Auditing and Assurance: Concepts and Applications 1 & 2

Question 1
Using the information in Case No. 2, what is the book balance on June 30, 20x1?
Response: P732,400

Score: 1 out of 1 Yes

Question 2
Using the information in Case No. 1, what amount of compensation expense should be
recognized in year 2?
Response: P114,000

Score: 1 out of 1 Yes

Question 3
Using the information in Case No. 10, what is the total effect of errors on the 20x2 net income?
Response: P320,100 understated
Score: 1 out of 1 Yes

Question 4
Using the information in Case No. 1, what amount should the entity report as share options
outstanding at the end of year 2?
Response: P564,000
Score: 1 out of 1 Yes

Question 5
Using the information in Case No. 2, what is the amount of deposit in transit on June 30?
Response: P70,000
Score: 1 out of 1 Yes

Question 6
Using the information in Case No. 8, what is the required balance of the Allowance for Bad
Debts account on December 31, 20x1?

Response: P583,200
Score: 0 out of 1 No
Question 7
Using the information in Case No. 7, what is the retained earnings balance before
appropriation of treasury shares on December 31, 20x2?

Response: P294,765
Score: 1 out of 1 Yes

Question 8
Using the information in Case No. 6, what is the correct inventory on November 30, 20x1?
Response: P206,500
Score: 1 out of 1 Yes

Question 9
Using the information in Case No. 1, what amount should the entity report as share options
outstanding at the end of year 3?
Response: P856,000
Score: 1 out of 1 Yes

Question 10
Using the information in Case No. 3, what is the gain (loss) on the sale of Joseph Co. ordinary
shares on March 1, 20x2?
Response: P43,500
Score: 1 out of 1 Yes

Question 11
Using the information in Case No. 7, what is the unappropriated retained earnings balance on
December 31, 20x2?
Response: P229,965
Score: 1 out of 1 Yes

Question 12
Using the information in Case No. 4, what amount of unrealized loss should be shown as a
component of other comprehensive income in the 20x5 statement of comprehensive income?
Response: P8,538
Score: 1 out of 1 Yes
Question 13
Using the information in Case No. 6, what is the estimated inventory on December 31, 20x1?
Response: P183,100

Score: 0 out of 1 No

Question 14
Using the information in Case No. 3, what amount of unrealized gain on these securities should
be reported in the 20x2 income statement?
Response: P12,000
Score: 1 out of 1 Yes

Question 15
Using the information in Case No. 2, what are the total bank receipts in June?
Response: P88,000
Score: 1 out of 1 Yes

Question 16
Using the information in Case No. 5, what is the current portion of Stephen’s notes payable on
March 31, 20x3?
Response: P1,600,000
Score: 1 out of 1 Yes

Question 17
Using the information in Case No. 6, what is the correct amount of net purchases up to
December 31, 20x1?
Response: P789,000
Score: 0 out of 1 No

Question 18
Using the information in Case No. 2, what are the total book receipts in June?

Response: P218,000
Score: 1 out of 1 Yes

Question 19
Using the information in Case No. 12, what is the total shareholders’ equity as of June 30,
20x1?
Response: P1,479,240
Score: 1 out of 1 Yes

Question 20
Using the information in Case No. 12, what are the total liabilities and shareholders’ equity as
of June 30, 20x1?
Response: P2,596,500
Score: 1 out of 1 Yes

Question 21
Using the information in Case No. 3, what amount should be reported as trading securities in
Rafael Company’s statement of financial position on December 31, 20x2?
Response: P663,000
Score: 1 out of 1 Yes

Question 22
Using the information in Case No. 11, what is the depreciation expense on buildings for 20x6?

Response: P1,405,350
Score: 1 out of 1 Yes

Question 23
Using the information in Case No. 10, what is the total effect of errors on the retained earnings
balance on December 31, 20x2?

Response: P155,100 understated

Question 24
Using the information in Case No. 8, what is the net realizable value (NRV) of Joy’s accounts
receivable on December 31, 20x1?

Response: P3,970,000
Score: 1 out of 1 Yes

Question 25
Using the information in Case No. 12, what are the total current assets as of June 30, 20x1?
Response: P933,000
Score: 1 out of 1 Yes

Question 26
Using the information in Case No. 1, what amount of compensation expense should be
recognized in year 1?
Response: P450,000
Score: 1 out of 1 Yes

Question 27
Using the information in Case No. 10, what is the total effect of errors on the 20x1 net income?
Response: P165,000 overstated

Score: 1 out of 1 Yes

Question 28
Using the information in Case No. 8, what is the balance of the Allowance for Bad Debts
account on December 31, 20x1 (before year-end adjustment)?
Response: P226,000

Score: 1 out of 1 Yes

Question 29
Using the information in Case No. 11, what is the depreciation expense on machinery and
equipment for 20x6?
Response: P2,594,375

Score: 1 out of 1 Yes

Question 30
Using the information in Case No. 5, what is the balance of estimated warranties payable as of
March 31, 20x3?
Response: P342,000

Score: 1 out of 1 Yes

Question 31
Using the information in Case No. 11, what is the depreciation expense on delivery equipment
for 20x6?
Response: P1,200,000

Score: 1 out of 1 Yes

Response: P387,270
Score: 0 out of 1 No

Question 33
Using the information in Case No. 5, how much was received by Stephen from the sale of
bonds on July 1, 20x1?
Response: P8,852,960
Score: 1 out of 1 Yes

Question 34
Using the information in Case No. 8, what is the additional bad debt expense to be recognized
for the year ended December 31, 20x1?
Response: P283,200

Score: 1 out of 1 Yes

Question 35
Using the information in Case No. 9, what is the carrying value of Patent No. 1122098 on
December 31, 20x4?
Response: P175,200

Score: 1 out of 1 Yes

Question 36
Using the information in Case No. 6, what is the correct amount of net purchases up to
November 30, 20x1?
Response: P692,500

Score: 1 out of 1 Yes

Question 37
Using the information in Case No. 4, what amount should be reported as an investment in
bonds in the statement of financial position on December 31, 20x3?
Response: P1,075,000
Score: 1 out of 1 Yes
Question 38
Using the information in Case No. 5, what amount of noncurrent liabilities should Stephen
report in its March 31, 20x3 statement of financial position?

Response: P14,370,783
Score: 1 out of 1 Yes

Question 39
Using the information in Case No. 2, what is the adjusted cash balance as of June 30, 20x1?
Response: P732,400
Score: 0 out of 1 No

Question 40
Using the information in Case No. 9, what is the carrying value of Patent No. 1122098 on
December 31, 20x8?
Response: P131,400
Score: 1 out of 1 Yes

Question 41
Using the information in Case No. 6, what is the gross income for the 11 months ended
November 30, 20x1?
Response: P224,000
Score: 1 out of 1 Yes

Question 42
Using the information in Case No. 7, what is the total share premium as of December 31, 20x2?
Response: P1,295,280
Score: 1 out of 1 Yes

Question 43
Using the information in Case No. 12, what are the total current liabilities as of June 30, 20x1?

Response: P637,260
Score: 1 out of 1 Yes

Question 44
Using the information in Case No. 7, what is the total shareholders’ equity on December 31,
20x2?
Response: P2,455,215
Score: 1 out of 1 Yes

Question 45
Using the information in Case No. 1, what amount of compensation expense should be
recognized in year 3?
Response: P292,000
Score: 1 out of 1 Yes

Question 46
Using the information in Case No. 11, what is the depreciation expense on leasehold
improvements for 20x6?
Response: P840,000
Score: 1 out of 1 Yes

Question 47
Using the information in Case No. 12, what is the amount of property, plant, and equipment,
net of accumulated depreciation as of June 30, 20x1?
Response: P1,663,500
Score: 1 out of 1 Yes

Question 48
Using the information in Case No. 5, what amount of current liabilities should Stephen report
in its March 31, 20x3 statement of financial position?
Response: P5,642,000
Score: 0 out of 1 No

Question 49
Using the information in Case No. 9, what is the carrying value of Patent No. 1122098 on
December 31, 2x11?
Response: P52,560
Score: 1 out of 1 Yes

Question 50
Using the information in Case No. 11, What is the accumulated depreciation – buildings on
December 31, 20x6?
Response: P7,982,850
Score: 1 out of 1