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Acc102 Final Exam 1
Acc102 Final Exam 1
Acc102 Final Exam 1
2. A delinquent stockholder is not entitled to the following rights, except the right
a. to be voted.
b. to dividends.
c. to vote or be represented in the meetings of the stockholders.
d. He is not entitled to all the rights of a stockholder.
3. What is the order of payment of liabilities of a dissolved general partnership using the code number
representing each liability?
a. I, II, III, IV
b. II, I, IV, III
c. II, I, III, IV
d. I, II, IV, III
4. What is the order of payment of liabilities of a dissolved general partnership using the code number
representing each liability?
I. Those owing to general partners other than for capital or for profits.
II. Those owing to creditors including limited partners, except those to limited partners on
account of their contributions and general partners.
III. Those owing to limited partners by way of their share in the profits and other compensation
by way of income.
IV. Those owing to limited partners in respect to their capital contributions.
V. Those owing to general partners in respect of capital.
VI. Those owing to general partners in respect of profits.
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5. Statement I: A substantial loss on realization may yield for a partner a capital deficiency but this will
not affect the partner’s interest in the partnership.
Statement II: In cases where the partnership assets are insufficient to settle all outside liabilities, the
partners should make additional cash contributions in the partnership.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.
6. Statement I: Liquidity of a business is important because it looks at the ability of the business in
meeting its financial obligations over long term.
Statement II: Vertical analysis is commonly called as trend analysis.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.
8. Statement I: Under access control, all cash expenses should be authorized by responsible managers.
Statement II: External auditors are responsible for a firm’s internal control.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.
10. The articles of incorporation differ from the by-laws in that the articles of incorporation are
a. the rules of action adopted by a corporation for its internal government.
b. adopted before or after incorporation.
c. a condition precedent in the acquisition by a corporation of a juridical personality.
d. approved by the stockholders if adopted after incorporation.
11. The following may be the consideration of the shares of stock of a corporation, except:
a. actual cash paid to the corporation.
b. previously incurred indebtedness of the corporation.
c. amounts transferred from unrestricted retained earnings.
d. services to be performed by a lawyer on the proposed increase in capital stock of the
corporation.
12. Stock dividends differ from cash dividends in that stock dividends
a. do not increase legal capital.
b. require the approval of both the board of directors and the stockholders.
c. involve disbursements of corporate funds.
d. once received by the stockholders, are beyond the reach of corporate creditors.
13. A stock that is issued without consideration or below par value or the issued price is known as
a. watered stock.
b. delinquent stock.
c. redeemable stock.
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14. Which of the following control procedures would most likely assure that access to shipping, billing,
inventory control, and accounting records is restricted to personnel authorized by management?
a. Segregate the responsibilities for authorization, execution, and recording, and prenumber and
control the custody of documents.
b. Establish the cash receipts function in a centralized location and require a daily reconciliation
of cash receipts records with deposit slips.
c. Establish policy and procedures manuals, organization charts, and supporting documentation.
d. Periodically substantiate and evaluate the recorded account balances.
15. Which of the following internal control procedures most likely would deter lapping of collections
from customers?
a. Independent internal verification of dates of entry in the cash receipts journal with dates of
daily cash summaries.
b. Authorization of write-offs of uncollectible accounts by a supervisor who is independent of
credit approval.
c. Segregation of duties between receiving cash and posting collections to the accounts receivable
ledger.
d. Supervisor’s comparison of the daily cash summary with the sum of the cash receipts journal
entries.
16. Collection of the company which are deposited already in the bank but not yet reflected in the bank
statement because it did not catch up with the cut-off period during the month and will be reported only in
the bank statement of the following month.
a. Outstanding Checks
b. Deposit in Transit
c. Notes Receivable Collected
d. Debit Memos
20. This method shows who among the partners have priority in the distribution of cash. Every time cash
is available for distribution to the partners, this is prepared.
a. Schedule of Safe Payments
b. Cash Priority Program
c. Statement of Liquidation
d. None of the above
21. When the current ratio is 2:1, an equal increase in current assets and current liabilities would result in
a. no change in current ratio.
b. increase in current ratio.
c. decrease in current ratio.
d. current ratio will double.
22. The statement of financial position of the partnership of A, B and C shows the following information:
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Liabilities 38,400
A, capital (50%) 76,000
B, capital (25%) 64,000
C, capital (25%) 56,000
Total liabilities and
equity 234,400
The partners realized ₱56,000 from the first installment sale of non-cash assets with total carrying
amount of ₱120,000. How much did B receive from the partial liquidation?
a. ₱25,000
b. ₱24,000
c. ₱16,000
d. ₱0
23. The statement of financial position of the partnership of A, B and C shows the following information:
Cash 40,000
Other assets 720,000
Total assets 760,000
Liabilities 300,000
B, loan 64,000
C, loan 20,000
A, capital (50%) 250,000
B, capital (30%) 86,000
C, capital (20%) 40,000
Total liabilities and
equity 760,000
The non-cash assets are sold for ₱320,000. Partner C is the only solvent partner. In the settlement of the
partners’ claims, how much additional contribution is required of Partner C?
a. ₱50,000
b. ₱30,000
c. ₱20,000
d. ₱0
24. The entry to record the issuance of ordinary shares for fully paid share subscriptions is
a. a memorandum entry.
b. Dr. Common Stock Subscribed; Cr. Common Stock; Cr. Additional Paid-In Capital
c. Dr. Subscribed Share Capital; Cr. Subscriptions Receivable
d. Dr. Subscribed Share Capital; Cr. Share Capital
26. In 2020, Newt Corp. acquired 6,000 shares of its own ₱1 par value ordinary share at ₱18 per share. In
2021, Newt issued 3,000 of these shares at ₱25 per share. Newt uses the cost method to account for its
treasury stock transactions. What accounts and amounts should Newt credit in 2021 to record the issuance
of the 3,000 shares?
a. Treasury Shares ₱54,000; Retained Earnings ₱21,000
b. Treasury Shares ₱54,000; Share Premium ₱21,000
c. Share Premium ₱72,000; Ordinary Shares ₱3,000
d. Share Premium ₱51,000; Retained Earnings ₱21,000; Ordinary Shares ₱3,000
27. On December 1, 2021, Line Corp. received a donation of 2,000 shares of its ₱5 par value ordinary
shares from a shareholder. On that date, the stock’s market value was ₱35 per share. The stock was
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28. The charter of a corporation (articles of incorporation) provides for the issuance of 100,000 shares of
common stock. Assume that 60,000 shares were originally issued and 5,000 were subsequently
reacquired. What is the number of shares outstanding?
a. 95,000
b. 100,000
c. 55,000
d. 60,000
29. The unadjusted balance in cash book is because of the result of which error?
a. Omission of bank charges
b. Unrepresented checks
c. Outstanding checks
d. Deposit in transit
30. ABC Company had sales of ₱10 million; operating income of ₱3 million; after tax income of ₱1
million; assets of ₱8 million; stockholder’s equity of ₱5 million; and a total debt of ₱3 million. What is
ABC’s return on equity?
a. 10.0%
b. 20.0%
c. 37.5%
d. 60.0%
II. FINAL ANSWER: PROVIDE THE FINAL ANSWER (2 pts each; 40 pts)
1. Ray Corp. declared a 5% stock (share) dividend on its 10,000 issued and outstanding shares of ₱2 par
value common stock, which had a fair value of ₱5 per share before the stock dividend was declared. This
stock dividend was distributed 60 days after the declaration date. By what amount did Ray’s current
liabilities increase as a result of the stock dividend declaration?
2. Laws in Nest's state of incorporation protect treasury stock from dilution. At December 31, 2022, how
many shares of Nest's common stock were issued?
3. Laws in Nest's state of incorporation protect treasury stock from dilution. At December 31, 2022, how
many shares of Nest's common stock were issued?
4. At December 31, 2020 and 2021, Carr Corp. had outstanding 4,000 shares of ₱100 par value 6%
cumulative preferred stock and 20,000 shares of ₱10 par value common stock (i.e., ordinary shares). At
December 31, 2020, dividends in arrears on the preferred stock were ₱12,000. Cash dividends declared in
2021 totaled ₱44,000. Of the ₱44,000, what amount were payable to preferred shares?
5. Using the same given in the preceding number, what amount were payable to common shares?
6. Arp Corp.’s outstanding capital stock at December 15, 2021, consisted of the following:
• 30,000, 5% cumulative preference shares, par value ₱10 per share, fully participating as to
dividends. No dividends were in arrears.
• 200,000 ordinary shares, par value ₱1 per share.
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7. The equity section of the statement of financial position of the partnership of A, B and C shows the
following information:
Non-cash assets are sold in installment. Cash distributions are made to the partners as cash becomes
available. In the second sale of non-cash assets, the partners received the same amount of cash in the
distribution. In the third sale of non-cash assets, the amount of cash available for distribution is ₱100,000.
The carrying amount of the remaining non-cash assets is ₱260,000. Under the cash priority program, how
much cash is distributed to B in the third installment payment?
8. Determine the amount of cash distributed to Partner A from the partial realization of partnership assets.
9. Determine the amount of cash distributed to Partner C from the partial realization of partnership assets.
10. Partners A, B and C decided to liquidate their partnership. A summary of the partnership’s statement
of financial position is shown below:
Three-fourths of the non-cash 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 partner’s interests?
11. Partners A, B and C decided to liquidate their partnership. A summary of the partnership’s statement
of financial position is shown below:
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12 - 13. 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? (12 partner; 13 amount)
14. Three-fourths of the non-cash 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?
15. How much is the deposit in transit at the end of the month?
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18. If preference shares are cumulative and nonparticipating (dividends in arrears are five years, including
the current year), how much dividends (gross of tax) will I receive from my investment?
19. If preference shares are cumulative and participating (dividends in arrears are five years, including the
current year), how much dividends (gross of tax) will you receive you’re your investment?
20. ABC Co. has a total debt of ₱420,000 and shareholders’ equity of ₱700,000. ABC Co. is seeking
capital to fund an expansion. It is planning to issue an additional ₱300,000 in common stock, and is
negotiating with a bank to borrow additional funds. The bank is requiring a debt-to-equity rate of 0.75.
What is the maximum additional amount ABC Co. will be able to borrow?
- END OF EXAMINATION -
Prepared by:
Approved by:
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