Professional Documents
Culture Documents
ODM
1. One who is represented as being, in fact, a partner, but who is not so as between the partners
a. Nominal partner c. Ostensible partner
b. Dormant partner d. Silent
2. When a partner invests assets other than cash into a partnership, these assets should be listed on the first year’s
Statement of Financial Position at
a. their original cost c. their fair market value
b. their carrying (book) value d. the value the investing partner assigns to them
3. BUSI and NESS decided to form a partnership on May 1, 2016. Assets contributed by the partners are:
BUSI NESS
Book value Fair value Book value Fair value
Cash ₱ 375,000 ₱ 375,000 ₱ 875,000 ₱ 875,000
Merchandise inventory 95,000 125,000
Furniture and fixtures 350,000 312,500 872,500 937,500
Transportation equipment 3,262,500 2,812,500
The transportation equipment is subject to a mortgage loan of 1,125,000, which is to be assumed by the
partnership. The partnership agreement provides that BUSI and NESS share profits and losses of 30% and 70%
respectively.
Assuming that the partners agreed to bring their respective capital in proportion to their profit and loss ratio, using
NESS capital as base. How much additional cash is to be invested (withdrawn) by BUSI?
a. ₱ (687, 500) b. ₱ (987, 500) c. ₱ 875,000 d. ₱ 687,500
4. Sponge and Bob are joining their separate business to form a partnership. Cash and non-cash assets are to be
contributed for a total capital of ₱300,000. The non-cash assets to be contributed and liabilities to be assumed are:
_____________Sponge___________ ____________Bob_____________
Book Value Fair Value Book Value Fair Value
Accounts Receivable ₱22,500 ₱22,500 ₱ - ₱ -
Inventories 22,500 33,750 60,000 67,500
Equipment 37,500 30,000 67,500 71,250
Accounts Payable 11,250 11,250 7,500 7,500
The partner’s capital accounts are to be equal after all contributions of assets and assumptions of liabilities.
The total asset of the partnership is
a. ₱225,000 b. ₱318,750 c. ₱281,250 d. ₱243,750
5. Refer to the immediately preceding item. The amount of cash that each partner must contribute;
a. Sponge ₱75,000 ; Bob ₱18,750 c. Sponge ₱63,750 ; Bob ₱11,250
b. Sponge ₱18,750 ; Bob ₱75,000 d. Sponge ₱11,250 ; Bob ₱63,750
6. FUTURE and CPA have capital balances of ₱560,000 and ₱450,000 respectively. Both decided to admit AKO
into their Partnership. He invested enough cash to have a 20% interest in the partnership. The profit and loss ratio
of the old partners is 3:2 respectively. After the admission of AKO, the capital balance of CPA amounted to
₱495,000. How much cash was invested by AKO?
a. ₱333,125 b. ₱112,500 c. ₱280,625 d. ₱393,125
7. Maxwell is trying to decide whether to accept a salary of ₱60,000 or a salary of ₱25,000 plus a bonus of 20% of
net income after the bonus as a means of allocating profit among the partners. What amount of income would be
necessary so that Maxwell would consider the choices to be equal? __________________. ₱210,000
8. GLENDA is trying to decide whether to accept a bonus of 25% of net income after salaries and bonus or a salary
of ₱97,500 plus a bonus of 10% of net income after salaries and bonus as a means of allocating profit among
partners. Salaries traceable to other partners are estimated to be ₱450,000. What amount of income would be
necessary so that GLENDA would consider the choices to be equal?
a. ₱1,100,000 b. ₱1,197,500 c. ₱650,000 d. ₱1,262,500
9. The fact that salaries paid to partners are not a component of partnership income is indicative of
a. a departure from generally accepted accounting principles
b. being characteristic of the entity theory
c. being characteristic of the proprietary theory
d. partnerships are characterized by unlimited liability
10. If COUNTRYSIDE receives his share of net income of ₱3,440 for the three month period ending December 31,
2016, what was the bonus given to RURAL?
a. ₱2,000 b. ₱1,000 c. ₱2,500 d. ₱1,750
11. In relation to the immediately preceding item, how much was the total net income recognized by the partnership
that will be reported in its Income Statement for the same period?
a. ₱20,000 b. ₱17,000 c. ₱50,000 d. ₱25,000
13. A primary element that distinguishes accounting for corporations from accounting for other legal forms of
business organization (e.g., partnerships) is that
a. GAAP apply to corporations but have only little applicability to other forms of organization
b. The corporation draws sharper distinction in accounting for sources of capital
c. In corporation, retained earnings may be reduced only by the declaration of dividends
d. The entity theory relates primarily to the other forms of business organization
15. Costs incurred to sell shares of stock (i.e., share issue costs) shall be debited to
a. Expense b. Share premium c. Organization cost d. Retained earnings
20. Which of the following dividends is usually not debited to retained earnings?
a. Cash dividend b. Property dividend c. Share dividend d. Liquidating dividend
22. A corporation reports the sale of some of its shares to a shareholder in its financial statements, and the shareholder
reports the same transaction as an investment. Therefore,
a. The revenue principle has been violated
b. The separate entity assumption has been violated
c. The double entry accounting concept has been violated
d. No accounting concept has been violated
25. At what amount per share should retained earnings be reduced for a 20% stock dividend?
a. Zero c. Market value at the date of declaration
b. Par value d. Market value at the date of issuance
27. A 300% stock dividend will have the same impact on the number of shares outstanding as a
a. 2-for-1 stock split b. 3-for-1 stock split c. 4-for-1 stock split d. 5-for-1 stock split
28. Bren company’s beginning inventory at January 1 was understated by ₱260,000 and its ending inventory was
overstated by ₱520,000. As a result, Bren’s cost of goods sold for the year was
a. ₱260,000 understated c. ₱780,000 understated
b. ₱260,000 overstated d. ₱780,000 overstated
31. Which of the following is issued to shareholders of a corporation to acquire its unissued or treasury shares within
a specified time at a specific price?
a. Share option b. Share warrant c. Share dividend d. Share split
32. An entity issued rights to its existing shareholders to purchase unissued ordinary shares at more than par value.
Share premium would be recorded when the rights
a. Are issued b. Are exercised c. Becomes exercisable d. Expire
33. AAA Co. was incorporated on January 1, 2011, with ₱5,000,000 from the issuance of share capital and borrowed
funds of ₱1,500,000. During the first year, net income was ₱2,500,000. On December 15, AAA paid a ₱500,000
Page 3 of 7 FUNDAMENTALS OF ACCOUNTING REVIEW
cash dividend. No additional activities affected shareholders’ equity in 2011. On December 31, 2011, AAA’s
liabilities had increased to ₱1,800,000. On December 31, 2011, what amount should be reported as total assets?
a. ₱6,500,000 b. ₱9,300,000 c. ₱8,800,000 d. ₱6,800,000
34. Mirr company was incorporated was incorporated on January 1, 2008, with the proceeds from the issuance of
₱7,500,000 in share capital and borrowed funds of ₱100,000. During the first year of operations, revenue from
sales and consulting amounted to ₱8,200,000 and operating costs and expenses totaled ₱6,400,000. On December
15, Mirr declared a ₱300,000 dividend, payable to shareholders on January 15, 2009.
No additional activities affected shareholders’ equity in 2008. Mirr’s liabilities increased to ₱2,000,000 by
December 31, 2008. On Mirr’s December 31, 2008 statement of financial position, total assets should be reported
at
a. ₱11,000,000 b. ₱11,300,000 c. ₱10,100,000 d. ₱12,100,000
35. The following information is available for Santana Company for the current year:
December 31 January 1
Cash ₱1,500,000 ₱1,000,000
Retained earnings 7,000,000 5,400,000
Cash flow from operating activities ?
Cash flow from investing activities (4,800,000)
Cash flow from financing activities 1,800,000
Dividends declared and paid 2,000,000
Net income 3,600,000
How much was the cash flow from operating activities?
a. ₱3,500,000 b. ₱2,500,000 c. ₱4,500,000 d. ₱3,600,000
36. MANUFACTURING;
Case A
Manufacturing cost for the period 157,000
Net purchases ?
Work in process inventory, Jan. 1 ?
Work in process inventory, Dec. 31 31,000
Raw materials used ?
Raw materials inventory, Jan. 1 15,000
Raw materials inventory, Dec. 31 18,000
Cost of goods manufactured 146,000
Labor cost 35,000
Factory overhead 25,000
Case B
Cost of goods sold ?
Raw materials used 60,000
Labor cost 40,000
Factory overhead 30,000
Work in process inventory increased by 20,000 and finished goods inventory decreased by 8,000.
Case C
Cost of goods manufactured 105,000
Cost of goods sold ?
Raw materials used 50,000
Factory overhead ?
Work in process decreased by 20,000 while finished goods increased by
15,000. Labor cost is 50% of raw materials used.