4TH ANNUAL REGIONAL CONVETION JAM- FINALS

JUNIOR ACCOUNTING MASTERS

JAM1. The process of converting non-cash resources and rights into cash or equivalent claims to cash is
called ________________.
ANSWER: Realization

JAM2. Goods in transit at year-end purchased FOB shipping point were appropriately recorded in the
purchases account but were incorrectly excluded from the ending inventory. What effect will this
omission have on assets, liabilities and equity at year-end?
a) No effect, Understated, Overstated
b) No effect, Overstated, Understated
c) Understated, No effect, Overstated
d) Understated, No effect, Understated
ANSWER: D. Understated, No effect, Understated

JAM3. A concept that states that all the components of a complete set of financial statement are
interrelated
a. Entity
b. Accounting Process
c. Concept of Articulation
d. Principle of Fair Presentation
ANSWER: C. Concept of Articulation

JAM4. The preparation of adjusting entries

a. is easy because they are simply copied from the work sheet
b. typically precedes the preparation of the financial statements
c. typically precedes the preparation of the work sheet
d. is difficult, and therefore they must first entered into the general journal in pencil.
ANSWER: A. is easy because they are simply copied from the work sheet

JAM5. On January 1, 2011, the merchandise inventory of Colter, Inc. was P1,000,000. During 2011 Colter
purchased P2,000,000 of merchandise and recorded sales of P2,500,000. The gross profit rate on
these sales was 25%.
What is the merchandise inventory of Colter at December 31, 2011?
ANSWER: P 1,125,000.

JAM6. Daye Company’s salaried employees are paid biweekly. Occasionally, advances made to employees
are paid back by payroll deductions. Information relating to salaries for the calendar year 2012 is as
follows:
12/31/11 12/31/12
Employee advances P12,000 P 18,000
Accrued salaries payable 91,000 ?
Salaries expense during the year 910,000
Salaries paid during the year (gross) 875,000
At December 31, 2012, what amount should Daye report for accrued salaries payable?
ANSWER: P126,000

JAM7. On December 31, 2001 Abel Company's inventory burned. Sales and purchases for the year had
been P1,500,000 and P980,000, respectively. The beginning inventory (Jan. 1, 2001) was P190,000; in
4TH ANNUAL REGIONAL CONVETION JAM- FINALS
the past Abel's gross profit has averaged 40% of selling price. Compute the estimated cost of
inventory burned.
ANSWER: P270,000

JAM8. XYZ Company needed a new warehouse and a contractor quoted a P5,000,000 price to construct it.
XYZ believed that it could build the warehouse for P4,300,000 and decided to use company employees
to build it. The final construction cost incurred by XYZ was P4,800,000 but the asset was recorded at
P5,000,000. What principle is this a violation of?
a. Cost Principle
b. Separate Entity
c. Matching Principle
d. Full disclosure
ANSWER: A. Cost Principle

JAM9. If no adjustments are needed for a particular company, its

a. post closing trial balance will be identical to its trial balance
b. adjusted trial balance will be identical to its post closing trial balance
c. trial balance will be identical to its adjusted trial balance
d. trial balance, adjusted trial balance, and post closing trial balance will be identical
ANSWER: C. trial balance will be identical to its adjusted trial balance

JAM10. Which of the following accounts will have an amount in the Adjustment columns of the work
sheet but probably not in the Trial Balance?
a. Owner’s Capital
b. Utilities Expense
c. Depreciation Expense, Machinery
d. Revenue from Services
ANSWER: C. Depreciation Expense, Machinery

JAM11. Clark Co.’s advertising expense account had a balance of P146,000 at December 31, 2010, before
any necessary year-end adjustment relating to the following:
• Included in the P146,000 is the P15,000 cost of printing catalogs for a sales promotional
campaign in January 2011.
• Radio advertisements broadcast during December 2010 were billed to Clark on January 2, 2011.
Clark paid the P9,000 invoice on January 11, 2011.
What amount should Clark report as advertising expense in its income statement for the year ended
December 31, 2010?
ANSWER: P140,000

JAM12. The professional regulatory board created under R.A. 9298 tasked with the supervision of the
registration, licensure and practice of accountancy in the Philippines.
a. PRC
b. BOA
c. PICPA
d. FRSC
ANSWER: B. BOA

JAM13. An analysis of Thrift Corp.’s unadjusted prepaid expense account at December 31, 2010, revealed
the following:
4TH ANNUAL REGIONAL CONVETION JAM- FINALS
• An opening balance of P1,500 for Thrift’s comprehensive insurance policy. Thrift had paid an
annual premium of P3,000 on July 1, 2009.
• A P3,200 annual insurance premium payment made July 1, 2010.
• A P2,000 advance rental payment for a warehouse Thrift leased for one year beginning January
1, 2011.
In its December 31, 2010 balance sheet, what amount should Thrift report as prepaid expenses?
ANSWER: P3,600

JAM14. An important purpose of closing entries is to

a. transfer the net income or loss to owner’s capital account
b. set permanent account balances to zero to begin the next period
c. update the nominal accounts at year end
d. help achieve the goals of the matching principle
ANSWER: A. transfer the net income or loss to owner’s capital account

JAM15. Presented below are the owner’s Capital, owner’s Withdrawals, and Income Summary accounts
for Karen’s Pet Grooming Boutique for the year ended December 31, 20xx. Closing entries have been
entered and posted.

Karen Fitch, Withdrawals Income Summary

1-May 3,800 31-Dec 9,800 31-Dec 4,500 31-Dec 19,000
19-Aug 6,000 31-Dec 14,500

Karen Fitch,
Capital
31-Dec 9,800 1-Jan 8,000
31-Dec 14,500

What is the correct amount of Karen Fitch, Capital on December 31, 20xx?
ANSWER: P12,700

JAM16. A work sheet is useful for all except of the following?

a. recording transactions from source documents
b. recording adjusting entries
c. recording closing entries
d. preparing financial statements
ANSWER: A. recording transactions from source documents

JAM17. On June 1, 2011, Pitt Company sold merchandise with an invoice price of P2,800,000 to Burr on
account. Pitt allowed trade discounts of 30% and 20%. Credit terms were 2/10 n/30 and the sale was
made FOB shipping point. Pitt prepaid P200,000 of delivery costs for Burr as an accommodation. June 11,
2011, what amount was received by Pitt from Burr as remittance in full?
ANSWER: P2,944,000
Invoice price 2,800,000
Cash discount (2,800,000 x 2%) (56,000)
Net amount 2,744,000
Add: Reimbursement of delivery cost 200,000
Total remittance from Burr 2,944,000
Invoice price is equal to list price less trade discount.
4TH ANNUAL REGIONAL CONVETION JAM- FINALS

JAM18. The allowance for Bad debts has a P10,000 starting balance. P3,000 worth of receivables was
recovered during the year. Bad debts expense amounted to P15,000. Accounts receivable at year end is
P670,000 and its Net realizable value is P662,000. What is the amount of receivables written off during
the year?
ANSWER: P20,000
[(10,000 + 3,000 + 15,000) – (670,000 – 662,000)]

JAM19. A building which was purchased on January 1, 2009 was sold on December 31, 2013. It has an
original cost of P2,050,000 with scrap value of P50,000. Engineers estimated that it would last for 8 years
only. How much cash should we received during the said sale in order to have a gain of P1,000,000?
ANSWER: P1,800,000
Cost 2,050,000
Accumulated Depreciation (2,050,000-50,000) x 5/8 (1,250,000)
Book Value 800,000
Gain on Sales 1,000,000
Proceeds 1,800,000

JAM20. Malatik Company showed net income of P480,000 in its income statement for the current year.
Selling expenses were equal to 15% of sales and also 25% of cost of sales. All other expenses were 13% of
sales. Ignoring Income Tax, what is the gross profit for the current year?
ANSWER: P1,600,000

Sales 100%
Cost of Sales (15%/25%) 60%
Selling Expenses 15%
Other Expenses 13%
Net Income 12%
Sales (480,000/12%) 4,000,000.00
Cost of Sales (4,000,000 x 60%) (2,400,000.00)
Gross Profit 1,600,000.00

JAM21. The credit total of a trial balance exceeds the debit total by P350. In investigating the cause of the
difference, the following errors were determined: a credit to accounts receivable of P550 was not posted;
a P5,000 debit to be made to the Purchases account was debited to Accounts payable instead; a P3,000
credit to be made to the Sales account was credited to the Accounts receivable account instead; the
Interest payable account balance of P4,500 was included in the trial balance as P5,400. The correct
balance of the trial balance is ___________.
ANSWER: P7,450
4TH ANNUAL REGIONAL CONVETION JAM- FINALS
JAM22. Hall Corp. reported revenue of P1,100,000 in its accrual basis income statement for the year
ended June 30, 2011. Additional information was as follows:
Accounts receivable June 30, 2010 P250,000
Accounts receivable June 30, 2011 530,000
Uncollectible accounts written off
during the fiscal year 13,000
Under the cash basis, Hall should report revenue of __________.
ANSWER: P807,000

JAM23. Which of the following statements is correct?

I. Accounting provides qualitative information, financial information, and quantitative
information.
II. Qualitative information is found on the notes to the financial statements only.
III. Accounting is considered an art because of it is supported by an organized body of
language.
IV. Accounting is considered a science because it involves the exercise of skill and judgment.
V. Measurement is the process of assigning numbers to objects such inventories or plant
assets and to events such as purchases or sales.
VI. All quantitative information is also financial in nature.
VII. The accounting process of assigning peso amounts or numbers to relevant objects and
events is known as Identification.
a. I, V
b. I, II, V, VI
c. I, II, III, IV, V
d. II, V, VI
ANSWER: A. I, V

JAM24. On the work sheet, under what circumstances will the last two columns be in balance after the
initial footing?
a. under no circumstances
b. under all circumstances, assuming no arithmetical errors have been made
c. when net income is zero
d. when no adjustment have been entered on the work sheet
ANSWER: C. when net income is zero

JAM25. A subsidiary ledger is

a) A listing of the components of account balances
b) A listing of accounts of a subsidiary
c) A listing of account balances just before closing entries are prepared
d) A backup system to protect against record destruction
ANSWER: A - A listing of the components of account balances

JAM26. The following information is given:

 Current liabilities 100,000
 Non-Current liabilities 150,000
 Owner’s Equity Twice as much as total liabilities
 Current Assets 40% of total assets
What is the total non-current asset?
ANSWER: P450,000 (250,000 x 3 x 60%)
4TH ANNUAL REGIONAL CONVETION JAM- FINALS
JAM27. The trial balance debit or credit amount of each account is combined with the amount of any
debit or credit adjustment to that account to determine the new balance of the account. This process is
known as ___________________.
ANSWER: Cross Footing

JAM28. On July 31, 2012, Ayo General Services purchased equipment for P80,000 and depreciated it on a
straight-line basis for six years with salvage value of 10% of its cost. On December 31, 2014, Ayo sold the
equipment for 55234. How much is the gain or loss on sale of equipment? Please indicate if it is a gain or
loss.
ANSWER: P4,234 Gain
Cost 80,000
Accumulated Depreciation (80,000x90%) x29/72 (29,000)
Book Value 51,000
Proceeds 55,234
Gain on sale 4,234

JAM29. An entry debiting inventory and crediting cost of goods sold would be made when
a) Merchandise is sold and the periodic inventory method is used.
b) Merchandise is sold and the perpetual inventory method is used.
c) Merchandise is returned and the perpetual inventory method is used.
d) Merchandise is returned and the periodic inventory method is used.
ANSWER: C. Merchandise is returned and the perpetual inventory method is used.

JAM30. The operating expenses other than interest expense of Tactful Company for the current year
amount to 40% of cost of sales but only 20% of sales. Interest expense is 5% of sales. The amount of
purchases is 120% of cost of sales. Ending inventory is twice as much as the beginning inventory. The
income after tax of 30% for the current year is P560,000. What is the amount of sales for the current
year?
ANSWER: P 3,200,000
Income before income tax (560,000/70%) 800,000.00

Sales 100%
Cost of Sales (20%/40%) 50%
Operating Expenses 20%
Interest Expense 5%
Income Before Income Tax 25%

Sales (800,000/25%) 3,200,000.00

4TH ANNUAL REGIONAL CONVENTION JAM FINALS
C1. On October 1, 2010, Acme Fuel Co. sold 100,000 gallons of heating oil to Karn Co. at P3 per gallon.
Fifty thousand gallons were delivered on December 15, 2010, and the remaining 50,000 gallons were
delivered on January 15, 2011. Payment terms were: 50% due on October 1, 2010, 25% due on first
delivery, and the remaining 25% due on second delivery. What amount of revenue should Acme
recognize from this sale during 2010?
ANSWER: P150,000

C2. Gross billings for merchandise sold by Pye Company to its customers last year amounted to
P12,720,000; sales returns and allowances were P270,000, sales discounts were P175,000, and
freight-out was P140,000. Net sales last year for Pye Company were ____________.
ANSWER: P12,275,000

C3. The following balances were reported by Mall Co. at December 31, 2010 and 2009:
12/31/10 12/31/09
Inventory P260,000 P290,000
Accounts payable 75,000 50,000
Mall paid suppliers P490,000 during the year ended December 31, 2010. What amount should Mall
report for cost of goods sold in 2010?
ANSWER: P545,000

C4. On August 1 of the current year, the company borrowed P278,000 from the local bank. The loan was
for 12 months at 9 % interest payable at the maturity date. The adjusting entry at the end of the year
relating to this obligation would include a debit to interest expense of?
ANSWER: P10,425 (278,000 x 9% x 5/12)

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