Advanced Financial Accounting and Reporting 1

Name: _______________________________________
Yr & Block: ___________________ Date: __________

Pre-test: Partnership Theories

True/False
Indicate whether the statement is true or false.

____ 1. A partner may withdraw from a partnership at any time without notice given to the existing partners.

____ 2. The Statement of Realization and Liquidation prepared during partnership liquidation presents the
same information that would be recorded for partnership liquidation but it is presented in tabular form.

____ 3. If cash denominated in foreign currency is invested into the partnership, the investment will be valued
at the current exchange rate at the time of investment.

____ 4. If a loss has occured during operations, an industrial partner is automatically exempted from sharing
in the loss.

____ 5. If a partner withdraws as a result of death, his legal heirs are entitled to replace him as a partner.

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____ 6. Espiritu and Cheng have the following profit and loss agreement: salaries of P30,000 and P45,000 for
Espiritu and Cheng, respectively; bonus to Espiritu of 10% of profit after salaries and bonus; interest
of 10% of average capital balances of P20,000 and 35,000 for Espiritu and Cheng, respectively; and
any balance equally. If the profit is P102,500, how much should be allocated to Espiritu?
a. P58,250 c. P44,250
b. P47,796 d. P44,125

____ 7. Nabua is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bunus of
10% of profit after the bonus as a way of dividing profits among the partners. What amount of profit
would make the choices equal?
a. P165,000 c. P135,000
b. P150,000 d. P15,000

____ 8. Tanupan is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bonus
of 10% of profit after salaries and bonus as a way of dividing profits amontd the partners. Salaries
traceable to the otehr parters is P100,000. What amount of profit would make the choices equal?
a. P165,000 c. P305,000
b. P265,000 d. P290,000

____ 9. Santos and Gloria share profit in the ratio of 3:2. However, Santos is to receive a bonus of 20% of the
profits, in addition to his profit share. The partnership made a profit for the year of P24,000 before the
bonus. Assuming Santo’s bonus is computed on profit after decuting said bonus, how much profit
share will Gloria receive?
a. P15,200 c. P9,600
b. P8,000 d. P9,000

____ 10. In its first year of operations, the partership of Reyes, Balino and Dimalanta made a profit of P20,000,
before providing for salaries of P5,000 and P3,000 per annum for Reyes and Balino, respectively. The
capital contributions of the partners are as follows: Reyes, P30,000; Balino, P20,000 and Dimalanta,
P10,000. Assuming that no profit of loss ratio are provided in the partnership agreement and that
there has been no change in the capital contributions during the year, how much profit share would
Reyes be entitled to receive?
a. P10,000 c. P11,000
b. P5,000 d. P15,000