Final Round

Theory of Accounts

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

b. I, II or III

c. II and III

d. I and II

Business Law

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

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

Auditing Theory

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

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

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

D. Withdraw from the engagement and consider whether there is any obligation, either contractual
or otherwise, to report to other parties, such as the board of directors or shareholders, the
circumstances necessitating the withdrawal (X)
4. What are substances that control the rates of chemical reactions?

5. What is the literal Greek translation of Sarcophagus?

Practical Accounting 2

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

follows:

FF GG

Cash P 15,000 P 37,500

Accounts receivable 540,000 225,000

Merchandise inventory -0- 202,500

Machinery and equipment 150,000 270,000

Total P705,000 P735,000

Accounts payable P135,000 P240,000

FF, capital 570,000 -0-

GG, capital -0- 495,000

Total P705,000 P735,000

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

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

GG. The partnership agreement provides for a profit and loss ratio and capital interest of 60% to FF and

40% to GG. How much cash FF must invest to bring the partner’s capital balances proportionate to their

profit and loss ratio?

MAS

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

Quality training 10,000 15,000

Materials inspection 20,000 35,000

Scrap 200,000 180,000

Rework 250,000 200,000

Product inspection 40,000 60,000

Product warranty 300,000 250,000

Basilica’s internal failure cost must have increased by around

AP

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

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

How much should be recognized as depreciation expense for the luxury motor vehicle?
Practical Accounting 1

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

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

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

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

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

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

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

Business Law

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

b. Alternative d. Speculative
Practical Accounting 2

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

16. What is the full name of Ms. World 2013 (include all names)?

MAS

17. Rochelle Block Co. produces cement blocks used in the foundation for buildings. The process takes
place in two sequential departments. The following data pertain to the month of October.
Pouring Dept. Finishing Dept.
Direct materials entered into production P 70,000 P 25,000
Direct labor 340,000 280,000
Applied manufacturing overhead 680,000 420,000
Cost of goods completed and transferred out 900,000 ± 400,000 +
± cost of goods transferred to the Finishing Department.
+ cost of goods transferred to finished goods.
The amount of work in process inventory of Rochelle Block at the end of October must be:

18. The process of identifying, measuring and relating revenue and expenses of an enterprise for an
accounting period is known as

19. “The best and most beautiful things in the world cannot be seen or even touched- they must be felt with
the heart.” Is the quote of which famous author?
Practical Accounting 1

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

Practical Accounting 1
21. On January 1, 2011 Ply Company purchased a 30% interest in Wood Company for P300,000 which gave
Ply Company significant influence over Wood Company. The excess of the acquisition cost over the net assets
acquired was attributed to goodwill in the amount of P30,000 since the carrying amounts of the identifiable
assets and liabilities of Wood Company were equal to their fair values.

In 2011 Wood Company reported income of P400,000 and declared dividends of P120,000. At December 31,
2011, the fair value of the investment in Wood Company was P305,000 while the estimated cost to sell the
holdings was P15,000.

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

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

MAS

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

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

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

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

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

If N’s policy is to finance all fixed assets and half the permanent current assets with long-term financing
and rest with short-term financing, what is the level of long-term financing?
24. Which country gave the Statue of Liberty to the USA as a gift?

Taxation

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

Interest from Philippine treasury certificates P4,000

Refund pertaining to 2010 income tax 500

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