2/16/24, 5:08 Prelim Quiz :

Prelim Quiz : AFAR

For answers to problem solving questions, use the following format: xxx,xxx example: nal
answer of two hundred thousand ve hundred fty two should be written as 200,552

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S1: An industrial partner who contributes his time and effort to the * 2 points
partnership is considered an employee and is paid just compensation
for his efforts S2: In computing for average capital, additional
investments decrease the average capital while withdrawals increase
the average
capital

Only S1 is true

Only S2 is true

Both statements are true

Both statements are false

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2/16/24, 5:08 Prelim Quiz :

Mae, Mila and Mike formed a partnership on January 15, 2011. * 3 points
Immediately after the partnership formation, the business named as
Triple M Supermarket has cash of P 30, 000 and net assets of P 150,000.
If the total claims of outside creditors amount to P 70,000, how much is
the
noncash assets of the business?

Your answer

Arthur, Brian and Craig are partners and share profits and losses as * 3 points
follows: Salaries of P40,000 to Arthur, P30,000 to Brian and none to
Craig. If net income exceeds salaries, then a bonus is allocated to Arthur.
The bonus is 5 percent of net income after deducting salaries and the
bonus. Residual profits or residual losses are allocated 10 percent to
Arthur, 20 percent to Brian and 70 percent to Craig. If net income before
salaries and
bonus is P140,000, how much is the share of Arthur?

Your answer

S1:In the admission of a new partner by purchase, any change in the * 2 points
value of assets and liabilities from the last balance sheet to the date of
dissolution shall be for the account of the old partners S2:There is an
increase in assets with corresponding increase in capital under the
admission of a new partner by investment

Only S1 is true

Only S2 is true

Both statements are true

Both statements are false

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2/16/24, 5:08 Prelim Quiz :

S1: Non cash contribution of partners in a partnership shall be recorded * 2 points

in the partnership books at fair market value. In the absence of a reliable
fair market value, the agreement between and among the partners shall
suffice. S2: A limited partner participates in the profits but not in the
losses
of the business

Only S1 is true

Only S2 is true

Both statements are true

Both statements are false

When admitting a new partner into an existing partnership, any * 2 points

allocation
for asset adjustment to the old partners are based on

[A] the pro t and loss ratio

[B] an equal distribution among the partners

[C] the fair values of the assets of each partner has contributed to the partnership

[D] the relative capital balances

[E]Answer not given

JJ partnership has capital balances on July 1, 2010 as follows: Jo, * 3 points

Capital: P 6, 000; Joy, Capital: P 14, 000. On the same date, Joyce
purchased interest in the partnership by paying Jo P 8, 000 for half of her
capital and half of her 50% profit sharing interest on the partnership. Net
income of JJ partnership for the period ended June 30, 2010 is P 2, 000.
The capital
credit of Joyce upon admission should be:

Your answer

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2/16/24, 5:08 Prelim Quiz :

S1:If the partners did not agree as to how profits are to be divided, then * 2 points
such should be divided equally S2: Ellie and Bea agreed to share profits
and losses in the ration 5:4 respectfully. In this case Ellie shares 50%
and
Bea shares 40%

Only S1 is true

Only S2 is true

Both statements are true

Both statements are false

S1: Right of succession allows partnership to have an indefinite life in as * 2 points

much as a retiring partner can easily transfer his right over the
partnership to other parties S2: Mutual agency is an advantage of a
partnership over
sole proprietorship

Only S1 is true

Only S2 is true

Both statements are true

Both statements are false

S1: The final distribution of cash to partners shall be made based on * 2 points
their profit or loss sharing agreement S2:The entry to record the exercise
of
offset is debit to partner's loan and credit cash

Only S1 is true

Only S2 is true

Both statements are true

Both statements are false

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2/16/24, 5:08 Prelim Quiz :

S1: The acquisition-related costs in a business combination to be * 2 points

expensed immediately include cost of issuing debt securities.S2:The
acquisition date is normally the date on which the acquirer legally
transfers the consideration, acquires the assets, and assumes the
liabilities of the
acquiree. This is also known as the closing date.

Only S1 is true

Only S2 is true

Both statements are true

Both statements are false

The rule of offset states that “before the partners receive any * 2 points
cash
distribution…”

[A] Loans from partners should be offset against their debit capital balances

[B] Receivables from partners should be offset against their debit capital balances

[C] Loans to partners should be offset against offset against their debit capital
balances

[D] Loans from partners should be offset against their credit capital balances

[E]Answer not given

The partnership of Joy and Joyce has the following account balances prior * 3 points
to liquidation: other assets: P450,000 Joy, Loan: P20,000 Accounts
Payable: P120,000 Joy, Capital P195,000 Joyce, Capital: P155,000.
The partners decided to liquidate partnership. If other assets are sold
for P385,000, and Joy and Joyce share profits and losses in the ratio
60:40 respectively, how much was received by Joy as final settlement?

Your answer

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2/16/24, 5:08 Prelim Quiz :

JJ admitted EE as partner to her business when the total assets and * 3 points
total liabilities of the sole proprietorship amounted to P250,000 and
P75,000 respectively. EE contributed cash of P50,000 and equipment
worth
P30,000. Partnership agreement on the net assets contributed by JJ are
as follows: 1.) Fixed assets are under depreciated by P15,000. 2.) Pre-
collected income amounts to P10,000. 3.) Insurance premium of P2,000
was expensed upon payment. Unexpired portion of the insurance amounts
to P500. JJ and EE agreed to divide profits and losses 6:4 respectively.
What is the capital credit of Jennifer upon partnership formation?

Your answer

Manong admits Nano as a partner in the business. Balance sheet * 3 points

accounts of Manong on September 30, just before admission of Nano
show:
Cash P 2,600

Accounts Receivable 12,000

Merchandise Inventory 18,000

Accounts Payable P6,200

Manong, capital 26,400

It is agreed that for purposes of establishing Manong’s interest

the following adjustments should be made:

Allowance for doubtful accounts of 2% should be established

Merchandise inventory is to be valued at P20,200

Prepaid expenses of P350 and accrued liabilities of P400 are to

be recognized
Nano is to invest sufficient cash to obtain 1/3 interest in the
partnership.
How much cash should Nano contribute?

Your answer

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2/16/24, 5:08 Prelim Quiz :

Rommel and Randy of RR Partnership have the following profit and * 3 points
loss agreement: Rommel to receive a bonus of 10% of profit after
bonus and after which the profit shall be divided 5:7 to Rommel and
Randy respectively. The partnership earned net income of P 275, 000
before bonus during 2010. The share of Rommel in the partnership
profits
amounted to?

Your answer

JJ and BB, who share in profits and losses in the ratio 3:7 decided to * 3 points
liquidate their JB Partnership. The partners’ capital balances were
P300,000 and P190,000 respectively. Before the realization of noncash
assets, the partnership has a zero balance in its cash account and
P200,000 balance in its liabilities. If JJ received P261,000 on the final
settlement of the partners’ claims, how much were the net proceeds
from
the sale of the noncash assets?

Your answer

S1:If the partners did not agree as to how profits are to be divided, then * 2 points
such should be divided equally S2: Ellie and Bea agreed to share profits
and losses in the ration 5:4 respectfully. In this case Ellie shares 50%
and
Bea shares 40%

Only S1 is true

Only S2 is true

Both statements are true

Both statements are false

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2/16/24, 5:08 Prelim Quiz :

On January 1, 2012, Phaeton Company acquired the net assets of * 3 points

Shaeron Company in a business combination treated as a purchase by
issuing its ordinary share capital worth P1,000,000. At the date of the
business combination, Phaeton’s net assets had a
book value of P1,200,000 and a fair value of P1,600,000. Shaeron’s net
assets had a book value of P650,000 and a fair value of P800,000.
Immediately following the combination, the net assets of the
combined
company should include a goodwill of

Your answer

Pad Company acquired all the nets assets of Sad Company by paying * 3 points
P375,000 cash. At the time of acquisition, the net assets of Sad
Company have a book value of P225,000 and a fair value of P270,000. In
addition, a total of P75,000 was paid as professional
fees to a consultant to effect the business combination. At what amount
should goodwill be recorded on Pad Company’s books?

Your answer

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