Advanced Financial Accounting and Reporting: Conceptual

ADVANCED FINANCIAL
ACCOUNTING AND REPORTING

Name: Date: ___________________
Course/Year/Section: Professor:________________
MULTIPLE CHOICE. Write your letter choices before the numbers.
CONCEPTUAL
1. Three of the following dissolves a partnership, except

a. Partnership business has become unlawful
b. Death, civil interdiction or insolvency of a partner
c. Expulsion of a partner
d. Partnership business can only be carried on at a loss
2. Statement 1: A newly admitted partner shall be liable for the pre-existing obligations of the
partnership at the time of his admission in favour of partnership creditors up to the extent of his
capital contribution
Statement 2: An industrial partner shall not share in the losses and his share in the profits shall be
just and equitable under circumstances
a. Both statements are true
b. Both statements are false
c. Statement 1 is true while statement 2 is false
d. Statement 2 is true while statement 1 is false
3. Which of the following is a characteristic of a process costing system?
a. Work-in process inventory is restated in terms of completed units
b. Costs are accumulated by order
c. It is used by a company manufacturing custom machinery
d. Standard costs are not applicable
4. What are prime costs?
a. The first costs incurred on a job
b. Indispensable as distinguished from avoidable costs
c. Direct materials and direct labor
d. Cost incurred on joint products before the split off point
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COMPUTATIONAL
5. On December 1, 2020, A and B formed a partnership, agreeing to share for profits and losses in the
ratio of 2:3, respectively. A invested an equipment that cost him P 25,000. B invested P 30,000 cash.
The equipment was sold for P 28,000, three hours after formation of the partnership. How much
should be the capital balance of A right after formation?
a. P 25,000
b. P 28,000
c. P 30,000
d. P 50,000
6. On March 1,2020, IN and DM formed a partnership with each contributing the following assets:
IN DM
Cash P 300,000 P 700,000

Equipment 250,000 750,000
Building - 2,250,000
Furniture 100,000 100,000
The building is subject to mortgage loan of P 800,000, which is to be assumed by the partnership
agreement provides that IN and DM share profits and losses 30% and 70%, respectively.
On March 1, 2020 the balance in DM’s capital account should be:
a. P 3,700,000
b. P 3,140,000
c. P 3,000,000
d. P 2,900,000
7. A, B, and C are partners in accounting firm. Their capital account balances at year-end were
A P 90,000, B P 110,000 and C P 50,000. They share profits and losses on a 4:4:2 ratio, after the
following special terms:
1. Partner C is to receive a bonus of 10% of net income after bonus
2. Interests of 10% shall be paid on that portion of a partner’s capital in excess of P 100,000
3. Salaries of P 10,000 and P 15,000 shall be paid to partners A & C, respectively.
Assuming a net income of P 44,000 for the year, total profit share of Partner C was:
a. P 7,800
b. P 16,800
c. P 19,400
d. P 21,800
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8. Iyel and Cute entered into a partnership ass of March 1, 2020 by investing P 125,000 and P 75,000,
respectively. They agreed that Iyel, as the managing partner was to receive a salary of P 30,000 per
year and a bonus computed at 15% of the net profit after adjustment for the salary; the balance of
the profit was to be distributed of their original capital balances. On Dec. 31, 2020 account balances
were as follows:
Cash P 70,000 Accounts payable P 60,000
Accounts receivable 67,000 Iyel Capital 125,000
Furniture 45,000 Cute Capital 75,000
Sales returns 5,000 Iyel Drawing (20,000)
Purchases 196,000 Cute Drawing (30,000)
Operating expense 60,000 Sales 233,000
Inventories on Dec. 31,2020 were as follows: supplies, P 2,500, merchandise P 73,000. Prepaid
insurance was P 950 while accrued expenses were P 1,550. Depreciation rate was 20% per year.
The partners’ capital balances on Dec. 31, 2020, after closing the net profit and drawing accounts,
were:
Iyel Cute
a. P 139,810 P 49,590
b. P 139,540 P 49,860
c. P 139,680 P 48,680
d. P 142,350 P 47,670
9. As of Dec. 31, 2020, the books of Iyel Super Cute Partneship showed capital balances of: Iyel P
40,000; Super P 25,000; Cute P 5,000. The partners’ profit and loss rate was 3:2:1, respectively. The
partners decided to liquidate and they sold all non-cash assets for P 37,000. After settlement of all
liabilities amounting to P 12,000, they still have cash of P 28,000 left for distribution. Assuming that
any capital debit balance is uncollectible, the share of Super in the distribution of the P 28,000 cash
would be:
a. P 17,800
b. P 18,000
c. P 10,200
d. P 0
10. The PLS Partnership is being dissolved. All liabilities have been paid and the remaining assets are
being realized gradually. The equity of the partners is as follows:
Partner’s Accounts Loans to/(from) partnership P/L ratio
P P 24,000 P 6,000 3
L 36,000 - 3
S 60,000 (10,000) 4
The first cash payment to any Partner(s) under a program of priorities shall be made thus:
a. To S, P 2,000
b. To L, P 6,000
c. To S, P 8,000
d. To L, P 6,000 and S P 8,000
Page 3 of 6
11. The following information relates to Super Cute Sir Iyel Company
Direct Materials P 50,000

Indirect Materials 10,000
Direct Labor 60,000
Indirect Labor 9,000
Factory overhead (excluding indirect material and indirect labor) 25,000
Conversion Cost is:

a. P 104,000
b. P 110,000
c. P 200,000
d. P 314,000
12. Tanzan Corp. employs a job order cost system. Its manufacturing activities in July, 2020, its first
month of operation, are summarized as follows
JOB Numbers
111 112 113
Direct materials P 7,000 P 5,800 P 5,000
Direct labor P 6,600 P 6,000 P 2,400
Direct labor hours 1,100 1,000 400
Units produced 200 100 300
Manufacturing overhead is applied at a rate of P 2 per direct labor hour for variable overhead and
P 3 per hour for fixed overhead. Jobs 111 and 113 were completed in July
What is the cost of the completed jobs?
a. P 24,500
b. P 28,500
c. P 30,000
d. P 35,900
13. Precious, Inc manufactures specialized precision electronics kits. In late march, Job order#1 and #2
were started. Estimated material costs were P 90,000 for both orders (60% for #1) while direct labor
were estimated at 700 for #1 and 400 for #2. Labor rate is P 18 per hour while variable overhead
rate is P 15 per hour. By the end of April, 755 of the required have been issued to production in the
amount of P 90,000 and both job orders have been 50% converted with 360 hours charged to#1 and
180 hours charged to #2 at the hourly rates given.
The total cost charged to Job Order#1 was:
a. P 45,800
b. P 52,350
c. P 64,080
d. P 65,880
Page 4 of 6
14. Benson Company, which had 6,000 units in work-in process at Jan. 1 that were 60% complete as to
conversion costs. During January 20,000 units were completed. At Jan. 31, 8,000 units remained in
WIP which were 50% complete as to conversion costs. Materials are added at the beginning of the
process. Using the weighted average method, the equivalent units for January for conversion costs
were:
a. 19,600
b. 22,400
c. 23,200
d. 24,000
15. Snowman Company instituted a new process in October. During this month, 20,000 units were
started in Department A. Of the units started, 2,000 were lost in the process, 14,000 units were
transferred to Department B and 4,000 remained in work in process at Oct. 31. The work in process
at Oct. 31 was 100% complete as to material costs and 50% complete as to conversion costs.
Material costs of P 54,000 and conversion costs of P 96,000 was charged to Department A in
October. What were the total costs transferred to Department B?
a. P 105,000
b. P 112,000
c. P 126,000
d. P 130,000
16. Information on Captain Inc’s direct labor costs for the month of January is as follows:
Actual direct labor hours 34,500

Standard direct labor hours 35,000
Total direct labor payroll P 241,500
Direct labor efficiency variance – favourable P 3,200
What is Captain’s direct labor rate variance?
a. P 17,250 unfavorable
b. P 20,700 unfavorable
c. P 21,000 unfavorable
d. P 21,000 favorable
17. Dalia uses a standard costing system in connection with the manufacturing of a “one size fits all”
article of clothing. Each unit of finished product contains 1.92 yards of direct material. However, a
20% direct material spoilage calculated on input quantities occurs during the manufacturing process.
The cost of the direct material is P 3 per yard. The standard direct material cost per unit of finished
product is:
a. P 4.80
b. P 6.00
c. P 7.20
d. P 7.50
Page 5 of 6
18. The following were among Cage Co.’s 2020 costs:
Normal spoilage P 5,000

Freigh-out 10,000
Excess of actual manufacturing cost over standard cost 35,000
Standard manufacturing cost 100,000
Actual prime manufacturing costs 80,000
Cage’s 2020 actual manufacturing overhead was:
a. P 40,000
b. P 45,000
c. P 55,000
d. P 120,000
19. Lake Corp. produces main products Kung and Fu. The process also yields by-product Panda. Net
realizable value of by-product Panda is subtracted from joint cost production of Kung and Fu
amounting P 79,000
Product Units produced Market value Additional cost after split-off

Kung 1,000 P 40,000 P0
Fu 1,500 35,000 0
Panda 500 7,000 3,000
Using net realizable value method for allocating joint cost, how much of joint cost should be
Allocated to product Kung?
a. P 40,000
b. P 53,333
c. P 54,000
d. P 26,333
20. Fita Company is preparing its annual profit plan. As part of analysis of the profitability of individual
products, the controller estimates the amount of overhead that should be allocated to the individual
product lines from the information given as follows:
Wall Mirrors Specialty Windows
Units produced 25 25
Material move per product line 5 15
Direct labor hours per unit 200 200
Budgeted material handling costs P 50,000
Under Activity-Based Costing (ABC), the material handling cost allocated to one unit of wall mirrors
would be:
a. P 1,000
b. P 500
c. P 1,500
d. P 2,000
Page 6 of 6

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ADVANCED FINANCIAL

ACCOUNTING AND REPORTING

MULTIPLE CHOICE. Write your letter choices before the numbers.

1. Three of the following dissolves a partnership, except

Cash P 300,000 P 700,000

Direct Materials P 50,000

Conversion Cost is:

Actual direct labor hours 34,500

Normal spoilage P 5,000

Product Units produced Market value Additional cost after split-off

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