Name:___________________________ Section:______ Score:_________

TEST- I Multiple Choice - Theory: Select the correct answer for each of the following
questions. (1 point each). All answers should be written on the answer sheet
attached.

1. A partnership liquidation occurs when:

A. A new partner is admitted

B. A partner dies
C. The ownership interest of one partner is sold to a new partner
D. The assets are sold, liabilities paid, and business operation terminated

2. The remaining cash of a partnership (after creditors have been paid) upon liquidation
is divided among partners according to their:

A. Capital balances
B. Contribution of assets
C. Drawing balances
D. Income sharing ratio

3. A gain or loss on realization is divided among partners according to their:

A. Income sharing ratio

B. Capital balances
C. Drawing balances
D. Contribution of assets

4. When is a partnership legally insolvent?

A. When the partnership assets are insufficient to meet partnership liabilities

B. When the partnership assets are insufficient to meet the partnership
liabilities and at least one partner is personally insolvent
C. When all the partners are personally insolvent
D. When the assets of the partnership plus the assets of all the partners are
insufficient to meet the partnership plus the individual partners’ liabilities

5. In which order are partnership assets distributed to partners under the Partnership
Law?

A. Capital balances, loans, profits

B. Loans, profits, capital balances
C. Loans, capital balances, profits
D. Profits, capital balances, loans

6. In a partnership liquidation the realization losses result in a debit balance in one

partners’ capital account. If this partner fails to contribute personal assets to make up
this deficit, how should the debit balance be handled by the partners?

A. It should be written off against partnership profits like any other bad debt
B. It should be allocated to all the partners in their profit and loss ratio
C. It should be allocated to the remaining partners in their remaining profit
and loss ratio
D. It should be set up as a receivable and turned over to a collection
agency

7. What is the rule of offset?

 A. Receivables from partners should offset against their debit cap[ital.
balances before they receive any cash distributions
B. Loans to partners should offset against their debit capital balances
before they receive any cash distributions
C. Loans from partners should offset against their credit capital balances
before they receive any cash distributions
D. Loans from partners should offset against their debit capital balances
before they receive any cash distributions

8. If a partnership is liquidated, how is the final allocation of business assets made to

the partners?

A. Equally
B. According to the profit and loss ratio
C. According to the final capital account balances
D. According to the initial investment made by each of the partners

9. Which of the following statement is true concerning the accounting that is made for a
partnership going through liquidation?

A. Gains and losses are reported directly as increases and decreases in

the appropriate account
B. A separate income statement is created just to measure the profit or
loss generated during liquidation
C. Since gains or losses rarely occur during liquidation, no special
accounting treatment is warranted
D. Within a liquidation, all gains and losses are divided equally among the
partners

10. If Juan, a partner with a loan receivable from a liquidating partnership receives less
cash than the amount of the loan during liquidation, the payment is recorded with a
debit to:

A. Loans Receivable from Juan

B. Juan capital
C. Juan drawing
D. Loan Payable to Juan

11. In the instalment liquidation of a partnership, each instalment of cash is distributed:

A. In the partners’ profit and loss ratio
B. In the ratio of partners’ capital account balances
C. As agreed to by the partners
D. As if no more cash would be forthcoming

12. What is the largest possible loss resulting from the realization of partnership assets
that the accountant estimates when preparing a safe payment schedule?
A. Book value of the recorded assets
B. Book value of recorded non-cash assets
C. Fair value of recorded assets
D. Fair value of recorded non-cash assets

13. Assuming no loans from partners, how is partner’s loss absorption potential
computed?

A. Multiply her pre-liquidation capital balances by her profit and loss ratio
B. Multiply her pre-liquidation capital balance by her fraction share of
profits and losses
C. Divide her pre-liquidation capital balance by her profit and loss ratio
D. Divide her profit and loss ratio by her pre-liquidation capital balance

14. What is a distribution plan?

 A. A guideline for the cash distributions made to partners during
liquidation
B. A list of the procedures to be performed during a liquidation
C. A determination of the final distribution to be made to the partners on
the settlement date
D. A detailed list of the transactions that will transpire in the
reorganization of a partnership

15. In the preparation of schedule of safe payment to partners, cash withheld for future
liquidation expenses and unrecorded liabilities that may be discovered is treated as:

A. Operating expenses
B. Liabilities
C. Loss on realization
D. Possible loss.

16. An entity shall recognize revenue to depict the transfer of promised goods or
services to customer in the ___________________ amount that reflects the
consideration to which the entity expects to be entitled in the exchange for those goods
or services.
A. Net
B. Residual
C. Gross
D. Fair value

17. Which of the following is an exception for application of PFRS 15?

A. Lease contracts
B. Insurance contracts
C. Pharmaceutical contracts
D. A and B

18. A contract is wholly unperformed if ……

A. The entity has not yet transferred any promised goods or services to the
customer
B. The entity has not yet received any consideration in exchange for
promised goods or services
C. The entity is not yet entitled to receive any consideration in exchange
for promised goods or services
D. All of the above

19. A good or service that is promised to a customer is distinct if:

A. The customer can benefit from the good or service on its own
B. The customer can benefit from the good or service together with other
resources that are readily to the customer
C. The entity’s promise to transfer the good or service to the customer is
separately identifiable from other promises in the contract
D. All of the above

20. According to PFRS 15, the asset is transferred to a customer….

A. When the asset is physically delivered to the customer premises:

B. ON the day specified by a contract with the customer
C. When the customer obtains control over it
D. On the day when the entity satisfies all performance obligations,
specified in the contract with the customer
21. On January 20X1, a vendor enters into a contract with a customer to build an item of
specialized equipment, for delivery on April 30, 20X1. However, the exact delivery date
is hard to estimate. The amount of consideration specified in the contract is P3,000,000,
but that amount will be decrease or increased by P5,000 for each day, depending on
whether the actual delivery date is before or after April 30, 20X1. How should the vendor
determine the transaction price for this contract?

A. A vendor needs to apply the most likely amount method in order to

predict the amount of consideration, because there is a range of
possible outcomes
B. A vendor needs to apply expected value method in order to predict the
amount of consideration, because there is a range of possible outcomes
C. The transaction price for this contract should be the same as specified
in the contract with a customer, which is P3,000,000
D. The transaction price may only be calculated when the equipment is
delivered and exact amount of consideration is known

22. Which of the following is included in the cost of fulfilling construction contact?

A. Cost of hiring equipment used in the construction

B. General administration costs for which reimbursement is not specified in
the contract
C. Selling cost
D. Depreciation of idle plant and equipment that is not used on a particular
contact

23. Under the zero–profit method contract revenue for the period is:

A. Equal to zero
B. Equal to the costs of construction recognized during the period
C. Equal to the contract price divided by the estimated construction period
D. Equal to the costs of construction recognized during the period that are
probable of recovery

24. Which of the following may affect the revenue recognized on a construction
contract?
A. Contract price
B. Change order
C. Escalation clause
D. All of the these

25. Under the cost-to-cost method, the percentage of completion may be computed as:
A. Total cost incurred to date multiplied by the estimated total cost to
complete
B. Total costs incurred to date divided by the estimated total costs to
complete
C. Total cost incurred to date multiplied by the estimated total costs to
complete
D. Total costs incurred to date divided by the sum of total costs incurred to
date and estimated costs to complete

26. An entity wins a completion bid to contract abuilding to a customer .The following
costs were incurred by the entity to obtain the contract , which following should be
excluded in the as an asset to recognize by entity.

A. External legal fees for due diligence

B. Travel costs to deliver the proposal
C. Commissions to sales employees
D. A and B
27. For a contract with a customer, the amount of consideration to which an entity
expects to be entitled in exchange for transferring promised goods or services to a
customer, excluding amounts collected on behalf of their parties.

A. Transaction price
B. Variable price
C. Modification price
D. Single price

28. For a good or service, the price at which an entity would sell a promised good or
service separately to a customer.

A. Transaction price
B. Contract price
C. Stand-alone selling price
D. Bundle price

29. A promise in a contract with a customer to transfer to the customer, either a good or
serve (or a bundle of goods or services that is distinct or a series of distinct goods or
services that are substantially the same and that have the same pattern of transfer to
customer.

A. Performance obligation
B. Construction contract
C. Contract liability
D. All of the above

30. It is an agreement to reimburse a company for expense and plus a specific amount
of profit, usually stated as a percentage of the contact full price.

A. Variable consideration
B. Cost-plus contract
C. Transaction contract
D. Constructions contract

TEST – II Multiple Choice – Computational: Select the correct answer for each of the
following questions.(2 points each).Solutions required, no solution no point. All
answers should be written on the answer sheet attached.

1. A and B are partners who share income in the ratio of 1:2 and have capital balances
of P40,000 and P70,000 at the time they decide to terminate the partnership. After all
noncash assets are sold and all liabilities are paid, there is a cash balance of P80,000.
What amount of loss on realization should be allocated to A?

A. 10,000 C. 30,000
B. 20,000 D. 80,000

2. The balance sheet of Marilyn and Monroe was as follows immediately prior to the
partnership being liquidated:

Cash 20,000
Other assets 160,000
Liabilities 40,000
Marilyn capital 60,000
Monroe capital 80,000
The other assets were sold for P139,000. Marilyn and Monroe share profits
and losses in 1:2 ratio. As a final cash distribution from the liquidation, Marilyn will
receive cash totalling:

A. 46,000 C. 60,000
B. 51,000 D. 73,333

3. Jimmy, Jerry and Johnny decide to liquidate their partnership. All assets are sold and
the liabilities are paid. Following these transactions, the capital balances and profit and
loss percentages are as follows: Jimmy, P27,000 and 30%; Jerry, (P12,000) and 40%;
Johnny ,P43,000and , 30%. Jerry is unable to contribute any assets to reduce the
deficit. How much cash will Jimmy receive as a result of the partnership liquidation?

A. 15,000 C. 23,400
B. 21,000 D. 27,000

4. X, Y and Z are partners, sharing income 1:2:3. After selling all of the assets for cash,
dividing losses on realization, and paying liabilities, the balance in the capital accounts
are as follows: X, P50,000 Cr.; Y, P40,000 Dr.; and Z, P30,000 Cr. How much cash is
available for distribution to the partners?

A. 120,000 C. 40,000
B. 90,000 D. 30,000

5. On June 11, 2016, Molly, Nora, and Olga form a partnership investing cash of
P15,000, P13,500, and P4,200 respectively. The partners share profits 3:2:2 and on
August 30, 2016, they have cash of P1,000, and other assets of P47,500; liabilities are
P25,600. On this date they decide to go out of business and sell all the assets for
P30,000. Olga has personal assets of P1,500 that may, if necessary, be used to meet
partnership obligations. How much should be distributed to Nora upon liquidation of the
partnership?

A. 4,000 C. 4,860
B. 2,040 D. -0-

6. AA, BB, CC, and DD are partners sharing profits in the ration of 3/21, 4/21, 6/21,
8/21. Their capital balances on December 31, 2016 are as follows:

AA P 500
BB 12,500
CC 12,500
DD 4,500
The partners decide to liquidate their firm and they accordingly convert the
noncash assets into P11,600 cash . After paying liabilities of P1,500, they have P11,100
to divide. What is the gain or loss on realization?

A. (11,250) C. (18,400)
B. 18,900 D. (18,900)

7. Cena, Batista and Lashley share profits in 5:3:2 ratio. Their capital accounts prior to
liquidation (which is expected to result in substantial gains) are as follows:

Cena P18,000 Cr. balance

Batista 27,000 Cr. balance
Lashley 3,000 Dr. balance

The partners wish to distribute cash as it becomes available so that the

capital accounts may be brought into the profit and loss ratio as rapidly
as possible. Who is the partner to receive the first available cash and up to
how much?

A. Cena , up to 54,000 C. Batista, up to16,200

B. Batista , up to 54,000 D. Lashley , up to 16,200

8. Gilbert, Joseph and Li are partners with capital balance of P350,000, P250,000 and
P350,000 and sharing profits 30%, 20% and 50% respectively. Partners agree to
dissolve the business and upon liquidation, all of the partnership assets are sold and
sufficient cash is realized to pay all claims except one for P50,000. Li is personally
insolvent, but the other two partners are able to meet any indebtedness to the firm. On
the remaining claim against the partnership, Gilbert is to absorb:

A. 15,000 C. 30,000
B. 25,000 D. 40,000

9. L, M, and N are partners, sharing income 1:2:3. After selling all of the assets for cash,
dividing loss on realization, and paying liabilities, the balances in the capital accounts
are as follows:
 L P50,000 Cr. balance
M 20,000 Cr. balance
N 30,000 Dr. balance
Assume that after the available cash is distributed to the partners, N pays
P15,000 of the deficiency to the firm. How much of the P15,000 should be
distributed to L?

A. -0- C. 10,000
B. 5,000 D. 15,000

Use the following information for next 5 questions.

Construction Company has entered into a contract with a customer to build a new 10-
story office building, expected to take two and half years to complete. This contract is for
a fixed fee of P25 million and has been determined to be a single performance
obligation. The total expected cost is P20 million

At the end of one year , When Construction Company determines that it has satisfy
45% of its performance obligation , the customer requested a change order because it
wants to be compliant with a new environmental standard and therefore will need to
change (among other specifications) all the windows. The total cost to the customer for
ensuring the building is compliant with this new standard will be an additional P5
million , and the cost to Construction Company will be P4.5 million.

The changes required for compliance are not considered to be a distinct performance
obligation. The contractor measures performance based on costs incurred. The costs
incurred to date is P9 million.

10. How much is the revenue to be recognized based on the original contract value?
A. 11,250,000 C. 13,020,000
B. 12,250,000 D. 13,250,000

11. What is the transaction price based on the modification?

A. 35 million C. 30 million
B. 34.5 million D. 25 million

12. How much is the revenue to be recognized under the modification of contract?
A. 10,000,00 C. 11,000,408
B. 11,000,000 D. 11,020,408

13. What is the estimated percentage of completion under the modification contact?
A. 45% C. 38%
B. 40% D. 37%

14 How much is the cumulative catch-up adjustments required on the revenue?

A. 229,592 C. 109,592
B. 129,592 D. (229,592)

15. Construction Company ABC signs a contract on June 20X1 to refurbish a building
and install a new windows with windows blinds (let’s call it “windows”). Total contract
price is P12 million. Total expected contract costs are: P6 million for windows
(purchased from external suppliers) and P4 million for labor, materials and other costs
related to the project.

As of December 20X1, ABC handed over the windows to the client, although the
installation has not been completed. However, the client obtained control of windows.
Other costs incurred to December 31 were P1 million, just before the year-end, the
client paid the first progress payment of P8 million. What is the percentage of
completion?

A. 50% C. 25%
B. 40% D. 20%
16. Using the information in number 15, how much is the total revenue to December
31, 20X1 excluding the windows?

A. 3.0 Million C. 2.0 Million

B. 2.5 Million D. 1.5 Million

17. In 20X1, Romen Co. was contracted to build a railroad. The project was initially
estimated to have a completion period of 4 years. If the project is completed within the
budgeted construction period, an incentive payment of P200,000 shall be provided to
Romen Co.

Information on the project is as follows:

20X1 20X2 20X3

Cost incurred to date 2,400,000 4,575,000 6,125,000
Estimated costs to complete 3,600,000 1,525,000 125,000

As of December 31, 20X3, Romen assessed that project will be

completed earlier than expected and, thus Romen will be entitled to the incentive
payment. It is highly probable that Romen will realize the incentive payment. All costs
are recoverable. How much is the final contract price will be billed at cost plus 20% for
the year 20X3?

A. 7,200,000 C. 7,700,000
B. 7,320,000 D. 7,800,000

18. Based on the information in number 17, what is the percentage of for the year
20X1?
A. 98% C. 40%
B. 75% D. 30%

19. Based on the information in number 17, how much is the profit for the year 20X2?

A. 435,000 C. 490,000
B. 480,000 D. 506,000

20. Using the information in number 17, how much is the profit for the year 20X3?
A. P435,000 C. 490,000
B. P480,000 D. 506,000

TEST- III Essay: Explain briefly each of the following questions. (5 points each).
All answers should be written on the answer sheet attached.
1. What is the core principle of PFRS 15?
2. One of the five criteria that must be met for a contract to exist is that it is probable
the entity will collect the consideration to which it is entitled. What does this mean
and how is this applied?
3. PFRS 15 refers to a performance obligation as a promised good or service (i.e.,
promise in a contract) that is distinct. How should a promised good or service be
identified?
4. How should an entity determine whether a promised is distinct performance
obligation and should be accounted for separately or whether it should be bundled
with other promises to be included in the application of the remaining steps of the
model?
5. How is the transaction price allocated to the performance obligations in the contract?
Deadline of submission of answers is October 4, 2020 @ 5:00 PM.
ATENEO DE ZAMBOANGA UNIVERSITY
School of Management and Accountancy
Accounting Department
 ADVACC 1
Answer Sheet (All answers should be written on these answer sheets).

Name_____________________________________ Section_________ Score__________

TEST I

1. ________ 16. _________

2. ________ 17. __________
3. ________ 18. __________
4. ________ 19. __________
5. ________ 20. __________
6. ________ 21. __________
7. ________ 22. __________
8. ________ 23. __________
9. ________ 24. __________
10. ________ 25. __________
11. ________ 26. __________
12. ________ 27. __________
13. ________ 28. __________
14. ________ 29. __________
15. ________ 30. __________

TEST II

1. ________ 11. __________

2. _________ 12. __________
3. _________ 13. __________
4. _________ 14. __________
5. _________ 15. __________
6. _________ 16. __________
7. _________ 17. __________
8. _________ 18. ___________
9. _________ 19. ___________
10. _________ 20. ___________

TEST III

1.
2.

3.

4.
5.