CUP – BASIC AND PARCOR

EASY

1. What Republic Act govern the practice of accountancy in the Philippines?

a. RA 9296 The Philippine Accountancy Act of 2004
b. RA 9396 The Philippine Accountancy Act of 2004
c. RA 9298 The Philippine Accountancy Act of 2004
d. RA 9398 The Philippine Accountancy Act of 2004
2. At the beginning of the year, Sarangani enterprises had a total assets of P700,000 and total liabilities of P500,000. If
the total assets increased by P150,000 during the year and total liabilities decreased by P80,000, what is the amount
of owner’s equity at the end of the year?
a. P200,000
b. P350,000
c. P430,000
d. P770,000
3. The following are the ethical issues that an accountant should recognize in order to achieve the objective of
accountancy profession except?
a. Integrity
b. Objectivity
c. Professional Competence and Behavior
d. Confidentiality

*It should be Professional Competence and Due Care

4. BSA 4 has the following information during the year:

Prepaid expense P50,000
Uncollectible accounts 2,500
Accrued expense 16,000
Depreciation expense 7,000
Taxes and licenses 15,000
Salaries expense 20,000
Supplies used 8,000
Freight out 2,000
How much is the total expense?
a. P104,500
b. P70,500
c. P52,500
d. P54,500
5. A professional accountant should carry out professional services in accordance with the relevant technical and
professional standards. Technical and professional standards include the following except?
a. Board of Accountancy (BOA)/ Professional Regulation Commission (PRC)
b. Financial Reporting Standards Council (FRSC)
c. Relevant Legislation
d. Auditing and Assurance Standards Commission (AASC)

*It should be Auditing and Assurance Standards Council

6. Kirito has rendered professional services on account to Mr. Florencio, the owner of Gem’s Appliance Plaza, for
P35,000. Kirito has incorrectly recorded the transaction as

Cash in Bank P53,000

Professional Income P53,000

As an accountant, what must be the correcting entry?

a. Professional Income P 53,000

Cash in Bank P53,000
b. Accounts Receivable P53,000
Professional Income P53,000
c. Accounts Receivable P35,000
Professional Income P35,000
d. Accounts Receivable P35,000
Professional Income P18,000
Cash in Bank P53,000
7. Which is not a requirement for admission for the CPA Board Examinations ?
a. Is a natural born Filipino Citizen
b. Has a good moral character
c. Is a holder of the degree of Bachelor of Science in Accountancy
d. Has not been convicted of any criminal offense involving moral turpitude

It should be Filipino Citizen Only.

8. The following account balances were taken from the General Ledger of Asuna, the owner and manager of Aincrad.
Cash in bank P750,000
Petty cash fund 1,000
Accounts receivable 10,000
Prepaid Expense 15,000
Accounts payable 56,000
Notes payable 35,000
Asuna Capital ?
What would be the total equities?
a. P685,000
b. P776,000
c. P91,000
d. P670,000
9. On July 12, 2018, Old Stock and New Stock formed a partnership with each contributing the following assets.

Old Stock New Stock

Cash P30,000 P 70,000
Machinery and Equipment P25,000 P 75,000
Building - P 225,000
Furniture and Fixtures P10,000 -
 The building is subject to a mortgage loan of P80,000, which is to be assumed by the partnership. The
partnership agreement provide that Old Stock and New Stock share profits and losses 30% and 70% respectively. On July
12, 2018 the balance in New Stock’s capital account should be:

a. P290,000
b. P305,000
c. P314,000
d. P370,000
10. It is a criteria for a principle to become generally acceptable wherein it states that it can be implemented without
undue complexity or cost.
a. Principle of Relevance
b. Principle of Objectivity
c. Principle of Feasibility
d. Principle of Cost-Benefit

AVERAGE

1. Under this form of trial balance, both debit and credit entries of the general ledger will appear in the listings
including the closed account.
a. Trial balance of balances
b. Trial balance of totals
c. Trial balance of sub-totals
d. Trial balance of per account
2. Statement 1: liquidity is the ability of the enterprise to meet currently maturing obligations.
Statement 2: solvency is the ability of cash over the longer term to meet maturing obligations.
Statement 3: financial structure is the source of financing for the assets of the enterprise.
a. Statement 1 and 2 are true while statement 3 is false
b. Statement 1 is true while statement 2 and 3 are false
c. All statements are true
d. None of the above
3. Pasado Company shows the following information for the year ended 2018.

Distribution Cost P1,000,000

Net Sales P9,500,000
Interest Expense P700,000
General and Administrative Expense P1,200,000
Cost of Goods Sold P4,000,000
Income Tax P800,000
Gain from Expropriation P500,000
Income from Discontinued Operations P600,000

What would be the reported Net Income for the year?

a. P2,400,000
b. P2,300,000
c. P1,800,000
d. P2,900,000
4. This refers to the “liquidating dividend” whereby the preferred shareholders are given priority over the ordinary
shareholders on net assets for distribution in case of corporation liquidation.
a. Dividend preference
b. Liquidation preference
c. Liquidation expense
d. Liquidation partiality
5. Alice Company shows the following information at year end.

Beginning Ending
Raw Materials P220,000 P305,000
Work in Process P400,000 P470,000
Finished Goods P250,000 P176,000

Purchases…………………………………………………………………………P3,000,000
Direct Labor……………………………………………………………………..P1,500,000
Indirect Labor…………………………………………………………………..P450,000
Taxes and Depreciation of Factory Building……………………..P150,000
Taxes and Depreciation on Sales Room and Office…………..P90,000
Utilities(60% Factory, 40% Storeroom)…………………………….P500,000
What is the TOTAL MANUFACTURING COST?

a. P5,315,000
b. P5,115,000
c. P5,025,000
d. P2,025,000
6. Which of the following does not follow the subscription and paid-up requirement?
Authorized Subscribed Paid-up
a. P100,000 P25,000 P6,250
b. P50,000 P12,500 P3,125
c. P75,000 P20,000 P5,000
d. P80,000 P20,000 P5,000
7. It is the point in time when all partnership affairs ended
a. Dissolution
b. Termination
c. Realization
d. Liquidation
8. Brock Company reported operating expenses in two categories, namely distribution and general and administrative.
The adjusted trial balance at year-end included the following expenses and loss accounts for the current year:
Accounting and legal fees P1,200,000
Advertising 1,500,000
Freight out 800,000
Interest 700,000
Loss on sale of long-term investment 300,000
Officer’s salaries 2,250,000
Rent for office space 2,200,000
Sales salaries and commission 1,400,000

One-half of the rented premises is occupied by the sales department.

 What amount should be reported as total distribution cost?
a. P4,800,000
b. P3,700,000
c. P5,900,000
d. P4,000,000
9. Agila Company provided the following information for the current year.

Beginning inventory P400,000

Freight in 300,000
Purchase returns 900,000
Ending inventory 500,000
Selling expenses 1,250,000
Sales discount 250,000
The cost of goods sold is six times the selling expenses.
What is the amount of gross purchases?
a. P8,500,000
b. P8,200,000
c. P8,450,000
d. P8,750,000
10. Which does not result to partnership dissolution?
1. admission of a new partner in the new partnership
2. retirement or withdrawal of a partner
3. death, bankruptcy or incapacity of creditors
4.incorporation of partnership
5. liquidation with dissolution
a. 3 only
b. 1, 3 and 5
c. 2, 3, 4 and 5
d. None of the above

DIFFICULT

1. MADALI LANG SA UNA is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bonus
of 10% of net income after salaries and bonus as a means of allocating profit among the partners. Salaries traceable
to the other partners are estimated to be P100,000. What amount of income would be necessary so that MADALI
LANG SA UNA would consider the choices to be equal.
a. P165,000
b. P290,000
c. P265,000
d. P305,000
2. In retirement of treasury share, if the retirement results to a loss, such loss should be debited to the following
accounts?
1. share premium to the extent of the credit when the share was issued
2. share premium from current treasury share transactions of the same class of share
3. accumulated profits and losses
a. 1, 2 and 3
b. 1 and 2 only
 c. 2 and 3 only
d. 1 and 3 only

* share premium from PREVIOUS treasury share transactions of the same class of share

3. PASADO KAYA Company had the following balances on December 31, 2016:

Cash in Bank- Current Account……………………….…….P5,000,000

Cash in Bank- Payroll Account……………..………..……...P1,000,000
Cash on Hand………………………………………..……………….P500,000
Cash in Bank-restricted for building
construction expected to be disbursed in 2017……..P3,000,000
Time Deposit, purchased December 15, 2016
and due March 15, 2017…………………………………….…..P2,000,000

The cash on hand include a P200,000 check payable to PASADO KAYA, dated January 15, 2017.
What total amount should be reported as cash and cash equivalents?

a. P8,300,000
b. P8,500,000
c. P12,300,000
d. P6,500,000
4. Share capital maybe issued for the following considerations:
1. Issued or sold for cash
2. Issued or sold on subscription basis
3. Issued in exchange for non-cash assets
4. Issued in exchange for services rendered or liability incurred
5. Issued in exchange for equity securities of other corporation
a. 1,2,4 and 5
b. 1,2 and 4
c. 1,3,4 and 5
d. 1,2,3,4 and 5
5. ADVANCE KASI AKO MAG-ISIP was incorporated on January 1, 2016 with proceeds from the issuance of P7,500,000
in share capital and borrowed funds of P1,100,000. During the first year, revenue from sales and consulting
amounted to P8,200,000, and operating cost and expenses totaled P6,400,000.
On December 15,2016, the entity declared a P300,000 dividend, payable to shareholder on January 15,2017. The
liabilities increased by P2,000,000 by December 31,2016.

On December 31,2016, what amount should be reported as total assets?

a. P11,000,000
b. P11,400,000
c. P12,100,000
d. P12,400,000
6. The articles of co-partnership must contain among others the following:
I. Name of the partnership, nature and place of business
II. Accounting period to be adopted
III. Profit and loss sharing
IV. Rights, powers and duties of the partners
V. Provision pertinent to dissolution and liquidation
a. I, II and IV
 b. I, III and IV
c. I, II, III and IV
d. I, II, II, IV and V
7. WALA NA FINISH NA Company provided the following information at year end:

Property, plant and equipment ………………………………………P35,000,000

Land ………………………………………………………………………………..P20,000,000
Cash……………………………………………………………………………. P5,000,000
Accounts receivable …………………………………………………..…P20,000,000
Allowance for doubtful accounts ………………………………...P1,000,000
Merchandise inventory…………………………………….…….….. P13,000,000
Prepaid insurance ………………………………………………………….P2,500,000
Financial asset at fair value through
other comprehensive income ………………………………..….P7,000,000
Accounts payable …………………………………………………………P8,000,000
Wages payable …………………………………………………………….P2,000,000
Short-term note payable ……………………………………………..P3,000,000
Bonds payable ………………………………………………………………P40,000,000
Premium on bonds payable ………………………………………….P3,000,000

What is the working capital?

a. P23,500,000
b. P33,500,000
c. P26,500,000
d. P45,500,000
8. Mercury Company showed cost of goods sold of P4,320,000 in the statement of comprehensive income after the
first year of operations.0
The manufacturing cost comprised of the following:

Materials Used 50%

Direct Labor incurred 30%
Manufacturing Overhead 20%

Goods in process at year-end amounted to 10% of the total manufacturing cost.

Finished goods at year-end amounted to 20% of the cost of goods manufactured.

What is the amount of the direct labor cost incurred?

a. P1,800,000
b. P1,728,000
c. P1,825,000
d. P1,828,000
9. Shorty Company, a corporation with listed shares, declares a 25% share dividend. It has 10,000 shares issued and
outstanding with par value of P100. On the date of declaration, the market value per share is P105.
The required journal entry at the date of declaration is?
a. Accumulated Profits (losses) P262,500
Share Dividend Distributable P250,000
Share Premium from share dividend P12,500
 b. Accumulated Profits (losses) P262,500
Share Dividend Distributable P262,500

c. Accumulated Profits (losses) P250,000

Share Dividend Distributable P250,000

d. Accumulated Profits (losses) P250,000

Share Premium from share dividend P12,500
Share Dividend Distributable P262,500
10. SINGKO NAGING DOS Company provide the following information at year end.

Ending goods in process P1,000,000

Depreciation-factory building P320,000
Cost of goods manufactured P5,340,000
Direct labor P1,980,000
Factory supervisor’s salary P560,000
Depreciation-headquarters building P210,000
Beginning goods in process P760,000
Ending raw materials P340,000
Indirect labor P360,000
Purchases of raw materials P2,300,000

How much is the beginning raw materials?

a. P190,000
b. P400,000
c. P473,000
d. P390,000

CLINCHER

1. This is the differences arise when foreign operations are translated from one currency into another currency for
presentation purposes.
a. Asset revaluation surplus
b. Foreign currency translation difference
c. Fair value difference
d. Foreign exchange rate difference
2. Operating activities are inflows and outflows of cash coming from the normal operating activities. The following cash
inflows and outflows are related to the usual determination of profits except?
a. Interest, dividends, commissions that were received
b. Sale of goods and services to customers
c. Collection of loan
d. Collection from account sales
3. The area of practice of accountancy namely public accountancy, commerce and industry, academe / education and
government are called:
a. Sectors
b. Scope of practice of accountancy
c. Section
d. Segment