1. Total receivables will remain unchanged for which of the following? a) Notes receivable discounting without recourse b) Collection of trade accounts receivable c) Assignment of receivables d) Factoring of receivables
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
1. Total receivables will remain unchanged for which of the following?
a) Notes receivable discounting without recourse
b) Collection of trade accounts receivable
c) Assignment of receivables
d) Factoring of receivables
2. An entity has 25% investment in ordinary share and 20% investment in
a) Both investments may be classified as Investment in Associate
b) The 20% may be classified as Investment at amortized cost and 25% may be classified as Investment at fair value
c) Both investments may be classified as Investment at Fair Value
d) The 25% interest may be classified as Investment at fair value and 20% may be classified as Investment in Associate
3. Purchases of merchandise inventories are always recorded net of:
a) Trade discount
b) Cash discount
c) Sales discount
d) Purchase discount
4. Which of the statements is incorrect concerning the depreciation methods?
a) Under the output method, the cost per unit of production is constant.
b) The straight-line method is particularly appropriate where the asset is expected to decline in usefulness as a function of time and the expected use pattern of the asset is fairly constant over time.
c) The sum of the years' digits method provides for a decreasing depreciation charge.
d) First-year depreciation under the double declining balance method is computed as the depreciable amount multiplied by double the straight-line rate.
e) None of the choices is incorrect
5. All of the following statements are true, except:
a) Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evident
b) When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered
c) Donation of PPE should be recorded at the fair value of the donated asset
d) When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values.
6. The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale are
a) Lesser than carrying amount
b) Less than current fair value
c) Lesser than cost
d) Greater than carrying amount
e) Greater than cost
7. DIY Company purchased machinery on January 1, 2020. It has an estimated useful life of four years and a residual value of ₱500,000. The machine is being depreciated using SYD Method. The depreciation applicable to this fixed asset for 2021 is ₱1,200,000. What was the acquisition cost of the machinery?
a) ₱ 3,000,000
b) ₱ 4,500,000
c) ₱ 4,000,000
d) ₱ 3,500,000
8. DIY Company purchased machinery on January 1, 2020. It has an estimated useful life of four years and a residual value of ₱500,000. The machine is being depreciated using SYD Method. The depreciation applicable to this fixed asset for 2021 is ₱1,200,000. What was the carrying value of the machinery on December 31, 2021?
a) ₱ 1,800,000
b) ₱ 1,700,000
c) ₱ 2,800,000
d) ₱ 3,300,000
9. BGC Company purchased 5,000 shares of ABC Company par ₱100 at ₱120 in March 2020 BGC received a share dividend of 1 share for every 5 owned on August 30, 2020. On September 15, 2020, the firm received a cash dividend of ₱10 per share. On October 1, 2020, BGC was granted the right to purchase 1 share at ₱105 for every 4 rights held. The share had a market value of ₱115 and the right had a value of ₱5 on the date the rights were received. On December 15, 2020, the company sold 2,000 rights at ₱7.50 and exercised the remaining rights. What is the average unit cost of the total investment as of December 31, 2020?
a) ₱ 99.29
b) ₱ 98.70
c) ₱ 120.65
d) ₱ 95.83
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