Financial Accounting and Reporting Quiz Bowl

EASY

1. Net realizable value is

• A. Fair value less cost to sell

• B. Estimated selling price less normal margin and cost to sell

• C. Estimated selling price less cost to complete and cost to sell

• D. Fair vale less normal margin and cost to complete.

2. When using periodic inventory method, which of the following generally would not be separately accounted for in the computation of cost of goods sold?

• A. Trade discounts applicable to purchases during the period.

• B. Cash discounts taken during the period.

• C. Purchase returns and allowances of merchandise during the period.

• D. Cost of transportation in for merchandise purchased during the period.

3. On December 28, Year 2, Kerr Manufacturing Co. purchased goods costing P50,000. The terms were FOB destination. Some of the costs incurred in connection with the sale and delivery of the goods were as follows:

Packaging for shipment P1,000; shipping P1,500;and special handling charges P2,000. These goods were received on December 31, Year 2. In Kerr’s December 31, Year 2 balance sheet, what amount of cost for these goods should be included in inventory?

• A. 54,500

• B. 53,500

• C. 52,000

• D. 50,000

4. Loans and receivables may be classified under IFRS 9 at

• A. Financial asset at amortized cost

• B. Financial asset at fair value through profit or loss

• C. Either A or B

• D. Neither A nor B

5. Expected credit losses of loan receivables are required to be measured through a loss allowance at an amount equal to (choose the exception)

• A. 12-month expected credit losses

• B. Full lifetime expected credit losses

• C. Monthly expected credit losses

• D. None of the foregoing

6. Which cash fund is included from the cash and cash equivalent balance?

• A. Fund set aside for acquisition of equipment and machinery.

• B. Fund set up in a bank exclusively for payment of employees’ compensation.

• C. Fund for the redemption of preference shares.

• D. Fund established for settlement of long-term obligations.

7. The use of the gross profit method assumes

• A. The amount of gross profit is the same as in prior years.

• B. Sales and cost of goods sold have not changed from previous years.

• C. Inventory values have not increased from previous years.

• D. The relationship between gross profit and sales remains stable over time.

8. A COMPANY reported current net receivables on December 31, Year 2 which consisted of the following:

Trade accounts receivable 930,000

Allowance for uncollectible accounts 20,000

Claim against shipper for goods in transit on November Year 1 30,000

Selling price of unsold goods sent by Paolo on consignment at 130% of cost and not

included in the ending inventory 260,000

Security deposit on lease of warehouse used in storing inventories 300,000

What is the correct total of current net receivables on December 31, Year 2?

• A. 1,500,000

• B. 1,200,000

• C. 1,240,000

• D. 940,000

9. Which of the following would not be deducted in the cost portion when calculating the cost ratio under retail method?

• A. Purchase allowance

• B. Purchase returns

• C. Net markdown

• D. Departmental transfer out

10. E COMPANY adopted a new method for estimating doubtful accounts at an amount indicated by aging of accounts receivable.

Allowance for doubtful accounts, January 1 250,000

Provision for doubtful accounts recorded during the year (2% of credit sales

of P10,000,000) 200,000

Accounts written off 205,000

Uncollectible accounts per aging, December 31 220,000

What is the year-end adjustment to the allowance for doubtful accounts?

• A. 175,000 debit

• B. 175,000 credit

• C. 25,000 debit

• D. 25,000 credit