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Name:________________________________________

Final Examination
ACCTY 111-Financial Accounting & Reporting
1st Sem SY 2023-2024

Good luck and Be HONEST!

Dear Lord, please give me the wisdom, knowledge and understanding to do well on this test. I
pray for a clear mind and a calm spirit so that I can remember all my classwork. In Jesus’
name, I pray. Amen.
Multiple Choice
Directions: Select the letter of the best answer. Write your answer in the answer sheet provided for
you. NO ERASURES OF ANY KIND.
THEORY OF ACCOUNTS (40 points)
1. STATEMENT 1: Ownership is easily transferred in a partnership.
STATEMENT 2: A partnership should always be constituted in writing.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
2. STATEMENT 1: Work or services that may either be personal manual efforts or intellectual may also be
contributed to a partnership.
STATEMENT 2: All of the partners in a general partnership are personally liable for all debts incurred by
the partnership
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
3. STATEMENT 1: As long as the action is within the scope of the partnership, any partner can bind the
partnership
STATEMENT 2: A proprietorship has a limited life whereas a partnership may have an unlimited life.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
4. STATEMENT 1: When a partner invests assets in a partnership, the assets are recorded at the partner’s
book value.
STATEMENT 2: a de jure partnership is one which complied with all the legal requirements for its
establishment.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
5. Claire inherited a large amount of money from her parents. Claire wishes to start her own business. Her
lawyer encourages her to make it a corporation. What disadvantage of a sole proprietorship is the lawyer
trying to avoid?
a. Unlimited liability
b. Lack of management skills
c. Lack of money
d. Retention of all profits
e. Easy to organize
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6. Kind of partnerships where the object is determinate. Its use or fruits or specific undertaking, or exercise
of profession or vocation
a. Universal partnership of all profits
b. Universal partnership of all present property
c. Partnership by estoppel
d. Particular partnership
e. De jure Partnership
7. A partner who does take active part in the business but is not known as a partner by outside parties
a. Secret Partner
b. Silent Partner
c. Dormant partner
d. Partner by estoppel
e. Lazy partner
8. The partner who can lose only what he has invested in a business is the
a. Industrial Partner
b. General Partner
c. Limited Partner
d. Secret Partner
e. Dormant Partner
9. The feature of unlimited liability covers all partner, except:
a. Industrial Partner
b. General Partner
c. Limited Partner
d. Secret Partner
e. Dormant Partner
10. Which of the following does not include in the provisions of article of partnership?
a. The date of formation and duration of partnership
b. The rights and duties of each partner
c. The accounting period to be adopted
d. The allocation of liabilities to partners
11. Which of the following is not an advantage of a partnership business?
a. Ease of formation
b. Less expensive to organize compared to corporation
c. It allows more creative brainstorming in making decision
d. Jointly liable for the actions of the other partners because of mutual agency
12. In the partnership formation, non-cash assets is valued at
a. Book value
b. Historical Cost
c. Fair Market Value
d. Agreed value
13. STATEMENT 1: A partnership agreement may validly stipulate that one partner shall receive no share in
profits or losses.
STATEMENT 2: When beginning capital balances are used in profit distribution, additional investments
during the year are encouraged.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
14. STATEMENT 1: Using average capital balances as a basis for profit distribution is preferable because it
reflects the capital actually available for use by the partnership during the year.
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STATEMENT 2: In the absence of stipulation, the share of each partner in profits or losses shall be in the
same proportion to what he may have contributed.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
15. STATEMENT 1: The provision of interest on partner’s capital will not be honored because the operations
resulted to a loss even if the agreement provided for such interest.
STATEMENT 2: The industrial partner is not liable for losses because he cannot withdraw the work or labor
already done by him.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
16. STATEMENT 1: It is possible to allocate profit or loss to partners based solely on average capital balance.
STATEMENT 2: The salary allocation to partners also appears as salaries expense on the partnership’s
statement of financial performance.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
17. When there is no partnership agreement regarding the distribution of profits, the profits will be distributed
based on
a. Beginning capital
b. Ending capital
c. Average capital
d. Initial/original capital
18. If t the agreement provides for the division of profits only, losses should be divided
a. Equally
b. According to original capital ratio
c. According to average capital ratio
d. According to profit ratio
19. What is the underlying purpose of the interest on capital balances component of allocating partnership
profits and losses?
a. Compensate partners who contribute economic resources to the partnership
b. Reward for special responsibilities undertaken
c. Reward labor and expertise contributions
d. All of the above
20. Pia is an industrial partner. Besides her services, she also contributed capital to the partnership that
makes her capital-industrial partner. There is no agreement as to distribution of profits or losses. The
share of Pia in the profit is
a. To be determined by the remaining partners
b. Pro-rata to her contribution
c. Such share as may be just and equitable under the circumstances
d. Combination of b and c
21. STATEMENT 1: Preference shares of stock may be issued with par or no par value.
STATEMENT 2: A shareholder in a corporation does not have the right to transact corporate business or to
intervene in the management of the business.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
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d. First statement FALSE; Second statement TRUE

22. STATEMENT 1: The liability of the shareholders for the payment of corporate debts is limited to te value of
their shares.
STATEMENT 2: Death of a shareholder will not dissolve the corporation.
a. Both statements are true
b. Both statements are false
c. First statement TRUE; Second statement FALSE
d. First statement FALSE; Second statement TRUE
23. A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a (an)
a. Eleemosynary corporation
b. Close corporation
c. Open corporation
d. Corporation Sole
e. Da Facto Corporation
24. When organizing a corporation, the incorporators submit articles of incorporation to
a. The Board of Investments
b. The Department of Trade and Industry
c. The Securities and Exchange Commission
d. The Bureau of Internal Revenue
25. Ordinary shares carry all of the following rights except the right to
a. Share in profits
b. Receive information about the corporation
c. Receive part of the profit before other classes of shares
d. Attend the annual shareholder’s meeting
26. The top governing body of a corporation is known as the
a. Corporators
b. Incorporators
c. Board of Directors
d. Management and Officers
27. The par value of ordinary shares is equal to
a. The amount received by the corporation when the share was originally issued
b. The amount at which the share is currently trading in an organized market
c. A designated peso a mount share established in the articles of incorporation
d. The book value of the ordinary share
28. The directors of a corporation are responsible for
a. Maintaining shareholder records
b. Declaring dividends
c. Preparation of accounting records and financial statements
d. The day to day managing of the business
29. The shareholders or members mentioned in the articles of Incorporation originally forming and
composing the corporation and who is signatories thereof are called
a. Subscribers
b. Promoters
c. Incorporators
d. Corporators
30. Which of the following is a disadvantage of the corporate form of business?
a. Corporations lack mutual agency
b. Owner’s limited liability
c. Ownership can be easily transferred
d. There is a greater degree of government control and supervision
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31. Treasury stock is considered to be

a. Authorized and issued shares
b. Issued and outstanding shares
c. Authorized and unissued shares
d. Unissued and outstanding shares
32. Authorized shares are the
a. Total number of shares that have been distributed to shareholders
b. Total number of shares that can be issued by the corporation at any time
c. Total number of shares that are owned by shareholders at the balance sheet date
d. Total number of shares the corporation has repurchased
33. Outstanding shares are the
a. Total number of shares that have been distributed to shareholders
b. Total number of shares that can be issued by the corporation at any time
c. Total number of shares that are owned by shareholders at the balance sheet date
d. Total number of shares the corporation has repurchased
34. When HIJ Corp was authorized to issue 1,000,000 shares of ordinary shares, it immediately issued 50,000
shares. In 2021, it issued an additional 20,000 shares. In 2023, it repurchased 5,000 shares with the
intent of reissuing them. On December 3, 2023 statement of financial position, HIJ Corp would show
a. 50,000 shares issued and 45,000 shares outstanding
b. 70,000 shares issued and 65,000 shares outstanding
c. 70,000 shares issued and 70,000 shares outstanding
d. 1,000,000 shares issued and outstanding
35. A corporation might repurchase its own stock for all of the following reasons except to
a. Use for employee compensation
b. Vote for the board of directors
c. Improve stock market price
d. Avoid takeover by an outside party
36. Treasury stock transactions may result in
a. Increases in the balance of retained earnings
b. Increases or decreases in the amount of profit
c. Decreases in the balance of retained earnings
d. Increases or decreases in the balance or amount of authorized shares
37. An individual shareholder is entitled to receive any dividend declared on shares owned, provided the
share is held on the
a. Date of declaration
b. Date of record
c. Date of payment
d. Date of Issue
38. When ordinary shares is sold on subscription
a. A shareholder’s equity account called Subscription Receivable is used to record the par value of
the shares issued.
b. The Ordinary shares account is credited when the subscription contract is signed and down
payment is received
c. The Ordinary shares account is credited when the subscription price has been fully paid and the
share is issued
d. The Ordinary shares account is not used. Shares issued on subscription are credited to
Subscribed Ordinary Shares, a permanent shareholders’ equity account
39. Which of the following dividends will result in a decrease to total shareholder’s equity?
I. Large share dividend
II. Cash/Property dividend
III. Small Share Dividend
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a. I, II, III
b. II and III
c. II only
d. I and III
40. The purchase of Treasury Stock will result in
a. A decrease in assets and a decrease in shareholder’s equity
b. A decrease in one asset account and an increase in a different asset account
c. A decrease in assets and a decrease in liabilities
d. No net changes in assets, liabilities or shareholders’ equity

PRACTICAL ACCOUNTING (40 points)

41. On February 1, 2023, SS and QQ formed partnership with each contributing the following assets
Assets SS QQ
Cash 30,000 70,000
Machinery 25,000 75,000
Building 225,000
Furniture and Fixtures 10,000
The building is subject to a mortgage loan of ₱90,000, which is to be assumed by the partnership
agreement provides that SS and QQ share profits and losses 30% and 70%, respectively.
On February 1, 2023, the capital account of QQ would show a balance of
a ₱280,000 c ₱314,000 e. Answer not given
b ₱305,000 d ₱370,000
For questions 42 and 43
Tom admits Jerry as a partner in business. Accounts in the ledger for Tom on November 30, 2023, just
before the admission of Jerry, show the following balances:
Amount
Cash 6,800
Accounts Receivable 14,200
Merchandise Inventory 20,000
Accounts payable 8,000
Stein, capital 33,000
It is agreed that for purposes of establishing Tom’s capital interest the following adjustments shall be
made:
a. An allowance for doubtful accounts of 3% of accounts receivable is to be established
b. The merchandise inventory is to values at 23,000
c. Salary expense of 600 and rent expense of 800 are to be recognized.
Jerry is to invest sufficient cash to obtain a 30% interest in the partnership.

42. Tom’s adjusted capital is

a ₱28,174 c ₱31,174 e. Answer not given
b ₱34,174 d ₱36,374
43. The amount of cash investment by Jerry is
a ₱14,646 c ₱13,360 e. Answer not given
b ₱12,074 d ₱10,252
44. Kat and Niel are partners who share profits and losses after salary and interest allowances in the ratio of
60:40, respectively. Kat’s salary is ₱20,000 and Niel’s salary is ₱10,000. The partners are also paid
interest on their average capital balances. In 2023, Kat received ₱10,000 in interest and Niel ₱4,000. If
Niel’s share of partnership profit was ₱40,000 in 2023, what was the total partnership profit?
a ₱95,000 c ₱109,000 e. Answer not given
b ₱100,000 d ₱144,000
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45. If a partnership has a profit of ₱44,000 and Partner Andrea is to be allocated a bonus of 10% of profit after
the bonus, Andrea’s bonus would be
a ₱4,400 c ₱4,000 e. Answer not given
b ₱3,600 d ₱4,840
46. Kim and Xian have the following profit and loss agreement: salaries of ₱30,000 and ₱45,000 for Kim and
Xian, respectively; a bonus to Kim of 10% of profit after salaries and bonus; and interest of 10% on average
capital balances of ₱20,000 and ₱35,000 for Kim and Xian, respectively. One-third of any remaining profit
is allocated to Kim and the balance to Xian. If the partnership had profit of ₱102,500, how much should
be allocated to Kim?
a ₱41,000 c ₱60,000 e. Answer not given
b ₱41,167 d ₱42,500
47. Her, Gio and Mar are partners with average capital balances during the year of ₱120,000, ₱60,000 and
₱40,000, respectively. Partners receive 10% interest on their average capital balances. After deducting
salaries of ₱30,000 to Her and ₱20,000 to Gio, the residual profit or loss is divided equally. The
partnership sustained a ₱33,000 loss before interest and salaries to partners. By what amount should
Her’s capital account change?
a. ₱42,000 increase
b. ₱35,000 decrease
c. ₱11,000 decrease
d. ₱ 7,000 increase
e. Answer not given
48. Carl and Lia formed a partnership on Jan 1, 2023 with Carl contributing ₱16,000 cash while Lia
contributing equipment with a book value of ₱6,400 and a fair value of ₱4,800 and inventory items with
book value of ₱2,400 and a fair value of ₱3,200. During the year, Lia made additional investments of
₱1,600 on April 1 and ₱1,600 on June 1, and on September 1, he withdrew ₱4,000. Carl has no additional
investments or withdrawals during the year. The average capital balance at the end 2023 for Lia is
a ₱7,200 c ₱8,000 e. Answer not given
b ₱8,800 d ₱16,000
49. Manny and Glory share profits in the ratio of 3:2. However, Manny is to receive a bonus of 20% of the
profits, in addition to his profit share. The partnership made a profit for the year of ₱24,000 before the
bonus. Assuming Manny’s bonus is computed on profit after deducting said bonus, how much profit
share will Glory receive?
a ₱8,000 c ₱15,200 e. Answer not given
b ₱16,000 d ₱9,600
50. Moving and Onn are partners with capitals of ₱200,000 and ₱120,000, respectively. The partnership
agreement provided the following :
• 10% interest on their capital investment
• Annual salary of ₱36,000 to Moving
• Remainder 60:40 to Moving and Onn
What is the profit to earned by the partnership before charges for interest & salary and the balance so that
Onn will receive ₱40,000 in the remainder of the profit after salary and interest
a ₱132,000 c ₱168,000 e. Answer not given
b ₱136,000 d ₱138,000

51. Presented below is information related to Very Easy Corporation

Share Capital-Ordinary, ₱1 par 4,000,000 Treasury Shares-Ordinary 150,000
Share Premium-Ordinary 550,000 Subscribed Ordinary Shares 400,000
Share Capital-Preference, ₱50 2,000,000 Subscription Receivable 100,000
par
Share Premium-Preference 400,000 Subscription Payable 200,000
Retained earnings 1,500,000
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The total equity of Very Easy Corporation is

a ₱8,600,000 c ₱8,150,000 e. Answer not given
b ₱8,700,000 d ₱8,300,000

Use the following facts to answer questions 52-55

During its first year of operations, Charm entered into the following transactions relating to stockholder’s
equity. Charm articles of incorporations authorized the issue of 2,400,00 Ordinary Shares, ₱10 par value
per share, and 300,000 Preference shares, ₱50 par value per share

March 14 Sold 600,000 Ordinary Shares for ₱100 per share.

March 15 Issued 10,000 Ordinary Shares to attorney in exchange for legal services
March 15 Sold 35,000 of its Ordinary Shares for ₱90 and 10,000 Preference Shares for
₱6,000,000
November 20 Issued 1,900 of its ordinary shares in exchange for equipment for which the
cash price was known to be ₱184,400

Based on the information, determine the correct balance of each of the following accounts
52. Ordinary Shares
a ₱6,634,000 c ₱6,469,000 e. Answer not given
b ₱6,019,000 d ₱6,119,000
53. Share Premium-Ordinary
a ₱58,215,400 c ₱55,065,400 e. Answer not given
b ₱56,965,400 d ₱57,315,400
54. Preference Shares
a 5,500,000 c ₱2,500,000 e. Answer not given
b ₱500,000 d ₱6,000,000
55. Share Premium-Preference
a ₱0 c ₱2,500,000 e. Answer not given
b ₱500,000 d ₱2,350,000

56. Yolly Co.,s equity at January 1, 2023 is as follows

Share Capital-Ordinary, ₱10 par value; authorized 300,000 2,250,000
shares; outstanding 225,000 shares
Share Premium-Ordinary 900,000
Retaine Earnings 2,190,000
Total 5,340,000

During 2023, Yolly had the following share transactions:

• Acquired 6,000 shares of its ordinary shares for ₱270,000
• Sold 3,600 treasury shares at ₱50 per share
• Sold the remaining treasury shares at ₱41 per share

No other transactions occurred during the year. Assuming Yolly uses the cost method to record treasury share
transactions, the total amount of all share premium accounts at December 31, 2023 is
a ₱891,600 c ₱908,400 e Answer not given
b ₱918,000 d ₱927,600
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57. Yes I Can Co. issued 100,000 shares of ₱10 par ordinary shares for ₱1,200,000. Yes I Can acquired 8,000
shares of its own ordinary shares at ₱15 per share. Three months later Yes I Can sold 4,000 of these
shares at ₱12 per share. If the cost method is used to record treasury shares transactions and to record
the sale of the 4,000 treasury shares, Ryan should
a. Debit Treasury shares ₱60,000
b. Debit Cash ₱48,000 and Retained Earnings ₱12,000
c. Credit Treasury Shares ₱40,000 and Share Premium-Treasury Shares ₱8,000
d. Credit Treasury Shares ₱48,000
e. Answer not given

Use the following facts to answer questions 58-60

On June 25, 2023, Atlas Corp. issues a 30% share dividend on its 200,000 shares of ₱10 par value ordinary
shares. The shares will be issued on July 8, 2023. The market price of Atlas Corp. stock is ₱15 per share
on June 25, and on the date the shares are distributed, the stock is selling for ₱12 per share.

58. The journal entry to record the declaration of the share dividend on June 25, 2023 will include a
a. Debit to retained earnings for ₱600,000
b. Debit to retained earnings for ₱600,000
c. Credit to share premium for ₱300,000
d. Credit to share premium for ₱200,000
e. Answer not given
59. The journal entry on June 25, 2023 will include a credit to Ordinary shares distributable in the amount of
a. ₱200,000
b. ₱300,000
c. ₱600,000
d. ₱900,000
e. Answer not given
60. On July 8, 2023, the share premium account is credited to
a. ₱200,000
b. ₱300,000
c. ₱600,000
d. ₱0
e. Answer not given

----End of Examination-----

Congratulations!
See you next year/semester!!!