Name________________________

Id. No____________________
P.O.Box______________________
City (Town)___________________
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UNITY UNIVERSITY COLLEGE

SCHOOL OF DISTANCE AND CONTINUING EDUCATION

Worksheet for Advanced Accounting II (Acct 402)

This is a test paper you are expected to do on your own. It carries 15 points. The
test paper should be completed and mailed to the School of Distance and
Continuing Education for evaluation. Do not try to complete the worksheet until
you have covered all the lessons and exercises in the course material.

Any questions in the course that you have not been able to understand should be
stated on a separate sheet of paper and attached to this worksheet. Your tutor
will clarify them for you.

After completing this test paper, be certain to write your Name, Id.No and
Address on the first page. Your Name and Id.No on the other pages only.

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Part I. Write “True” if the statement is correct and “False” if the statement is
wrong (1/2 point each).

1. Dissolution of a partnership may not necessarily be followed by liquidation.

2. In partnership liquidation, the remaining cash is distributed to the partners based
on their income sharing agreement.
3. Under integral period approach to interim reporting, the interim period is
considered as an integral part of the annual period.
4. In bankruptcy liquidation, fully secured creditors are entitled to obtain satisfaction
of all or part of their claims from the assets pledged as collateral.
5. Bankruptcy reorganization involves, among other things, the realization of the
assets of bankrupt firm.

Part II. Choose the best answer from the alternatives given and write the
letter of your choice at the left of the question (1/2 point each).

1. Which of the following test is used by a company that operates in different

industries to identify reportable segments?
a. Revenue test d. Liability test
b. Operating profit test e. All of the above except d
c. Asset test
2. Which of the following data should be disclosed in interim financial reports?
a. Sales for the period
b. Significant changes in financial position
c. Earning per share data
d. Extraordinary items
e. All of the above
3. The type of legacy in which the gift involves the sum of money without naming
the sources of funds is:
a. Specific legacy c. General legacy e. None of the above
b. Demonstrative legacy d. Residual legacy

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 4. The class of creditors who is entitled to receive cash from proceeds available from
the realization of the debtor’s assets is:
a. Unsecured creditors with priority
b. Fully secured creditors
c. Unsecured creditors without priority
d. Partially secured creditors
e. a and b
5. In partnership, income sharing agreement may be used to divide:
a. Net income or loss among/between partners
b. Assets revaluations between/among partners
c. Bonus allowed to the existing partners
d. Gain or loss in the liquidation process between/among the partners
e. All of the above

Part III. Workout Questions

1. Consider the following data for GRB Company which prepares interim reports
quarterly:

Items 1st Quarter 2nd Quarter 3rd Quarter

Pre-tax income 600000 700000 500000
Estimated income tax rate 50% 40% 35%

Required: (3 points)
a. Compute income tax provision for each of the three quarters
b. Prepare the necessary entry to record the income tax provision of each
quarter

2. Assume that Grace partnership was owned and operated by partners A,B, and C for the
last ten years. The partners decided to liquidate the partnership and the liquidation
process took between January 1 and May 15, 2005. The balance sheet of the
partnership immediately prior to liquidation is shown below:

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Cash………………………….. 80000 Liabilities…………. 50000
Non-cash assets……………… 320000 A, capital………….. 200000
B, Capital…………. 140000
______ C, Capital…………. 90000
Total………………… 480000 Total…………. 480000

All non-cash assets are sold in a single transaction. The income sharing agreement
is 4:4:2. All liabilities are paid at one time. Non-cash Assets and Liabilities will be
used as account titles in place of various assets, contra assets, and liabilities
accounts. Assume that all non-cash assets are sold for Br. 250000.

Required (7 points)

a. Prepare the Statement of Partnership Liquidation

b. Prepare the necessary entry to record the transactions arising in the liquidation
process

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1. Accounting, 8th edition, McGraw-Hill
Larsen, E.J.(2000), Modern Advanced Accounting,
Company, Boston
2. Accounting, 6th edition, IRWIN, New York
Hoyle, J.B., et.al (2001), Advanced Accounting,
3. Accounting, 2nd edition, McGraw-Hill
Engler and Bernstein (1998), Advanced Accounting,
Company, Boston
4. S.KR. Paul (1996), Advanced Accounting,
Accounting, New Central Book Agency (P) LTD,
Calcutta.