FINACC3 6.

Using the indirect method, what amount should

At the beginning of current year, Crispin Santos be reported as net cash flow from operating
started a retail merchandise business. During the activities?
year, the entity paid trade creditors P2M and a. 780,000 c. 880,000
suffered a net loss of P350,000. The ledger account b. 700,000 d. 550,000
preclosing balances at year end included the
following: Brook Company provided the following information
Accounts Receivable 600,000 for the current year:
Accounts Payable 750,000 Decrease in inventory 300,000
Capital-total investment in cash 2,000,000 Increase in wage payable 100,000
Expenses paid in cash 100,000 Restructuring Charge 2,300,000
Merchandise account with Depreciation 1,000,000
Unadjusted debit balance 700,000 Net Income 500,000
None of the relocation has yet taken place in
There were no withdrawals. All sales and purchases connection with the restructuring.
were on credit. The merchandise account is debited
for purchases and credited for sales. 7. What amount should be reported as net cash
flow from operating activities?
1. What is the amount of purchases for the year? a. 4,200,000 c. 3,600,000
a. 2,000,000 c. 1,250,000 b. 1,900,000 d. 4,000,000
b. 2,750,000 d. 2,050,000
2. What is the amount of sales for the year? Zoe Company reported net income of P3,400,000 for
a. 2,750,000 c. 2,650,000 the current year. The net income included
b. 2,050,000 d. 700,000 depreciation of P840,000 and a gain on sale of
3. What is the cash balance for December 31? equipment of P170,000. The equipment had an
a. 1,350,000 c. 1,450,000 original cost of P4,000,000 and accumulated
b. 2,000,000 d. 3,450,000 depreciation of P2,400,000. All of the following
4. What is the merchandise inventory on December accounts increased during the current year:
31? Patent 450,000
a. 700,000 c. 750,000 Prepaid rent 680,000
b. 450,000 c. 0 Financial asset at FV through
Other Comprehensive Income 100,000
Roger Company reported a net income of P3,520,000 Bonds Payable 500,000
for the current year. The entity provided the
following additional information: 8. What amount should be reported as net cash
flow from investing activities?
Purchase of plant assets 2,800,000 a. 1,720,000 provided c. 540,000 provided
Depreciation of plant assets 1,480,000 b. 1,220,000 provided d. 380,000 used
Dividends declared 970,000
Net decrease in noncash current assets 290,000 Karr Company reported net income of P3,000,000 for
Loss on sale of equipment 130,000 the current year. Changes occurred in certain
accounts as follows:
5. What is the net cash provided by operating Equipment 250,000 increase
activities? Accumulated depreciation 400,000 increase
a. 5,420,000 c. 7,250,000 Notes Payable 300,000 Increase
b. 5,130,000 d. 5,290,000
- During the year, the entity sold equipment
Sun Company provided the following data for the costing 250,000, with accumulated depreciation
preparation of the statement of cash flows for the of P120,000 for a gain of 50,000.
current year: - In December of the current year, the entity
purchased equipment costing P500,000 with
Increase in accounts receivable 300,000 P200,000 cash and a 12% note payable of
Decrease in income tax payable 170,000 P300,000.
Depreciation 1,000,000 9. In the statement of cash flows, what amount
Net Income 250,000 should be reported as net cash used in investing
Gain on sale of equipment 440,000 activities?
Loss on sale of building 210,000 a. 20,000 c. 220,000
b. 120,000 d. 350,000
 a. Incorrect footing of Special Journals
10. In the statement of cash flows, what amount b. Posting a debit as a credit or vise verse
should be reported as net cash provided by c. Balance in the wrong side of account
operating activities? d. Omission of journal entry
a. 3,400,000 c. 3,520,000
b. 3,470,000 d. 3,570,000 Use the following information for questions to 17-19
The income statement of CS Corporation for 2016
Lax Company provided the following information included the following:
during the current year. Interest Expense 75,500
Dividend received 500,000 Insurance Expense 9,600
Dividend paid 1,000,000 Salaries Expense 65,000
Cash received from customers 9,000,000 The following have been excerpted from CS
Proceeds from issuing share capital 1,500,000 Corporation’s balance sheets:
Interest Received 200,000 12/31/16 12/31/15
Proceeds from sale of long Interest
term investments 2,000,000 Receivable 7,500 9,100
Cash paid to suppliers and Salaries
Employees 6,000,000 Payable 4,200 8,900
Interest paid on long term debt 400,000 Prepaid
Income taxes paid 300,000 Insurance 1,500 1,100
Cash balances, January 1 1,800,000 17. The cash received for interest during 2016 was
11. What is the net cash provided by operating a. 66,400 c. 75,500
activities for the current year using direct b. 73,900 d. 77,100
method? 18. The cash paid for salaries during 2016 was
a. 3,000,000 c. 2,700,000 a. 60,300 c. 69,700
b. 3,300,000 d. 2,000,000 b. 60,800 d. 10,000
12. What is the net cash provided by investing 19. The cash paid for insurance premiums during to
activities? 2016 was
a. 2,500,000 c. 2,200,000 a. 8,100 c. 9,200
b. 2,000,000 d. 0 b. 8,500 d. 10,000
13. What is the net cash provided by financing Use the following information for the questions 20-
activities? 22
a. 1,500,000 c. 500,000 Excess Company paid or collected during 2017 the
b. 1,000,000 d. 0 following items:
14. On January 1, 2016 the statement of financial Insurance Premiums paid 25,450
position of Richway Company showed total Salaries Paid 116,300
assets of P5,000,000 total liabilities of 2,000,000 Interest Collected 53,750
and contributed capital of 2,000,000. During the The following balances were from Excess Company’s
current year, the corporation issued capital of BS:
P500,000 par value at a premium of P300,000. 12/31/16 12/31/2017
Dividend of P250,000 was paid on December 31, Prepaid
2016. The statement of financial position on insurance 2,400 1,700
December 31, 2016 showed total assets of Interest
P7,500,000 and total liabilities of 3,200,000. The Receivable 4,700 3,200
net income for the current year is Salaries
a. 1,750,000 c. 750,000 Payable 12,300 10,600
b. 1,000,000 d. 500,000
15. If revenues are greater than expenses, the 20. The insurance expense on the income statement
Income Summary account will be closed by a for 2017 was
a. Debit to Income summary and a credit to Cash a. 25,450 c. 24,750
b. Debit to Income Summary and a credit to RE b. 26,150 d. 23,750
c. Debit to RE and Credit to Income Summary 21. The interest revenue on the income statement
d. No Entry for 2017 was
16. A trial balance proves only that posted debits are a. 53,750 c. 52,250
equal to posted credits. Equality of debits and b. 55,250 d. 50,550
credits is not conclusive proof of the absence of
error. The following errors are disclosed by the
Trial Balance, except
22. The salary expense on the income statement for d. Reports and statements such as environmental
2017 was reports and value added statements.
a. 116,300 c. 114,600 29. The primary responsibility for the
b. 118,000 d. 105,700 preparation and presentation of the
financial statements of an entity is
23. The last step in the accounting cycle is to reposed in the
a. Prepare a post closing trial balance --- a. Management of the entity
b. Journalize and post closing entries b. Internal auditor
c. Prepare financial statements c. External auditor
d. Journalize and post adjusting entries d. Controller
24. What is the correct order of the
following events in the accounting 30. Which of the following statements is
process? true concerning the objective of financial
I. Financial Statements are prepared statements?
II. Adjusting entries are recorded I. Financial statements do not provide all the
III. Nominal accounts are closed information that users may need to make
a. I, II, III c. III, II, I economic decisions since they largely
b. II, I, III d. II, III, I portray the financial effects of past events
25. Which of the following is not among the and do not necessarily provide nonfinancial
first five steps in the accounting cycle? information.
a. Record transactions in journals II. Financial statements show the results of the
b. Record closing entries stewardship of management or the
c. Adjust the general ledger accounts accountability of management for the
d. Post entries to general ledger accounts resources entrusted to it.
a. I only c. Both I and II
26. Which of the following steps in the b. II only d. Neither I nor II
accounting cycle are listing in logical
order? 31. Comprehensive income includes
a. Post the journal entries to the ledger a. Profit or loss only
accounts, prepare a worksheet, and then b. Other comprehensive income only
take a trial balance c. Both profit or loss and other comprehensive
b. Journalize the closing entries, post the income
closing entries, and then take a post d. Neither profit or loss nor other comprehensive
closing trial balance income
c. Prepare the earnings statement, prepare 32. Other comprehensive income includes
the statement of financial position and all of the following, except
then prepare a worksheet a. Unrealized gain on forward contract designated
d. Post the closing entries, take a post as each flow hedge
closing trial balance, then journalize the b. Loss from translating the financial statement of a
closing entries. foreign operation
27. The manner in which the accounting c. Actuarial gain on defined benefit plan that is fully
records are organized and employed recognized through other comprehensive
within a business is referred to as income
a. Accounting system d. Dividend paid to shareholders
b. Business document
c. Voucher system 33. Which of the following statements is
d. Special Programs true concerning the preparation of
28. A complete set of financial statements financial statements?
includes the following components, I. Financial statements shall be prepared on a
except going concern basis unless management
a. Statement of financial position, statement of either intends to liquidate the entity or to
comprehensive income and statement of cash cease trading, or has no realistic alternative
flows. but to do so.
b. Statement of changes in equity II. An entity shall prepare its financial
c. Notes, comprising a summary of significant statements, except for cash flow
accounting policies and other explanatory information, using the accrual basis of
information accounting.
 a. I only c. Both I and II
b. II only d. Neither I nor II 40. Alternatively, which of the following is
34. Materiality depends on classified as an operating cash flow:
a. The nature of the omission or misstatement. a. Interest received
b. The size of the omission or misstatement. b. Interest paid
c. The size and nature of the omission or c. Dividend received
misstatement judged in the surrounding d. Dividend paid
circumstances.
d. The judgment of management.
35. When the classification of items in the
financial statements is changed, the
entity
a. Must not reclassify the comparative amounts.
b. Can choose whether to reclassify the
comparative amounts.
c. Must reclassify the comparative amounts, unless
it is impracticable to do so.
d. Must reclassify the current year amounts only.
36. An entity shall classify an asset as current
when (choose the incorrect one)
a. The entity expects to realize the asset or intends
to sell or consume it within the entity’s normal
operating cycle.
b. The entity holds the asset for the purpose of
trading.
c. The entity expects to realize the asset within
twelve months after the reporting period.
d. The asset is cash or a cash equivalent that is
restricted to settle a liability for more than
twelve months after the reporting period.

37. An entity must present additional line

items in a statement of financial position
when
a. Such presentation is relevant to an
understanding of the entity’s financial position.
b. Such presentation is a generally accepted
practice in the sector in which the entity
operates.
c. Such presentation is required by the tax
authorities of the jurisdiction in which the
entity operates.
d. Such presentation is relevant to an
understanding of the entity’s financial position
and financial performance.

38. Cash Flows in the statement of cash

flows are
a. Inflows of cash and cash equivalents
b. Outflows of cash and cash equivalents
c. Inflows and outflows of cash
d. Inflows and outflows of cash and cash
equivalents
39. Bank borrowings is generally considered
a. Operating activities
b. Investing activities
c. Financing activities
d. Borrowing activities