Professional Documents
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Advac
Advac
LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City
Name:_____________________________________ Score:____________________
1. A and B agreed to form a partnership. The contributions of the partners are as follows:
A B
Cash 600,000
Inventory 20,000
Land 400,000
Equipment 50,000
Additional information:
Half of the inventory is unpaid. The partnership agreed to assume the related accounts payable.
The land has a fair value of ₱700,000 and is subject to a mortgage of ₱100,000. However, B agreed
to settle the mortgage personally.
A B
Cash 400,000 -
Accounts receivable 100,000 -
Equipment 700,000
Total 500,000 700,000
A, capital 500,000
B, capital 700,000
Total 500,000 700,000
Additional information:
The accounts receivable includes a ₱30,000 account that is deemed uncollectible.
The equipment is over-depreciated by ₱50,000. The equipment was obtained by B through
financing. The related loan payable has an unpaid balance of ₱250,000 which the partnership
assumes on repaying.
Which partner has the higher capital credit, and how much?
a. A, ₱470,000 c. A, ₱500,000
b. B, ₱500,000 d. B, ₱400,000
3. Under the bonus method, the asset contribution of the partner receiving a bonus is debited
a. at fair value.
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b. at an increased amount with a corresponding decrease to the other partners’ asset
contributions.
c. at a decreased amount with a corresponding increase to the other partners’ asset contributions.
d. b or c, depending on which partner is receiving the bonus.
4. A and B formed a partnership. The partnership agreement stipulates the following:
Annual salary allowances of ₱80,000 for A and ₱40,000 for B.
The partners share in profits and losses equally.
During the period the partnership incurred a loss of ₱20,000 before deduction for salaries. By what
amount did B’s capital account change?
a. Increased by ₱12,000 c. Increased by ₱32,000
b. Decreased by ₱12,000 d. Decreased by ₱32,000
6. A and B formed a partnership. The partnership agreement stipulates the following:
Annual salary allowances of ₱10,000 for A and ₱40,000 for B.
Bonus to A of 10% of the profit after partner’s salaries but before bonus and interest.
Interest of 12% on the beginning capital balance of A.
The partners share profits and losses on a 60:40 ratio.
During the period the partnership earned profit of ₱200,000 before deduction for salaries. B’s beginning
capital balance was ₱60,000. How much is the share of A in the profit?
a. 101,680 c. 110,820
b. 98,320 d. 96,720
7. A and B formed a partnership. The partnership agreement stipulates the following:
First, A shall receive 2% of profit up to ₱200,000 and 5% over ₱200,000.
Second, B shall receive 1% of the remaining profit over ₱200,000.
Any remainder shall be shared equally.
The partnership earned profit of ₱500,000. C’s capital account had a beginning balance of ₱300,000.
The difference between the amounts received by A and B is
a. 160,000. c. 80,000.
b. 240,000. d. 60,000.
9. A and B formed a partnership. The partnership agreement stipulates the following:
Annual salary allowances of ₱80,000 for A and ₱40,000 for B.
The partners share in profits and losses equally.
The partnership earned profit of ₱100,000 after salaries. How much is the share of B?
a. 70,000 c. 130,000
b. 30,000 d. 90,000
10. A and B formed a partnership. The partnership agreement stipulates the following:
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Monthly salary allowances of ₱10,000 for A and ₱4,000 for B. The salaries are recognized as
expenses.
The partners share equally in profits and losses.
The share of A in the partnership profit during the period was ₱595,000, including a bonus of
₱90,000. How much was the share of B?
a. 386,000 c. 405,000
b. 398,000 d. 504,000
Use the following information for the next eight questions:
The partners’ capital accounts in AB Partnership before the admission of a new partner are as follows:
13. C purchases 20% interest in the partnership from A for ₱120,000. How much is the capital balance of
A after the admission of C?
a. 133,333 c. 96,000
b. 24,000 d. 148,000
14. C purchases 20% interest in the partnership proportionately from A and B for ₱120,000. How much
is the gain or loss recorded in the partnership books?
a. 48,000 c. 60,000
b. 56,000 d. 0
15. Using the case in #14 above, how much is the total equity of the partnership after the admission of
C?
a. 320,000 c. 240,000
b. 440,000 d. 200,000
16. C acquires 20% interest in the partnership by investing ₱120,000 to the business. No bonus is given
to C. How much is the capital balance of A after the admission of C?
a. 200,000 c. 240,000
b. 264,000 d. 0
19. Before the admission of C, B decides to retire. The partnership pays B ₱180,000 in settlement of his
partnership interest. How much is the capital balance of A after the retirement of B?
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a. 200,000 c. 260,000
b. 140,000 d. 320,000
20. Using the case in #18 above, how much is the total equity of the partnership after the retirement of
B?
a. 320,000 c. 240,000
b. 440,000 d. 500,000
21. A and B decided to liquidate their partnership business. The statement of financial position of the
business shows the following information:
The partners were able to convert all assets into ₱90,000 cash. How much did B receive from the final
settlement of his interest?
a. 30,000 c. 28,000
b. 35,000 d. 36,667
22. A and B decided to liquidate their partnership business. The statement of financial position of the
business shows the following information:
The partners were able to convert all assets into ₱180,000 cash. How much did A and B receive from the
final settlement of their interests, respectively?
a. 50,000; 50,000 c. 70,000; 30,000
b. 60,000; 40,000 d. 56,667; 43,333
23. Partners A, B and C decided to liquidate their partnership. A summary of the partnership’s
statement of financial position is shown below:
Cash 50,000
Noncash assets 1,200,000
Total 1,250,000
Three-fourths (3/4) of the noncash assets were sold for ₱920,000. The partnership paid ₱5,000
transaction costs on the sale. How much cash did C receive from the settlement of the partners’
interests?
a. 163,000 c. 193,000
b. 186,000 d. 206,000
24. Partners A, B and C decided to liquidate their partnership. A summary of the partnership’s
statement of financial position is shown below:
Half of the noncash assets were sold for ₱370,000. The partnership paid ₱2,000 liquidation expenses.
How much cash did B receive from the settlement of the partners’ interests?
a. 163,400 c. 139,600
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b. 168,000 d. 136,400
All the noncash assets were sold for ₱870,000. The partnership paid ₱12,000 liquidation expenses.
One-third of the noncash assets were sold for ₱70,000. The partnership paid ₱8,000 liquidation
expenses. Partner C is insolvent. How much cash did A receive from the settlement of the partners’
interests?
a. 12,400 c. 13,600
b. 16,800 d.12,800
Use the following information for the next two questions:
Partners A, B and C decided to liquidate their partnership. A summary of the partnership’s statement of
financial position is shown below:
Cash 50,000
Noncash assets 1,200,000
Total 1,250,000
29. If a cash priority program is prepared, which partner is paid first and how much is the total
payments to that partner before all partners will share on the available cash based on their profit or
loss ratios?
a. A, ₱20,000 c. B, ₱96,000
b. B, ₱90,000 d. B, ₱60,000
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30. Three-fourths (3/4) of the noncash assets were sold for ₱920,000. The partnership paid ₱5,000
transaction costs on the sale. How much cash did A receive from the settlement of the partners’
interests under the cash priority program?
a. 447,500 c. 493,500
b. 386,500 d. 306,500
31. Bye-bye Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown
below:
LIABILITIES
Accounts payable 700,000 700,000
Salaries payable 800,000 800,000
Notes payable 500,000 500,000
Loan payable 750,000 750,000
Total liabilities 2,750,000 2,750,000
EQUITY
Share capital 1,000,000
Deficit (1,450,000)
Capital deficiency (450,000)
Additional information:
Administrative expenses expected to be incurred during the liquidation process is ₱180,000.
The equipment is pledged as collateral security for the notes payable.
The land is pledged as collateral security for the loan payable.
Assuming all the assets were sold, and all the liabilities were settled, equal to their realizable values,
how much would Mr. A, an unsecured non-priority creditor, would expect to receive from his ₱500,000
claim from Bye-bye Corporation?
a. 98,312.24
b. 104,761.90
c. 130,912.34
d. 214,711,24
Use the following information for the next two questions:
A, B, and C formed a joint operation. The joint operators shall make initial contributions ₱40 each. Profit
and loss shall be divided equally. The following data relate to the joint operation’s transactions:
A B C
Joint operation 32 Cr. 40 Cr. 48 Cr.
Expenses paid from JO cash 20 8 12
Value of inventory taken 20 24 16
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b. ₱80 payment
c. ₱32 receipt
d. ₱76 receipt
Joint operation
Nov. 5 Merchandise-A 8,500 Nov. 15 Cash sales-C 20,400
12 Merchandise-B 7,000 18 Cash sales-C 4,200
14 Freight-in-C 200 30 Merchandise-B 1,210
Dec. 10 Purchases-C 3,500 Dec. 25 Unsold mdse. 540
charged to A
22 Selling expenses-C 550
The joint arrangement provided for the division of gains and losses among A, B and C in the ratio of
2:3:5. The joint operation is to close on December 31, 2008.
A B
Joint operation 18,000 Cr. 20,200 Cr.
Expenses paid from JO cash 1,850 2,600
Value of inventory taken 1,000 1,800
There are unused constructions supplies which LL agreed to take over at its cost of ₱42,000.Final
settlement with the joint operators will require payments as follows:
a. LL pays NN ₱11, 200, and MM pays NN ₱14, 000.
b. LL pays NN ₱25, 600, and MM ₱14, 400.
c. LL pays MM ₱14, 400, and NN pays LL ₱30,800.
d. LL pays MM ₱35,600, and NN pays LL ₱14,400.
39. The following are the transactions of a joint operation formed by A, B and C during a year:
a. A contributed cash of ₱100 and merchandise costing ₱200.
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b. B contributed merchandise costing ₱400. Freight-in paid by B is ₱20.
c. C made purchases amounting to ₱100 using the cash contributed by A.
d. C paid expenses of ₱200 using its own cash.
e. C made total sales of ₱800. All the merchandise was sold except one-half of those contributed by B.
f. C is appointed as the manager of the joint operation. As compensation, C is entitled to a ₱30 salary
plus bonus of 25% on profit after salary and bonus.
g. Interest of 10% per annum is allowed to A and B’s capital contributions.
h. C is charged for the cost of any unsold inventory. Profit or loss after necessary adjustments shall be
divided equally.
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a. V, IV, II, I, III c. V, I, IV, III, II
b. V, III, I, IV, II d. V, I, III, IV, II
The franchise contract requires Franchisor Co. to undertake activities that would further improve its
brand and its products, to which Franchisee Co. has rights, by continuously undertaking research and
development projects and marketing and promotional activities. Although those activities do not result
in the transfer of a good or a service to Franchisee Co. as those activities occur, it is expected that
Franchisee Co. will benefit from those activities.
All of the necessary preparations were completed, and TIPPLE Co. started operations, on January 31,
20x1.
45. How should Franchisor Co. recognize revenue from the ₱1,000,000 initial franchise fee?
a. Recognize the ₱1,000,000 initial franchise fee as revenue in full on January 1, 20x1.
b. Recognize the ₱1,000,000 initial franchise fee as revenue in full on January 31, 20x1.
c. Recognize the ₱1,000,000 initial franchise fee as revenue throughout the license period.
d. Any of the above, as a matter of accounting policy choice.
46. How should Franchisor Co. recognize revenue from the 5% of sales continuing franchise fee?
a. Franchisor Co. shall estimate the variable consideration and amortize it as revenue over the
license period.
b. Franchisor Co. shall estimate the variable consideration, subject the estimate to the
“Constraining estimates of variable consideration” principle of PFRS 15 and amortize it as
revenue over the license period.
c. Franchisor Co. shall discount the amount determined in Choice (b) above and amortize it as
revenue over the license period.
d. Franchisor Co. shall recognize revenue equal to 5% of Franchisee’s sales as and when those sales
occur.
47. ABC Co. produces a wide variety of frozen foods. Due to the faltering economy, ABC closed its
provincial sales outlets. Instead, ABC outsourced various distributors to sell its products. Each
distributor accepting delivery shall pay ABC 10% of the factory selling price of the goods delivered
and accepted. However, if the distributor fails to sell all of the goods accepted before their
expiration dates, ABC is obligated to repurchase the unsold goods. In June 20x1, ABC delivered
goods with total factory selling price of ₱10,000,000 to its distributors. ABC received 10% of the
total factory selling price of the goods delivered. When should ABC recognize revenue from the
goods delivered?
a. When the goods are shipped to the distributor.
b. When the goods are sold to the ultimate customers.
c. When the distributor pays ABC Co.
d. When ABC received the 10% of the total factory selling price of the goods delivered.
49. Consignor Co. paid the in-transit insurance premium for consignment goods shipped to Consignee
Co. In addition, Consignor advanced part of the commission that will be due when Consignee sells
the goods. Should Consignor include the in-transit insurance premium and the advanced
commissions in inventory costs?
Insurance premium Advanced commission
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a. Yes Yes
b. No No
c. Yes No
d. No Yes
50. Black Co., a consignee, paid the freight costs for goods shipped from White Co., a consignor. These
freight costs are to be deducted from Black’s payment to White when the consignment goods are
sold. Until Black sells the goods, the freight costs should be included in Black’s
a. Cost of goods sold c. Selling expenses
b. Freight-out costs d. Receivable
51. X Ltd., a large manufacturer of cosmetics, sells merchandise to Y Ltd., a retailer, which in turn sells
the goods to the public at large through its chain of retail outlets. Y Ltd. purchases merchandise
from X Ltd. under a consignment contract. When should revenue from the sale of merchandise to Y
Ltd. Be recognized by X Ltd.?
a. When goods are delivered to Y Ltd.
b. When goods are sold by Y Ltd.
c. It will depend on the terms of delivery of the merchandise by X Ltd. to Y Ltd. (i.e., CIF [cost,
insurance, and freight] or FOB).
d. It will depend on the terms of payment between Y Ltd. and X Ltd. (i.e., cash or credit).
Materials generated from the testing were sold for ₱5,000 and included in the remittance to Trumpet
Co.
52. How much profit is earned by the consignor from the sale?
a. 3,292,500
b. 5,375,000
c. 1,025,000
d. 3,412,500
53. How much was the net remittance to the consignor?
a. 9,182,500
b. 8,417,500
c. 8,850,500
d. 7,891,500
54. How much is the cost of the unsold machineries?
a. 3,075,000
b. 2,987,000
c. 1,025,000
d. 1,000,000
55. HEARTY WARM & SINCERE Co. uses the “installment sales method.” Information on HEARTY’s
transactions during 20x1 and 20x2 is shown below:
20x1 20x2
Installment sales 4,000,000 4,800,000
Cost of sales 2,400,000 2,640,000
Gross profit 1,600,000 2,160,000
Cash collections from:
20x1 sales 1,600,000 800,000
20x2 sales 1,920,000
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How much is the realized gross profit in 20x2?
a. 1,484,000
b. 1,284,000
c. 1,184,000
d. 984,000
56. RIBALD OFFENSIVE Co. uses the installment method. On December 31, 20x3, RIBALD Co.’s records
show the following balances:
Deferred gross profit (before year-end adjustments) 2,252,000
Installment receivable - 20x2 960,000
Installment receivable - 20x3 2,400,000
Gross profit rate in 20x2 is 24% based on sales while gross profit rate in 20x3 is 33 1/3%based on cost.
58. How much are the balances of installment receivables on December 31, 20x2?
From 20x1 From 20x2
a. 800,000 1,440,000
b. 2,000,000 2,400,000
c. 1,440,000 800,000
d. 2,400,000 2,000,000
59. Compute for the installment sales in 20x1 and 20x2.
20x1 20x2
a. 800,000 1,440,000
b. 2,000,000 2,400,000
c. 1,440,000 800,000
d. 2,400,000 2,000,000
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60. PERAMBULATE STROLL Co. uses the installment method. The following information was taken from
PERAMBULATE’s records:
20x1 20x2
Installment sales 2,000,000 2,400,000
Cost of sales 1,200,000 1,320,000
Cash collections from:
20x1 sales 800,000 400,000
20x2 sales 960,000
How much is the total deferred gross profit on December 31, 20x2?
a. 320,000
b. 1,440,000
c. 648,000
d. 968,000
61. PHILANDERING FLIRTING Co. uses the installment method. PHILANDERING Co. has the following
collection policy on its installment sales:
20% down payment
Balance collectible as follows: 50% in the year of sale, 30% in the second year, and 20% in the third
year.
Installment sales during 20x1, 20x2 and 20x3 were ₱2,400,000, ₱3,000,000 and ₱3,600,000,
respectively.
Gross profit rate throughout the three years was 40% based on sales.
How much is the net adjustment to the “Investment in branch” account? increase (decrease)
a. 100,000
b. 48,000
c. (48,000)
d. (52,000)
Use the following information for the next eleven questions:
The following information was taken from the records of a branch:
Sales by branch 2,800,000
Billings to branch by home office 2,500,000
Operating expenses 400,000
Ending inventory at billed price 1,000,000
The following information was taken from the records of the home office:
Branch current account 2,600,000
Shipments to branch 2,000,000
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Allowance for markup - Unadjusted 500,000
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