PROF 3 (FINAL)

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If the partnership agreement provides for the division of losses only. Profits 1 point

should be divided: *

Equally.

According to beginning capital ratio.

According to ending capital ratio.

According to average capital ratio.

Salaries to partners of a partnership typically should be accounted for as: * 1 point

A device for sharing net income.

An operating expense of the partnership

Drawings by the partners from the partnership.

Reductions of the partners' capital account balances.

A partners' withdrawal of assets from a partnership that is considered a 1 point

permanent reduction in that partners' equity is debited to the partners': *

Drawing accounts

Retained earnings account

Capital account

Loan receivable account

In the cash distribution plan which partner gets the first cash distribution? 1 point

The partner with the largest loan balance.

The partner with the largest loss absorption potential.

The partner with the largest capital balance.

The partner with the largest profit and loss ratio

In the installment liquidation of a partnership, each installment of cash is 1 point

distributed: *

In the partners' profit and loss ratio.

In the ratio of partner's capital account balances.

As agreed to by the partners.

As if no more cash would be forthcoming.

What is the largest possible loss resulting from the realization of 1 point
partnership assets that the accountant estimates when preparing a safe
payment schedule? *

Book value of recorded assets.

Book value of recorded non-cash assets.

Fair value of recorded assets.

Fair value of recorded non-cash assets.

In the preparation of schedule of safe payment to partners, cash withheld 1 point

for future liquidation expenses and unrecorded liabilities that may be
discovered is treated as: *

Operating expenses.

Liabilities

Loss on realization.

Possible loss.

On a statement of affairs, how are liabilities classified? * 1 point

Current and non-current.

Secured and unsecured.

Monetary and non-monetary.

Historic and futuristic.

In the reporting of a corporate liquidation, assets are shown at: * 1 point

Present value calculated using an appropriate effective rate.

Net realizable values.

Historical cost.

Book value.

A category of assets that typically has zero in the Free Assets column of a 1 point
statement of affairs is: *

Factory supplies inventory

Tools

Short-term prepayments

None of the above

When an asset is transferred to a branch from the home office, which of 1 point

the following occurs? *

Only a memo entry is made.

A credit to Home Office account.

A debit to Home Office account.

A credit to Investment in Branch account.

A home office's Investment in Branch account is a(n): * 1 point

Asset

Controlability

Unrealized income

Liability

A branch's Home Office account is a(n): * 1 point

Asset

Asset and Liability

Asset and Capital account

Liability or Capital account

The home office ships merchandise to the branch at an amount above 1 point

cost. How should the Investment in Branch account be debited? *

At cost

At billed price

At selling price

At billed price less cost

The home office ships merchandise to its branch above cost. What journal 1 point
entry should the branch make to record receipt of the shipment? *

A type of sale which provides for a series of payments over a period of 1 point

time. *

Credit sale.

Auction sale.

Installment sale.

Barter sale.
Under the installment method, realized gross profit is computed at the end 1 point
of each year by: *

Multiplying the total collections by the gross profit rate based on cost.

Multiplying the total collections by the gross profit rate based on sales.

Multiplying the selling price by the gross profit rate

Multiplying the cost of sales by the gross profit rate.

Under the installment method, the difference between the selling price 1 point
and the cost of sale is recorded as: *

Deferred gross profit.

Income.

Asset.

Expense.

Upon signing the franchise contract, the franchisee is required to pay the: * 1 point

Continuing franchise fee.

Professional fee.

Initial franchise fee.

Brokers fee.
The initial franchise fee received by the franchisor should first be: * 1 point

Recognized as revenue

Deferred

Recognize as asset

Recognized as other income

What determines substantial performance for purposes of recognizing the 1 point

initial franchise fee? *

When the franchisee actually commence operation.

When the franchisee pays the initial franchisee in full.

When the franchisee pays a cash down payment.

When the franchisee signs the franchise contract.

When the initial franchise fee is not paid in full and collectibility of the note 1 point
for the balance is not reasonably assured, the method to be used by
franchisor to recognize revenue from the initial fee is: *

Installment method

Gross profit method

Accrual basis

Cost method
When the initial franchise fee is not paid in full and collectibility of the note 1 point

for the balance is reasonably assured, the method to be used by franchisor

to recognize revenue from the initial franchise fee is: *

Installment method

Gross profit method

Accrual method

Cash basis

The amount of revenue recognized under IFRS 15 is the: * 1 point

Historical cost

Transaction price

Settlement price

Face value

Indicators of transfer of control for an obligation satisfied at a point in time 1 point

includes: *

Physical possession

Transfer of legal title

Acceptance of the asset

All of the above

Adam, a partner in the AE Partnership, has a 30% participation in 2 points

partnership profits and losses. Adam's capital account has a net decrease
of P60,000 during the year 2013. During 2013, Adam withdraw P130,000
(charged against his capital account) and contributed property valued at
P25,000 to the partnership. What was the net income of AE Partnership
for 2013? *

P150,000

P233,333

P350,000

P550,000

Red, White, and Blue form a partnership on May 1, 2013. They agree that 2 points

Red will contribute office equipment with a total fair value of P40,000;
White will contribute delivery equipment with a fair value of P80,000; and
Blue will contribute cash. If Blue want a one third interest in the capital and
profits, he should contribute the following cash: *

P40,000

P60,000

P120,000

P180,000
On June 11, 2013, Moly, Nora, and Olga form a partnership investing cash 2 points

of P15,000, P13,000, and P4,200 respectively. The partners share profits

3:2:2 and on August 30, 2013, they have cash of P1,000, and other assets
of P47,500; liabilities are P25,600. On this date they decide to go out of
business and sell all the assets for P30,000. Olga has personal assets of
P1,500 that may, if necessary, be used to meet partnership obligations.
How much should be distributed to Nora upon liquidation of the
partnership? *

P4,000

P2,040

P4,860

P0

The partners of RJ and AG, share profits 3:2. However, RJ is to receive a 2 points

yearly bonus of 20 percent of the net profits after deducting said bonus,
in addition to his profit share. The partnership made a net income for the
year of P24,000 before the bonus. How much profit share will RJ receive?
*

P16,000

P10,000

P15,200

P14,400
Filipino Co. has been forced into bankruptcy and liquidated. Unsecured 2 points
claims will be paid at the rate of P0.50 on the peso. Gold Co. holds a non-
interest bearing note receivable from Filipino Co. in the amount of
P50,000, collateralized by machinery with a liquidation value of P10,000.
The total amount to be realized by Gold on this note receivable is- *

P35,000

P30,000

P25,000

P10,000

The Abra Company owes P200,000 on a note payable plus P8,000 in 2 points

interest to its bank. The note is secured by inventory with a book value of
P160,000 and a fair value of P120,000. What amount will the bank
received if unsecured creditors receive 75% of their claims? *

P120,000

P160,000

P180,000

P186,000
The home office ships merchandise to the branch at 50 percent above 2 points
cost. On its books the branch shows a beginning inventory of home office
merchandise amounting to 15,000 and shipments from home office of
110,000. Its ending inventory of home office merchandise is 5,000. What
amount should the home office adjust the allowance for overvaluation of
branch inventory account? *

P40,000

P55,000

P60,000

P62,500

A branch's ending inventory of merchandise shipped by the home office 2 points

and purchased from outside vendors amounts to P50,000. The post-

closing balance in the Unrealized Gross Profit in Branch Inventory account
is P6,000 due to the home office practice of shipping merchandise at
20% above cost. The merchandise purchased from outside vendors
contained in the ending inventory of the branch amounts to: *

P38,000

P30,000

P18,000

P14,000
The Simon Company always ships merchandise to a branch outlet at a 30 2 points

percent mark-up above cost. During 2013, this branch received P182,000
in such shipments while also acquiring goods from outside vendors at
cost of P96,000. Half of the branch's December 31, 2013, inventory of
P57,200 came from home office acquisitions. At the beginning of 2013,
the branch held merchandise with a transfer price of P49,400. All of this
inventory had been purchased directly from the home office. At the end
of 2013, what is the adjusted balance in Simon's Allowance for
Overvaluation in Branch Inventory account? *

P4,250

P5,340

P6,000

P6,600

Gothong, Inc. sells automatic voltage regulators costing P700 at a price of 2 points

P1,200. Cardinal Audio buys a dozen voltage regulators on installment and

trade-in six (6) of its old units at a trade-in value of P300 each. Gothong,
Inc. spends P25 to recondition the old units and sells them for P315.
Gothong, Inc. expects a 10 percent gross profit from the sale of used
voltage regulators. How much is the over-allowance granted by Gothong,
Inc. on the trade-in? *

P249

P150

P339

P189
BMW Corporation sells car on a three year installment sales contract. On 2 points

December 31, 2021, the last day of BMW's first year of operations, the
results of operations before adjustment are summarized below: Sales =
1,000,000; Cost of installment sales = 700,000; Operating expenses =
80,000 The total collections during the year including interest and
financing charges of P100,000 is P500,000. What is the net income of
BMW Corporation for the year ended December 31, 2021? *

P220,000

P140,000

P150,000

P120,000

JJ Company sold goods on installment. For the year just ended, the 2 points

following were reported: Installment sales = 3,000,000; Cost of

installment sales = 2,025,000; Collections on installment sales -
1,800,000; Repossessed accounts = 200,000; Fair value of repossessed
merchandise = 120,000 The repossession resulted to: *

Gain of P5,000

Loss of P80,000

No gain, no loss

Loss of P15,000
ACA Video Company sells betamax equipment. It maintains its accounting 2 points
records on a calendar year basis. On October 1, 2012, ACA Video
Company sold a television set to Mr. Santiago. The cost of the set was
P18,000, and the set was sold for P24,000. A down-payment of P6,000
was received along with a contract calling for the subsequent payment of
P1,000 on the first day of each month starting on the following month. No
interest was added to the contract. Mr. Santiago paid the monthly
installments promptly on November 1 and December 1 in 2012. He also
made seven installments payments in 2013 after which he defaulted on
the contract. The set was then repossessed on November 1, 2013.
Assuming the repossessed set has a fair value of P4,000, what is the
gain(loss) on repossession to be recognized? *

P(2,750)

P2,750

P750

P1,500

The following information are obtained from the books of Robin, Inc. on 2 points

June 30, 2021: Deferred gross profit balance (after adjustment) =

202,000; Total collections on installment sales = 440,000; Gross profit
rate based on cost = 25%. Robin, Inc. uses the installment method of
accounting. What is Robin's total installment sales for 2013? *

P1,560,000

P1,440,000

P1,450,000

P1,010,000
Philacor consigned 12 refrigerator units to Ocampo Emporium. The cost is 2 points

P6,000 each and the consignor paid P720 for the freight to Ocampo. The
consignee rendered an account sales for the 5 refrigerator units it sold at
P7,700 per unit. It deducted the following items: Commissions at 10% of
sales net of commission Marketing expense of 10% of commission
Delivery and installation cost of P30 per unit. How much is the net
remittance of the consignee? *

P34,500

P4,500

P4,200

P33,780

The gross profit recognized by the Philacor (consignor) from Ocampo 2 points

Emporium (consignee) sales will be *

P4,200

P4,800

P8,200

P8,420

The deferred cost that will be recognized by Philacor (consignor) on its 2 points

statement of financial position, from the given information will be *

P42,420

P37,840

P37,780

P33,780
How much is the gross profit of Philacor (consignor)? * 2 points

P3,815

P4,200

P37,780

P3,395

On January 1, 20x1, an entity accepted a long-term construction project to 2 points

build a condominium at a fixed contract price of 140 million. The outcome

of performance obligation in connection with this contract cannot be
measured reasonably as of year-end. The following data are provided by
the accountant and project manager: Estimated cost to complete
construction project as of January 1, 20x1, 90,000,000 Actual costs
incurred as of December 31, 20x1, P45,000,000 How much is entity’s
gross profit for the year ended December 31, 20x1? *

P30 million

P10 million

P25 million

P0
How much is the revenue earned from the contract in 2018? * 2 points

P1.6 m

P1.8 m

P 1.76 m

P 1.67 m

How much is the gross profit realized for 2019? * 2 points

P576,000

P550,400

P1,126,400

P 480,000
How much is the revenue earned for 2020? * 2 points

P 5.12 m

P 2.88 m

P3.52 m

P8.00 m

On April 1, 2021, Andok's a franchisor, entered into franchise agreement 2 points

with Mr. Gomez. The initial franchise fee is P500,000 of which P100,000
is payable in cash upon signing of the franchise agreement and the
balance evidence by a 12% promissory note. As of December 31, 2021 the
franchisor fails to render substantial services and none thus far had been
rendered to the franchisee. When Andok's prepares its financial
statements on December 31, 2021, the revenue from the franchise fee to
be reported is: *

500,000

100,000

400,000
On August 1, 2021, Jobee Company sells a franchise that requires initial 2 points

franchise fee of P5,000,000. On September 15, 2021, the contract was

signed and the franchisee paid the initial franchise fee in full. On
November 2, the franchisee commenced operations after substantial
services have been rendered by the franchisor at a cost of P50,000. What
is the net income from the franchise fee of the franchisor in its December
31, Statement of Comprehensive Income? *

5,000,000

4,950,000

50,000

On July 1, 2021, Ms. Tan signed an agreement to operate as franchisee of 2 points

Butter Company for an initial franchise fee of P500,000. Of this amount,

P100,000 was paid upon signing of the franchise agreement and the
balance evidence by a 12% promissory note payable in two annual
payments of P200,000 each beginning December 31, 2021. The first
payment was collected on due date. Assuming the collectibility of the
note is reasonably assured, what is the revenue from the franchise fee to
be reported by Butter Company in its December 31, 2021 statement of
comprehensive income? *

500,000

100,000

400,000

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