Financial Accounting Quizbowl

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1.Which of the following is an appropriate combination of a biological asset and its agricultural produce?
Biological assetsAgricultural produce
A. SheepYarn
B. Trees in plantation forestLogs
C. Dairy cattleButter
D. PigsCarcass

2.Apportionment of the purchase price in a lump sum acquisition of different assets is based on all of these, except
A. Book values of the assets to the seller
B. Relative market values
C. Tax assessment values
D. Appraisal values

3.When bonds are issued between interest payment dates, any accrued interest received is usually credited to
A. Interest expense
B. Interest income
C. Interest receivable
D. Bond premium

4.An airline should recognize revenue from an airline ticket in the period in which
A. Passenger reservations are booked
B. Passenger reservations are confirmed
C. Ticket is issued
D. Related flight takes place

5.Which of the following is not a distinguishing characteristic of a derivative instrument?
A. Terms that require or permit net settlement
B. Must be “highly effective” throughout its life
C. No initial net investment
D. One or more underlyings and notional amounts

6.These are group or divisional assets (e.g., head office building, EDP, equipment or research center) that do not generate cash inflows independently from other assets and that are usually regarded as part of cash generating unit.

A. Corporate assets
B. Subsidiary
C. Service departments
D. Exclusive cash generating unit

7.Assume that employees confessed to a P500,000 inventory theft but are not able to make restitution. How should this material fraud be shown in the company’s financial statements? A. Classified as loss and shown as a separate line item in the statement of comprehensive income. B. Initially classified as an account receivable because the employees are responsible for the goods. Because they cannot pay, the loss would be recognized as a write-off of accounts receivable. C. Included in the cost of goods sold because the goods are not on hand, losses on inventory shrinkage are ordinary, and it would cause the least amount of attention. D. Recorded directly to retained earnings because it is not an income-producing item.

8.In reconciling net income on an accrual basis to net cash provided by operating activities. What adjustment is needed to net income because of (1) an increase during the period in prepaid expenses, and (2) the periodic depreciation expense of company properties?

A. (1) Add (2) Add
B. (1) Add (2) Deduct
C. (1) Deduct (2) Add
D. (1) Deduct (2) Deduct

9.If a company employs the sum-of-the-years’ digits (SYD) method of depreciation for an asset with an estimated useful life of four years, the percentage of the total depreciable cost that will be expensed in the third year is:

A. 10%
B. 25%
C. 20%
D. 90%

10.In a cash flow statement using the indirect method, a decrease in prepaid expense should
A. Reported as an outflow and inflow of cash
B. Reported as an outflow of cash
C. Deducted from net income
D. Added to net income

1.On January 1, 2013, an SME acquired 30% of the ordinary shares of an investee for P1,000,000 plus transaction cost of P10,000. The SME uses the cost model to account for its investment in associate. The investee recognized a net loss of P500,000 for 2013 and paid dividends of P200,000 on December 31, 2013. The fair value of the investment is P1,020,000 on December 31, 2013 and the cost to sell is estimated at P40,000. There is no published price quotation for the investment in associate. What is the carrying amount of the investment in associate on December 31, 2013? A.1,020,000


2.An SME buys goods priced at P500 per unit. The supplier awards the buyer a 20% discount on orders of 100 units or more....
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