(Average) On December 31, 2017, Gab Company's "cash and cash equivalent" balance per

ledger of
P 5,000,000 includes the following:

Demand Deposit P 2,000,000

Time Deposit – 120 days P 1,500,000
Treasury Bill –(Acquired on Dec. 15 and will P 500,000
mature on Feb. 15)
Cash in Sinking Fund –for acquisition of P 800,000
Equipment
Petty Cash Fund P 200,000

What is the correct amount of cash that Gab should report?

A. P 4,000,000 C. P 2,700,000
B. P 3,500,000 D. P 2,200,000

Solution: 2,000,000 + 200,000

(Difficult) KenetKabinet's bank statement for the month of December included the following
information:

Ending Balance, December 31 P 3,000,000

Bank Service Charge P 50,000
Proceeds of loan made by Kenet P 1,000,000

In comparing the bank statement to its own cash records, KenetKabinet found the following:

Deposits made but not yet recorded by bank P 1,500,000

Checks written and mailed but not yet recorded by bank P 790,000

KenetKabinet also discovered that that he erroneously recorded a check for P 96,000 that
should be recorded as P 69,000 from a customer.

What is the cash balance per ledger on December 31?

A. P 4,687,000 C. P 4,633,000
B. P 2,787,000 D. P 3,710,000
Solution:
Balance per Bank 3,000,000
Deposit in Transit 1,500,000
Outstanding Checks (790,000)
Adjusted bank balance 3,710,000

Balance per Ledger(Squeeze) 2,787,000

Bank service charge (50,000)
Proceeds of loan 1,000,000
Book Error(96,000-69,000) (27,000)
Adjusted Book Balance 3,710,000

(Average) Determine if the statements are true or false

Statement I. Income tax is a tax on the yearly profit arising from property, professions,
trades and offices.
Statement II. VAT is a tax which is imposed only on the increase in the worth, merit or
importance of goods, properties or services, and not on the total value of goods or service
being sold or rendered
Statement III. The Vat Payable is computed by the following formula, output tax less actual
input tax or 70% of output tax whichever is lower.

A. True, True, True

B. True, True, False
C. True, False, True
D. True, False, False

Solution : Based on iCPA

(Average) In general, there are three classes of tax systems around the world, which is :
A. single tax, direct tax, and indirect tax
B. single tax, double tax, and partial double tax
C. single tax, double tax, and VAT
D. direct tax, indirect tax, and VAT

Solution : Based on iCPA

(Difficult) Clarisse was injured in a vehicular accident that was reported in the news with the
headline "akala ko katapusan ko na". She incurred and paid medical expenses of P10,000
and legal fees of P5,000. In the same year, she recovered P35,000 as settlement from the
insurance company which insured the car owned by the other party involved in the
accident. From the above payments and transactions, the amount taxable to Clarisse is?

A. P 35,000
B. P 40,000
C. P 45,000
D. P 0
Solution : Based on iCPA. All of the recovered amounts are not income because they are
merely compensation for actual losses suffered. They do not constitute taxable gain as they
were not received as payment for services, interest or profit from investment.

(Average) Tantarantantan Company's checkbook balance on December 31, 2017 was P

7,000,000. He also noticed some items:
I. A check payable to Tantarantantan dated January 2, 2018
In payment of sale made on Dec. 10, 2017, not included
In the balance. P 1,000,000
II. A check payable drawn and payable to vendor for inventories
purchased on Dec. 15,2017 but not mailed until New Year. P 500,000
III. A check payable to Tantarantantan deposited on Dec. 30, 2017
but returned because of lack of signature, returned to the
bank on January 3,2018. P 1,500,000

What is the amount to be reported as "cash" on December 31,2017?

A. P 7,000,000 C. P 8,500,000
B. P 6,000,000 D. P 7,500,000

Solution: 7,000,000 + 500,000 – 1,500,000