Junior Philippine institute of

Saint Mary’s University Chapter

Accountants
Federation Year 2017-2018

JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS- SMU CHAPTER

“ACADEMIC LEAGUE 2017: Tagisan ng Talino”
-ELIMINATION ROUND-
DIRECTIONS: Select the best answer for each of the following questions. Write your answer in the answer sheet
provided. Strictly NO ERASURES ALLOWED. Do not write anything on the Test Questionnaire.
SUBJECT: PARTNERSHIP AND CORPORATION
TIME ALLOTED: 45 seconds each THEORY QUESTION
60 seconds each PROBLEM QUESTION
TIME ALLOWED: 25 MINUTES

1. If the partnership agreement does not specify how profit is to be allocated, profits or losses should be allocated
a. Equally
b. In accordance with their capital contribution.
c. In proportion to the average of capital invested during the period.
d. Equitably so that partners are well compensated for their time and effort.

2. The most equitable distribution of partnership profits based on capital contributions uses which of the following capital concept?
a. Equally
b. Average capital
c. Ending capital
d. Beginning capital

3. A partner who contributes money or property as well as his work or industry to the capital of the partnership is called
a. Industrial partner
b. Capitalist partner
c. Managing partner
d. Capitalist-industrial partner

4. Which of the following will not result in dissolution of a partnership?

a. Incapacity of a partner.
b. Negative capital balance of a partner.
c. Bankruptcy of a partner.
d. Admission of a new partner.

5. If a partner is insolvent, his personal properties shall first be distributed

a. To the partnership creditors.
b. To the partners by way of additional contribution when the assets of the partnership were insufficient to settle all obligations.
c. To partnership and separate creditors in the ratio of their loan exposures.
d. To separate creditors.

6. Which of the following statements is correct regarding a partner’s capital deficiency?

a. The partner should contribute to reduce the debit balance to the extent possible.
b. If contributions are not possible, the other partners with credit capital balances will be allocated a portion of the debit balance.
c. Partners who absorb another’s capital deficiency have a legal claim against the deficient partner.
d. All of these statements are correct.

7. A partner’s loss absorption balance is calculated by

a. Dividing the partner’s capital balance by his percentage interest in capital.
b. Multiplying distributable assets by the partner’s profit sharing percentage.
c. Dividing the partner’s total interests by his profit and loss sharing percentage.
d. Multiplying the partner’s total interests by his profit and loss sharing percentage.

8. The following is the priority sequence in which liquidation proceeds will be distributed for a partnership
a. Partnership liabilities, partnership loans and partnership capital balances.
b. Partnership drawings, partnership liabilities, partnership loans and partnership capital balances.
c. Partnership liabilities, partnership loans, partnership drawings and partnership balances.
d. Partnership liabilities, partnership capital balances and partnership loans.
 Junior Philippine institute of
Saint Mary’s University Chapter
Accountants
Federation Year 2017-2018

9. R, S and T decided to form a universal partnership of all present property. The contract of partnership was executed on October
10, 2009 but they commenced business on October 18, 2010. One of the following is not correct?
a. If the partnership is for 15 years, but one of the partners withdraws from the partnership on the 12th year, the firm is dissolved.
b. The partnership began its existence on October 10, 2009.
c. If after the expiration of the its term, the partners continue to transact business, the partnership is converted to a partnership at
will.
d. In the absence of any partnership agreement specifically covering the division of losses among the partners, they will be
deemed to share the losses in accordance with their capital contributions.

10. Two individuals who were previously sole proprietors formed a partnership. Property other than cash which is part of the initial
investment in the partnership would be recorded for financial accounting purposes at the
a. Proprietors’ book values or the fair value of the property at the date of the investment, whichever is higher.
b. Proprietors’ book values or the fair value of the property at the date of the investment, whichever is lower.
c. Proprietors’ book values of the property at the date of the investment.
d. Fair value of the property at the date of the investment.

1. A and B formed a partnership on January 1, 2017. Their contributions were as follows: A: P600,000 and B: P1,0000,000. During
the year, the partnership earned profit of P4,000,000. There was no stipulation in the agreement on how profits ae to be shared by
the partners. How much is the share of B in the partnership profit?
a. P1,500,000
b. P2,500,000
c. P2,000,000
d. Cannot be determine

2. A has a 25% participation in the profits of the partnership. During the year, A’s capital has a net increase of P40,000. A made a
contribution of P60,000 and withdrawals of P240,000 during the year. How much is the partnership profit during the year?
a. P120,000
b. P480,000
c. P560,000
d. P720,000

3. Michelle, an active partner in the Michelle-Esme partnership receive an annual bonus of 25% of the partnership income after
bonus. During the year 2017, partnership income before bonus amounted to P240,000. The bonus of Michelle for 2017 is:
a. P45,000
b. P48,000
c. P80,000
d. P60,000

4. The partners, A and B, shares profits 3:2. However, A is to receive a yearly bonus of 20% of profits, in addition to his profit share.
The partnership made a ne income for the year of P24,000. Assuming A’s bonus is bonus is computed on profit after bonus, w
much will B’s share in the partnership profit?
a. P15,200
b. P16,000
c. P8,000
d. P9,000

5. Arturo Perez, a partner in AP partnership has a 30% participation in partnership profits and losses. Perez capital accounts has a
net decrease of P60,000 during 2017. During 2017, Perez withdrew P130,000 nd contributed a property valued at P25,000. What
was the net income of AP Partnership for 2017?
a. P150,000
b. P233,333
c. P350,000
d. P550,000
1. Under PAS 33, treasury shares are considered as anti-dilutive because
a. They decrease the basic earnings per share
b. They decrease the diluted earnings per share
c. They decrease the number of common shares outstanding
d. They increase the income available to common shareholders
 Junior Philippine institute of
Saint Mary’s University Chapter
Accountants
Federation Year 2017-2018

2. In calculating diluted earnings per share (EPS), which of the following should not be considered?
a. The weighted number of shares outstanding
b. The amount of cash dividends declared on ordinary shares
c. The amount of dividends declared on cumulative preference shares
d. The number of ordinary shares resulting from the assumed conversion of debentures outstanding
3. For which of the following purposes should an appropriation for possible loss contingencies be established?
a. To match applicable costs with current revenue.
b. To reduce fluctuations in net income in order to lend stability of the entity.
c. To charge operations in periods of rising prices for the losses which may otherwise be absorbed in periods of falling prices.
d. To inform shareholders that a portion of retained earnings should be set aside from amounts available for dividends because
of such contingencies.

4. The dividends declared account is a nominal account and

a. Carried forward on the next accounting period
b. Closed directly to retained earnings
c. Closed directly to income summary
d. Closed directly to capital

5. Earnings per share disclosures are required only for

a. companies with complex capital structures.
b. companies that change their capital structures during the reporting period.
c. public companies.
d. private companies.

6. In applying the treasury stock method of computing diluted earnings per share, when is it appropriate to use the average market
price of common stock during the year as the assumed repurchase price?
a. Always
b. Never
c. When the average market price is higher than the exercise price
d. When the average market price is lower than the exercise price

7. Gains and losses on the purchase and resale of treasury shares may be reflected on
a. Paid-in capital accounts
b. Paid-in capital and retained earnings account
c. Income, paid-in capital and retained earnings account
d. Income and paid-in capital accounts

8. At the date of financial statements, common stock shares issued would exceed common stick shares outstanding as a result of the
a. Declaration of stock split
b. Declaration of stock dividends
c. Purchase of treasury shares
d. Payment in full of subscribed shares

9. The par value of common stocks represents

a. Liquidation value of the shares
b. Book value of the shares
c. The legal nominal value assigned to the shares
d. The amount received by the corporation when the stocks were originally issued

10. Share issuance cost are recognized directly in equity. If the related share premium is insufficient to offset any share issuance
costs, the issuance cost are
a. Recognize as expense in profit or loss
b. Charged directly to retained earnings
c. Charged directly to share capital
d. Both a or b

1. The accounts below appear in the December 31 trial balance of KKD Company.
Authorized Ordinary Share P3,500,000
Unissued Ordinary Share P1,000,000
 Junior Philippine institute of
Saint Mary’s University Chapter
Accountants
Federation Year 2017-2018

Subscribed Ordinary Share P500,000

Subscription Receivable P600,000
Premium on Ordinary Share P200,000
Retained Earnings – Unappropriated P500,000
Retained Earnings – Appropriated P220,000
Revaluation Surplus P400,000
Treasury Shares, at cost P220,000

What is the total Shareholders’ Equity to be reported by KKD Company on its 2017 financial position?
a. P7,140,000
b. P3,640,000
c. P3,500,000
d. P4,400,000

2. The Shareholders’ Equity section of AAA Company Revealed the following information
Preference Share, P100 par P1,150,000
Share Premium – Preference P402,500
Ordinary Share, P15 par P2,625,000
Share Premium – Ordinary P1,375,000
Subscribed Ordinary Share P250,000
Retained Earnings P950,000
Notes Payable P2,000,000
Subscriptions Receivable – Ordinary P200,000

How much is the legal capital?

a. P5,400,000
b. P4,025,000
c. P6,025,000
d. P4,952,500

3. The company issued 2,000, P10o par ordinary shares for an outstanding obligation amounting to P250,000. On this date, the
shares are quoted at P140 per share. What should the company recognize as gain(loss) on extinguishment of debt?
a. P(30,000)
b. P30,000
c. P50,000
d. P(50,000)

4. The company issued for P1,000,00 cash 1,000 ordinary share of P200 par value Preference Share and 2,000 shares of P100
Ordinary shares. The preference and ordinary shares have fair values of P280 and P180 per share respectively. What is the share
premium credited to ordinary shares?
a. P200,000
b. P400,000
c. P228,571
d. P133,333

5. Appa Corporation was authorized to issue share capital of P1,000,000, divided into P100 par value share on January 1, 2017. How
much should be the minimum cash payment on initial subscription in order to comply with legal requirements?
a. P62,500
b. P125,000
c. P250,000
d. P375,000