Professional Documents
Culture Documents
Advacc 1 Quiz 1 With Answers
Advacc 1 Quiz 1 With Answers
1. A and B formed a partnership. Although A and B contributed equal amounts of cash, it was
agreed that the initial credit to A’s capital account should be greater than that of B. If the
bonus method is used, which of the following statements is correct?
a. A capital bonus is given to B.
b. The initial capital of the partnership is equal to the sum of A and B’s contributions.
c. Partner B’s account is not affected by the agreement.
d. Goodwill must be recorded.
2. Mang and Ming agreed to form a partnership. The partnership agreement stipulates that
Mang shall contribute a noncash asset with fair value of ₱1,000 while Ming shall contribute
cash of ₱1,000. However, since Ming will be bringing in a special skill to the partnership, the
partners agreed that Ming shall be entitled to a 70% interest in the partnership initial net
assets and in subsequent partnership profits and losses. Which of the following statements
is correct?
a. Mang’s noncash asset contribution shall be debited at ₱300.
b. The net credit to Ming’s capital account is ₱1,400.
c. Mang is given a bonus.
d. The partnership’s total equity immediately after the formation is ₱2,400.
3. Which of the following transactions or events does not affect the total assets of a
partnership?
a. An old partner retires and his capital balance is settled by the partnership at a lower
amount.
b. An incoming partner purchases interest from an existing partner.
c. A partnership is dissolved and its assets and liabilities are revalued to fair value.
d. A new partner is admitted in a partnership when he invested noncash asset to the
partnership.
5. The admission of a new partner under the bonus method will result in
a. Bonus to the old partners only.
b. Bonus to the new partners only.
c. Bonus to either the new partner or the old partners, but not both.
d. Bonus to either the new partner or the old partners, or to both.
11. In case of retirement of an existing partner, which of the following scenario will result to
an asset revaluation downward?
a. When the retiring partner receives less than his capital balance and results in an increase
in the capital balance of the remaining partners
b. When the retiring partner receives more than his capital balance and results in a decrease
in the capital balance of the remaining partners
c When the retiring partner receives less than his capital balance and results in a decrease in
the capital of the remaining partners
d. When the retiring partner receives more than his capital balance and results in an
increase in the capital balance of the remaining partners
13. When a partner's capital account shows a debit balance and the said partner has a loan
account, this law permits him to use his loan to make up for his deficiency. What legal
doctrine permits this law?
a. Right to realization
b. Right to termination
c. Right to equalization
d. Right to offset
14. It is the loss where in the book value of the unrealized non-cash assets and cash
withheld for future liquidation are combined.
a. Loss absorption potential
b. Loss on realization
c. Maximum possible loss
d. Liquidation loss
15. When Danny withdrew from John, Daniel, Harry, and Danny LLP, he was paid
P80,000, although his capital account balance was only P60,000. The four partners
shared net income and losses equally. The journal entry of the partnership to record
Danny's withdrawal preferably should include :
a. P6,667 debit to John, Capital.
b. P6,667 credit to John, Capital.
c. P5,000 debit to John, Capital.
d. P5,000 credit to John, Capital.
b. Limited life
c. Mutual agency
d. Ease of formation
a. General Partner
b. Limited Partner
c. Industrialist Partner
d. Third-Party Partner
Problems #1:
On September 30, BAD admits COMPANY for an interest in his business. On this date, BAD’s
capital account shows a balance of ₱158,400. The following were agreed upon before the
formation of the partnership:
• Prepaid expenses of ₱17,500 and accrued expenses of ₱5,000 are to be recognized.
• 5% of the outstanding accounts receivable of Bad amounting to ₱100,000 is to be recognized
as uncollectible.
• Company is to be credited with a one-third interest in the partnership and is to invest cash
aside from the ₱50,000 worth of merchandise.
The partners agreed to divide profits and losses in the ratio of 70:30, respectively. How
much cash is to be invested by COMPANY?
a. ₱32,950
b. ₱82,950
c. ₱55,300
d. ₱281,800
Problem #2:
ALJUR and AJ agreed to form a partnership by contributing the assets of their separate
businesses. The partners agreed to an equal capital credit on the total contributed capital. Cash
settlements will be made among them to even out the difference. The abridged statement of
financial positions of ALJUR and AJ is are follows:
ALJUR AJ
Total assets ₱ 120,000 ₱ 80,000
Total liabilities 40,000 20,000
The partnership formation results in
a. ₱10,000 bonus to AJ
b. ₱10,000 cash settlement to AJ.
c. ₱10,000 goodwill to AJ
d. ₱10,000 cash settlement from AJ.
Problem #3:
Duterte, Duque, and Roque are partners with average capital balances during 2020 of
₱472,500, ₱238,650, and ₱162,350, respectively. In 2020, the partnership had a net loss of
₱125,624 before the interest and salaries to partners. Partners Duterte, Duque, and Roque
profit or loss agreement are as follows:
a) 10% interest on their average capital balances
b) Salaries of ₱122,325 to A and ₱82,625 to C
c) Residual profits or loss is divided equally.
By what amount should Duterte’s and Roque’s capital account change – increase
(decrease)?
*Answer 1 = Duterte and Answer 2 = Roque
a. ₱ 30,267 (₱40,448)
b. (₱ 40,844) ₱31,325
c. ₱ 29,476 ₱ 17,536
d. (₱41,875) (₱41,875)
Problem #4:
GERALD and JULIA are partners in merchandising business. During 2020, the withdrew their
salary allowances of ₱40,000 and ₱60,000, respectively. Profits and losses are shared in the
ratio of 3:2. The income summary account has a credit balance of ₱120,000 before any income
allocation. Their capital accounts reflect the following:
GERALD JULIA
Beginning balance………………………………………₱50,000 ₱30,000
Additional investments……………………………… ₱30,000 ₱40,000
Withdrawals other than for salary allowances……... (₱10,000) (₱15,000)
Ending Capital………………………………………… ₱70,000 ₱55,000
The capital balance of each partner on December 31, 2020 after closing the income
summary and withdrawals accounts.
a. GERALD, ₱82,000; JULIA, ₱63,000
c. GERALD, ₱70,000; JULIA, ₱55,000
b. GERALD, ₱122,000; JULIA, ₱123,000
d. GERALD, ₱82,000; JULIA, ₱123,000
Problem #5:
The following statement of financial position summary, together with residual profit-sharing
ratios, was developed on April 1, 2020 when the AAA, BBB and CCC partnership began its
liquidation:
Cash ₱140,000
Accounts receivable 60,000
Inventories 85,000
Plant assets-net 200,000
Loan to AAA 25,000
Liabilities 60,000
Loan from BBB 20,000
AAA capital (20%) 75,000
BBB capital (40%) 200,000
CCC capital (40%) 155,000
If available cash except for a ₱5,000 contingency fund is distributed immediately, AAA,
BBB, and CCC, respectively, should receive:
a. ₱-0-, ₱80,000, and ₱15,000
b. ₱-0-, ₱70,000, and ₱5,000
c. ₱16,000, ₱32,000, and ₱32,000
d. ₱-0-, ₱72,500 and ₱7,500
Problem #6:
The partnership agreement of CHINA, JAPAN and KOREA provides for the division of net
income as follows: (1) JAPAN, who manages the partnership, is to receive a salary of ₱16,500
monthly. (2) Each partner is to be allowed interest at 15% on ending capital. (3) Balance is to be
divided 25:30:45.
During 2020, CHINA invested an additional ₱96,000 in the partnership. JAPAN made an
additional investment of ₱60,000 and withdrew ₱90,000, and KOREA withdrew ₱70,000. No
other investments or withdrawals were made during 2020. On January 1, 2020, the capital
balances were CHINA, ₱280,000; JAPAN, ₱300,000; and KOREA, ₱170,000. Total capital at
year-end was ₱975,000.
Compute the share of each partner in the net income at year-end: (CHINA, JAPAN and
KOREA respectively)
a. ₱ 36,175 ₱214,230 ₱ 21,405
b. ₱ 57,250 ₱ 68,700 ₱103,050
c. ₱ 36,175 ₱214,230 (₱21,405)
d. ₱36,175 ₱ 54,230 ₱148,595
Problem #7:
RANZ and NIANA who share profits and loss equally admit NATALIA into a partnership
upon the investment by NATALIA of P125,000 for a 1/3 interest. Account balances for RANZ
and NIANA on June 30, 2000, just before the admission of NATALIA are as follows:
It is agreed that for purposes of establishing the interests of the former partners the
following adjustments shall be made:
(1) An allowance for doubtful accounts of 2-1/2% is to be
established.
(2) The merchandise inventory is to be valued at P110,000.
(3) Accrued expenses of P4,000 are to be recognized.
(4) Prepaid insurance is to be valued at P9,250.
The capital balances of RANZ, NIANA and NATALIA, respectively after NATALIA’s
admission is:
a. P120,000; P 80,000; P125,000
b. P144,000; P 74,000; P125,000
c. P104,333; P104,333; P104,333
d. P124,333; P 84,334; P104,333
Problem #8:
A summary of balance sheet for ABC Co. appears below. Partners LU ANG, HEE RAP and
NAH MAN share profits and losses in the ratio of 2:3:5, respectively. Some account with their
respective balances are as follows:
Cash 100,000
LU ANG, capital 425,000
Inventory 125,000
HEE RAP, capital 400,000
Marketable Securities 200,000
NAH MAN, capital 200,000
Land 100,000
Building-net 500,000
The partners agree to admit D for a 1/5 interest. The fair value of partnership land is appraised
at P200,000 and the fair value of inventory is P175,000.
The assets are to be revalued prior to the admission of D and there is a decrease of P30,000 in
the capital interest of the new partner after his admission.
Q2: The amount of cash investment of D to acquire 1/5 interest in the partnership?
a. P301,250
b. P256,250
c. P75,000
d. P331,250
Problem #9:
MacDo will invest in the partnership of Jabili and Pitsa Hat for a 40% interest. Jabili and Pitsa
Hat have capital of ₱400,000 and ₱300,000 and shares profit 60:40, respectively. MacDo is to
invest ₱200,000 into the partnership and to purchase 1/2 of Jabili’s interest for ₱300,000.
Compute the capital interest of MacDo, Jabili and Pitsa Hat, respectively, under the
bonus method.
a. ₱500,000, ₱200,000; ₱200,000
b. ₱360,000, ₱224,000; ₱316,000
c. ₱400,000, ₱200,000; ₱200,000
d. ₱200,000, ₱200,000; ₱200,000
Problem #10:
As of December 31, the books Ton Partnership showed capital balances of: T, ₱400,000; O, ₱250,000; N,
₱50,000. The partners’ profit and loss ratio was 3:2:1, respectively. The partners decided to liquidate
and they sold all non-cash assets for ₱370,000. After settlement of all liabilities amounting ₱120,000,
they still have cash of ₱280,000 left for distribution. Assuming that any capital debit balance is
uncollectible, the share of T in the distribution of the ₱280,000 cash would be:
a. ₱178,000
b. ₱180,000
c. ₱ 190,000
d. ₱170,000