes place.
A. Holistic Test
B. Dominancy Test
C. Visible Test
D. Vita Test
48. Z commissioned X and Y to paint a wall at the main lobby of his building Z provided for the materials. After
the completion of the project, Z fully paid the artists' fee of X and Y. Who will own the copyright in the aforesaid
painting?
A. X and Z owns the copyright
B. Z owns the copyright
C. X, Y and Z owns the copyright
D. None of the above
49. In determining the likelihood of confusion, the following must be considered
A. The resemblance between the trademarks
B. The similarity of the goods which the trademarks are attached
C. The likely effect on the purchaser
D. All of the above
50. I. The first sale of an authorized copy of the work exhausts the author's right to control distribution of copies.
II. Moral rights are assignable or subject to license.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
TAXATION
51. A municipality may levy an annual ad-valorem tax on real property such as land, building, machinery, and
other improvement only if
a. the real property is within the Metropolitan Manila Area.
b. the real property is located in the municipality.
c. the DILG authorizes it to do so.
d. the power is delegated to it by the province,
52. Real property owned by the national government is exempt from real property taxation unless the national
government.
a. transfers it for the use of a local government unit.
b. leases the real property to a business establishment.
c. gratuitously allows its use for educational purposes by a school established for profit.
d. sells the property to a government-owned non-profit corporation.
53. Where the real property tax assessment is erroneous, the remedy of the property owner is:
a. To file a claim for refund in the Court of Tax Appeals if he has paid the tax, within thirty (30) days from date
of payment.
b. To file an appeal with the Provincial Board of Assessment Appeals within thirty (30) days from receipt of the
assessment.
c. To file an appeal with the Provincial Board of Assessment Appeals within sixty (60) days
d. from receipt of the assessment; d. To file an appeal with the Provincial Board of Assessment Appeals within
sixty (60) days from receipt of the assessment and playing the assessed tax under protest
54. Which statement on prescriptive periods is true?
a. The prescriptive periods to assess taxes in the National Internal Revenue Code and the Local Government
Code are the same;
b. Local taxes shall be assessed within five (5) years from the date they became due;
c. Action for the collection of local taxes may be instituted after the expiration of the period to assess and to
collect the tax,
d. Local taxes may be assessed within ten (10) years from discovery of the underpayment of tax which does
not constitute fraud.
55. The prescriptive period for local taxes, in case there is no finding of fraud is:
a.
b.
c.
d.
Two (2) years
Three (3) years.
Five (5) years
Seven (7) years
A domestic corporation reported the following information for prior year;
Dividend received from another domestic corporation ………..P1,000.000
Royalty income from foreign country ………………………………2,000,000
Business income in the Philippines …………………………………..7,000,000
56. The tax base for the P2/P5,000 earnings as additional community tax is
a. 10,000,000
b. 9,000,000
c. 8,000,000
d. 7,000,000
57. The maximum additional community tax that could be collected from domestic corporation per year is
a. 5,005
b. 5,500
c. 10,000
d. 10,500
58. C.P. A. is practicing both his accountancy profession as accredited by BOA and his lawyering profession as
Barrister passer. He is maintaining his offices in two municipalities. In both municipality ordinances, the
Professional Tax Receipts is issued at P275 for CPAs and for Lawyers. For the year, how much C.P. A should be
paying as his PTRs for the practice of his professions?
a. 275
b. 550
c. 1,000
d. 1,500
59. The tax declaration indicated the fair value of land at P1,000,000. If it is located in Metro Manila, how much
is the maximum real property tax if it is used for industrial purpose?
a. 2,000
b. 4,000
c. 8,000
d. 10,000
60. The tax declaration indicated the fair value of land at P1,000,000. If it is located in the province, how much is
the maximum real property tax if it is used as timberland?
a. 2,000
b. 4,000
c. 5,000
d. 8,000
END