c1. What is the minimum partner requirement to start a partnership firm?

A. 10
B. 5
C. 2
D. 20

2. Agreement in which form is required in a partnership firm?

A. Written
B. Oral
C. A or B
D. None of the above.

3. Which among the following is not a characteristic of a partnership firm?

A. Easy Formation
B. Equal Profits
C. Limited Liability
D. Mutual Consent

4. Which among the following are the features of a partnership firm?

A. Two or more persons are carrying common business under an agreement.

B. They are sharing profits and losses in the fixed ratio.
C. Business is carried by all or any of them acting tor all as an agent.
D. All of the above.

5. If the partnership agreement provides a formula for the computation of a bonus to the partners,
the bonus would be computed

a.Next to last, because the final allocation is the distribution of the profit residual
b.Before income tax allocations are made
c.After the salary and interest allocations are made
d.In any manner agreed to by the partners

6. Bob and Fred form a partnership and agree to share profits in a 2 to 1 ratio. During the first year
of operation, the partnership incurs a P20,000 loss. The partners should share the losses

a.Based on their average capital balances

b.In a 2 to 1 ratio
c.Equally
d.Based on their ending capital balances

7.A partnership agreement calls for allocation of profits and losses by salary allocations, a bonus
allocation, interest on capital, with any remainder to be allocated by preset ratios. If a partnership
has a loss to allocate, generally which of the following procedures would be applied?

a.Any loss would be allocated equally to all partners.

b.Any salary allocation criteria would not be used.
c.The bonus criteria would not be used.
d.The loss would be allocated using the profit and loss ratios, only.

8.Partner Trexie had a capital balance on January 1, 2020 of P45,000 and made additional capital
contributions during 2020 totaling P50,000. During the year 2020, Trexie withdrew P8,000 per
month. Trexie’s post-closing capital balance on December 31, 2020 is P30,000. Trexie’s share of
2020 partnership income is:

a.P96,000
b.P50,000
c.P31,000
d.P8,000

Feedback:
Beg Capital P45,000
Additional investment 50,000
Withdrawal (8,000 x 12) (96,000)
Net income 31,000
End Capital P30,000

Partners Jack and Daniel have a profit and loss agreement with the following provisions: salaries of
P20,000 and P25,000 for Jack and Daniel, respectively; a bonus to Dee of 10% of net income after
bonus; and interest of 20% on average capital balances of P40,000 and P50,000 for Jack and
Daniel, respectively. Any remainder is split equally. The partnership had net income of P88,000.

9. How much should be allocated to partner Jack?

a.36,000
b.44,500
c.50,000
d.43,500

10. How much should be allocated to partner Daniel?

a.36,000
b.44,500
c.50,000
d.43,500

Feedback:
Bonus = 10% (Net income – Bonus)
B = 10% (88,000 – B)
B = 8,800 – 10%B
1.1B = 8,800
B = 8,800/1.1
Bonus = 8,000
 Jack Daniel Total
Salaries 20,000 25,000 45,000
Interest 8,000 10,000 18,000
Bonus 8,000 8,000
Balance 8,500 8,500 17,000
Total 44,500 43,500 88,000

Gin and Alfonso formed a partnership in 2020. The partnership agreement provides for annual
salary allowances of P55,000 for Gin and P45,000 for Alfonso. The partners share profits equally
and losses in a 60:40 ratio. If the partnership had earnings of P80,000 before any allowance to
partners.

11. What amount of these earnings should be credited to Gin’s capital account?
a.40,000
b.43,000
c.44,000
d.45,000

12. What amount of these earnings should be credited to Alfonso’s capital account?
a.40,000
b.37,000
c.36,000
d.35,000

Feedback:
Gin Alfonso Total
Salaries 55,000 45,000 100,000
Balance (12,000) (8,000) (20,000)
Total 43,000 37,000 80,000

Partners Tom and Jerry have a profit and loss agreement with the following provisions: salaries of
P30,000 and P45,000 for Tom and Jerry respectively; a bonus to Tom of 12% of net income after
salaries and bonus; and interest of 10% on average capital balances of P50,000 and P65,000 for
Tom and Jerry, respectively. One- fourth of any remaining profits are allocated to Tom and the
balance to Jerry. If the partnership had net income of P108,600,

13. How much should be allocated to partner Tom?

a.43,225
b.43,816
c.47,850
d.65,375

14. How much should be allocated to partner Jerry?

a.43,225
b.43,816
c.47,850
d.65,375

Feedback:
Bonus = 12% (Net income – Bonus - Salaries)
B = 12% (108,600 – B – 75,000)
B = 12% (33,600 – B)
B = 4,032 – 12%B 1.12
B = 4,032 B= 4,032/1.12
Bonus = 3,600

Tom Jerry Total

Salaries 30,000 45,000 75,000
Interest 5,000 6,500 11,500
Bonus 3,600 3,600
Balance 4,625 13,875 18,500
Total 43,225 65,375 108,600

Moe, Larry, and Curly are forming a partnership. The partners contribute cash and noncash assets
valued at P30,000, P50,000 and P25,000, respectively. The partners choose to apply the bonus
method where applicable. If the partners agree to establish equal capital account balances when
the partnership is formed,

15. How much of a bonus is received by Moe?

a.P5,000
b.P10,000
c.P15,000
d. P0

16. How much of a bonus is received by Larry?

a.P5,000
b.P10,000
c.P15,000
d. P0

17. How much of a bonus is received by Curly?

a.P5,000
b.P10,000
c.P15,000
d. P0

Feedback:
Partner Total Contributed Capital Total Agreed Capital Bonus to (from)
Moe 30,000 35,000 5,000
Larry 50,000 35,000 (15,000)
Curly 25,000 35,000 10,000
TOTAL 105,000 105,000 -
18. Barbie and Ken enter into a partnership agreement in which Barbie is to have a 60% interest in
capital and profits and Ken is to have a 40% interest in capital and profits. If Ken contributes
P50,000 cash to the partnership and Barbie and Ken agree that Ken’s capital account should equal
Ken’s P50,000 cash contribution, what amount should Barbie contributes to the partnership to
equal to her capital account?

a.P60,000
b.P65,000
c.P70,000
d.P75,000

On March 1, 2020, Road Runner and Cayote formed a partnership with each contributing the
following assets:
Road Runner Cayote
Cash P30,000 P70,000
Machinery 25,000 75,000
Building - 225,000
Furniture and Fixtures 10,000 -
Total P65,000 P370,000

The building is subject to a mortgage loan of P90,000, which is to be assumed by the partnership
agreement provides that Road Runner and Cayote share profits and losses 30 percent and 70
percent, respectively.

19. On March 1, 2020, the capital account of Cayote would show a balance of:
a.P280,000
b.P305,000
c.P314,000
d.P370,000

Feedback:
Cash 70,000
Machinery 75,000
Building 225,000
Mortgage (90,000)
Total 280,000

20. Assuming that the partners agreed to bring their respective capital in proportion to their
respective profit and loss ratio, and using Cayote’s capital as the base, how much cash is to be
invested by Road Runner?
a.P19,000
b.P30,000
c.P40,000
d.P55,000

Feedback:
Partner Capital Ratio Total Contributed Capital Total Agreed Capital Additional Cash
Road Runner 30% 65,000 120,000 55,000
Cayote 70% 280,000 280,000 0
TOTAL 345,000 400,000 55,000