Saint Mary’s University

School of Accountancy

Practical Accounting 2 Quiz Bee

Elimination Round

Name:_____________________________________________________________________________
Direction: Encircle the letter of the correct answer.

Partnership
1. Cab and Jo are considering forming a partnership whereby profits will be allocated through the
use of salaries and bonuses. Bonuses will be 10% of net income after total salaries and bonuses.
Cab will receive a salary of P30,000 and a bonus. Jo has the option of receiving a salary of
P40,000 and a 10% bonus or simply receiving a salary of P 52,000. Both partners will receive the
same amount of bonus.
Determine the level of net income that would be necessary so that Jo would be indifferent to the
profit sharing option selected.
a. P240,000 c. P94,000
b. P300,000 d. P334,000

2. The partnership agreement of RR and SS provides that interest at 10% per year is to be credited
to each partner on the basis of weighted-average capital balances. A summary of the capital
accounts of SS for the year ended December 31, 2011, is as follows:
Balance, January 1…………………………. P420,000
Additional investment, July 1……………… 120,000
Withdrawal, August 1……………………….. (45,000)
Balance, December 31……………………. 495,000
What amount of interest should be credited to SS’s capital account for 2011?
a. P45,750 c. P46,125
b. P49,500 d. P51,750

3. MM, NN and OO partners, share profits on a 5:3:2 ratio. On January 1, 2012, PP was admitted to
the partnership with a 10% share in the profits. The old partners continue to participate in profits
in their original ratio.
For the year 2012, the net income of the partnership was reported as P12,500. However, it was
discovered that the following items were omitted in the firm’s books:
Unrecorded at year-end 2011 2012
Prepaid expense……………………….. P800
Accrued expense……………………… P600
Unearned income……………………... 700
Accrued income………………………. 500
What is the new profit and loss ratio for N?
a. 30% c. 27%
b. 25% d. 32%

4. Refer to number 3, how much is the share of partner OO in the 2012 net income?
a. P2,214 c. P2,286
b. P2,322 d. P2,250

5. Capital balances and profit and loss sharing ratios of the partners in the BIG Entertainment
Gallery are as follows:
Betty, capital (50%)…………………… P140,000
Iggy, capital (30%)……………………. 160,000
Grabby, capital (20%)……………….. 100,000
Total……………………………………….. P400, 000
Betty needs money and agrees to assign half of her interest in the partnership to Yessir for
P90,000 cash. Yessir pays directly to Betty. Yessir does not become a partner.
What is the total capital of the BIG Partnership immediately after the assignment of the interest to
Yessir?
a. P330,000 c. P490,000
b. P200,000 d. P400,000

Corporate Liquidation

6. The following data were taken from the statement of affairs for Liquo Company:
Assets pledged for fully secured liabilities
(fair value, P75,000)…………………………… P90,000
Assets pledged to partially secured liabilities
 (fair value, P52,000)…………………………... 74,000
Free assets (fair value, P40,000)…………………….. 70,000
Unsecured liabilities with priority…………………… 7,000
Fully secured liabilities………………………………… 30,000
Partially secured liabilities…………………………… 60,000
Unsecured liabilities without priority……………….. 112,000
Compute the: (1) total estimated deficiency t unsecured creditors, and (2) the expected recovery
per peso of unsecured claims.
a. (1) P42,000; (2) P0.65 c. (1) P 0; (2) P1.00
b. (1) P3,000; (2) P0.98 d. (1) P42,000; (2) P0.70
Joint Venture

7. Ramos, Silva and Torre formed a joint venture. Ramos is to act as manager and is designated to
record the joint venture accounts in his books. As manager, he is allowed a salary of P12,000.
Remaining profit (loss) is to be divided equally.
The following balances appear at the end of 2011 before adjustments for venture inventory and
profits.
Debit Credit
Joint venture cash………………. P48,000
Silva, capital……………………… 3,000
Torre, capital…………………….. P27,000
The venture is to terminate on December 31, 2011 with unsold merchandise costing P10,400.
Assuming that the venture profit is P5,000, what is the balance of the Joint Venture account
before the distribution of profit?
a. P6,400 Cr. c. P19,000 Dr.
b. P5,400 Dr. d. P15,400 Dr.

8. Alas and Bernal are participants in a venture for the acquisition of costruction supplies at an
auction. The two participants agreed to contribute cash of P20,000 each to be used in purchasing
the supplies, and to share profits and losses equally. They also agreed that each shall record his
purchases, sales and expenses in his own books.
Several months later, the two participants terminated the venture. The following data relate to the
venture activities:
Alas Bernal
Joint venture……………………. P16,000 Cr. P18,400 Cr.
Value of inventory taken…….. 600 2,200
Expenses paid from JV cash… 800 1,800
The amount of joint venture sales is:
a. P77,000 c. P34,400
b. P27,000 d. None

9. Refer to number 8, how much would Alas receive in the final settlement?
a. P2,000 c. P4,000
b. P18,600 d. P38,000

10. Ranto and Santo formed a joint venture to acquire and sell a special type of merchandise. Ranto is
to manage the venture and to furnish the capital. The participants are to share equally any gain or
loss on the joint venture. On April 1, 2011, Santo sent Ranto P10,000 cash, which was all used to
purchase merchandise. Ranto paid freight of P240 on the merchandise purchased. On April 27,
one half of the merchandise was sold for P7,200 cash. Ranto paid the cost of delivering
merchandise to customers which amounted to P260. No further transactions occurred until the
end of the month.
The profit (loss) of the venture for the month of April, 2011 is:
a. P1,820 c. P(1,700)
b. P1,950 d. None

Installment Sales

11. Dj Co. accounts for installment sales on the installment basis. On January 1, 2012, ledger
accounts included the following balances:
Installment Receivable, 2010…………… P38,500
Installment Receivable, 2011…………… 155,000
Deferred Gross Profit, 2010……………… 11,550
Deferred Gross Profit, 2011……………… 62,000
On December 31, 2012, account balances before adjustments for realized gross profit on
installment sales were:
Installment Receivable, 2010…………… P none
 Installment Receivable, 2011…………… 42,000
Installment Receivable, 2012…………… 100,500
Deferred Gross Profit, 2010……………… 11,550
Deferred Gross Profit, 2011……………… 62,000
Deferred Gross Profit, 2012……………… 75,810
Installment sales in 2012 were made at 42% above cost of merchandise.
The total realized gross profit on installment sales in 2012 is?
a. P132,510 c. P97,510
b. P98,910 d. P102,834

12. The books of Harry Co. show the following balances on December 31, 2012:
Accounts Receivable…………………………….. P313,750
Deferred Gross Profit (before adjustment)……. 38,000
Analysis of the accounts receivable reveal the following:
Regular accounts………………………………….. P207,500
2011 installment accounts……………………….. 16,250
2012 installment accounts……………………….. 90,000
Sales on an installment basis in 2011 were made at 30% above cost; in 2012, at 33 1/3 above cost.
Expenses paid was P1,500 relating to installment sales. How much is the net income on
installment sales?
a. P11,000 c. P16,000
b. P11,500 d. P10,250

13. These data pertain to installment sales of Kester Store:

 Down payment: 20%
 Installment sales: P545,000 in 2010; P785,000 in 2011; and, P968,000 in 2012
 Mark-up on cost: 35%
 Collections after down payment: 40% in the year of sale, 35% in the year after, and 25%
in the third year.
Compute the Installment Accounts Receivable at the end of 2012.
a. P621,640 c. P464,640
b. P646,460 d. P612, 640

Construction Accounting

14. DJ Builders, Inc. has consistently used the percentage-of-completion method of accounting for
construction-type contracts. During 2011, DJ started work on a P9,000,000 fixed-price
construction contract that was completed in 2012. DJ’s accounting records disclosed the
following:
12/31/2011 12/31/2012
Cumulative contract costs incurred…. P3,900,000 P6,300,000
Estimated total costs at completion…. 7,800,000 8,100,000
How much income would DJ have recognized on this contract for the year ended December 31,
2012?
a. P100,000 c. P600,000
b. P300,000 d. P700,000

15. Bon Construction Company has consistently used the percentage-of-completion method of
recognizing income. During 2011, Bon started work on a P3,000,000 construction contract which
was completed in 2012. The accounting records provided the following data:
2011 2012
Progress billings………………………. P1,100,000 P1,900,000
Costs incurred each year………….. 900,000 1,800,000
Collections……………………………. 700,000 2,300,000
Estimated cost to complete………. 1,800,000
How much income should Bon have recognized in 2012?
a. P100,000 c. P150,000
b. P110,000 d. P200,000

Franchise Accounting

16. On May 31, 2011, Kenny received P200,000 from Rogers representing the down payment on the
franchise agreement signed on that date. Rogers issued promissory notes for the balance of
P1,000,000, payable in four equal semi-annual installments. Franchise services are substantially
completed by Kenny on semi-annual installment due on November 20, 2011 at an aggregate cost
of P900,000. The first semi-annual installment due on November 30, 2011 was appropriately paid
by Rogers. Accordingly, Kenny uses the accrual method in recording franchise revenue. In its
 December 31, 2011 financial statements, how much would Kenny report as deferred franchise
revenue for the year?
a. P 0 c. P600,000
b. P300,000 d. P750,000

17. On September 30, 2011, Criselda’s, Inc. received from Ambo P550,000 representing franchise
fee. Franchise services were immediately started by Criselda’s and these were completed on
October 31, 2011 at cost amounting to P330,000. The franchise fee revenue to be reported by
Criselda’s in its October 31, 2011 income statement is:
a. P 0 c. P220,000
b. P137,500 d. P550,000
c.
18. Ruby Co. charges new franchisees an initial fee of P2,500,000. Of this amount, P1,000,000 is
payable in cash when the agreement is signed, and the remainder is to be paid in three equal
annual installments which are evidenced by interest bearing promissory notes. In consideration
therefore, Ruby Co. will assist in locating the business site. Conduct a market study to estimate
earnings potential, supervise construction of a building, and provide initial training to employees.
On December 3, 2011, Ruby Co. entered into a franchising agreement with Jade, Inc. By the end
of the year, Ruby Co. has completed about 25% of the initial services at a cost of P150,000 and it
has ascertained that collection of the notes is reasonably assured. For 2011, Ruby Co. should
recognize franchise revenue of:
a. P 0 c. P1,000,000
b. P850,000 d. P2,500,000

Home Office, Branch, and Agency Accounting

19. Charity, Inc. established its first branch on May 1, 2011. During the first month of operation, the
home office shipped merchandise to the branch worth P138,000 which included a markup of 15%
on cost. Sales for cash were P80,000 while sales on account were P250,000. At month’s end, the
branch reported operating expenses of P38,000 and a closing inventory of P23,000 at billed price.
As far as the home office is concerned, the true branch net income for May, 2011 is:
a. P82,000 c. P177,000
b. P147,000 d. P192,000

20. Leila Co.’s Clark branch submitted the following data for 2011, its first year of operation:
Sales………………………………….. P203,500 Cr.
Shipments from home office……. 186,120 Dr.
Operating expenses………………. 18,755 Dr.
Home Office-current……………… 48,125 Cr.
Shipments to the branch are billed at cost. The December 31, inventory of the branch was
P25,245. What is the correct balance on December 31, 2011 of the Branch Account – current as
per home office books?
a. P46,750 c. P65,505
b. P48,125 d. P71,995

Business Combinations

21. On December 1, 2011, Casio Ltd. acquired all the assets and liabilities of Aurora Ltd. With Casio
Ltd. Issuing 100,000 shares to acquire these net assets. The fair value of Aurora Ltd.’s assets and
liabilities at this date were:
Cash…………………………………… P50,000
Furniture and fittings………………... 20,000
Accounts receivable……………… 5,000
Plant…………………………………… 125,000
Accounts payable…………………. 15,000
Current tax liability………………….. 8,000
Provision for annual leave………… 2,000
The financial year for Casio Ltd. is January-December.
The fair value of each Casio Ltd. share at acquisition date is P1.90. At acquisition date, the
acquirer could only determine a provisional fair value for the plant. On March 1 2012, Casio Ltd.
received the final value from the independent appraisal, the fair value at acquisition date being
P131,000. Assuming the plant had a further five-year life from the acquisition date.
The amount of goodwill arising from the business combination at December 1, 2011:
a. P15,000 c. P5,000
b. P13,000 d. P 0

Not-for-Profit Organizations and Government Accounting

 22. The following information was available from St. Louis University’s accounting records for its
current funds for the year ended March 31, 2011:
Restricted gifts received
Expended…………………………… P100,000
Not expended……………………… 300,000
Unrestricted gifts received
Expended…………………………… 600,000
Not expended……………………… 75,000
What amount should be included in current funds revenues for the year ended March 31, 2011?
a. P600,000 c. P775,000
b. P700,000 d. P1,000,000

23. Agency AAA received the following allotment for year 2011:
Capital Outlay (CO)…………………………………. P50,000,000
Maintenance and Other Operating Expenses…. 10,000,000
Personal Services (PS)………………………………. 5,000,000
Financial Expenses (FE)………………………………. 100,000
Total…………………………………………………….. P65,100,000
The entry to record the above allotment would be:
a. No entry
b. Memorandum entry in Registry of Allotments and Obligations
c. National Clearing Account…… 65,100,000
Appropriations Alloted……. 65,100,000
d. Cash-National Treasury,
Modified Disb. System……… 65,100,000
Subsidy Income from
National Gov’t……… 65,100,000
Job Order Costing

24. Fusion Company has the following data on April 30, 2011:
April manufacturing overhead………….. P30,101.80
Decrease in ending inventories:
Materials……………………………... 2,430.00
Goods in Process…………………… 590.00
Increase in ending inventory:
Finished Goods……………………… 1320.40
The manufacturing overhead amounts to 50% of the direct labor, and the direct labor and
manufacturing overhead combined equal 50% of the total cost of manufacturing. All materials are
purchased F.O.B. shipping point.
What is the cost of goods manufactured?
a. P180,610.80 c. P182,300.80
b. P181,200.80 d. P183,200.80

25. A hospital has a P100,000 expected utility bill this year. The janitorial, accounting, and orderlies
departments are service functions to the operating, hospital rooms, and laboratories departments.
Floor space assigned to each department is
Department Square Footage
Janitorial………………………….... 1,000
Accounting……………………….. 2,000
Orderlies…………………………… 7,000
Operating…………………………. 4,000
Hospital Rooms…………………… 30,000
Laboratories………………………. 6,000
How much of the P100,000 will eventually become the hospital rooms department total costs,
assuming a direct allocation based on square footage is used?
a. P60,000 c. P75,000
b. P72,000 d. P80,000

Process Costing

26. Bronson Company, which had 6,000 units in work-in-process at January 1 that were 60%
complete as to conversion costs. During January 20,000 units were completed. At January 31,
8,000 units remained in WIP which were 40% complete as to conversion costs. Materials are
added at the beginning of the process.
Using the weighted average method, the equivalent units for January for conversion costs were:
a. 19,600 c. 23,200
b. 22,400 d. 25,600
 27. Refer to number 24, how many units were started during January/
a. 18,000 c. 20,000
b. 19,600 d. 22,000

Joint and By-Products

28. Ashwood Company manufactures three main products, F, G, and W, from a joint process. Joint
costs are allocated on the basis of relative sales value at split-off. Additional information for June
production activity follows:
F G W Total
Units produced……………………….... 50,000 40,000 10,000 100,000
Joint costs………………………………... ? ? ? P450,000
Sales value at split-off…………………. P420,000 P270,000 P60,000 P750,000
Additional costs if processed further.. P 88,000 P 30,000 P12,000 P130,000
Sales value if processed further……... P538,000 P320,000 P78,000 P936,000
Assuming that the 10,000 units of W were processed further and sold for P78,000, what was
Ashwood’s gross profit on this sale?
a. P21,000 c. P30,000
b. P28,500 d. P66,000

Standard Costing
29. Thorp Co.’s records for April disclosed the following data relating to direct labor:
Actual cost…………………………… P10,000
Rate variance……………………….. 1,000 favorable
Efficiency variance…………………. 1,500 unfavorable
Standard cost……………………….. P9,500
Actual direct labor hours for April amounted to 2,000. Thorp’s standard direct labor rate per hour
in April was
a. P5.50 c. P4.75
b. P5.00 d. P4.50

Activity-Based Costing

30. Which of the following statements about activity-based costing is not true?
a. Activity-based costing is useful for allocating marketing and distribution costs.
b. Activity-based costing is more likely to result in major differences from
traditional costing systems if the firm manufactures only one product rather
than multiple products.
c. In activity-based costing, cost drivers are what cause costs to be incurred.
d. Activity-based costing differs from traditional costing systems in that products
are not cross-subsidized.