Intacc 2 - Sample Question PDF

Preview

Summary

Goods worth P12,000 was shipped on account (2/10, n/30) to MIKASA Company on January 10, 2006 from EREN Company. The term of the shipment was FOB shipping point. EREN Company paid freight of P950. On January 12, 2006, P2,500 worth of merchandise was received by EREN Co. from MIKASA Co. due to wrong ...

Description

1. Goods worth P12,000 was shipped on account (2/10, n/30) to MIKASA Company on January 10, 2006 from EREN Company. The term of the shipment was FOB shipping point. EREN Company paid freight of P950. On January 12, 2006, P2,500 worth of merchandise was received by EREN Co. from MIKASA Co. due to wrong specification. MIKASA Company made a partial payment of P5,000. How much is the subsequent collection of EREN Company from MIKASA Company assuming MIKASA Company paid within the discount period? a. 5,450 b. 5,260 c. 4,500 d. 4,410 2. ARMIN Inc. incurred the following costs during the current year: Materials 350,000 Irrecoverable purchase taxes 30,000 Abnormal amounts of wasted materials 30,000 Storage costs of finished goods 90,000 Delivery to customers 20,000 Labor 120,000 Administrative overheads unrelated to production 15,000 Variable production overhead 50,000 Factory administrative costs 40,000 Cartage in 8,000 Cartage out 12,000 How much should the inventory be measured? a. 625,000 b. 610,000 c. 598,000 d. 578,000 3. On March 1, 2021, JEAN Corp. purchased a tract of land for Php 18M. Goods incurred additional cost of Php 4.5M during the remainder of the year 2021 in preparing the land for sale. The land was subdivided into residential lots as follows: Lot Class Number of Lots Sales Price per Lot A 100 240,000 B 100 160,000 C 200 100,000 Using the relative sales value method, how much should be allocated to Class A Lot? a. 7,200,000 b. 8,640,000 c. 9,000,000 d. 10,800,000 4. CONNIE Inc. is a seller of bags. CONNIE does not maintain monitoring on the movement of inventories upon every purchase or sale. The following are the details of the activities on one of CONNIE’s signature bags, HUKBAG on the end of the period, December 31: Date Dec. 1 Dec. 2 Dec. 3 Dec. 4 Dec. 5 Dec. 31

Transaction Beg. Balance Purchase Sales Purchases Sales Purchases

Units 6,000 9,000 10,800 14,400 11,400 4,800

Cost Php 20 Php 24 Php 26 Php 27

Using the FIFO inventory system, how much is the ending inventory of HUKBAG on December 31? a. 280,800 b. 294,720 c. 302,400 d. 316,800 5. Refer to #4, but using the weighted average inventory system, how much is the ending inventory of HUKBAG on December 31? a. 280,800 b. 294,720 c. 302,400 d. 316,800 6. SASHA Inc. is a seller of cabinets. The following are the details of the activities on one of SASHA’s cabinets, URUKAN on the end of the period, December 31: Date Dec. 1 Dec. 2 Dec. 3 Dec. 4 Dec. 5 Dec. 31

Transaction Purchase Sales Purchases Sales Sales Purchases

Units 500 300 1,000 600 300 1,000

Cost Php 15 Php 17

Php 20

SASHA maintains stock card catalogs when monitoring movements of its inventories. Using the FIFO inventory system, how much is the purchases of URUKAN on December 31? a. 19,400 b. 44,500 c. 25,100 d. 25,000 7. Refer to #6, how much is the ending inventory of URUKAN on December 31? a. 19,400 b. 44,500 c. 25,100 d. 25,000 8. Refer to #6, but using the weighted average inventory system, how much ending inventory unit cost of URUKAN on December 3? a. 15 b. 16.67 c. 20 d. 19.23 9. Refer to #6, but using the weighted average inventory system, how much is the ending inventory of URUKAN on December 31? 25,000 b. 19,400 c. 19,500 d. 25,200 10. HISTORIA Corp. presented the following information on its work-in process inventories for their financial statements presentation on December 31, 2021: ODM Gear Historical cost 56,640 Selling price 108,800 Estimated cost to complete 14,400 Replacement cost 50,400 Normal profit margin as % of selling price 25%

Thunder Spears 90,000 108,000 20,400 95,400 10%

Following PAS 2 Inventories on subsequent measurement, the Thunder Spears should be valued at? a. 76,800 b. 87,600 c. 90,000 d. 95,400 11. During 2021, ANNIE Corp. signed a noncancelable contract to purchase 1,000 sacks of rice at Php 900 per sack with delivery to be made in 2022. On December 31, 2021, the price of rice had fallen to Php 850 per sack. On May 9, 2022, the company accepts delivery of rice when the price is Php 880 per sack. In the December 31, 2021 statement of comprehensive income, what amount of gain or loss on purchase commitment should be included?

a. 30,000 gain b. 30,000 loss c. 50,000 gain d. 50,000 loss 12. REINER Inc. sells its merchandise at a gross profit of 30%. The following figures are among those pertaining to REINER’s operations for the six months ended June 30, 2021: Sales 200,000 Beginning inventory 50,000 Purchases 130,000 On June 30, 2021, all of REINER’s inventory were destroyed by tsunami. What is the estimated cost of this destroyed inventory? a. 20,000 b. 40,000 c. 70,000 d. 120,000 13. FALCO Corp. uses retail inventory method to approximate the lower of cost or market. The following information pertains to the month of August:

Cost of goods available for sale Net markups (excluded from GAS) Net markdowns (excluded from GAS) Sales Sales discounts Sales allowances

Cost 720,000

Retail 900,000 100,000 40,000 680,000 1,000 3,000

What is the estimated cost of inventory at lower of cost or market at August 31? a. 201,600 b. 210,000 c. 224,000 d. 230,400 14. How should prompt payment discount not taken be dealt with when valuing inventories at the lower of cost and net realizable value (NRV) using the gross method? a. added to cost b. ignored c. deducted in arriving at NRV d. deducted from cost 15. Which of the following methods of measuring the cost of goods sold most closely parallels the actual physical flow of the merchandise? a. LIFO b. FIFO c. Average cost d. Specific Identification

On May 3, 2021, CHEDDAR THE DOG CORP. completed the construction of a building for administrative use at a total cost of Php 14,000,000. The building is estimated to have an estimated residual value of Php 1,000,000 and useful life to 10 years. The company uses cost model in the valuation of the building and uses straight-line method. On December 31, 2023, the company performed impairment test and an impairment loss of Php 480,000 was recognized. On October 31, 2025, the building was reclassified to investment property as the property will be rented out under an operating lease. No change in useful life and

residual value is expected after the change. CHEDDAR THE DOG’s policy on the investment property is to measure it using fair value model. On the same date, the fair value of the asset was determined to be Php 10,050,000. The fair value of the building on December 31, 2025 and 2026 was Php 11,000,000 and Php 11,450,000, respectively. During the first quarter of 2027, the company decided to use the building as their head office and factory site. Therefore, on May 1, 2027, the investment property was reclassified back to P.P.E when the fair value was Php 9,500,000. 16. What is the net amount to be presented in the Statement of Comprehensive Income for the period ended 2021? a. 1,400,000 b. 933,333 c. 1,300,000 d. 866,667 2. What is the net amount to be presented in the Statement of Comprehensive Income for the period ended 2023? a. 1,780,000 b. 480,000 c. 1,300,000 d. NIL 3. What is the net amount to be presented in the Statement of Comprehensive Income for the period ended 2024? a. 1,370,909 b. 1,234,545 c. 1,300,000 d. NIL 4. What is the net amount to be presented in the Statement of Comprehensive Income for the period ended 2025? a. 4,238,788 b. 2,181,212 c. 3,210,000 d. 1,231,212 5. What is the net amount to be presented in the Statement of Comprehensive Income for the period ended 2026? a. 2,095,455 b. 450,000 c. 1,645,455 d. NIL 6. What is the net amount to be presented in the Statement of Comprehensive Income for the period ended 2027? a. 4,272,222 b. 1,950,000 c. 2,322,222 d. NIL

7. Identify the correct statements from the following: I.

Investment property may be valued subsequent to initial recognition using the cost model or the revaluation model.

II.

Depreciable properties measured under the revaluation model are subject to depreciation.

III. Depreciable investment properties measured under the fair value model are not subject to depreciation. IV. The fair value of a property classified as investment property measured under the fair value model is required to be determined more frequently than the fair value of a property measured under the revaluation model. a. I, II, III, IV b. II, III, IV c. III, IV d. III 8. Select the correct statement: a. A leasing company should treat all of its assets used in providing lease services as investment property. b. Investment properties that are to be disposed of without further development are treated as investment property until they are derecognized. c. All investment properties held for capital appreciation will be classified as held for sale in the long run. d. Investment properties being re-developed as investment properties on behalf of third parties are investment properties. 9. Which of the following circumstances demonstrate a change from owner-occupied property to investment property? a. Commencement of development with a view to sale b. End of re-development of the investment property for use as investment property c. Commencement of owner occupation d. End of use of property for administrative purposes to be leased in one or more operating leases. 10. Which of the following statements are true? I.

Investment properties under full PFRS is measured either at cost or fair value model. The entity has a choice. II. Investment properties under PFRS for SMEs is measured at fair if the fair value can be measured reliably without undue cost or effort on an ongoing basis. The fair value model is by circumstance not by choice. The cost model or revaluation is used when the fair value cannot be measured reliably without undue cost or effort. 11. According to PAS 2, the primary issue in accounting for inventories is the determination of ____. I. cost to be recognized as asset in the statement of financial position. II. the amount recognized as expense in the statement of profit or loss and other comprehensive income when the related revenues are recognized. III. obsolete items that need to be written down to net realizable value. IV. the point of sale where ownership is transferred from the seller to the buyer

a. b. c. d.

I and II I, II, and III I, II, and IV I, II, III, and IV

12. PAS 2 Inventories shall not be applied to which of the following? a. minor tools and spare parts b. buildings being sold by a “buy and sell” real estate entity c. obsolete inventory d. assets held for use in the production or supply of goods 13. Inventories of commodity broker-traders are measured at? a. Fair value b. Cost c. Net realizable value d. Fair value less costs to sell 14. Which of the following is correct regarding the recognition of inventories? a. Inventories are recognized only when legal title is obtained is obtained b. Inventories are recognized only when they meet the definition of inventory and they qualify for recognition as assets. c. Inventories include only those that are readily available for sale in the ordinary course of business d. Inventories are recognized only by entities engaged in trading or manufacturing operations.

15. Which of the following is excluded in the scope of PAS 2 on inventories? a. Inventories of a service provider c. Manufacturing supplies b. Construction in progress d. Raw materials

16. Which of the following would not be included in the inventory amount reported on a company’s balance sheet? a. Items shipped out on consignment to another company. b. Items shipped today FOB shipping point, invoice had been mailed to the customer. c. Items in the receiving department of the company; returned by the customer, invoice have been mailed d. Items purchased from a supplier and en route directly to a customer of the company; the term is FOB destination; invoice received but not yet paid. 17. When allocating costs to inventory produced, fixed overhead should be based upon a. The actual use of production facilities b. The normal capacity of production facilities c. The highest production levels in the last three periods. d. The lowest production levels in the last three periods. 18. The use of discount lost account implies that the recorded cost of an inventory is

a. b. c. d.

Invoice price Invoice price plus the purchase discount lost Invoice price less the purchase discount taken Invoice price less purchase discount allowable whether taken or not

19. The specific identification method can be used only a. In income tax returns b. For financial reporting purposes but not in the income tax returns c. When the individual items in inventory are similar in terms of cost, function and sales value d. When the actual acquisition costs of individual units can be determined in the accounting records 20. Which condition would most likely warrant the use of specific identification method? a. Unit price is low b. Inventory turnover is low c. Inventory quantities are large d. Inventory pricing is stable and consistent 21. During a period of steadily rising prices, which of the following methods of measuring the costs of goods sold is likely to result in reporting the highest gross profit? a. FIFO b. LIFO c. Weighted average cost d. Specific identification 22.

When a periodic inventory system is used: a. Two entries must be made when goods are purchased b. Cost of goods sold is a residual amount, rather than an account c. Ending inventory is treated as an expense and beginning inventory is treated as an asset d. Purchases account is not used; all inventory purchase entries are debited to the inventory account

23. In a perpetual inventory system, an inventory flow assumption is used primarily for determining which costs to use in a. Recording sales revenue b. Recording the cost of goods sold c. Recording the purchases of inventory d. Forecasts of future operating results, that will be used as basis for production budget 24. The gross margin method of estimating ending inventory may be used for all the following, except? a. Internal as well as external interim reports b. Internal as well external year-end reports c. Estimate of inventory destroyed by fire or other casualty d. Rough test of validity of an inventory cost determined under either periodic or perpetual system 25.

A major advantage of the retail inventory method is that it

a. b. c. d.

Permits companies which use it to avoid taking an annual physical inventory Gives a more accurate statement of inventory cost than other methods Hides costs from customers and employees Provides a method for inventory control and facilitates determination of periodic inventory

26.

Under PAS 16, property, plant and equipment include all the following, except a. Property held for administrative purposes b. Property used for extract of minerals, oil or natural gas c. Property used in production or supply of goods and services d. Biological assets related to agricultural activity and mineral rights

27.

According to PAS 16 Property, plant and equipment, which of the following items should be capitalized into the cost of property, plant and equipment? I. Cost of excess materials resulting from a purchasing error II. Cost of testing whether the asset works correctly III. Initial operating losses whilst demand builds up IV. Cost of preparing the site for installation a. b. c. d.

I, II I, II, III II, IV I, II, III, IV

28.

Plant assets purchased on long-term credit contracts should be accounted for at a. The total value of the future payments. b. The future amount of the future payments. c. The present value of the future payments. d. None of the above.

29.

An improvement made to an old machine increased its fair market value and its production capacity by 25% without extending the machine’s useful life. The cost of the improvement preferably should be? a. Expensed b. Capitalized c. Recorded as a loss d. Recorded as a liability

30.

Technical or commercial obsolescence arises from a. Expected usage of the asset b. Expected physical wear and tear c. Expiry date of related lease of the asset d. Improvement in production or change in market demand for output of the asset

31.

Any renovating or remodeling costs incurred to put a building purchased in a condition suitable for its intended use is a: Capital Expenditure

Revenue Expenditure

a. b. c. d. 32.

Yes No Yes No

No Yes Yes No

In an exchange transaction with commercial substance, JUJUTSU Co. received equipment with a fair value equal to the carrying amount of other assets given up. JUJUTSU also contributed cash. As a result of the exchange, JUJUTSU recognized: a. b. c. d.

A loss equal to the cash given up. A loss determined by the proportion of cash paid to the total transaction value. A gain determined by the proportion of cash paid to the total transaction value. Neither a gain nor loss.

33.

A principal objection to the straight-line method of depreciation is that it a. Provides for the declining productivity of an aging asset. b. Ignores variations in the rate of use of asset. c. Tends to result in a constant rate of return on a diminishing investment base. d. Gives smaller periodic write-off than decreasing charge methods.

34.

Government grant shall be recognized when there is reasonable assurance that a. The entity will comply with the conditions of the grant b. The grant will be received c. The entity will comply with the conditions of the grant and the grant will be received d. The grant must have been received.

35.

Construction of a qualifying asset is started on April 1, 2021 and finished on December 1, 2021. The fraction used to multiply an expenditure made on April 1, 2021 to find weighted-average accumulated expenditures is a. 8/8 b. 8/12 c. 9/12 d. 11/12

36.

Under PAS 23, capitalization of borrowing costs is suspended a. when there is temporary delay that is a necessary part of the process of getting an asset ready for its intended use b. during a period where substantial technical and administrative work is being performed c. during extended periods of suspension of active development of a qualifying asset d. when the construction of the asset is completed

37.

Changes in residual value or estimated quantity of mineral reserves are a. changes in accounting estimates accounted for prospectively. b. changes in accounting estimates accounted for retrospectively. c. changes in accounting policy accounted for prospectively. d. changes in accounting policy accounted for retrospectively.

38.

Which of the following is not a disclosure required by PFRS 6? a. Information about commercial reserve quantities. b. Accounting policies for exploration and evaluation expenditures, including the recognition of exploration and evaluation assets.

c. d.

39.

The amounts of assets, liabilities, income and expense, and operating and investing cash flows arising from the exploration for and evaluation of mineral resources. Information that identifies and explains the amounts recognized in the financial statements arising from the exploration for and evaluation of mineral resources.

In case of downward revaluation of an asset, which is revalued for the first time, the account to be debited is a. Property, plant and equipment b. Revaluation reserve c. Profit or loss account d. General reserve

40.

Which of the following is not an indication of possible asset impairment? a. Significant decrease or decline in the market value of the asset b. Evidence of obsolescence or physical damage of an asset c. Evidence that the economic performance of an asset will be worse than expected d. The use of acc...