FAR=AFAR Cup

Multiple Choice

What is the capital of the Philippines?

• Baguio

• Boracay

• Davao

• Manila

Multiple Choice

Cash equivalents are

• Short-term and highly liquid investments that are readily convertible into cash

• Short-term and highly liquid investments that are readily convertible into cash with remaining maturity of three months

• Short-term and highly liquid investments that are readily convertible into cash and acquired three months before maturity

• Short-term and highly liquid marketable equity securities

Multiple Choice

Which of the following statements concerning interest-bearing notes receivable is generally a false statement

• Amortization of the premium causes the carrying amount of the notes receivable to decrease over the life of the note.

• The periodic amortization of discount or premium is the difference of nominal interest recorded and effective interest recorded over the life of the note.

• The unamortized discount on notes receivable should be added to the outstanding principal amount of notes receivable to arrive at the carrying value of notes receivable.

• Amortization of the discount causes the carrying amount of the notes receivable to increase over the life of the note.

Multiple Choice

When a new partner is admitted into a partnership and the capital of the old partners decreases, which of the following explains the reason for the decrease?

I. Undervalued liabilities were written up to their fair values.

II. Undervalued assets were written up to their fair values.

• I only

• II only

• Both I and II

• Neither I nor II

Multiple Choice

Which of the following statements is true with regard to a withdrawing partner?

• A bonus must be paid to the retiring partner

• A bonus may be paid to the retiring partner

• A bonus must be paid to the retiring partner or to the remaining partners

• Recognizing a bonus is not appropriate when a partner retires

Multiple Choice

Which of the following statements define the term “net realizable value”?

• The estimated selling price in the ordinary course of business plus the estimated costs of completion less the estimated cost necessary to make the sale

• The estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale

• The estimated cost of completion less selling price in the ordinary course of business

• The estimated costs necessary to make the sale plus sleeping price in the ordinary course of business less the estimated cost of completion

Multiple Choice

When property other than cash is invested in a partnership, at what amount should noncash property be credited to the contributing partner’s capital account?

• Fair value at the date of contribution

• Assessed valuation of property

• Lower of cost or net realizable value

• Agreed valuation of the partners

Multiple Choice

Which of the following is not a cash item?

I. Demand deposit

II. Customer post-dated checks

III. Time deposit

• I and II

• II and III

• I and III

• I, II and III

Multiple Choice

Non-controlling interest in consolidated income is never affected by

• upstream sales

• downstream sales

• Non-controlling interest is affected by all sale

• None of the above

Multiple Choice

The venture was terminated on December 31, 2018, and unsold merchandise costing P10,500 was taken over by Tan. Reyes made cash settlement with Silva and Tan.

In the final settlement, how much did Tan receive?

• P31,500

• P27,000

• P21,000

• P10,500

Multiple Choice

Sales from one subsidiary to another are called

• downstream sales

• upstream sales

• inter subsidiary sales

• horizontal sales

Multiple Choice

How should the cost of issuing debt in an acquisition be recognized in business combination?

• Expensed

• Amortized over the term of the debt

• Deducted from the value of the debt

• Deducted from shareholders' equity

Multiple Choice

Jenny Co Acquired 80 per cent of the equity share capital of Smith Co on 1 October 20x3. The consideration given was P2,000,000 in cash and 400,000 equity shares of Jenny Co. On 1 October 20x3 the market value of each Jenny Co’s shares was P3 and the fair value of Smith Co’s net tangible assets was P2,000,000. The non- controlling interest was measured at the proportionate share of the acquirer’s net assets. Due to poor trading conditions the goodwill arising on the acquisition of Smith Co, goodwill was determined to be impaired by 25 per cent by the reporting date of 31 March 20x4.

What is the amount of goodwill reported in Jenny Co’s consolidated accounts at 31 March 20x4?

• nil

• P300,000

• P900,000

• P1,200,000

Multiple Choice

MM is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus bonus of 10% of net income after salaries and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P100,000. What amount of income would be necessary so that MM would consider the choices to be equal?

• P165,000

• P290,000

• P265,000

• P305,000

Multiple Choice

In a Statement of Financial Affairs, a company's assets should be valued at

• Historical cost

• Net realizable value, if lower than historical cost

• Replacement cost

• Net realizable value, whether higher or lower than historical cost

Multiple Choice

Which of the following statements is true?

• A bond purchased at a discount will pay more cash interest per period than interest revenue is recognized on the accrual basis.

• The market price of a bond tends to fluctuate directly, and in the same direction, with changes in the market rate of interest.

• When the effective rate of interest is higher than the stated rate of interest, the bond will be purchased at a premium.

• A bond premium has the effect of reducing the amount of interest revenue below the amount of interest that would be earned if the bond were to yield their stated rate.

Multiple Choice

The rework cost was attributable to exacting specifications required by the job and was charged to the specific order. The units cost of Job Order No. 369 is:

• P266

• P280

• P292

• P316

Multiple Choice

The unadjusted balance in the Allowance, for Overvaluation account at year-end represents

• The mark-up on the merchandise available for sale by the branch for the year.

• The mark-up on the merchandise shipped to the branch during the year.

• The mark-un on merchandise shipped to the branch during the year less the mark-up on the merchandise returned by the branch during the year

• The mark-up on the cost of good sold by the branch for the year.

Multiple Choice

In order to compute equivalent units of production using fifo method of process costing, work for the period must be broken down to units:

a. Started and completed during the period

• Started and completed during the period

• Completed during the period and units in ending inventory

• Completed from beginning inventory, started and completed during the month, and units in ending inventory

• Started during the period and units transferred out during the period

  Processes during the period and units completed during the period

Multiple Choice

Under PFRS 9, what is the principle for recognition of a financial asset?

• A financial asset is recognized when the entity obtains control of the instrument

• A financial asset is recognized when the entity becomes a party to the contractual provisions of the instrument

• A financial asset is recognized when it is probable that future economic benefits will flow to the entity and the cost or value of the instrument can be measured reliably

• A financial asset is recognized when the entity obtains the risks and rewards of ownership of the financial asset and has the ability to dispose the financial asset

Multiple Choice

An investor uses the cost method to account for an investment in common stock. A portion of the dividends received this year were in excess of the investors share of the investee’s earnings subsequent to the date of investment. The amount of dividend revenue that should be reported in the investor’s income statement for this year should be

• The portion of the dividends received this year that were not excess of the investor’s share of investee’s earnings subsequent to the date of investment

• The total amount of dividends received this year

• The portion of the dividends received this year that were in excess of the investor’s share of investee’s earnings subsequent to the date of investment

• Zero

Multiple Choice

Which represents the proper journal entry for a period inventory system that should be made on the books of the branch when goods that cost the home office P100,000 to manufacture are shipped to the branch at a price of P110,000?

• A

• B

• C

• D

Multiple Choice

Which of the following is the transfer by the debtor to the creditor of any asset, such as real estate, inventory, receivables, and investment, in full payment of an obligation?

• Asset Swap

• Lease

• Postemployment benefits

• Retained Earnings

Multiple Choice

Which of the following statements about comprehensive income is true?

• Comprehensive income is equal to profit or loss plus total other comprehensive income plus extraordinary items

• Profit or loss is equal to comprehensive income plus total other comprehensive income

• Total other comprehensive income is equal to comprehensive income plus profit or loss

• Comprehensive income is equal to profit or loss plus total other comprehensive income

Multiple Choice

A financial liability due within twelve months after the reporting period shall be classified as non-current when

• It is refinanced on a long-term basis after the end of reporting period

• The entity has no discretion to refinance for at least twelve months

• It is refinanced on a long-term basis on or before the issue of financial statements

• it is refinanced on a long-term basis on or before the end of reporting period

Multiple Choice

Which of the following is the proper ranking order of properly distributions stipulated by the Law on Partnership under the Civil Code of the Philippines?

• Those owing to separate creditors, those owing to partners by way of contribution, those owing to partnership creditors

• Those owing to partners by way of contribution, those owing to separate creditors, those owing to partnership creditors

• Those owing to partners by way of contribution, those owing to partnership creditors, those owing to separate creditors

• Those owing to separate creditors, those owing to partnership creditors, those owing to partners by way of contribution

Multiple Choice

According to IFRS 15, what is the accounting treatment of the transaction price when a contract with a customer has multiple performance obligations?

• The transaction price shall be recognized as revenue of the most important performance obligation

• The transaction price shall be allocated equally to the different performance obligations

• The transaction price shall be recognized as revenue only at the end of completion of all performance obligations

• The transaction price shall be allocated to the different performance obligations by reference to their relative standalone selling prices

Multiple Choice

A non-current asset is presented in the statement of financial position as current asset

• If the noncurrent asset is actually sold after the end of the reporting period but before the financial statements are authorized for issue.

• Only when it qualifies to be classified as held for sale in accordance with PFRS 5 as of the end of the reporting period.

• Only when it qualifies to be classified as held for sale in accordance with PFRS 5 after the end of the reporting period but before the financial statements is authorized for issue

• In any of these circumstances