UB Republic of the Philippines ‘Commission on Higher Education Don Honorio Ventura Technological State University Bacolor, Pampanga COLLEGE OF BUSINESS STUDIES BS Accountancy Qualifying Examination (Basic Accounting and Accounting for Partnership and Corporation) SET2 1. Michele an active pater inthe Michlle-sme Parership, receives an annual bonus of 25% ofthe partnership income deducting the bonus. For the year ended December 31, 1992, the partnership income before the Bonus amount 9 000. The bonus of Michelle forthe year 1992s vi 5,000 Penang» = TF = 8 WD B. Pa8.000_ 4. P80,000 2% Onda 120, Sand pooted thi asets to frm a partersip, withthe fm to tke over terbusines asses and assume () the liabilities. Partners capitals are to be based on the assets transferred after the following adjustments: 8) T's inventory isto be increased by P3,000 'b) Anallovance for bad debts of P1,000 and P1,S00 are be set up on the books of Sand T, respectively ©) Accounts payable of P4,000 isto be recognized in S’s books. ‘8)_ Anamount of eash must be eoneibuted by any one ofthe pariners in order to establish equal amount of interest. ‘The following balances appear on $ and T's individual books on June 1, before adjustments: 5 7 Asels ——_Libltes 0 om) Faw * s 75,000 P5000 = 10 wo (100) i t T 3,000 34,500 > 9 How much apts must becredied to Sand ee 7 ED LD) OR) so = ney -ga, ig 9) P81 300 qo 0.000 - 7 Capaal P7000 © 7 5. Under the partnership agreement, partner M is to receive a bonus of 20% of net income afer bonus and the remainder to be distributed as follows: 35% each 1o M and N and 30% to T. Ifthe partmeship's net income is P6,360,000, how much isthe bonus 10M? 1060 0% ~ Botws Mi 4 a. PI272,000 loam = (v0 O ®. © P1,060,000 © p 493,334 e.P1,017,600 D4. Parmers Gretchen and Kristine age hat Kristine isto recsve a P1500 salary fom ther partnership and remaining profs Inet be divided ina'3:2 rato IPKrstne receives ol sare of P6000, how much ithe pares praia? a. "po0.000 . Prsado \ ¢. P67,500 on & Pso.000 p) D5. Imatinted partnership 1 The gener partners have ited aity All parmers have limited bility Allbutt gener! pares ave nite ability 4. Allbutthe general partners have unlimited Kbilty J) & waktorbe ig wnt a onotapmeit a toapeiy of pr Nouvel cpa © any spr Ano pee wi ur oto fo ov‘snot a characteristic ofthe corporate form of organization ity (b mutual agency continues existence 4. centralized authority bs. The communication pase of Accounting i acomplised by a). Processing Data Reporting 1 des Recording Data 4) Storing Data makers D % Which ofthe following isan asset ofa firm? ) An overdrawn balance on the firm's bank account 2) Money owed by the firm to one of its suppliers of good Durchased on credit = 1b) Computer Equipment owned by the firm 44) The capital ofthe firm © 10. which ofthe folowing i business even that isnot considered a recordable tangacton? 4) Accompany pays an employee for work performed ‘A customer inquires about the availability of service 'b). company receives «produc previously ordered 44) A castomer purchases a service D1 When a customer buys services on credit, the contract is regarded as complete when: a) The bill is prepared .) the date specified inthe contact is at hand .) The cash payment is received Otte services are rendered D 12, Atthe beginning ofthe Year 2016, a company purchased a fir insurance policy covering a prio f two years. The P 5,600 cos ofthe policy was pid in cash, At then end of 2016, the company will reduce Prepaid Insurance Policy by. Po 6) 5600 coetial b)P467 P2800 Ws [\, 13 Fulled company which uses the gross price method of recording purchases and the periodic inventory system , bought ‘merchandise for P 8,000, terms 2/10, n/30. If Fulfiled returns P 2,000 of the goods to the vendor. The entry to record the should include a (Credit to Purchased Returns and Allowances 'b) Debit to Accounts Payable, P 1,200 ¢) Debit to discounts Lost of P40 4) Debit to purchase retums and allowances P 1,960 1D M4 Which of the folowing types of accounts measure economic lows over a pio of ime? 2) Real Accounts Nominal Accounts «) Mixed Accounts 4) Summary Accounts 4p 15 Alldescriions revel he characteris oa period invent sytem, excep '2) Cost of goods sod is determined atthe end ofthe reporting period 1b) Purchases are recorded at cost £4. loventory record is always uptodate G Merchants ven secur s 6 wate begining an cading of acoumting pid — yp Increase in Purchase Discount i) Increase in Freight In 6) Decrease in Freight Out ) Decrease in Purchase Return oe 5) of the following will increase the gross profit of a merchandising business? 17. Imaceountng, the concep of * Recognition” means “a. Assigning an amount or value to an accountable event ') Jouralizing a transaction inthe books or original entry ‘The process of formally incorporating in the totals of the balance sheet and income statement an item that meets the probability and measurability criteria for accountable events. 4.) Joumalizing and posting an accountable event and including it in the trial balance total |) 18 wie ovine tsi cnbinsion ojo et? =) tree At ny 3} Dene megs ncn iy©.) Decrease in Liability and Decrease in Asset @ Increase in Asset nd Derese in Eauity Dec eer ae as prarc eatpemeay meee pets eae ty Fair Value ae fl 20 Apu nv las pine asst cami hte ein te pb ko ‘Silent Partnet_ . Secret Partner Nominal Partner 4 Ostensible Partner \) 2% om iy 1,2 ety a ase mel «pag hr tad oes tte ao 23 Pete in afer sa GO os The a a Fev crete vr St tayo ae tao Destiny right after the formation? Dd & a) 30,000 ©) 55,000 ve to 0 3 so Bam = ‘Avengers Partnership is for problem 22-25 ‘The capital balances of Captain America, Iron Man and Incredible Hulk in Avengers Partnership on April 27, 2016 is as follow Cail Pe. Banco Percentage Copan America 200,000 i ion Man 100000 5ore Ineredbe Hulk 60,000 3m isan (On that date, Thor is admited as new parte, ‘Wy: 0 0 22 How muh wl Thor invest give him 20% ners? "120000 ©) sn00 72.00 3) «0000 © i) (23, Tor purchase interest inthe prtaerhip fr P0000, what wl be the capita lane of on Man ae the adision? » "78.000 30,000 oe ® ¥4.000 78,000 s AA. 24 Je Thor inves P120,000 for interest, what wil be the capital balance of Ion Man afer the admission? w wo ') 10,000 ©) 120,000 ) 80,000 3) ener not given (105) Loop Wh 0 Dov ic 25. If Thor invest P100,000 for 1/5 interest, what will be the capital balance of Captain America after the admission? a) 200,000 203,200 ¢noo ) 3 Pe S mow {020 ns D 26. Centaur and Davion formed & partnership and agreed to divide initial capital equally, even though Centaur contributed Sepa oa pen felse nieces ae a eee eee ea acerca eee 23,000 ©) 25,000 23.000 24667 (C 25, LOLA BASYANG reported the following during the year: ous Cash b P-40,000 Accounts Payable 30,000 Unused Supplies 50,000 Yj) SOW) Service Revenues 100,000) 49 yoo Accounts receivable 30000 Operating Expense 40,000! Equipment ‘s 60,000 A Allowance for Bad Debts 1,000 Basyang, Personal 15,000 How nhs the aunt of OLA BASANG, Cantal? a.) 80,000 }) 104,000 FAN) oy M1 'b.) 84,000 d.) 105,000 ; ama 4 vo WoW, Jew Seu) TODC32. he 35. av \ * ‘The accounting clerk of Aquino and Abunda Services recorded the collection of accounts receivable related to recorded service income as P 23,000 instead of P 32,000. The effect of such error will ‘2. Understate total income by P 9,000 .) Understated total assets by P 9,000 ) Understate total owner’s equity by P 9,000_ 4d.) No effect on the totals of assets, liabilities and owner's equity ‘Which is false concerning the rules of debit and credit? 1.) The left side of an account is always the debit side and the right side is always the credit side ‘The word “ Debit” means to increase and the word “ credit” means to decrease E) Increases in assets and expenses are debit entries and increase the liabilities and revenues are credit entries 4.) The normal balance of any account appears onthe side for recording increases Inthe accounting equation, an inerease in asset can be associated with 1a) A decrease ina lability 1b) A decrease in owner's equity ® Am increase in a lability @) An increase in another asset Which of the following statements regarding a tral balance is incorrect? ‘a Atrial balance should always balance A trial balance is atest ofthe equality ofthe debits and credits in the ledger ‘Atrial balance that is in balance proves that no error of any kind has been made in the accounts during the ‘accounting period 4) A trial balance is useful inthe preparation ofthe income statement and the balance sheet ¥ + ‘Owner's Equity was understated and liabilities were overstated. Which ofthe following errors could have been the cause? 2) Making the adjustment entry for depreciation expense twice 'b.) Failure to record the interest accrued on notes payable &,) Failure to make the adjusting entry to record revenue which had been eared but not yet billed to customers <2) Failure to record the eamed portion of rent received in advance Ifa 4,700 cash purchase of supplies is recorded as a P 5,700 debit to Supplies Expense and a P 5,700 credit to. cash, the result will be that Supplec By —-SL08 Supplies expense wil be overstated and Cash wil be understated n b.) The cash account will be overstated ay ‘S100 ) The supplies expense account will be understated 4) The al balance wil be out of balance ‘f accounts receivable has a debit postings of P 580,000, credit postings of P 440,000 and a normal ending balance of P 480,000, which ofthe following wasitsbegigning balance? = 2) P 626000 credit } eangoo dest “STD yy) b.) P 340,000 Credit 1) P 340,000 Debit \4 Which of the following is an example of an investing activity? ‘2.). Obtaining a bank loan b.) Paying taxes to the government Purchasing of gods and services Purchasing a building 36-38 Use the following information to answer the following questions: VICTORY Realty Company had the following balance sheet accounts and balances: Accounts Payable 60,000 4-% ovo = 70 000 Equipment P 70,000 Pe ‘Accounts Receivable P 10,000" Victory, Capital PR LOY Building 777 Ise Wo OUD Land P 70,000 Cash P 30,000 j %0 009 If the balance of the Victory Capital was P 210,000, what would be the balance ofthe building account? > n 2) 250,000 @) P 90,000 ; id ) 40,000 4.) P210,000 64) 000oe U x. p* y# a » ° pss a ») 2 ® 46. a » Q a o#. ‘the balance ofthe building account was P 150,000 and the equipment was sold for P 70,000, what would be the total of ‘owner's equity? a) P 150,000 Qe 2rom b) P 160,000 ‘YP 330,000 ‘cash, what would be the Ifthe balance of the building account was P 140,000 and P 30,000 of Accounts Payable was paid balance of vitory capital account? a) P210,000 © P 320,000 >) 260,000 <4) P 340,000 “The Post- Closing Trial Balance would not include which ofthe following accounts? ‘Accumulated Deprecation- Office Equipment ‘Owner's Capital ‘Owner's Withdrawals Unearned Legal Fees “The Post- Closing Trial Balance differs from the adjusted tial balance in that it does not Include balance sheet accounts Include nominal statement accounts ‘Take into account adjusting entries ‘Take into account closing entries ‘Which ofthe following accounts is closed by debiting the account? Purchases Purchase retums and allowances Sales Return and Allowances Freight In tothe individual accounts inthe ‘The controling account inthe general ledger that summarizes the debits and cre ‘customer's ledger is called: coarse 2) Accounts Payable ) Purchases (B) Accounts Receivable 4) Sales Ta fim uses special oumals, in which joumal would the sale of merchandise for cash be recorded? Cash Disbursement Journal «) Genera Joural Cash Receipts fournal Gi sales Journal ane. iced cash on the not issued by the customer fr professional services rendered. You will: we Cred Notes Payable Debit Notes Receivable Wouoad Credit income Credit Notes Receivable ‘Adjusting Entries are needed: ‘Whenever the revenue is not received in cash ‘Whenever expenses are not paid in cash Primarily to correct errors in the initial recording of business transactions Whoncige transactions affect the revenue or expenses of more than one accounting period “The contributed capital ofa corporation does not include: ‘The stated value ofthe ordinary shares issued Dividends ‘Share Premium Preference Share Fstimated Bad Debts of GAGAMBALA COMPANY is 10% ofthe outstanding accounts receivable, At the bepining of the Jar he aceount receivable has a balance ofP 85,000 andthe company has rendered services of P 95,000 on account and P 3500 on cash, Tal collection forthe year are P 120,000, how much Allowance for Bad Debts shuld be provided atthe end ofthe current year? ae 65 0 Www — Woo As wd 4% wea) P8500 ©) P.6,000 ») P9500 4) P20,500 J) 48 Aoss from the sale of non-cash assets will a) decrease assets | b) decrease Partner's equity | €)_ Increase assets but decrease Partner's equity {@) Decrease assets and Decrease Partners Equity A 49. ‘The following are the financial data of SIYA at AKO: SIVA AKO, ‘Cash 11,000 22,354 ‘Accounts Receivable 234,536 567,890. Tnventories 120,035 260,102 Land 603,000 = Building i BAIT Furniture and Fixtures 30345 34,789. Other Assets 2,000 3,600 TOTAL 1.020516 1,317,002 ‘Accounts Payable TE 90 283,650 ‘Notes Payable 200,000. 345,000 SIVA, Capital 41,976 7 ‘AKO, Capital i T3352 TOTAL 1on0916 13317002 SIYA and AKO agreed to form a partnership contributing ther respective assets and equities subject tothe following adjustments: ‘Accounts Receivable of P 20,000 in SIYA’s books and 35,000 in AKO’s are uncollectible Inventories of P 5,500 and P 6,700 are worthless in SIYA and AKO’ respective books (Other assets of P 2,000 and P 3,600 in SIYA's and AKO's respective books are to be writen off 4 VAN tu Tag 482 ‘The capital account of the partners after the adjustments will be: oe Ls (to bo) (s 00) SIVA AKO 1 Sb), Lar) Q steers 683,052 (2, 000) & Wy ) 615,942 717394 ai ©) 649,876 712345, 8) 613,576 683,350 “ ns J\s0. BEBANG, WANGBUand BULAN femed procs on Snr 1,206, etang nial vested P 20000, Wangs 'P 300,000 and Bulan, P 450,000. The partnership agreement states that profits and losses are to be shared equally By the partners after consideration is made forthe following: Salary allowances of P 120,000 for Bebang, P 96,000 for Wangbu and P 72,000 for Bulan 9 cy) AUG TDN = 388 000 ‘Average pariner's capital balances during the year shal be allowed 10% interest nwo son Gn, ‘Additional Information: » woo = mH OD ey (On June 30, 2016, Bebang invested an additional P 120,000 Blan withdrew P 140,000 from the partnership on September 30,2016 od x Sa = © ® Stare on the remaining partnership profit was P 10,000 fr each parte. 9p "ha = SUA ‘How much is the total interest on average capital balances of the partners? ‘ooo 97,500 ©.) P115, 200 ASDUDX Sha < jou 5) 107,500 «) None of the above ‘fo coo X Hie = 90 © 51. The admission of new partner under the bonus metho wil su in wm w Bonus to the od partners only. Bonus to the new partners only ‘Bonus to either the new partner or the old partners, but not both, None ofthe above 52. Iftotal eredits exceed total debits inthe Balanced Sheet columns of a worksheet, Ja loss has occured mistake has been made,ps Ds ¥ sv e s © a profit has occured. 4.no conclusion can be drawn until the closing entries have been made. Which of the following i a cash outflow from operating activities? «a. Payment for intrest expen ’. Payment to acquire property and equipment. «. Payment to settle notes payabl 4. Payment to owners in the form of withdrawals In which financial statement does Income Summary appear? 1. Balance Sheet bi Income statement «. It does not appear in any fin 4. Statement of changes in equity statement, The item eating for P10,00, subject toa trade discount of 25% ipl fr within he discount period on terms of 2/10, 1130. What the amount of payment? )P10,000 <.p7400 WW KTS XN b) P7500 @77350 ‘The purchase ofa service vehicle on account? ill decrease Assets and decrease libilty. decrease equity. 5 Will increase assets and decrease liability. Will increase assets and increase a liability Corporate officers are 4. elected by shareholders ». appointed by the board of directors ©. appointed by management «elected by incorporators ‘Choose the situation which illustrates the mi 1m requirement of the law to corporate formation: Authorize Capital suscribed Cail Paidin capita a 100,000 P25,000 5,000 .. A. 5 “vaaoo0 5,000 5000 “5S © 50,00 12.000 ans & 60.00 15,000 Sooo, > ‘The partnership agreement of SAN FERNANDO and ANGELES provides that interest at 12% per year isto be credited to cach partner on the basis of average capital balances. A summary of ANGELES capital acCount for the year ended December 51,2016 isa follows: ‘Qo mo x “ia = vod ‘Balance, January 1 P 840,000 Jogo 00 X "ia 10005 Additional Investment, July 1 240,000 ‘WOW x Fig = 4/2500 ithdraval, August 1 90,000 —— Bale, December 31 990,000 9a Spo X 049 = 40 700 ‘What amount of interest should be ereited to ANGELES capital account for 2016? © P1000 «) 99000 @ poise ayp92se0 When a corporation declares a cash dividend, the entry include a: Debit to Net Inoome Credit to Share Premium Debit to Retained Eamings Credit 10 Cash a ‘Statement J: The Income Summary account appears inthe income statement, ‘Statement 2: Net sales isnot an account name. y/ Only otis § Oty Sena tine 3) Botton ae 4) Both statements are not trueae Ce. Re pow ‘Statement 1: The post-closing trial balance contains asset, isi ‘Statement 2: There is sufficient information ona post-closing tr «Caan cts k re sblance sect. 4) Only statement 1 is true b) Only statement 2is true — ©) Both statements are true 4) Both statements are not true Statement I: To simplify the recording of regular transactions in the next accounting period, al adjusting journal entries are reversed, Statement 2: A reversing entry i a journal entry which isthe exact opposite ofa related ad the period. ‘entry made atthe end of 2) Only statement 1 is true b) Only statement 2 is true ©) Both statements are true Both statements are not tue | Statement 1: Treasury stock shall have no voting right as long as they remain inthe treasury. ‘Statement 2: Treasury shares are shares that are issued but not oustanding. 2) Only statement | is tue >) Only statement 2 is true ©) Both statements are true ) Both statements are not true ‘Statement 1: The amount for owner's Withdrawals will appear inthe Income Statement columns of a worksheet. X ‘Statement 2: The heading for an income statement might include the line" As at December 31, 2014." x 8) Onlin ie 3) nlysmumen aime {)Botsatement ae GB —Batidatenens ae matic 5. Statement 1: The par value of share refers to its value on the open market. ‘Statement 2: The par value of shares constitutes the legal capital of a corporation... 2) Only statement 1 is rue b) Only statement 2 is true ©) Both statements are true 4) Both statements are not tue “Statement: 1a pose in parmership allocate profit or fost partners base solely onthe stated tio, ~~ Statement 2: Itis possible fora partner's capital account to inerease asa result ofthe allocation of a loss. 8) Only statement 1 is true b) Only statement 2 is true c) Both statements are true 4) Both statements are not true ‘Statement 1: "The enry to record the exercise of offet wil debit he pariers" Joan account and ereditcash. X ‘Statement 2: The cash setlement of all abilities is refered to as realization, 2) Only statement 1 is true b) Only statement 2is true c) Both statements are true 4) Both statements are not true ‘Statement I: When the existing partners pay a bonus toa newly admitted partner, the existing partner's accounts are debited. V“ ‘Statement 2: When a bonus is allowed to a new partner, part of the entry to record his admission to business reduces the ‘capital accounts ofthe ol partners. 8) Only statement 1 is true b) Only statement 2 is true & Both statements are true 4) Both statements are not trueQo. be Qn 16, ‘Statement 1: Two or more person may form a partnership for exercise ofa profession. ~ ‘Statement 2: A partnership and a corporation cannot form a partnership ./ 8) Only statement 1 is true b) Only statement 2 is true ©) Both statements are true 4) Both statements are not true ‘Statement I: The dissolution ofa partnership isthe same as the liquidation ofa partnership. X. Ssaement 2: Te lo sivorpto bles represent te maximum les that he primes could tor without rencng thle ‘equity below zero. 2) Only statement 1 is true b) Only statement 2is true ©) Both statements are true 4) Both statements are not true ‘Statement 1: Ifa corporation declares stock dividends of more than 20%, the basis in debiting retained earings isthe par value of the stock. 4 ‘Statement 2: Ifa corporation declares stock dividends of 20% or ess, the basis in del ‘alue ofthe stock. retained earnings isthe market 8) Only statement 1 is true b) Only statement 2 is true ©) Both statements are true ) Both statements are not true ‘Statement |: The only purpose of preparing til balance isto prove the equality of debit and credit ‘Statement 2: Preparation of worksheet is just optional and is not a requirement under GAAP. 2) Only statement 1 is tue ) Only statement is true ©) Both statements are true / 4) Both statements are not true ‘Statement I: Accounting is a service activity whose function is to provide qualitative information, about economic entities ‘that is intended to be useful in making economic decision. ‘Statement 2; For reporting purposes, the personal assets and debts of a business owner should be combined with the assets and debts ofa business, 8) Only statement | is true b) Only statement is true ©) Both statements are true 4) Both statements are not true ‘Statement 1: Both Transportation In and Out accounts are closed by crediting the accounts. ~~ ‘Statement 2: Sales discount isa contra-revenue account with a normal credit balance. #\ X 8) Only statement 1 is true b) Only statement 2 is true ©) Both statements are true 4) Both statements are not true ‘Statement 1: A stockholder may bind the corporation toa contract. Statement 2: The arbitrary value assigned toa share of stock is called market value 4) Only statement 1 is true b ° 4) Both statements are not true ‘Statement 1: Declaration date isthe date on which the dividends are distributed to the stockholders, ‘Statement 2: The corporation makes no journal entry on the date of record, 8) Only statement 1 is true b) Only statement 2 is true ©) Both statements are true 4) Both statements are not trueWs Satement : Profs and ose, in gener, shal be divided in accordance with he agreement of the paraers. ‘Statement 2: If the partners did not agree as to how profits are to be divided, then such should be divided among the partners equally. 4 8) Only statement 1 is true ») Only statement 2 is true ©) Both statements are true 8) Both statements are not true ‘Statement 1: The admission of a new partner in an existing partnership dissolves the old partnership. 3 ‘Statement 2: new partner may be admitted into the partnership with the consent of the majority of the old partners. |~ ‘Only statement 1 is true ® Shy stoner? Soue ©) Both statements are true Both statements are not true |. Statement 1: The Statement of Financial Position reports to the performance of the business ‘Statement 2: The Statement of Financial Postion reports whether the business is iquid or not 8) Only atone sue 3 Only satenen 2 ue — Boiisntenens wee @ Bah Satenens at ne VY Wovanal, involv L caeene