XAVIER UNIVERSITY (ATENEO DE CAGAYAN)

QUIZ
Accounting 3.1 (Partnership & Corporation Accounting)
Name: ___________________________________ Section: Ac 3.1 AC___

Test 1 : Multiple Choice 20 points (Write the letter of your answer on the space provided.)
1) Salaries to partners of a partnership typically should be accounted for as:
a) a device for sharing net income. b) an operating expense of the
partnership.
______ c) drawings by the partners from d) reductions of the partners’ capital
the partnership. account balances.
2) Which of the following is an expense of a partnership?
a) interest on partners’ capital b) interest on loans from partners
account balances. to the partnership.
_______ c) both a and b. d) neither a and b.
3) A partner’s withdrawal of assets from a partnership that is considered a permanent
reduction in that partner’s equity is debited to the partner’s:
a) drawing account. b) retained earnings account.
_______ c) capital account. d) loan receivable account.
4) The allocation of an error should be based on the profit and loss ratio in effect when:
a) the error was discovered. b) the error was corrected.
_______ c) the error was committed. d) the allocation should always be
made equally.

Test 11: Partnership Operations 80 points (Use columnar sheet.)

Problem 1:
A and M are partners. Their capital accounts during 2009 were as follows:
A, Capital M, Capital
8/1 P 8,000 : 1/1 P 40,000 3/1 P 9,000 : 1/1 P 60,000
: 4/1 8,000 : 7/1 7,000
: 11/1 18,000 : 10/1 12,000
Net loss of the partnership for the year 2009 amounted to P39,500. The partnership
agreement provides for the division of income/loss as follows:
 Each partner is to be credited 10 percent interest on his simple average
capital.
 Any remaining income or loss is to be divided equally.

Required: What is M’s share of loss for the year? (Support your answer with schedule
of profit/loss distribution.)

Problem 2:
P and N formed a partnership on January 02, 2009, and agreed to share net income and losses
90 percent and 10 percent, respectively. P invested cash of P250,000. N invested no assets but
had a specialized expertise and managed the firm full time. The partnership contract provided
for the following:
 Partners’ capital accounts are to be credited annually with interest at 5 percent of
beginning capital accounts balances.
 N is to be paid a salary of P10,000 a month.
 N is to receive a bonus of 20 percent of income before deduction of salary, bonus and
interest on partners’ capital account balances.
 Bonus, interest, and N salary are considered expenses.
The income statement for the year ended 2009 for the partnership includes the following:
Revenue P 964,500
Less: Expenses (including salary, interest, and bonus to N) 497,000
Net Profit P 467,500
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Required: What is N’s bonus for 2009? (Support your answer with schedule of profit/loss
distribution.)

(End of Examination)
das2010-11Q2