1st Year Questionnaires
1st Year Questionnaires
ELIMINATION ROUND
LEVEL II
1. Accounting has been given various definitions, which of the following is not one of those definitions?
a. Accounting is a service activity. Its function is to provide quantitative information, primarily financial in
nature, about economic entities that is intended to be useful in making economic decisions.
b. Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of
money, transactions and events which are, in part of at least, of a financial character and interpreting the
results thereof.
c. Accounting is a systematic process of objectively obtaining and evaluating evidence regarding assertions
about economic actions and events to ascertain the degree of correspondence between these assertions
and established criteria and communicating the results to interested users.
d. Accounting is the process of identifying, measuring, and communicating economic information to permit
informed judgment and decisions by users of information.
2. Which of the following statements is incorrect regarding the basic accounting concepts?
a. One of ABC Co.’s delivery trucks was involved in an accident. Although no lawsuits have yet been filed
against ABC, ABC recognized a liability for the probable loss on the event. This is an application of the
prudence or conservatism concept.
b. Under the consistency concept, the financial statements should be prepared on the basis of accounting
principles which are followed consistently.
c. Under the entity theory, the business is viewed as a separate entity. Therefore, the personal transactions
of the business owners are not recorded in the business’ accounting records.
d. The time period concept means that financial statements are prepared only at the end of the life of a
business.
4. This concept defines the area of interest of the accountant. It determines which transactions are recognized
in the books of accounts and which are not.
a. Articulation c. Separate entity
b. Matching d. Full disclosure
6. The process of identifying, measuring, analyzing, and communicating financial information needed by
management to plan, evaluate, and control an organization’s operations is called
a. financial accounting. c. managerial accounting.
b. tax accounting. d. auditing.
7. It is the official accounting standard setting body in the Philippines. It is composed of a chairperson and 14
members.
a. Financial Reporting Standards Committee (FRSC)
b. Financial Reporting Standards Council (FRSC)
c. Accounting Standards Committee (ASC)
d. Accounting Standards Council (ASC)
8. You are the accountant of ABC Co. During the period, your company purchased staplers worth ₱1,500.
Although the staplers have an estimated useful life of 10 years, you have charged their cost as expense. Which
of the following is most likely to be true?
a. You are applying the concept of matching.
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b. You are applying the concepts of materiality and cost-benefit consideration.
c. You are applying the concept of verifiability.
d. You are just lazy to compute for the periodic depreciation.
10. The primary users of financial statements under the Conceptual Framework include
I. Existing and potential investors
II. Employees
III. Lenders and other creditors
IV. Suppliers and other trade creditors
V. Customers
VI. Governments and their agencies
VII. Public
VIII. Professional accountants, including auditors
11. The Conceptual Framework broadly classifies the qualitative characteristics into
a. primary and secondary qualitative characteristics.
b. major and minor qualitative characteristics.
c. fundamental and enhancing qualitative characteristics.
d. cold and hot qualitative characteristics.
12. Identify the qualitative characteristics that enhance the usefulness of financial information.
I. Relevance
II. Reliability
III. Faithful representation
IV. Comparability
V. Verifiability
VI. Timeliness
VII. Understandability
15. Which of the following is incorrect regarding the use of the term ‘reporting entity’ under the Conceptual
Framework?
a. A reporting entity one that is required, or chooses, to prepare financial statements.
b. A reporting entity must be a legal entity.
c. A reporting entity can be a parent and its subsidiaries viewed as a single entity.
d. All of these are correct.
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16. The cost of inventory is recognized as expense
a. immediately.
b. using the matching concept.
c. by systematic allocation.
d. any of these as a matter of accounting policy choice
19. Which of the following statements is correct when an entity departs from a provision of a PFRS?
a. The entity’s financial statements would be grossly incorrect; therefore, PAS 1 does not allow such a
departure.
b. PAS 1 permits such a departure if the relevant regulatory framework requires, or otherwise does not
prohibit, such a departure.
c. PAS 1 requires certain disclosures when an entity departs from a provision of a PFRS.
d. b and c
20. Which of the following statements is correct regarding the classification of financial liabilities as current or
noncurrent in accordance with PAS 1?
a. Currently maturing obligations are presented as current liabilities even if their original term is longer than
one year and even if a refinancing agreement is completed after the end of the reporting period but before
the financial statements are authorized for issue.
b. Currently maturing obligations are presented as noncurrent liabilities only if their original term is longer
than one year.
c. Currently maturing obligations are presented as noncurrent liabilities only if a refinancing agreement is
completed after the end of the reporting period but before the financial statements are authorized for issue.
d. Currently maturing obligations are presented as noncurrent liabilities if a refinancing agreement is
completed after the financial statements are authorized for issue.
21. According to PAS 1, the judgments and estimates embodied in the financial statements, for example,
materiality judgments, assessments of uncertainty and risk, and the like, are the responsibility of the entity’s
a. management. c. auditor.
b. accountant. d. janitor.
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24. Entity A buys and sells artifacts. Each artifact is unique and not ordinarily interchangeable. According to PAS
2, the cost formula that Entity A should use is
a. Specific identification. c. FIFO.
b. Weighted Average. d. Any of these.
26. Which of the following is presented in the activities section of the statement of cash flows?
a. Purchase of a treasury bill three months before its maturity date.
b. Dividends paid this year although declared in a prior year.
c. Acquisition of equipment through issuance of note payable.
d. Bank overdrafts that can be offset.
27. In the statement of cash flows of a non-financial institution, interest income received is presented under
a. operating activities. c. investing activities.
b. financing activities. d. a or c
28. If the price of crackers goes up when the price of cheese goes down, crackers and cheese are
a. inferior goods. c. both substitutes and complements.
b. substitutes. d. Complements
29. Select the group that best represents the basic factors of production.
a. land, labor, capital, entrepreneurship
b. land, labor, money, management skills
c. land, natural resources, labor, capital
d. land, labor, capital, technology
32. Mallory decides to spend 3 hours working overtime rather than watching a video with her friends. She earns
P8 an hour. Her opportunity cost of working is
a. the P24 she earns working.
b. the P24 minus the enjoyment she would have received from watching the video.
c. the enjoyment she would have received had she watched the video.
d. nothing, since she would have received less than P24 of enjoyment from the video.
33. A company using the periodic inventory system has the following account balances: Merchandise Inventory at
the beginning of the year, P4,000; Transportation-In, P450; Purchases, P12,000; Purchases Returns and
Allowances, P2,300; Purchases Discounts, P220. The cost of merchandise purchased is equal to
a. P13,930 c. P9,489
b. P9,930 d. P14520
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34. The primary difference between a periodic and perpetual inventory system is that a
a. periodic system determines the inventory on hand only at the end of the accounting period
b. periodic system keeps a record showing the inventory on hand at all times
c. periodic system provides an easy means to determine inventory shrinkage
d. periodic system records the cost of the sale on the date the sale is made
35. A sales invoice included the following information: merchandise price, P4,000; transportation, P300; terms
1/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned of P600 is granted prior to
payment, that the transportation is prepaid by the seller, and that the invoice is paid within the discount period,
what is the amount of cash received by the seller?
a. P3,366 c. P3,666
b. P3,400 d. P3,950
36. The JPB partnership reported net income of P160,000 for the year ended December 31, 20x4. According to
the partnership agreement, partnership profits and losses are to be distributed as follows:
J P B
37. DO is admitted into the partnership of RE and MI by investing cash equivalent to ¼ of their capital. Which of
the following is true after the admission of DO?
a. Assets of the partnership will increase
b. Total partners' equity remain the same
c. RE and MI capital decreased by ¼
d. Assets of the partnership will remain the same
38. Partner Ae first contributed P50,000 of capital into existing partnership on March 1, 2016. On June 1, 2016,
said partner contributed another P20,000. On September 1, 2016, he withdrew P15,000 from the partnership.
Withdrawal in excess of P10,000 are charged to partner's capital accounts. What is the annual weighted
average capital balance of Partner Ae?
a. 32,500 c. 60,000
b. 51,667 d. Answer not given
39. If a partner's capital balance is credited for an amount greater than or less than the fair value of his net
contribution, the excess or deficiency is called a
a. Bonus c. Discount
b. Goodwill d. Premium
Sales P 700,000
Cost of goods sold 400,000
Operating expenses 100,000
Salary allocations to partners 130,000
Interest paid to banks 20,000
Partners' drawings 80,000
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a. 200,000 c. 50,000
b. 180,000 d. Answer not given
42. He refers to a partner who contributed not only money and property but also industry to the newly formed
partnership.
a. Industrial partner c. Capitalist-industrial partner
b. Nominal partner d. Capitalist partner
44. It is a source of a civil obligation that refers to a juridical relation which arises from certain lawful, voluntary and
unilateral act, to the end that no one may be unjustly enriched or benefited at the expense of another.
a. Quasi-delict c. Contract
b. Quasi-contract d. Delict
45. In an obligation to deliver a determinate thing, what degree of diligence shall be exercised by the obligor or
debtor in the preservation of the determinate thing in the absence of applicable legal provision and valid
agreement of the paries?
a. Extraordinary diligence c. Absolute diligence
b. Diligence of a good father of a family d. Utmost diligence and care
46. It is an obligation where the debtor is alternatively bound by different prestations and it is extinguished by the
performance of any of them.
a. Alternative obligation c. Conjunctive obligation
b. Facultative obligation d. Indivisible obligation
48. At the end of 2019, Tayum Company made four adjusting entries for the following items:
1. Depreciation expense, P25,000.
2. Expired insurance, P2,200 (originally recorded as prepaid insurance).
3. Interest payable, P6,000.
4. Rental revenue receivable, P10,000.
In the normal situation, to facilitate subsequent entries, the adjusting entry or entries that may be reversed is
(are)
a. Entry No. 3. c. Entries No. 3 and No. 4.
b. Entry No. 4. d. Entries No. 2, No. 3, and No. 4.
50. Entity A's inventories on December 31, 20x1 have a cost of ?100,000 and a net realizable value of ?80,000.
Accordingly, Entity A recognized a write-down of inventories of ?20,000. Shortly after December 31, 20x1, but
before the financial statements were authorized for issue, the inventories were sold for a net sale proceeds of
?70,000. The correct amount of inventory write-down to be reported in Entity A's December 31, 20x1 financial
statements is
a. 20,000 c. 30,000
b. 0 d. any of these
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