10/13/21, 4:02 PM CUP 1: DIFFICULT ROUND

CUP 1: DIFFICULT ROUND Total points 63/70

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CUP 1: DIFFICULT ROUND 63 of 70 points

NOTE: 𝗖𝗟𝗜𝗖𝗞 𝗧𝗛𝗘 𝗦𝗨𝗕𝗠𝗜𝗧 𝗕𝗨𝗧𝗧𝗢𝗡 𝗕𝗘𝗙𝗢𝗥𝗘 𝗧𝗛𝗘 𝗧𝗜𝗠𝗘 𝗥𝗨𝗡𝗦 𝗢𝗨𝗧. If not, YOUR ANSWER will not be
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10/13/21, 4:02 PM CUP 1: DIFFICULT ROUND

First statement: An adjusted trial balance that shows equal debit and 7/7
credit columnar totals proves the accuracy of the adjusting entries.
Second statement: Reversing entries are made at the end of the
accounting cycle to correct errors in the original recording of
transactions. *

A. True,True

B. False, True

C. True,False

D. False,False

An example of an item which is not a liability is * 7/7

A. Advance from customer on contract

B. Accrued estimated warranty cost

C. Bonus issue

D. All of the above

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10/13/21, 4:02 PM CUP 1: DIFFICULT ROUND

Which of the following should not be disclosed in an enterprise’s 0/7

statement of cashflows prepared using the indirect method? *

A. Interest paid, net of amounts capitalized.

B. Income taxes paid.

C. Cash flow per share.

D. Dividends paid on preferred stock.

E. None of the above

Correct answer

C. Cash flow per share.

On March 1, 2013, Forest Co. borrowed cash and signed a 36-month, 7/7
interest-bearing note on which both the principal and interest are
payable on February 28, 2016. At December 31, 2015, the liability for
accrued interest should be *

A. 10 months' interest.

B. 22 months' interest.

C. 34 months' interest.

D. 36 months' interest.

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10/13/21, 4:02 PM CUP 1: DIFFICULT ROUND

The accountant of the Review Company made the following adjusting 7/7
entry on December 31. Prepaid Rent = P1,800, Rent Expense = P1,800. If
annual rent is paid in advance every October 1, the original transaction
entry made was *

A. Debit Prepaid Rent and credit Cash, P1,800.

B. Debit Rent Expense and credit Cash, P1,800.

C. Debit Rent Expense and credit Cash, P2,400.

D. Debit Rent Expense and credit Cash, P7,200.

The accountant of Mutya Company made the following adjusting entry 7/7
on December 31. Rent Income = P 900, Unearned Rent Income = P 900. If
annual rent is received in advance every March 1. the original transaction
entry made was *

A. Debit Cash and credit Unearned Rent Income, P900.

B. Debit Cash and credit Rent Income, P1,080.

C. Debit Cash and credit Rent Income, P5,400.

D. Debit Rent Income and credit Cash, P5,400.

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10/13/21, 4:02 PM CUP 1: DIFFICULT ROUND

Lakers Company received P12,000 from a tenant on December 1 for four 7/7
months' rent of an office. This rent was for December, January, February,
and March. If Lakers debited Cash and credited Unearned Rental Income
for P12,000 on December 1, the necessary adjustment December 31
would include *

A. A debit to Rental Income of P3,000

B. A credit to Rental Income of P3,000

C. A debit to Unearned Rental Income of P9,000

D. A credit to Unearned Rental Income of P9,000

Prepaid Insurance: Balance beginning of year = P5,600, Balance end of 7/7

yea = P6,400. During the year, an additional business insurance policy
was purchased. A 2-year premium of P2,500 was paid and charged to
Prepaid Insurance.Determine the adjusting entry that was made to arrive
at the ending balance. *

A. Debit Insurance Expense and credit Prepaid Insurance, P1,700.

B. Debit Prepaid Insurance and credit Insurance Expense, P1,700.

C. Debit Prepaid Insurance and credit Insurance Expense, P800.

D. Debit Prepaid Insurance and credit Insurance Expense, P6,400.

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10/13/21, 4:02 PM CUP 1: DIFFICULT ROUND

* 7/7

A. P12,500

B. P4,600

C. P8,400

D. P500

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10/13/21, 4:02 PM CUP 1: DIFFICULT ROUND

At 31 December 2017 the following require inclusion in a company’s 7/7

financial statements: a. On 1 January 2017 the company made a loan of
P12,000 to an employee, repayable on 1 January 2018, charging interest
at 2% per year. On the due date she repaid the loan and paid the whole
of the interest due on the loan to that date. b. The company paid an
annual insurance premium of P9,000 in 2017, covering the year ending 31
August 2018. c. In January 2018 the company received rent from a tenant
of P4,000 covering the six months to 31 December 2017. For these
items, what should be included as current assets in the company’s
statement of financial position as at 31 December 2017? *

A. P22,240

B. P18,240

C. P19,240

D. P15,240

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10/13/21, 4:02 PM CUP 1: DIFFICULT ROUND

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