Balance Sheet and Fair Value

Topics: Balance sheet, Generally Accepted Accounting Principles, Asset Pages: 10 (1798 words) Published: August 15, 2011
Financial Accounting
1. Which of the following is usually considered cash?
a. Certificate of deposit
b. Checking account
c. Money market saving certificate
d. Postulated Check

2. In preparing the August 31, 2011 bank reconciliation, Apex Company provided the ff. information
Balance per bank statement 1,805,000
Deposit in transit 325,000
Return of customer’s check for 60,000
Insufficient fund
Outstanding checks 275,000
Bank service change for August 10,000

On Aug 31, 2011, what is the adjusted cash in bank?

a. 1, 855, 000
b. 1, 795, 000
c. 1, 785, 000
d. 1, 755, 000

3. Credit balances in Accounts Receivable shall be classified as

a. Current Liabilities
b. Part of Accounts Payable
c. Long-term Liabilities
d. Reduction from accounts

4. Which of the following is not an acceptable lasts for valuation of inventory?

a. Historical Cost
b. Current replacement cost
c. Prime cost
d. Current selling price less cost of disposal

5. Capetown Company began operation on Jan. 1, 2011 Capetown has found that its estimated bad debt expense has been consistently higher than actual bad debts. Management proposes lowering the percentage from 3% of credit sales to 2% . Credit Sales for 2011 totaled P5,000,000, and accounts written off as uncollectible during 2011 totaled P550,000. What is the bad debt expense for 2011?

a. 150,000
b. 100,000
c. 550,000
d. 240,000

6. Where there is a production cycle of more than one for a biological asset, PAS 41 encourages separate disclosure of

a. Physical change only
b. Price change only
c. Total change in value
d. Physical change and price change

7. Financial accounting is the area of accounting that emphasizes reporting to

a. Management
b. Regulatory bodies
c. Internal auditors
d. Creditors and investors

8. An investor purchased a bond as a long term investment on January 1. Annual interest was received in December 31. The investor interest income for the year would be higher if the bond was purchased at

a. Par
b. Face value
c. A discount
d. A premium

9. Donated equipment for which for fair value has been determined shall be recorded as a debit to the equipment account and a credit to

a. Other comprehensive income
b. Retained earnings
c. Share Capital
d. Income

10. Depreciation is best described as a method of

a. Asset valuation
b. Current value allocation
c. Cost allocation
d. Useful life determination


1. The following information is available for Tonette Company for the current year:

Net Sales3,600,000
Freight in90,000
Purchases discounts 50,000
Ending inventory240,000

The gross margin is 40% of sales. What is the cost of goods available for sale?

a. 1 680 000
b. 1 920 000
c. 2 400 000
d. 2 440 000

2. Raiza Company acquired a financial asset at its market value of P3 200 000. Broker fees of P 209 000 were incurred in relation to the purchase. At what amount should the financial asset initially be recognized respectively if it is classified as at fair value through profit or loss or as a available for sale?

a. 3,400,000 and 3,200,000
b. 3,200,000 and 3,200,000
c. 3,200,000 and 3,400,000
d. 3,400,000 and 3,400,000

3. On August 1, 2011, Bameo Company purchased a new machine on a defereed payment basis. A down payment of P100,000 was made and 4 monthly installments of P250,000 each are to be made beginning on September 1,2011. The cash equivalent price of the machine was P950,000 . Bameo incurred and paid installation costs amounting to P30,000. What is the amount to be capitalized as cost of the machine?

a. 950,000
b. 980,000
c. 1,100,000
d. 1,130,000

4. Jazz Company purchased land with a current market value of P2,400,000. The carrying amount of the land was P1,305,000. In exchange for the land, Jazz issued 20,000 ordinary shares with par value of P100 and market value of...
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