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Acctng For Governmental,Not-For-Profit Entities (ACT GOV)
Far Eastern University
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MCQ 1
Which of the following statements concerning compensating
balance agreements is NOT true?
They increase the efective interest rate to the borrower They must be disclosed in the inancial statements’ footnotes They reduce the amount of cash available to the borrower They always involve legal restrictions on the cash received
MCQ 2
In reconciling the bank balance with the book cash balance, which of the
following would NOT cause the bank balance shown in the bank
statement to be lower than the unadjusted balance?
Deposit in transit Cash on hand at the company Interest credited to the account by the bank NSF checks from a customer, as reported on the bank statement
MCQ 3
Which of the following items would be added to the bank
balance on a bank reconciliation?
Correction of an overstatement of the accounts receivable due to error in recording check collection by the hungry accountant Correction of an understatement of the accounts receivable due to error in recording check collection by the heartbroken accountant Correction of an erroneous charge to the company’s bank account made by an overly- excited-for-the-holidays teller. Correction of an erroneous credit to the company’s bank account made by a scorned teller who received a toilet plunger from the department kris kringle.
MCQ 4
Which of the following items would be deducted from the bank
balance on a bank reconciliation?
Correction of an erroneous charge to the company’s bank account made by an overly- excited-for-the-holidays teller. Correction of an overstatement of the accounts receivable due to error in recording check collection by the hungry accountant Correction of an understatement of the accounts receivable due to error in recording check collection by the heartbroken accountant Correction of an erroneous credit to the company’s bank account made by a scorned teller who received a toilet plunger from the department kris kringle.
MCQ 5
The cash short or over account
Is a real account
Is contra-cash account Is debited upon reimbursement when the petty cash funds proves out short Is debited upon reimbursement when the petty cash funds proves out over
MCQ 6
In replenishing an imprest petty cash fund, which of the following
entries is required?
Debit – Individual Expense Account; Credit – Cash Debit – Cash; Credit – Petty Cash Fund Debit – Petty Cash Fund; Credit – Cash. Debit – Petty Cash Fund; Credit – Individual Expense Account
MCQ 7
A company, which has an adequate amount in its Allowance for
Doubtful Accounts, writes of as uncollectible an account
receivable from a bankrupt customer. This action will:
Reduce total current assets Reduce net income for the period Have no efect on total current assets Reduce the amount of equity
MCQ 8
Which of the following is an advantage of using the net price
method for recording cash discounts on credit sales?
It properly relects current period sales revenue It requires less record-keeping eforts than the gross method It eases communication with customers about their balances It simpliies recording of sales returns and allowances
MCQ 9
What is the preferable presentation of accounts receivable from
oicers, employees, or ailiated companies on a statement of inancial
position?
As ofsets to equity. By means of footnotes only. As assets but separately from other receivables. As trade notes and accounts receivable if they otherwise qualify as current assets.
MCQ 10
Sales to the president of the company on account is reported under
Other current assets Advances to suppliers Advances to oicers Accounts receivable
MCQ 11
Which of the following statements is not correct regarding Long-
term Notes Receivable?
losses of inventory shall be
Recognized as component of cost of sales in the period the write-down or loss occurs. Deferred until the related inventory is sold. Recognized as operating expense in the period the write-down or loss occurs. Recognized as other expense in the period the write-down or loss occurs.
MCQ 17
Freight cost FOB Destination from the consignee to the consumer is
Expensed by the consignee Expensed by the consignor Inventoriable by the consignor Inventoriable by the consignee
6,000,
MCQ 18
If the ending inventory is overstated while purchases and
beginning inventory are correct,
The net income for the year is overstated. The net income for the year is understated. Both net income and cost of sales are overstated. The cost of sales for the year is overstated.
MCQ 19
Generally speaking, biological assets relating to agricultural
activity should be measured using
Historical cost A fair value approach Historical cost less depreciation less impairment Net realizable value
MCQ 20
Female security dogs used by Security Agencies in its services
are classiied under
Bearer Animals Biological Assets
6,
Property, Plant and Equipment
MCQ 21
Agricultural produce is measured at
At its fair value less estimated cost to sell at the point of sale. At cost at the point of sale. At its fair value less estimated cost to sell at the point of harvest. At cost at the point of harvest.
MCQ 22
The change in fair value of biological assets is part physical change
(growth, etc.) and part unit price change. Separate disclosure of the two
components is
required only in interim inancial statements
6,
encouraged but not required not necessary in both interim and annual inancial statements
MCQ 23
The accounting standard that prescribes the accounting treatment
and disclosures related to agricultural activity.
IAS 16
IAS 20
IAS 41
IAS 23
MCQ 24
It is permissible to capitalized interest on
Assets that already are in use or a ready for their intended use in the earning activities on the entity Assets under construction Assets that are not being used in earning activities of the entity and that are not undergoing the activities necessary to get them ready for such use Inventories that routinely manufactured in large quantities or a repetitive basis
MCQ 25
A principal objection to the straight-line method of depreciation is that it
Ignores variations in the rate of asset use Tends to result in a constant rate of return on a diminishing investment base Provides for the declining productivity of an aging asset Gives smaller periodic write-ofs than decreasing charge methods
MCQ 26
When payment for is deferred beyond normal credit terms, the
diference between the cash price and total payments is
Charged to retained earnings Interest expense over the useful life of the asset Capitalized as cost of PPE Interest expense over the credit period
MCQ 27
Borrowing costs related to speciic borrowings shall be
Capitalized up to the extent of the average accumulated expenditure Partially capitalized depending on the existence of a general borrowing
6,
Capitalized
MCQ 28
Cost of razing an old building to make way for construction of a factory on
Check drawn on entity’s account,payable to supplier dated and recorded on
What amount should be reported as cash and cash equivalents
What is amount of the petty cash fund balance for statement of
- Checkbook balance 5,000,
- Bank statement balance 4,000,
- December 31, 2020 but not mailed until January 31, 2021 1,000,
- Cash in sinking fund 1,500,
- Treasury bills, purchased November 1, 2020 and maturing January 31,
- 2,500,
- Time deposit, purchased October 1, 2020 and maturing January 31,
- 2,000,
- 8,000, on December 31, 2020?
- 8,500,
- 7,500,
- 6,000,
- PROBLEM
- follows: Coins and currency 3, Oust The Turtle Now’s petty cash fund showed its composition as
- Transportation Paid Vouchers
- Gasoline
- Oice supplies
- Postage stamps
- Due from employees 1,
- Check returned by bank marked NSF 1,
- Check drawn by the company to the order of the Petty Cash Custodian 2,
- Petty Cash Fund 10,
- 5, inancial position purposes?
- 6,
- 6,
- 6,
PROBLEM 5
Oust The Turtle Now Company has the following balances on
December 31, 2020:
Cash on hand 4,500.
Cash in bank A
33,000 Cash in bank
X 50,000 Cash in
bank C 822,999.
Cash on hand excludes $3. Exchange rate on balance sheet date
isP51:$1.
Oust The Turtle Company wrote a check (Cash in bank A) worth
20,000 dated December 30, 2020 but is still unreleased as of balance
sheet date.
Oust The Turtle Company released a check (Cash in bank X) dated
January1, 2021 worth ₱55,000 on December 20, 2020.
Oust The Turtle Company wrote a check (Cash in bank C) worth
₱2,001 dated December 31, 2020, released on January 31, 2020.
How much is Oust The Turtle Company’s cash on December 31, 2020?
987,
985,652.
987,
985,499.
PROBLEM 6
Oust The Turtle Now Corporation’s petty cash fund, which has an
imprest balance of P5,000 showed a composition when counted
as follows:
Bills 1,
Coins 40
Vouchers –Transportation 1,
Vouchers –Gasoline 889
Vouchers –Supplies 1,
How much is Petty Cash Fund?
1,
1,
5,
1,
PROBLEM 7
In preparing its August 31, 2020 bank reconciliation, Bing Corp.
has available the following information:
Balance per bank statement, 8/31/
21,650 Deposit in transit, 8/31/2020 3,
Return of customer's check for insuicient funds, 8/30/
600 Outstanding checks, 8/31/2020 2,
Bank service charges for August 100
2020 4,000,000 31,000 4,
The collections from customers during 2020 totaled 3 million
pesos, excluding recoveries. Doubtful accounts are provided for as a
percentage of accounts receivable. The entity estimates 2% of ending
balance of accounts receivable in 2020 is uncollectible.
What amount should be reported as allowance for doubtful accounts on
December 31, 2020?
50,
63,
63,
50,
What is the net realizable value of accounts receivable on December
31, 2020?
2,475,
2,492,
2,479,
2,488,
How much is the doubtful accounts expense in 2020?
37,
50,
37,
50,
PROBLEM 11
Marylett Company accepted from a customer in settlement of an
account a 4,000,000, 90-day 12% note dated August 31, 2020. On
September 30, 2020, the entity discounted the note at 15% with
recourse at the bank.
The note was paid in full by the maker on maturity. The discounting
with recourse is accounted for as a conditional sale with
recognition of a contingent liability.
What amount was received from the note receivable discounting?
4,103,
4,017,
3,965,
4,120,
PROBLEM 12
On December 31, 2019, Janice Company sold used equipment
with carrying amount of P 2,000,000 in exchange for a noninterest-
bearing note of P 5,000,000 requiring ten annual payments of P
500,000. The irst payment was made on December 31, 2020. The
market interest for similar note was 12%. The present value of an
ordinary annuity of 1 is
5 for ten periods and 5 for nine periods.
What amount should be recognized as interest income for 2020?
319,
600,
261,
339,
PROBLEM 13
Sun Inc. factors P 2,000,000 of its accounts receivables
without guarantee (recourse) for a inance charge of 5%. The
inance company retains an amount equal to 10% of the accounts
receivable for possible adjustments.
What would be recorded as a gain (loss) on the transfer of receivables?
Loss of P 300, Gain of P 100, Loss of P 100, Loss of P 200,
PROBLEM 14
Sun Inc assigns P 2,000,000 of its accounts receivables as collateral for
a P 1 million 8% loan with a bank. Sun Inc. also pays a inance fee
of 1% on the transaction upfront.
What would be recorded as a gain (loss) on the transfer of receivables?
Loss of P 160, Zero Loss of P 20, Loss of P 180,
PROBLEM 15
Oust the Turtle Now Corporation sells equipment. On January 1, 2020, the
entity sold equipment to Chai Na Company costing P280,000 for
P400,000.
Chai Na signed a non-interest bearing note for 400,000, payable in four equal
installments every December 31. The cash sales price for the equipment is
P350,000.
The efective rate is 5%.
How much is the discount on notes receivable (also known as unearned
interest income)?
50,
Zero 70, 45,
PROBLEM 16
Oust The Turtle Now imported goods at a cost of P 620,000,
including P 40,000 non-refundable import duties and P 10,
recoverable purchase taxes. The risks and rewards of ownership of
the imported goods were transferred to the retailer upon collection
of the goods from the harbor warehouse. Freight costing P 10,
with terms FOB Shipping Point was
4,500,
5,000,
4,800,
4,100,
PROBLEM 20
The records of Serene Retail Store report the following data for the
month of January 2020:
Sales 12,000,000 Markdown 600,
Sales allowance 100,000 Markdown cancellation
100,000 Sales returns 500,000 Freight on purchases
100,000 Employee discounts 200,000 Purchases at cost
8,950,
Normal losses at retail 800,000 Purchase returns at cost 450,
Initial markup on purchases 6,200,000 Purchase returns at retail
600,000 Additional markup 500,000 Beginning inventory at cost
600,
Markup cancellations 100,000 Beginning inventory at retail
800,000 Abnormal losses at costs 200,000 Abnormal losses at retail
250,
What is the estimated cost of goods sold using the average
retail inventory method?
5,400,
7,500,
7,550,
7,450,
PROBLEM 21
Jarvis, Inc. manufactures cruise ships for sale. Each ship costs
approximately P 25,000,000 to build and takes 3 years to fully
construct.
During the time it takes to construct one cruise ship, Jarvis incurs P2,400,
in interest cost related to the construction. The interest cost is
incurred evenly throughout the construction period. During the irst year of
construction, Jarvis builds a shell that can be customized for any
purchaser according to speciications; construction during the inal 2
years is all based on client speciication.
The International Accounting Standards Board requires that
Jarvis account for this interest cost as
P 2,400,000 is recorded as interest expense as incurred. P 2,400,000 is capitalized to the cruise ship. P 800,000 incurred in 1st year is expensed as incurred; the remainingamount is capitalized to the cruise ship. P 800,000 is capitalized to the cruise ship; the remaining amount isexpensed as incurred.
PROBLEM 22
Transactions for the month of June were:
PURCHASES SALES
June1 (balance)800@ P3 June 2 600 @P 5.
3 2,200 @ P3 6 1,600 @ P 5.
7 1,200 @ P3 9 1,000@ P
5.
15 1,800 @ P3 10 400 @ P 6.
22 500 @ P 3 18 1,400 @ P6.
25 200 @ P
6.
Assuming that perpetual inventory records are kept in dollars, the
ending inventory on a FIFO basis is
4,
4,
4,
4,
Assuming that perpetual inventory records are kept in units only,
the ending inventory on an average-cost basis, rounded to the nearest
dollar, is. (Hint: Use two decimal places for average unit cost)
4,
4322
4,
4,
Problem 23
Oust The Turtle Now Corporation has the following assets:
Mango trees also cultivated for its lumber,
P5,000,000 Mangoes attached to the tree,
P500,
Harvested mangoes, P200,
Narra trees, P10,000,
Apple trees, P3,000,
Harvested apples, P300,
Crops (corn - P500,000; oats - P800,000; wheat -
P700,000) How much is the total biological asset?
17,500,
15,500,
20,000,
20,500,
PROBLEM 24
Sheryl Dairy produces milk for local ice cream producers. The
entity began operations on January 1, 2020 by purchasing milking
cows for P 5,000,000. The entity provided the following
information at year-end relating to the milking cows:
Carrying amount –January 1 5,000,
Change in fair value due to growth and price change 2,000,
2,800,
3,200,
PROBLEM 27
On January 1, 2019 an entity acquired an equipment with an
estimated useful life of 10 years and estimated residual value of P
50,000. The deprecation applicable to this equipment was P
240,000 for 2021 computed under the sum of years digits
method.
What was the acquisition cost of equipment?
2,400,
1,700,
1,650,
2,450,
PROBLEM 28
On January 2, 2020, Indian River Groves began construction of a
new citrus processing plant. The automated plant was inished and
ready for use on September 30, 2021. Expenditures for the
construction were as follows:
January 2, 2020 200,
September 1, 2020 600,
December 31, 2020 600,
March 31, 2021 600,
September 30, 2021 400,
Indian River Groves borrowed P 1,100,000 on a construction loan at
12% interest on January 2, 2020. This loan was outstanding
during the construction period. The company also had P 4,000,0 00
in 9% bonds outstanding in 2020 and 2021.
What were the weighted-average accumulated expenditures for 2020?
400,
533,
500,
1,000,
The complete course name of ACT1104 is Intermediate Accounting 1 Kimi lang, Bhie
PROBLEM 29
Lee Company received an P 1,800,000 subsidy from the government
to purchase manufacturing equipment on January 2, 2021. The
equipment has a cost of P 3,000,000, a useful life a six-years, and
no salvage value. Lee depreciates the equipment on a straight-
line basis.
If Lee chooses to account for the grant as deferred revenue, the grant
revenue recognized will be:
P 500,000 per year for the years 2021-2026. Zero in the irst year of the grant's life. P 300,000 per year for the years 2021-2026. P 1,800,000 in 2021.
If Lee chooses to account for the grant as an adjustment to the
asset, the amount of depreciation expense recorded in 2021
will be:
Zero P 500, P 200, P 300,
PROBLEM 30
Percy Resources Company acquired a tract of land containing an
extractable mineral resource. Percy is required by its purchase contract
to restore the land to a condition suitable for recreational use after
it has extracted the mineral resource. Geological surveys estimate
that the recoverable reserves will be 2,000,000 tons, and that the
land will have a value of P 1,200,000 after restoration. Relevant cost
information follows: Land, P 9,000,
Estimated restoration costs, P 1,800,
If Percy maintains no inventories of extracted material, what should be
the charge to depletion expense per ton of extracted material?
P 4.
P5.
P 4,
P 3.
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Course: Acctng For Governmental,Not-For-Profit Entities (ACT GOV)
University: Far Eastern University
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