Far Partnership Bs Accountancy

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FAR- Partnership bs accountancy
BSA (Batangas State University)
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FINANCIAL ACCOUNTING AND REPORTING- PARTNERSHIP (QUESTIONNAIRE/REVIEWER)

CHAPTER 1: PARTNERSHIP FORMATION
1. A partner whose liability for partnership debts is limited to his capital contribution to the
partnership is called a _______
A. General partner
B. Secret partner
C. Limited partner
D. Dormant partner
2. A partner who contributes money or property to the capital of the partnership is called _______
A. Industrial partner
B. Capitalist partner
C. Nominal partner
D. Ostensible partner
3. A partner whose connection with the partnership is open and public so that his name is included in
the firm name of the partnership is called ______
A. Nominal partner
B. Ostensible partner
C. Dormant partner
D. Secret partner
4. A partner who contributes his work or labor to the common fund of the partnership is called
_________
A. Industrial partner
B. Capitalist partner
C. Managing partner
D. Nominal partner
5. A partner who has no voice or participation in the management of the affairs of the partnership is
called _________
A. Dormant partner
B. Silent partner
C. Secret partner
D. Nominal partner
6. A partner who takes charge of the winding up of the partnership affairs upon dissolution is called
_______
A. Ostensible partner
B. Silent partner
C. Limited partner
D. Liquidating partner
7. A partner who is not actually a partner but who by his acts, is made liable as a partner to the third
persons for the partnership obligation is called ________
A. Nominal partner
B. Dormant partner
C. Secret partner
D. Limited partner
8. General partners are liable for partnership debts to the extent of their separate property after all the
partnership assets have been exhausted. A kind of partnership where all the partners are general

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partners is called _________

A. Universal partnership
B. Limited partnership
C. General partnership
D. Particular partnership
9. A partnership contract is perfected by mere consent which makes it _______

A. Onerous
B. Nominate
C. Consensual
D. Bilateral
10. A partnership contract has a special designation in law, which makes it _______
A. Onerous
B. Nominate
C. Bilateral
D. Preparatory
11. The agreement of the partners embodied in a public instrument is called ________
A. Articles of co-partnership
B. Articles of incorporation
C. By-laws
D. None of the above
12. To be a partner, a member has to contribute money, property, or industry to the partnership. This
makes the partnership agreement _________
A. Bilateral
B. Nominate
C. Onerous
D. Preparatory
13. What is the appropriate measurement basis for a non-cash asset contributed by a partner in a
partnership?
A. Assessed valuation of the asset for property tax purposes
B. Original purchase price of the asset based on the record of the contributing partner
C. Contributing partner's tax basis for the asset
D. Fair value of the asset at the date of contribution
14. Which of the following would not be considered a characteristic of a partnership?

A. Co-ownership of property
B. Mutual agency
C. Unlimited liability
D. Unlimited life
15. Which of the following would not be considered an advantage of forming a partnership?
A. A partnership has unlimited liability
B. A partnership is easily formed
C. A partnership is relatively free from governmental regulations and restrictions
D. Skills and resources can be combined
16. The assets contributed by partners in the partnership become the common property of all
partners. Thus, a partnership is characterized by ___________

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A. Co-ownership of property
B. Co-ownership of profit
C. Co-ownership of all present property
D. None of the above
17. This is a characteristic of a partnership which makes a partner's act binding for all the other
partners, except in cases when the act is beyond the scope of partnership operations. What is it?
A. Onerous
B. Consensual
C. Mutual agency
D. Bilateral
18. Partner's investment may include which of the following?

A. Cash
B. Non-Cash Assets
C. Non-Cash Assets with liabilities to be assumed
D. All of the above
19. Which of the following characteristics does not apply to a general professional partnership?
A. Unlimited life
B. Mutual agency
C. Unlimited liability
D. No business income tax
20. A partnership agreement should include which of the following?

A. Each partner's duties
B. The method of allocating profits and losses
C. The purpose of the business
D. All of the above
21. A partnership which comprises all the profits that the partners may acquire by their work or
industry during the existence of the partnership is called ________
A. De jure partnership
B. Particular partnership
C. Universal partnership of profit
D. Universal partnership of all present property
22. Partner's capital account is credited in the following cases except when it involves the recording
of the ________
A. Additional investment
B. Original investment
C. Share in the profit
D. Debit balance of the drawing account at the end of the period
23. Which of the following accounts has a normal credit balance?

A. Loans to partners
B. Partner's capital
C. Partner's drawing
D. Due from partner
24. Which of the following items is NOT collectible from a partner?

A. Loans receivable from partners

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B. Loans to partner
C. Loans from partner
D. Due from partner
25. What is the basis of capital sharing if the partners do not have an agreement as to the amount of
their individual capital contribution?
A. Equal share
B. Based on profit and loss agreement
C. Fair value of asset contributed
D. Service
26. At what value will cash contributions of a partner be recorded in the partnership books?
A. Future value of cash
B. Purchasing value of cash
C. Actual amount of cash
D. Past value of cash
27. What is the valuation if a partner contributes a non-cash property to the partnership?
A. Agreed value of the property
B. Acquisition cost of the property
C. Actual amount of the property
D. Fair value of the property
28. What is the entry for the acceptance of an industrial partner's skill as his/her contribution?
A. General journal through a memorandum entry
B. General ledger through debit-credit entry
C. General journal through debit-credit entry
D. General ledger through a memorandum entry
29. Statement 1: There is a bonus to a partner whose capital contribution is less than the capital
credited to him.
Statement 2: If one of the partners' capital credit is not equal to the amount of his actual capital
contribution, there is a bonus to be recognized, that is, if the total partners' capital contribution is
equal to total partnership capital
A. Only statement 1 is correct
B. Only statement 2 is correct.
C. Both statements are correct
D. Both statements are not correct
30. For fair and honest business formation of a partnership, each partner's initial investment of non-
cash assets should be recorded at their ________
A. Book values
B. Carrying values
C. Fair market values
D. Quoted values
31. The drawing account is debited, except for

A. Withdrawal of partnership's assets by the partner
B. Partnership obligations assumed or paid by the partnership
C. Partner's personal indebtedness paid or assumed by the partnership
D. Funds or claims of partnership collected and retained by the partner

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32. Which of the following is debited directly to capital?

A. Permanent withdrawal.
B. Partner's share in losses
C. Partner's share in profits
D. Withdrawal of assets by the partner in anticipation of partnership profit
33. Jack invested in a partnership a parcel of land which costs his father ₱200,000. The land had a
market value of ₱300,000 when Jack inherited it three years ago. Currently, the land is independently
appraised at ₱550,000 even though Jack insisted that he wouldn't take ₱900,000 for it. The land
should be recorded in the accounts of the partnership at ______
A. ₱300,000
B. ₱900,000
C. ₱550,000
D. ₱200,000
34. If the amount of liabilities is ₱165,000 and the percentage of owner's claim in the total
partnership's assets is 45%, the partnership's total assets would be ______
A. ₱200,000
B. ₱300,000
C. ₱366,667
D. ₱255,750
35. If the net assets of the partnership is 250,000 and the total partnership's liability is 350,000, the
partnership total capital would be ________
A. ₱600,000
B. ₱350,000
C. ₱250,000
D. ₱100,000
36. If the total partnership's assets increased by 12% and total partners' equity increased to ₱260,000
and has an old balance of 200,000. How much is the change in liabilities if the new balance is
₱440,000?
A.₱15,000 increase
B. ₱15,000 decrease
C. ₱20,000 increase
D. ₱25,000 decrease
37. Angela, Angelica and Andrea are forming a partnership. The appraised value of assets contributed
is ₱60,000, ₱80,000 and ₱100,000, respectively. In addition, Angela and Andrea agreed that
Angelica's experience is worth ₱30,000. The partners desire to apply the bonus method where
applicable. What is the total capital recorded at the date the partnership is formed?
A. ₱270,000
B. ₱240,000
C. ₱230,000
D. ₱250,000
38. Desiree and Deborah contribute ₱100,000 cash each while Dexter contributes his skill. How much
is the total partnership capital?
A. ₱100,000
B. ₱200,000
C. ₱300,000
D. ₱400,000

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39. Jennifer and Jessica will contribute ₱150,000 cash each and Jennica will contribute ₱50,000 plus
her skill. They agreed to share profit at 2:2:1, respectively. The correct amount of the total partnership
capitalization would be _____
A. ₱200,000
B. ₱370,000
C. ₱250,000
D. ₱350,000
40. Wala, Akong and Pake formed a partnership to which Wala contributed a parcel of land with an
acquisition cost of ₱25,000; Akong contributed ₱50,000 cash and Pake ₱75,000 cash. The land has a
fair value of ₱50,000 at the date of formation. The total capital credit of the partnership should be
________
A. ₱150,000
B. ₱125,000
C. ₱175,000
D. ₱145,000
41. Peter, Patter and Pan are forming a new partnership. Peter is to invest cash of ₱100,000 and a car
repair equipment originally costing ₱120,000 but has a second hand market value of ₱50,000. Patter
on the other hand is to invest cash of ₱160,000. Pan whose family business is dealing with a car
repair equipment to be used by the partnership with a regular price of ₱120,000 but which cost their
family's business ₱100,000. Partners agreed to share profits and losses equally. What are the capital
balances of partners upon formation?
A. Peter, ₱220,000; Patter, ₱160,000; Pan, ₱150,000
B. Peter, ₱150,000; Patter, ₱160,000; Pan, ₱120,000
C. Peter, ₱160,000; Patter, ₱160,000; Pan, ₱160,000
D. Peter, ₱176,666; Patter, ₱176,666; Pan, ₱176,666
42. Estrada and Moreno formed a partnership on March 1, 2016 and contributed the following assets:
Estrada Moreno
Cash ₱80,000
Equipment ₱50,000
The equipment was subjected to a chattel mortgage of 10,000 that was assumed by the partnership.
The partners agreed to share profits and losses equally. Moreno's capital account on March 1, 2016
should be _______
A. ₱45,000
B. ₱50,000
C. ₱55,000
D. ₱40,000
43. On March 1, 2019, Juan and Pedro formed a partnership with each contributing the following
assets:
Juan Pedro
Cash ₱30,000 ₱70,000
Machineries and Equipment 25,000 75,000
Building 225,000
Furniture and Fixtures 10,000

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The building is subject of a mortgage loan of ₱80,000 which is to be assumed by the partnership. The
partnership agreement provides that Juan and Pedro share profits and losses 30% and 70%,
respectively. On March 1, 2019, the balance in Pedro's capital account should be _______
A. ₱370,000
B. ₱310,000
C. ₱280,000
D. ₱290,000
44. Using the same information in No. 43, except that the mortgage loan is not assumed by the
partnership. On March 1, 2019, the balance in Pedro's capital account should be ________
A. ₱370,000
B. ₱310,000
C. ₱280,000
D. ₱290,000
45. Desiree and Deborah started a partnership. Desiree contributed a building she purchased 10 years
ago for 100,000. The accumulated depreciation of the building on the date of formation of the
partnership is 25,000 and the fair value is 110,000. For what amount will Desiree's capital be credited
on the books of the partnership?
A. ₱100,000
B. ₱75,000
C. ₱110,000
D. ₱25,000
46. On October 1, 2016, Steve admits Martin for an interest in his business. On this date, Steve's
capital account shows a balance of ₱180,000, subject to the following adjustments:
• Prepaid expenses of ₱21,000 and accrued expenses of ₱14,500 are to be recognized
• 5% of the outstanding accounts receivable of Steve amounting to ₱90,000 is to be
recognized as uncollectible
• Martin is to be credited with 1/3 interest in the partnership and is to invest cash in addition to
the ₱36,000 worth of merchandise inventory.
How much is the cash should Martin invest?

A. ₱95,000
B. ₱55,000
C. ₱91,000
D. ₱36,000
47. Ding and Dong agreed to invest equal amounts and share profits and losses equally in the
partnership with Ding investing cash of 44,000 and merchandise valued at 56,000. Dong will also
invest a total of 100,000 including cash and the agreed values of various assets as follows:
Carrying Value Fair Market Value

Accounts Receivable ₱78,000 ₱70,000
Allowance for Bad Debts 3,500 5,000
Inventory 9,300 10,500
Office Equipment, net 12,000 8,000
Accounts Payable 30,000 30,000
What amount of cash should Dong invest upon formation of the partnership?
A. ₱53,000
B. ₱55,000

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C. ₱46,500
D. ₱66,500
48. Using the same data in No. 47, with accounts payable not to be assumed by the partnership, how
much cash would Dong invest?
A. ₱83,500
B. ₱80,500
C. ₱16,500
D. ₱26,500
For items 49-51

King invited Ina to join him and form a partnership. Ina agreed to join King provided that the following
adjustments are taken up in the books of King.
• Prepaid expenses of ₱25,000 and accrued expenses of ₱20,000 are to be taken up in the
books of King
• Fair value of King's equipment is ₱10,000 higher than its carrying value
• Merchandise Inventory is to be reduced by ₱12,000
King's Capital before adjustment for the above items was ₱450,000. Ina will invest enough cash to
make her interest equal to 40%.
49. How much is King's adjusted capital?

A. ₱755,000
B. ₱453,000
C. ₱403,000
D. ₱450,000
50. How much will Ina invest to give her a 40% interest in the partnership?
A. ₱300,000
B. ₱302,000
C. ₱382,000
D. ₱392,000
51. How much is the total agreed capital with King's adjusted capital as the base?
A. ₱750,000
B. ₱755,000
C. ₱780,000
D. ₱785,000
For items 52-54

Jack and Jill opened a partnership on March 1, 2016 with Jack investing cash of ₱100,000 and Lot
inherited from his parents costing ₱300,000. Upon formation of the partnership, it has an assessed
value of ₱500,000 for tax purposes which is ₱50,000 higher than the market value. Jill agreed to
invest cash to come up with a 50% interest and share in the profits and losses of the partnership.
52. How much is the total agreed capital?

A. ₱550,000
B. ₱1,100,000
C. ₱1,000,000
D. ₱1,150,000
53. At what amount will the lot be recorded in the books of the partnership on March 1, 2016?

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A. ₱400,000
B. ₱500,000
C. ₱450,000
D. ₱550,000
54. Assuming that the Land has an existing mortgage loan of ₱100,000 that is to be assumed by the
partnership, how much cash would Jill invest enough to make his interest equal to 40%?
A. ₱300,000
B. ₱400,000
C. ₱450,000
D. ₱500,000
55. A.Alcantara, B. Bautista and C. Castro are new CPAs and are to form a partnership. A. Alcantara is
to contribute cash of ₱50,000 and her computer originally costing ₱60,000 but has a second hand
value of ₱25,000. B.Bautista is to contribute cash of ₱80,000. C.Castro, whose family is selling
computers, is to contribute cash of ₱25,000 and a brand new computer plus printer with a regular
price in the market at ₱60,000 but which cost their family's computer dealership ₱50,000. Partners
agreed to share profits equally.
What would be the total initial measurement basis of the assets contributed to the partnership?
A. Alcantara, 31%; Bautista, 33%, Castro, 35%
B. Alcantara, 32%; Bautista, 34%; Castro, 34%
C. Alcantara, 32%; Bautista, 31%; Castro, 37%
D. Alcantara, 35%; Bautista, 30%; Castro, 35%
For items 56-57

Polo and Loco entered into a partnership on August 1, 2019 by investing the following assets:
Polo Loco
Cash ₱400,000
Inventories ₱500,000
Land 1,100,000
Building 750,000
Equipment 650,000
The agreement between Polo and Loco provides that profits and losses are to be divided 30% to Polo
and 70% to Loco, and that the partnership is to assume the ₱350,000 mortgage loan on the building
56. How much cash must Loco invest if he is to receive a capital credit proportionate to his share in
profit in the partnership?
A. ₱130,000
B. ₱135,000
C. ₱140,000
D. ₱145,000
57. How much is the total partners' equity if Loco would invest cash of 600,000 in addition to the
above assets invested and liabilities assumed?
A. ₱3,650,000
B. ₱3,850,000
C. ₱3,750,000
D. ₱3,570,000

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For items 58-59

As of February 1, 2013, Heckel and Jeckel decided to form a partnership. Their statement of financial
position on this date is as follows:
Heckel Jeckel
Cash ₱41,000 ₱53,500
Accounts Receivable 425,000 280,000
Merchandise Inventory 242,500
Property, Plant and Equipment 360,000 470,000
Total ₱826,000 ₱1,046,000
Accounts Payable ₱150,000 ₱320,000

Heckel, Capital 676,000
Jeckel, Capital 726,000
Total ₱826,000 ₱1,046,000
The partners agreed that the property plant and equipment of Heckel and Jeckel were overvalued by
₱35,000 and ₱60,000 respectively. An allowance for uncollectible accounts of ₱150,000 and ₱80,000
shall be recognized in the books of Heckel and Jeckel, respectively.
The capital contribution of each partner is the net amount of the assets contributed to and liabilities
taken over by the partnership
58. What would be the total partners’ equity immediately after the formation of the partnership?
A. ₱1,077,000
B. ₱1,087,000
C. ₱1,090,000
D. ₱1,187,000
59. How much cash should Heckel invest if the partnership agreement provides for capital balances
proportionate to profit and loss sharing ratio of 3:2 to Heckel and Jeckel, respectively, using the
adjusted capital of Jeckel as the base?
A. ₱380,000
B. ₱388,000
C. ₱440,000
D. ₱488,000
60. On August 1, Archie and Bert pooled the resources of their businesses to form a partnership. The
partnership shall likewise assume the liabilities of their individual businesses.
Partner's capitals are to be based on net assets transferred after the following adjustments:
• Bert's inventory is to be increased by ₱6,000
• An allowance for uncollectible accounts of ₱2,000 and ₱3,000 are to be set up in the books
of Archie and Bert, respectively
• Accounts payable of ₱8,000 should be recognized in Archie's books
• Other assets of ₱12,000 and ₱14,000 in Archie's and Bert's books are to be written off.
Their unadjusted trial balances showed the following balances at August 1:
Archie Bert

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Assets ₱150,000 ₱226,000

Liabilities 10,000 69,000
What are the capital balances of Archie and Bert, respectively, immediately after the formation of the
partnership?
A. ₱118,000 and ₱146,000
B. ₱118,000 and ₱140,000
C. ₱120,000 and ₱146,000
D. ₱129,000 and ₱120,000
For items 61-64

On June 30, 2017, Lao and Yao formed a partnership with each contributing the following assets:
Lao Yao
Cash ₱200,000
Inventories 120,000
Equipment 180,000
Land and Building ₱2,200,000
Land and Building is currently mortgaged in the bank and has an outstanding balance of 800,000.
(Each question is independent from each other)
61. How much additional cash should Lao invest to give him an equal share in the partnership if Yao
will pay the loan from his personal assets?
A. ₱850,000
B. ₱920,000
C. ₱1,700,000
D. ₱2,200,000
62. How much cash should Lao invest to give him an equal share in the partnership if the partnership
will assume the outstanding bank loan? Interest payment is updated up to June 30, 2017?
A. ₱450,000
B. ₱900,000
C. ₱850,000
D. ₱1,700,000
63. How much cash should Lao invest to give him an equal share in the partnership if the partnership
will assume the bank loan which interest of 10% per annum had been paid up to September 30, 2017?
A. ₱920,000
B. ₱850,000
C. ₱1,700,000
D. ₱1,900,000
64. Referring to No. 63 above, how much shall be the total partners' equity after the formation of the
partnership?
A. ₱2,840,000
B. ₱2,400,000
C. ₱2,250,000
D. ₱2,350,000
For items 65-66

Sephora invites Sandra to be a partner in her business. Before Sandra's admission, they agreed that

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the following adjustments are to be taken up in the books of Sephora

• 10% of outstanding accounts receivable of 250,000 with related allowance of 5,000 is to be
recognized as doubtful accounts
• Fair market value of Sephora's equipment is 80% of the original cost of 500,000. No
depreciation has yet to be recognized
Sephora's capital before adjustments was 450,000. Sandra will invest cash to have a 1/3 interest in
the partnership.
65. How much is Sephora's adjusted capital balance?

A. ₱320,000
B. ₱330,000
C. ₱340,000
D. ₱350,000
66. How much cash should Sandra invest in the partnership?

A. ₱160,000
B. ₱163,000
C. ₱165,000
D. ₱170,000
For items 67-70

On August 1, 2019, Ralph admits Vilma for an interest in his business. On this date, Ralph's capital
account shows a balance of ₱250,000. Ralph agreed to the condition of Vilma to adjust the following
accounts on his books before the formation of the partnership:
• Ralph's outstanding accounts receivable were ₱100,000 with related allowance for bad debts
of ₱10,000. 20% of the receivable was assessed to be uncollectible.
• Inventory of ₱130,000 was overvalued by ₱10,000
• Prepaid Rent expense of ₱24,000 in the books of Ralph represents rental for the 3rd quarter
of 2019.
• Of the ₱8,000 supplies taken-up in the books, only ₱3,000 worth of supplies were actually on
hand.
• Equipment with net carrying value of ₱180,000 is under depreciated by ₱10,000
Aside from the above accounts, Ralph has ₱150,000 cash in bank. Ralph and Vilma agreed to have a
total partners' equity of ₱1,200,000 and their profit and loss sharing ratio of 2:1. Both would
contribute additional cash to make their interest in the partnership proportionate to the profit and loss
sharing ratio.
67. How much is the total asset contributed by Ralph after adjustment?
A. ₱530,000
B. ₱535,000
C. ₱539,000
D. ₱545,000
68. How much is the Prepaid Rent after adjustment?

A. ₱8,000
B. ₱16,000
C. ₱24,000
D. ₱32,000
69. How much is the adjusted capital of Ralph?

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A. ₱207,000
B. ₱210,000
C. ₱220,000
D. ₱250,000
70. How much is the cash contributed by Vilma?

A. ₱400,000
B. ₱500,000
C. ₱700,000
D. ₱800,000
For items 71-75

B.Go wants to expand his existing business BG Company. To generate additional capital, he invited C.
Sy to form a partnership. Mr. Sy agreed to invest enough cash in order to have a 40% interest in the
partnership. Before the formation of the partnership, BG Company had the following assets with
200,000 accounts payable to be assumed by the partnership.
Cash ₱100,000
Accounts Receivable 350,000
Inventories 480,000
Equipment 280,000
Accumulated Depreciation- Equipment (40,000)
Land and Building 2,400,000
Accumulated Depreciation- Land and Building (500,000)
Total Assets ₱3,070,000
B. Go and C. Sy agreed to the following adjustments on BG Company's accounts:

• 5% of the accounts receivable is considered worthless and to be written-off and the
remaining accounts is estimated to be 90% collectible
• Inventories is to be valued at ₱380,000
• After appraisal, land and building was given an appraised value of ₱2,100,000
71. How much is the adjusted allowance for bad debts of B.Go?
A. ₱30,500
B. ₱33,250
C. ₱34,350
D. ₱35,150
72. How much is the capital of B.Go before adjustments?

A. ₱2,135,000
B. ₱2,385,000
C. ₱2,450,000
D. ₱2,870,000
73. How much is the capital of B. Go after adjustments?

A. ₱2,919,250
B. ₱2,912,570
C. ₱2,925,560
D. ₱2,990,000
74. How much is the total assets of B. Go after adjustments?

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A. ₱3,200,000
B. ₱3,119,250
C. ₱3,220,500
D. ₱3,450,000
75. How much is the cash contributed by C. Sy to the partnership?

A. ₱2,079,500
B. ₱2,080,500
C. ₱2,085,550
D. ₱2,125,000
76. Abel and Cain formed a partnership and agreed to divide initial capital equally. Abel contributed
₱200,000 and Cain contributed ₱180,000 in identifiable assets. Under bonus method to adjust the
capital accounts, Abel's capital accounts should be debited for _______
A. ₱20,000
B. ₱10,000
C. ₱30,000
D. ₱50,000
77. Matteo and Sarah formed a partnership and agreed to have an equal interest in the partnership's
assets. They agreed to make the following contributions: Matteo contributed ₱100,000 and Sarah
contributed ₱84,000 in identifiable assets. Under bonus approach, what is the amount of bonus from
Matteo to Sarah capital?
A. ₱46,000
B. ₱16,000
C. ₱8,000
D. ₱23,000
78. Richard and Raymond agreed to form a partnership with agreed capitalization of ₱300,000 with
Raymond contributing 1/3 of the total agreed capitalization. How much should Richard contribute?
A. ₱200,000
B. ₱150,000
C. ₱100,000
D. ₱50,000
79. Hannah is the owner of an existing single proprietorship with net assets of ₱50,000. They agreed
to record the assets and liabilities of Hannah's business at book value. The book value of Hannah's
business liability is ₱60,000. Harry and Harold will contribute equally in cash 60% of the total
capitalization based on the capital contribution of Hannah. The capital contribution of Harry should
be ________
A. ₱37,500
B. ₱35,000
C. ₱82,500
D. ₱90,000
80. Roxanne is an owner of a sole proprietorship with net assets at book value of ₱100,000. Rochelle
is also a sole proprietor with net assets at book value of ₱200,000. The net assets of Roxanne and
Rochelle are to be taken by the partnership at their respective book value. Rachelle is to contribute
cash equal to 1/2 of the total agreed capitalization based on the contribution of Roxanne and
Rochelle.
The amount of Rachelle's cash contribution should be _______

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A. ₱100,000
B. ₱150,000
C. ₱200,000
D. ₱300,000
CHAPTER 2: PARTNERSHIP OPERATION

1. In the absence of an agreement, the share of each partner in the profits and losses shall be in
accordance with the _____
A. Equally
B. Original capital contribution
C. Average capital balance
D. Ending capital balance
2. The A and B partnership agreement provides for A to receive a 20% on profits before the bonus.
Remaining profits and losses are divided between A and B in the ratio of 1:3, respectively. Which
partner has a greater advantage when the partnership has a profit or when it has a loss?
Profit Loss
A. A B
B. A A
C. B B
D. B A
3. What refers to the regular advances made by the partners in anticipation of their share in profit?
A. Temporary withdrawals
B. Permanent withdrawals
C. Owner's capital
D. Owner's drawing
4. Why is it general professional partnership exempted from 30% income tax?

A. Because it is mandated by the law
B. Because individual partners under GPP shall be the one who are subjected for income tax in
their separate and individual capacities
C. Both A and B
D. Neither A and B
5. The articles of co-partnership should make clear all of the following points, except ________
A. Procedures for admitting new partners
B. Profit-sharing ratio
C. Taxes paid by the partnership
D. Withdrawals allowed to partners
6. The following are options available for determining the partners' share in profit except which of the
following?
A. Capital contribution
B. Capital contribution and service to the partnership
C. Loans to the partnership
D. Stated fraction or ratio
7. Partnership financial statements are much like those of _______

A. Personal financial statements
B. Not-for-profit organization
C. Proprietorship

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D. Corporations
8. The partnership agreement of Santos and Cruz provides for salary allowances of ₱45,000 to
Santos and ₱35,000 to Cruz, with the remaining profit or loss to be divided equally. During the year,
Santos and Cruz each withdrew cash equal to 80% of their salary allowances. If partnership profit is
₱100,000, Santos' equity in the partnership would _______
A. Decrease more than Cruz
B. Decrease the same as Cruz
C. Increase more than Cruz
D. Increase the same as Cruz
9. Partners Desiree and Deborah share profit and loss equally after each has been credited with
annual salary allowances of ₱160,000 and ₱140,000, respectively. Under this agreement, Desiree will
benefit by ₱20,000 more than Deborah in which of the following circumstances?
A. In all earnings or loss situations
B. Only if the partnership does not incur a loss for the year
C. Only if the partnership has earnings of 300,000 or more for the year
D. Only if the partnership has earnings of at least 20,000 for the year
10. In a partnership, partners' salaries are considered as _______

A. A liability
B. A loss
C. An allocation of profits and losses
D. An expense of the business
11. Which of the following profit and loss allocation methods fully disregards the service rendered by
the partner in the partnership and the capital contribution made by each partner?
A. Bonus allowance to partners; balance in agreed ratio
B. Equally
C. Interest allowance to partners; balance in agreed ratio
D. Salary allowance to partners; balance in agreed ratio
12. Closing entries of a partnership include entries to ________

A. Close the income summary and dividends declared accounts to retained earnings
B. Close income and expense accounts to the income summary account and then close the
income summary account balance to the partners' drawing accounts
C. Eliminate capital accounts and record the distribution of assets to partners to effect the
partnership termination and liquidation
D. Record distribution of cash to partners
13. If the partnership does not specify how profit is to be allocated to the partners, profits and losses
should be allocated
A. Equally
B. Equitably so that partners are well compensated for their time and effort
C. In accordance with their capital contribution
D. In proportion to the average capital invested during the period
14. Which of the following best describes the nature of allowances for salaries and interest in a
partnership profit and loss sharing agreement?
A. They are means of determining reasonable monthly withdrawals cby each partner
B. They are means of distributing profit in relation to services rendered and capital invested
by partners

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C. They are treated as expenses of the business that should be deducted from revenue in
determining profit
D. They are amounts upon which each partner will have to pay personal income tax
15. In order to arrive at an equitable manner of distributing profits and losses, any or all of the
following factors may be taken into consideration, except _____
A. Amount of capital contributed by the partners
B. Number of dependent children of the partners
C. Service rendered to the partnership by the partners
D. Skills of the partners that are needed in running the partnership
16. Statement 1: When the partnership agreement specifically provides for salaries and interest, the
provision must be applied before the remainder of profit or loss is divided
Statement 2: The partnership profit is divided in proportion in each partner's capital equity interest,
unless the partnership contract specifically indicates the manner of dividing the profit
B. Only statement 2 is correct
D. Both statements are incorrect
17. Statement 1: An industrial partner is exempt from sharing in partnership losses

Statement 2: Salaries to partners and interest on partners' capitals are accounted for as expenses
of the partnership
18. Statement 1: Any salary allowances stipulated in the partnership agreement are considered only if
profit is sufficient to cover such allowance
Statement 2: It is necessary to set up a drawing account for the industrial partner for the purpose
of recording his/her share in the profits of the partnership
19. Statement 1: A partnership is not subject for income tax

Statement 2: There is a bonus allowance to partner/s if the partnership incurred losses
20. Statement 1: When beginning capital balances are used, additional investment during the year are
discouraged because making such investments are not compensated in the division of profits in the
next year
Statement 2: When average capital are used, investments and withdrawals made during the year
are encouraged

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For items 21-22

The following account balances for the partnership of Desiree, Deborah and Dexter were taken from
the books on October 1, 2013.
Assets ₱500,000
Liabilities 200,000
Desiree, Capital 120,000
Deborah, Capital 95,000
Dexter, Capital 85,000
The partners agreed to distribute profits as follows:

• Annual salaries to Desiree and Deborah of ₱5,000 each
• Annual interest of 5% on beginning capital
• Bonus of 15% to Desiree based on profit after salaries, interest and bonus
• Remaining profit: 25% to Desiree, 35% to Deborah and 40% to Dexter
The partnership began its operations on October 1, 2013 and profit for the three months ended
December 31, 2013 is ₱69,500
21. Which of the following is TRUE?

A. The bonus to Desiree is ₱5,804
B. Profit after salaries, interest and bonus is ₱38,696
C. Deborah's share in profit is ₱21,688
D. Dexter's share in profit after salaries, interest and bonus is ₱13,534
22. How much is equity balance of Deborah on December 31, 2013?

A. ₱116,688
B. ₱123,455
C. ₱132,450
D. ₱147,235
23. LS and GM are partners of BMG Partnership, which began its operations on June 1, 2013 with the
following capital balances:
LS, Capital ₱1,440,000
GM, Capital 720,000
According to the partnership agreement, all profits and losses will be distributed as follows:
• LS will be allow an annual salary of ₱960,000 while GM will be allowed a monthly salary of
₱112,000
• The partners will be allowed interest equal to 15% of the capital balance as of the first day of
the year.
• GM will be allowed a bonus of 12% of profit after bonus
• The remainder will be divided equally
• Each partner is allowed to withdraw up to ₱72,000 during 2013 and up to ₱96,000 per year
for years 2014 through 2017
The partnership operations resulted in profit of ₱560,000 for the remainder of 2013 and loss of
₱280,000 for the year 2014. Each partner withdrew the maximum amount from the business each
period.

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Which of the following statements is correct?

A. The capital balance of LS at the end of 2014 is ₱1,242,925
B. The share of GM in the net loss in 2014 is a credit to capital account of ₱14,575
C. There is a net increase of ₱97,500 in the capital account of LS from beginning to end of
2013
D. The capital balance of GM at the end of first year is ₱1,038,500
24. The partnership of D, T and I was formed on January 1, 2013. The original investments were as
follows: D, ₱240,000; T, ₱360,000; I, ₱540,000. According to the partnership agreement, profit or loss
will be divided among the respective partners as follows:
• Salaries of ₱80,000 for D, ₱70,000 for T and ₱48,000 for I
• Interest of 9% on the original capital balance for each partner
• Remainder is divided equally
How much was the partnership loss if I's share in loss was ₱39,600?
A. ₱108,000
B. ₱129,600
C. ₱136,200
D. ₱171,000
For items 25-26

On January 1, 2013, Tommy, Jason and Kimberly formed a partnership with Tommy as an industrial
partner. Jason and Kimberly contributing cash of ₱400,000 and ₱600,000, respectively. They agree to
divide profits in the ratio of 2:4:3 to Tommy, Jason and Kimberly, respectively
The operations of the partnership for the year 2013 resulted in the loss of ₱240,000.
25. How much is the share of Jason and Kimberly in the partnership loss?
A. ₱137,143 and ₱102,857
B. ₱80,000 and ₱160,000
C. ₱96,000 and ₱144,000
D. ₱120,000 and ₱120,000
26. What would be the equity balance of Jason and Kimberly for the year 2013?
A. ₱304,000 and ₱456,000
B. ₱262,857 and ₱497,143
C. ₱280,000 and ₱480,000
D. ₱340,000 and ₱440,000
For items 27-28

Angela and Nicks formed a partnership on January 1, 2014. They agreed to divide the profit or loss
according to the following assumptions:
• Annual salary allowance of ₱100,000 to Angela and ₱85,000 to Nicks
• Bonus of 20% and 30% is given to Angela and Nicks, respectively based on profit after
deducting all bonuses
• Remainder is to be divided equally
The partnership operations for the year 2014 resulted in a profit of ₱300,000
27. How much is the bonus to Angela and Nicks, respectively?

A. ₱50,000 and ₱70,000
B. ₱70,000 and ₱80,000

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C. ₱30,000 and ₱40,000

D. ₱40,000 and ₱60,000
28. How much is the share of Angela in profit?

A. ₱152,500
B. ₱147,500
C. ₱134,500
D. ₱142,000
29. In its first year of operation, R and S Company, a partnership, made a profit of ₱270,000 before
providing for salaries of ₱75,000 and ₱60,000 per annum for Richmond and Samuel, respectively as
stipulated in the partnership agreement. Capital contributions are as follows:
Richmond ₱45,000
Samuel 30,000
Tyron 15,000
Total ₱90,000
There is no stipulation as to the division of profit or loss and there has no change in the capital
contributions during the year
What would be the respective shares of Richmond, Samuel and Tyron in the profit?
A. Richmond, ₱142,500; Samuel, ₱105,000 and Tyron, ₱22,500
B. Richmond, ₱135,000; Samuel, ₱67,500 and Tyron ₱67,500
C. Richmond, ₱90,000; Samuel, ₱90,000 and Tyron, ₱90,000
D. Richmond, ₱180,000; Samuel, ₱45,000 and Tyron, ₱45,000
30. Heidi and Ingrid are partners agreeing to allow monthly salaries (₱15,000 and ₱10,000,
respectively), 6% interest on the capital investment at the beginning of the year (₱650,000 and
₱350,000, respectively. The remaining profit is to be shared equally. Partnership operations during
the first year resulted in a profit of ₱350,000.
What would be the respective shares of Heidi and Ingrid in this profit?
A.₱175,000 and ₱175,000
B. ₱214,000 and ₱136,000
C. ₱233,333 and ₱116,667
D. ₱262,500 and ₱87,500
31. Angela and Bianca formed a partnership. The partnership agreement stipulates the following:
• Annual salary allowance of ₱80,000 for Angela and ₱40,000 for Bianca
• The partners share in profits and losses equally
The partnership earned profit of ₱100,000. How much is the share of Bianca?
A. ₱70,000
B. ₱30,000
C. ₱48,000
D. ₱52,000
32. Ciara and Diana formed a partnership. The partnership agreement stipulates the following:
• Annual salary allowances of ₱10,000 for Ciara and ₱40,000 for Diana
• Bonus to Ciara of 10% of the profit after salaries but before bonus
• The partners share profits on a 60:40 ratio

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During the period, the partnership incurred a loss of ₱20,000 before deduction for salaries. By what
amount did Diana's capital account change?
A. Increased by ₱12,000
B. Decreased by ₱12,000
C. Increased by ₱32,000
D. Increased by ₱32,000
33. Elise and Francine formed a partnership. The partnership agreement stipulates the following:
• Annual salary allowances of ₱10,000 for Elise and ₱40,000 for Francine
• Bonus to Elise of 10% of the profit after salaries but before bonus and interest
• Interest of 12% on the beginning capital balance of Francine
• The partners share profits and losses on a 60:40 ratio
During the period, the partnership earned profit of ₱200,000 before deduction for salaries. Francine's
beginning capital balance was ₱60,000. How much is the share of Elise in the profit?
A. ₱101,680
B. ₱98,320
C. ₱110,820
D. ₱96,720
34. Gilbert and Herbert formed a partnership. The partnership agreement stipulates the following:
• First, Gilbert shall receive 2% of profit up to ₱200,000 and 5% over ₱200,000
• Second, Herbert shall receive 1% of the remaining profit over ₱200,000
• Any remainder shall be shared equally
During the year, the partnership earned a profit of ₱500,000
How much is the share of Gilbert in the profit?

A. ₱258,000
B. ₱268,885
C. ₱242,000
D. ₱241,905
35. Isabelle, Jechelle and Kristelle formed a partnership. The partnership agreement stipulates the
following:
• Annual salary allowances of ₱100,000 for Isabelle and ₱20,000 for Jechelle
• 10% interest on the beginning capital balance of Kristelle
• The partners share in profits and losses on a 40:40:20 ratio.
The partnership earned a profit of ₱500,000. Kristelle's capital account had a beginning balance of
₱300,000. The difference between the amounts received by Isabelle and Jechelle is ________
A. ₱160,000
B. ₱240,000
C. ₱80,000
D. ₱60,000
36. Liezel and Michelle formed a partnership. The partnership agreement stipulates the following:
• Annual salary allowances of ₱80,000 for Liezel and ₱40,000 for Michelle
The partnership earned profit of ₱100,000 after salaries. How much is the share of Michelle?

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A. ₱70,000
B. ₱30,000
C. ₱130,000
D. ₱90,000
37. Nanding and Onyok formed a partnership. The partnership agreement stipulates the following:
• Monthly salary allowances of ₱10,000 for Nanding and ₱4,000 for Onyok. The salaries are
recognized as expenses
• The partners share equally in profits and losses
The partnership earned profit of ₱360,000. How much is the share of Nanding?
A. ₱300,000
B. ₱228,000
C. ₱148,000
D. ₱128,000
38. Pedro and Quennie share equally in the partnership profits and losses. During the year, Pedro's
capital account has a net increase of ₱50,000. Pedro made contributions of ₱10,000 and capital
withdrawals of ₱60,000 during the year. How much was the partnership profit for the year?
A. ₱180,000
B. ₱200,000
C. ₱210,000
D. ₱480,000
39. Rachelle and Sunshine formed a partnership. The partnership agreement stipulates the following:
• Annual salary allowance of ₱100,000 for Rachelle, the managing partner
• 10% bonus to Rachelle after salaries but before deduction for the bonus
The share of Rachelle in the partnership profit during the period was ₱595,000 including a bonus of
90,000. How much was the share of Sunshine?
A. ₱386,000
B. ₱398,000
C. ₱405,000
D. ₱504,000
40. Trisha and Vanessa formed a partnership. The partnership agreement stipulates the following:
• Annual salary allowances of ₱200,000 for Trisha and ₱300,000 for Vanessa
• Interest of 10% based on beginning capital of Vanessa
• Bonus to Trisha of 20% based on profit before deducting salaries and interest
During the year, the partnership earned profit of ₱600,000. Beginning capital balance of Vanessa was
90,000. How much is the share of Trisha?
A. ₱323,500
B. ₱294,500
C. ₱334,500
D. ₱305,500
For items 41-43

The partnership agreement of Aira and Aris provides that annual interest at 10% of average capitals
shall be credited to each partner; Aira and Aris are provided monthly salaries of ₱48,000 and ₱72,000,

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respectively; bonus at 20% of profits after salaries, interest and bonus shall be credited to Aira; and
residual profit or loss is divided, 60% to Aira and 40% to Aris.
The partnership started operations on July 1, 2014 and uses the calendar year as its reporting period.
The profit for the six months ended December 31, 2014, after interest and salaries amounted to
₱96,000.
41. If average capital balances of Aira and Aris are ₱240,000 and ₱360,000, respectively, how much
is the bonus credited to Aira?
A. ₱15,000
B. ₱16,000
C. ₱20,000
D. ₱24,000
42. If average capital balances of Aira and Aris are ₱100,000 and ₱200,000 respectively, how much is
the total share of Aris in the total profit?
A. ₱484,000
B. ₱474,000
C. ₱454,000
D. ₱464,000
43. Referring to No. 42, what was the original profit?

A. ₱831,000
B. ₱834,000
C. ₱920,000
D. ₱940,000
For items 44-45

Joy, a managing partner of Chick and Joy Company was credited with a salary of ₱120,000 and
interest of ₱60,000 on her capital account and was charged with ₱20,000 as her share of the balance
in the Income Summary account, after taking partners' salaries and interest on partners' capital
balances into account. She withdrew ₱140,000 during the year.
44. What amount will Joy report to Bureau of Internal Revenue as her share in the partnership profit?
A. ₱140,000
B. ₱150,000
C. ₱160,000
D. ₱180,000
45. How much should the partnership report as Joy, equity in its statement of financial position?
A. ₱20,000
B. ₱30,000
C. ₱40,000
D. Cannot be determined
For items 46-49

Irish and Ben began operations on March 1, 2013. On that date, Irish invested ₱1,500,000 cash and
Ben invested land and building with fair values of ₱800,000 and ₱1,000,000, respectively. Ben also
invested ₱600,000 cash on November 1, 2013 to provide additional working capital for the
partnership. The partnership contract includes the following profit-sharing plan.
• Annual salaries: ₱180,000 (Irish); ₱240,000 (Ben)
• Annual interest on average capital balance: 10% (Irish); 10% (Ben)

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• Remainder: 60% (Irish); 40% (Ben)
The annual salary was to be withdrawn by each partner in 12 equal monthly installments.
During the fiscal year ended February 28, 2014, Irish and Ben had net sales of ₱5,000,000, cost of
goods sold of ₱2,800,000 and total selling and administrative expenses of ₱1,000,000. The partners'
salaries had been recorded as part of operating expenses, and each partner made monthly cash
drawings in accordance with the partnership contract. (Ignore income tax effects)
46. How much is the correct profit of the partnership for the fiscal year February 28, 2014?
A. ₱1,200,000
B. ₱1,620,000
C. ₱1,250,000
D. ₱1,630,000
47. What is the average monthly capital balance of Ben?

A. ₱800,000
B. ₱1,000,000
C. ₱1,400,000
D. ₱2,000,000
48. How much is total share of Irish in the profit for the period?
A. ₱780,000
B. ₱840,000
C. ₱510,000
D. ₱620,000
49. How much is the equity of Ben as of February 28, 2014?

A. ₱3,100,000
B. ₱2,940,000
C. ₱2,100,000
D. ₱1,970,000
50. Soledad and Steven formed a partnership on January 1, 2015 with Soledad contributing ₱180,000
cash and Steven contributing equipment with a book value of ₱76,000 and a fair value of ₱32,000.
During 2015, Steven made additional investments of ₱16,000 on March 31 and ₱16,000 on June 1,
and on August 31, he withdrew ₱40,000. Soledad made neither additional investments nor
withdrawals during the year.
What is the average monthly capital of Steven for the year 2015?
A. ₱30,000
B. ₱38,000
C. ₱40,000
D. ₱45,000
For items 51-54

Lawrence and Angela Joy formed a partnership on January 1, 2014. On this date, Lawrence
contributed capital of ₱600,000. On the other hand, Angela Joy contributed no capital because she
will manage the firm on full time basis. The partnership agreement provides for the following:
• Capital accounts are to be credited annually with interest at 5% of the beginning capital
• Angela Joy is to be paid a salary of ₱20,000 per month
• Angela Joy is to receive a bonus of 20% of profit computed before interest, salaries and

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bonus are deducted.

• Profits are to be divided between Lawrence and Angela Joy in the ratio of 7:3
There are no withdrawals by either partner during the year. The partnership income statement
contains the following:
Revenues ₱1,720,000
Expenses (including salary, interest and bonus) 840,000
Net Profit ₱880,000
51. How much is the bonus to Angela Joy?

A. ₱287,500
B. ₱275,250
C. ₱250,500
D. ₱295,000
52. Assume that the bonus is based on profit computed after bonus but before interest and salaries
are deducted, how much is the bonus to Angela Joy?
A. ₱191,667
B. ₱230,000
C. ₱287,500
D. ₱240,500
53. What would be the equity balance of Lawrence at year-end?

A. ₱1,246,000
B. ₱1,791,500
C. ₱1,975,000
D. ₱2,105,000
54. What was the adjusted profit?

A. ₱1,437,500
B. ₱1,434,750
C. ₱1,457,000
D. ₱1,575,000
55. Arman, Bernard and Cyril are partners with average capital balances in 2013 of ₱240,000,
₱120,000 and ₱80,000, respectively. Partners receive 10% interest on their average capital balances.
Salaries allowed to Arman and Cyril is ₱60,000 and ₱40,000, respectively; the balance of the profit is
to be divided equally. In 2013, the partnership sustained a loss of ₱66,000 before interest and
salaries to partners.
How much is the share of Cyril in the loss.

A. (₱20,000)
B. (₱22,000)
C. (₱25,000)
D. (₱30,000)
56. The capital accounts of Domenic and Ace at the end of the year follow:
Domenic Ace
Debit Credit Debit Credit
January 1 ₱160,000 ₱240,000

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March 28 180,000
August 1 ₱20,000
September 4 ₱40,000
October 25 80,000
The partnership had a profit of ₱120,000 for the year. The partnership agreement provides that the
profit is to be divided according to average capital ratio.
How much is the share of Domenic in the profit for the year?
A. ₱64,177
B. ₱63,174
C. ₱62,147
D. ₱61,176
57. Partners Oliver, Patrick and Ronald had average capital balances during the year of ₱400,000,
₱500,000 and ₱100,000, respectively. The partnership agreement provides for the following division
of profits and losses
• Interest: 6% on average capital balances of each partner
• Salaries: Oliver, ₱100,000; Patrick, ₱150,000 and Ronald, none
• Remainder: Oliver, 20%; Patrick, 30% and Ronald, 50%
If the total share of Oliver in the profit is ₱112,000, how much should have been the partnership profit?
A. ₱230,000
B. ₱240,000
C. ₱250,000
D. ₱260,000
58. Desiree, a partner in DDS partnership has a 30% participation in partnership profits and losses.
Desiree's capital account decreased by a net amount of ₱240,000 during the calendar year 2013.
During 2013, Desiree withdrew ₱520,000 which was charged against her capital account and
contributed property to the partnership with a fair value of ₱100,000 but with a carrying value of
₱80,000.
What was the profit of the DDS partnership for 2013?

A. ₱500,000
B. ₱600,000
C. ₱700,000
D. ₱800,000
For items 59-60

Mica and Rain are partners of MR Company. The partnership agreement stipulates the following:
• Annual salary allowances of ₱300,000 to Mica and ₱400,000 to Rain
• Annual interest of 8% based on beginning capital balances of Mica and Rain
• Remaining profits or losses is to be shared equally
The partnership operations resulted in a profit of ₱750,000. Beginning capital balances of Mica and
Rain are ₱350,000 and ₱450,000, respectively.
59. How much is the share of Mica in the profit?

A. ₱321,000
B. ₱429,000
C. ₱520,000

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D. ₱710,000
60. Assume further that the partnership agreement stipulates that the partners' salaries and interest
shall be made only to the extent that the profit can provide, what would be the respective shares of
Mica and Rain in the profit?
A. ₱321,000 and ₱429,000
B. ₱321,875 and ₱428,125
C. ₱187,500 and ₱562,500
D. ₱250,000 and ₱500,000
61. The partnership agreement of Kier and Emil provides that interest at 10% per annum is to be
credited to each partner on the basis of weighted average capital balances. A summary of Emil's
capital account for the year ended December 31, 2018 is as follows:
Balance, January 1 ₱280,000

Additional Investment, June 30 160,000
Withdrawal, July 31 90,000
Balance, December 31 ₱350,000
What amount of interest should be credited to Emil for the year 2018?
A. ₱32,000
B. ₱32,250
C. ₱33,200
D. ₱33,500
62. Ashley and Hilarie are partners in a merchandising business. During 2014, they withdrew their
salary allowances of ₱280,000 and ₱420,000, respectively. Profits and losses are shared in the ratio
of 3:2. The Income Summary account before any profit allocation has a credit balance of ₱900,000.
The partner's capital accounts show the following:
Ashley Hilarie
Beginning, balances ₱700,000 ₱500,000
Additional investments 300,000 400,000
Withdrawals other than salary allowances (150,000) (100,000)
Ending balance ₱850,000 ₱800,000
What would be the equity balances of the partners' Ashley and Hilarie, respectively on December 31,
2014 after dividing the profit?
A. ₱970,000 and ₱880,000
B. ₱820,000 and ₱780,000
C. ₱920,000 and ₱870,000
D. ₱770,000 and ₱820,000
63. On January 2, 2019, Vince and Leila formed a partnership. Vince contributed capital of ₱175,000
and Leila contributed ₱25,000. They agreed to share profits and losses 80% and 20%, respectively.
Vince is a general manager and works in the partnership full time and is given a monthly salary of
₱5,000; an interest of 5% of the beginning capital of both partners; and bonus of 15% to Vince based
on profit before salaries, interest and bonus are deducted.
The income statement of the partnership for the year ended December 31, 2019 as follows:
Net Sales ₱875,000

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Cost of Goods Sold 700,000

Gross Margin 175,000
Expenses (including salary, interest and bonus) 143,000
Net Profit ₱32,000
How much is the bonus to Vince?

A. ₱13,304
B. ₱14,440
C. ₱18,000
D. ₱20,170
64. What will be the basis of dividing partnership losses if the partnership agreement stipulates only
the division for profit?
A. Profit-sharing ratio
B. Original capital contribution
C. Equally
D. Average Capital balance
65. What will be the basis of dividing the partnership profits if the agreement stipulates only the
division for losses?
A. Based on the ending capital balances of capitalist partners
B. Based on the original contribution of capitalist partner but just and equitable share for
industrial partner
C. Based on the time devoted in managing the business
D. Based on average capital balances of partners
66. Bonus allowance to partner/s is allowed only when the partnership generates ____________
A. Profit
B. Loss
C. Profit and Loss
D. Depends on the agreement
67. Why is an industrial exempted from absorption of partnership losses?

A. Because industrial partner cannot withdraw the services rendered in the operation of the
partnership
B. Because the law of partnership says so
C. Because industrial partner cannot withdraw any properties of the partnership
D. Because industrial partner is only tasked to manage the business
68. The credit balance in the Income Summary account represents ________
A. Profit
B. Loss
C. Capital
D. Profit and Loss
69. The balance of Income Summary account is transferred to the drawing accounts of the partners.
This is possible _______
A. If the partners' intention is to keep the capital account intact for investment and
permanent withdrawals of capital
B. If the partners' intention is to make profits and losses as part of permanent capital
C. If the partners' intention is to keep profits and loss as part of temporary withdrawals
D. All of these

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70. The balance of Income Summary account is transferred directly to the capital accounts of the
partners. This is possible ________
A. If the partners' intention is to keep the capital account intact for investment and permanent
withdrawals of capital
B. If the partners' intention is to make profits and losses as part of permanent capital
C. If the partners' intention is to keep profits and loss as part of temporary withdrawals
D. All of these
71. If the partners devote equal time in the operation of the partnership, what is the most equitable
way of dividing partnership profit?
A. Equally
B. Arbitrary ratio
C. Capital ratio
D. Interest on capital and balance on the agreed ratio
72. Which of the following methods are provided in full whether the profit is insufficient or sufficient
or when there is a loss?
A. Interest on capital and the balance on the agreed ratio
B. Bonus to managing partner and the balance on the agreed ratio
C. Salary allowances to partners and the balance on the agreed ratio
D. A and C
73. The following methods of dividing profits and losses does not recognize the time and effort may
devote by partners in running the operation of the partnership except which one?
A. Arbitrary ratio
B. Salary allowances to partners and the balance on the agreed ratio
C. Interest on capital and the balance on the agreed ratio
D. Capital ratio
74. The following methods of dividing profits and losses recognize the differences in the capital
contributions made by partners except which one?
A. Average capital ratio
B. Interest on capital and the balance on the agreed ratio
C. Bonus to managing partner and the balance on the agreed ratio
D. Ending capital ratio
75. In CPA Board Exam, the phrase "salaries, interest and bonus are recognized as expenses". This
means that _______
A. The profit generated by the firm is already the net of the partners' salaries, interest and
bonus
B. The salaries, interest and bonus are treated as part of the operating expenses of the firm
C. The salaries, interest and bonus will not become methods of allocating profits
D. The salaries, interest and bonus are considered as temporary withdrawals which will be
deducted to partners' equity at year-end
For items 76-80

Glasie and Glorie are partners engaged in an export-import business. Several transactions during
2013 affected the partner's capital accounts, which are summarized as follows:
Glasie Glorie
Debit Credit Debit Credit

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Balance, January 1 ₱600,000 ₱800,000

March 1. ₱100,000
April 1 200,000
May 1 100,000
June 30 ₱150,000
August 31 100,000
October 1 150,000
October 31 125,000 50,000
The Income Summary account has a credit balance of ₱180,000
76. If profits and losses are divided using the average capital ratio, how much is the share of Glasie in
the profit?
A. ₱74,483
B. ₱74,546
C. ₱82,450
D. ₱85,120
77. If profits and losses are divided using the ending capital ratio, how much is the share of Glorie in
the profit?
A. ₱78,947
B. ₱80,000
C. ₱100,000
D. ₱101,053
78. If profits and losses are divided using the simple average, what would be the respective shares of
Glasie and Glorie in the profit? (Assume that the ending capital balance of Glorie was ₱850,000)
A. ₱74,483 and ₱105,517
B. ₱77,143 and ₱102,857
C. ₱76,696 and ₱103,304
D. ₱80,000 and ₱100,000
79. Assume that the partners agreed on the following: interest on average capital at 8%; salaries of
24,000 and 48,000 to Glasie and Glorie, respectively; bonus to Glasie at 20% of profit after deducting
interest, salaries but before deducting bonus; and any remaining amount of the profit is to be divided
equally. How much is the share of Glorie in the profit?
A. ₱68,000
B. ₱74,483
C. ₱90,000
D. ₱112,000
80. Assume the agreements of the partners are the same as in (79), except that interest is equal to
12% of the amount by which the ending capital balance exceeds the beginning balance. How much is
the share of Glasie in the profit?
A. ₱68,000
B. ₱74,483
C. ₱90,000
D. ₱112,000
CHAPTER 3: PARTNERSHIP DISSOLUTION (CHANGES IN THE OWNERSHIP)

1. What refers to the change in the relation caused by any partner ceasing to be associated in the
carrying on as distinguished from the winding up of the business of the partnership?

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A. Formation
B. Operation
C. Dissolution
D. Liquidation
2. Which of the following results in the dissolution of the partnership?

A. Admission of new partner
B. Withdrawal or Death of a partner
C. Incorporation of partnership
D. All of these
3. What refers to the amount of capital transferred by one partner to another partner/s?
A. Capital Credit
B. Bonus
C. Goodwill
D. Agreed Capital
4. It refers to an asset without physical substance recognized only when an enterprise buys an
existing entity at price higher than the fair value of the net assets of the acquired entity. What is it?
A. Goodwill
B. Bonus
C. Capital Credit
D. Agreed Capital
5. It refers to the equity of the partners in the partnership obtained by multiplying the total partnership
capital by the applicable percentage of interest of the partner. What is it?
A. Goodwill
B. Bonus
C. Capital Credit
D. Agreed Capital
6. A partner may be admitted in the partnership by which of the following ways?

A. Purchase of Interest from the existing partners
B. Investment of Assets in the partnership
C. Purchase of Interest from the outside creditors of the partnership
D. A and B
7. This principle dictates that no one becomes a partner without the consent of all partners. What is it?
A. Delectus Personae
B. Egocentrism
C. Double-Entry System
D. Debit-credit format
8. The payment of new partner in purchasing of interest to the existing partners of the partnership is
__________
A. Made personally and it is not recorded in the books of the partnership
B. Made personally and it is recorded in the books of the partnership
C. Made for the intention of increasing the total partners' equity
D. Made for the intention of decreasing the total partners ‘equity
9. Which of the following is correct regarding admission of new partner by investing assets in the
partnership?

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A. Investment of assets of new partner will increase total assets and total partners’ equity
B. Investment of assets of new partner will decrease the total assets and total partners' equity
C. Investment of assets of new partner will not affect the total assets and total partners' equity
D. Investment of assets of new partner will result in the increase in the obligations of the
partnership
10. If actual contribution is greater than the capital credit of the new partner, then _________
A. There is a bonus to old partners
B. There is no bonus to be given
C. There is a bonus to new partner
D. There is goodwill to be recognized
11. If actual contribution is less than the capital credit of the new partner, then _______
12. If actual contribution is the same as the capital credit of the new partner, then _________
13. The following are some reasons for granting a bonus to new partner except which one?
A. Extensive business network of the new partner
B. Earning records of an entity that wants to admit the new partner
C. Technical skills of the new partner
D. Vast financial resources of the new partner
14. Which of the following will be used if the admission of new partner by investing assets does not
have a provision on which method should be used or when the problem is silent?
A. Bonus method
B. Goodwill method
C. No method to be used
D. Either A or B
15. Which of the following methods can be used to accomplish the withdrawal or retirement of a
partner?
A. By selling the interest of the retiring partner to the existing partners
B. By selling the interest of the retiring partner to the partnership
C. By selling the interest of the retiring partner to the outsider
D. All of these
16. If the cash to be settled to retiring partner is greater than to his/her actual interest in the
partnership, then _______
A. The excess amount will be treated as bonus to remaining partners
B. The excess amount will be treated as bonus to retiring partner
C. The excess amount will be recognized as goodwill of an entity
D. The excess amount will be used to settle the liabilities of the partnership
17. If the cash to be settled to retiring partner is less than to his/her actual interest in the partnership,

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then ________
A. The excess amount will be treated as bonus to remaining partners
B. The excess amount will be treated as bonus to retiring partner
C. The difference will be recognized as goodwill to the retiring partner
D. The excess amount will be used to settle the liabilities of the partnership
18. Recognizing the goodwill to the retiring partner will result in the ________
A. Increase in total assets and total partners' equity of the partnership
B. Increase in equity of the retiring partner so that the cash to be settled to him will become
equal to his/her actual interest in the partnership
C. No changes in the total assets and partner's equity
D. All of these
19. Accounting procedures for settling the interest of the deceased partner to his/her estate are
similar to ________
A. Accounting procedures for the withdrawal of the partner
B. Accounting procedures for the admission by investment of assets
C. Accounting procedures for the incorporation of partnership
D. Accounting procedures for the admission by purchase of interest
20. When the partnership decided to incorporate, its assets and liabilities ______
A. Are transferred into corporation in exchange of stocks
B. Are sold to the stakeholders of the corporation
C. Are sold to the outside creditors of the corporation
D. Are transferred to the shareholders of the corporation
21. What refers to the excess of carrying amount of the asset over the recoverable amount?
A. Impairment of assets
B. Revaluation of assets
C. Purchase of interest
D. Capital credit
22. What refers to the adjustment of asset carrying amounts to fair values which may result in an
increase or decrease of the asset value?
A. Impairment of assets
B. Revaluation of assets
C. Purchase of interest
D. Capital credit
23. Any difference between the carrying amount of capital of the deceased or retiring partner and the
amount to be paid to settle his/her equity _________
A. may indicate that some assets or liabilities of the partnership were overvalued or
undervalued
B. may indicate that there is a bonus to be recognized to the either retiring or remaining
partners
C. may indicate that there is goodwill to be recognized to retiring partner
D. All of these
For items 24-25

Sophia purchased one-half of Jay's interest and share in profit in the Jay and Chris partnership by
paying Jay 180,000. Before Sophia's admission, capital balances of Jay and Chris were 240,000 and
400,000, respectively. Jay and Chris were sharing profits and losses in the ratio of 2:3, respectively.

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24. What would be the capital balance of Sophia immediately after her admission?
A. ₱80,000
B. ₱100,000
C. ₱120,000
D. ₱150,000
25. What would be the new profit and loss ratio between Jay, Chris and Sophia, respectively?
A. Jay, 20%; Chris, 30%; Sophia, 50%
B. Jay, 30%; Chris, 30%; Sophia, 40%
C. Jay, 20%; Chris, 40%; Sophia, 40%
D. Jay, 30%; Chris, 60%; Sophia, 10%
26. The partnership agreement of Desiree and Adrian provides for equal sharing of profits and losses.
Prior to the admission of Nicks, the capital accounts are Desiree, 150,000 and Adrian, 210,000. Nicks
invests 180,000 for a 150,000 interest.
How much is the Adrian, Capital immediately after the admission of Nicks?
A. ₱210,000
B. ₱220,000
C. ₱225,000
D. ₱275,000
For items 27-28

Lucas and Marcos, who share profits and losses equally, agree to take Juan into the partnership for a
40% share in capital and profits. Lucas and Marcos retain 30% each. Lucas and Marcos have capital
balances of 100,000 and 140,000, respectively before the admission of Juan. Juan pays 120,000
directly to Lucas and Marcos for his 40% interest. All assets of the partnership, except land are fairly
valued.
27. By how much was land undervalued?

A. ₱50,000
B. ₱60,000
C. ₱70,000
D. ₱90,000
28. What would be the capital balance of Marcos immediately after the admission of Juan?
A. ₱100,000
B. ₱102,000
C. ₱110,000
D. ₱125,000
For items 29-30

Agnes, Angela and Angelica are partners sharing profits in the ratio of 3:3:2, respectively. On July 31,
their capital balances are as follows: Agnes, ₱280,000; Angela, ₱200,000; and Angelica, ₱160,000.
They agree to admit Andrea on the following conditions:
• Andrea is to pay Agnes ₱200,000 for 1/2 of Agnes' interest
• Andrea is to invest ₱160,000 in the partnership
• Some assets of the partnership are undervalued by ₱160,000
• Andrea's interest is to be 25%
29. What would be the total partnership capital immediately after the admission of Andrea?

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A. ₱880,000
B. ₱920,000
C. ₱960,000
D. ₱1,100,000
30. What would be the capital balance of Agnes immediately after the admission of Andrea?
A. ₱222,500
B. ₱282,500
C. ₱312,050
D. ₱323,450
For items 31-33

Partners Ellie, Ollie and Millie agreed to sell to Tillie one-fourth of their respective capital and profit
and loss interest for a total cash payment of ₱160,000. The capital balances and the respective
percentage interest in the profits and losses immediately before the sale to Tillie are as follows:
Profit/loss-sharing ratio Capital balance

Ellie 50% 320,000
Ollie 30% 180,000
Millie 20% 60,000
31. What would be the new profit and loss ratio Ellie, Ollie, Millie and Tillie, respectively?
A. Ellie, 37.5%; Ollie, 22.5%; Millie, 15%; Tillie, 25%
B. Ellie, 30%; Ollie, 25%; Millie, 20%; Tillie, 25%
C. Ellie, 25%; Ollie, 25%; Millie, 25%; Tillie, 25%
D. Ellie, 20%; Ollie, 30%; Millie, 25%; Tillie, 25%
32. What would be the capital balance of Ollie immediately after Tillie's admission?
A. ₱120,000
B. ₱135,000
C. ₱142,500
D. ₱152,000
33. How much would be received by Ellie from the sale of portion his interest to Tillie?
A. ₱50,000
B. ₱60,000
C. ₱75,000
D. ₱80,000
34. Egay and Egoe who share profits and losses equally have capital balances of ₱200,000 and
240,000, respectively. They admit Engyl for 1/3 interest in the partnership capital and profits for an
investment of ₱260,000.
By how much were the net assets undervalued? (Engyl is credited for his capital contribution)
A. ₱80,000
B. ₱90,000
C. ₱110,000
D. ₱120,000
35. Tess and Shirley who share profits and losses equally, have capital balances of ₱170,000 and
₱200,000, respectively. They agreed to admit Gen for a 1/3 interest in capital and profits for her
investment of ₱200,000. Partnership assets are not be revalued.

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How much of the 200,000 would be credited to Tess and Shirley, respectively?
A. Tess, ₱5,000; Shirley, ₱5,000
B. Tess, ₱6,000; Shirley, ₱4,000
C. Tess, ₱8,000; Shirley, ₱2,000
D. Tess, ₱7,000; Shirley, ₱3,000
For items 36-38

Angela, Bianca and Ciara are partners who share profits and losses in 3:2:1 ratio. On December 31,
2013, Angela decided to retire. At that time, the partners' capital account balances were ₱96,000,
₱84,000 and ₱144,000 respectively. (Each question is independent from each other)
36. The partners agree that the inventories have current fair value in excess of carrying value of
₱36,000. After the books were adjusted and reflect fair values of assets, Angela received cash equal
to the balance of her capital account at what amount?
A. ₱114,000
B. ₱112,000
C. ₱120,000
D. ₱135,000
37. The partners agreed that some assets were undervalued by ₱36,000 but decided not to adjust the
books to reflect fair values. The undervaluation of assets, however, is considered in calculating the
amount to be paid to Angela in settlement of her equity. What would be the capital balances of
Bianca and Ciara, respectively after the retirement of Angela?
A. ₱60,000 and ₱132,000
B. ₱55,000 and ₱136,000
C. ₱75,000 and ₱137,000
D. ₱80,000 and ₱140,000
38. The partners agreed that the amount shown for inventory was ₱24,000 more than its current fair
market value. After reflecting in the books the adjustment in the fair value of inventory, Angela was
paid in cash equal to the balance of her capital account at what amount?
A. ₱84,000
B. ₱96,000
C. ₱100,000
D. ₱125,000
For items 39-40

Mike and Tess are partners with capital balances of ₱70,000 and ₱50,000, respectively. They share
profits and losses in the ratio of 3:1, respectively. Voce is to be admitted into the partnership for a
cash contribution of ₱60,000 for 1/2 interest in the partnership capital and in the future profits and
losses.
39. If Voce will be given a capital credit of ₱90,000, how much was charged in the capital account of
Mike?
A. ₱22,500
B. ₱25,000
C. ₱26,400
D. ₱28,700
40. If Voce will be given a capital credit of ₱50,000, what would be the capital balance of Tess after
Voce's admission?

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A. ₱62,500
B. ₱80,000
C. ₱90,000
D. ₱100,000
41. Manny and Jinky are partners with capital balances of ₱30,000 and ₱40,000 and sharing profits
and losses 40% and 60%, respectively. Krista is to be admitted as a partner by paying ₱20,000 in
exchange for 50% of Manny's equity.
How much is the total interest of Manny and Jinky, respectively, after admission of Krista?
A. ₱20,000 and ₱40,000
B. ₱20,000 and ₱20,000
C. ₱15,000 and ₱40,000
D. ₱15,000 and ₱20,000
42. Rhovil and Mark are partners with profit and loss ratio of 75:25 and capital balances of ₱100,000
and ₱50,000, respectively. Gem is to be admitted to the partnership by purchasing a 20% interest in
the capital, profits and losses for 60,000.
Assuming that no asset revaluation is to be made, the capital balances of Rhovil and Mark,
respectively, after the admission of Gem are:
A. ₱80,000 and ₱40,000
B. ₱100,000 and ₱50,000
C. ₱112,000 and ₱38,000
D. ₱120,000 and ₱60,000
43. Assuming that the equipment of the partnership is undervalued, the capital balances of Rhovil,
Mark and Gem, respectively, after the admission are:
A. ₱100,000; ₱50,000; ₱60,000
B. ₱170,000; ₱70,000; ₱60,000
C. ₱192,500; ₱77,500; ₱30,000
D. ₱800,000; ₱40,000; ₱30,000
44. Patricia contributed ₱24,000 and Ciara contributed ₱48,000 to form a partnership and they
agreed to share profits in the ratio of their original capital contribution. During the first year of
operations, they made a profit of ₱16,290; Patricia withdrew ₱5,050 and Ciara withdrew ₱8,000. At
the start of the following year, they agreed to admit Gizelle into the partnership. Gizelle was to receive
a one-fourth of interest in capital and profits upon payment of ₱30,000 to Patricia and Ciara whose
capital accounts were to be reduced by transfers of Gizelle's capital account of amounts sufficient to
bring them back to their original capital ratio.
How should the ₱30,000 paid by Gizelle be divided between Patricia and Ciara, respectively?
A. ₱9,825 and ₱20,175
B. ₱9,300 and ₱20,700
C. ₱10,000 and ₱20,000
D. ₱15,000 and ₱15,000
45. Siya, Ako and Tayo are partners with capital balances of ₱224,000, ₱780,000 and ₱340,000,
respectively, sharing profits and losses in the ratio of 3:2:1. Kami is admitted as a new partner
bringing with him expertise and is to invest cash for a 25% interest in the partnership, which includes
a credit of ₱210,000 bonus upon his admission.

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How much cash should Kami contribute?

A. ₱168,000
B. ₱390,000
C. ₱450,000
D. ₱600,000
For items 46-47

Desiree, Deborah and Dexter are partners sharing profits and losses in the ratio of 5:3:2, respectively.
As of December 31, 2014, their capital balances were ₱285,000, ₱240,000 and ₱180,000, respectively.
On January 1, 2015, the partners admitted Donnalyn as a new partner and according to their
agreement, Donnalyn will contribute ₱240,000 in cash to the partnership and also pay ₱30,000 for
15% of Deborah's share. Donnalyn will be given a 20% share in profit while the original partners' share
will be proportionately the same as before. After admission of Donnalyn, the total capital will be
₱990,000 and Donnalyn's capital will be ₱210,000
46. The amount of asset revaluation is

A. ₱21,000
B. ₱45,000
C. ₱66,000
D. ₱111,000
47. The amount of bonus in the admission of Donnalyn would be _______

A. ₱66,000
B. ₱33,000
C. ₱36,000
D. ₱19,800
For items 48-49

One, Two and Three share profits in the ratio of 2:3:5. On January 20, Three opted to retire from the
partnership. The capital balances on this date follow:
One ₱25,000
Two 40,000
Three 35,000
48. How much will be the capital of Two, assuming Three sold his interest to Two for 10,000?
A. ₱25,000
B. ₱40,000
C. ₱50,000
D. ₱75,000
49. By how much should One, Capital decrease, assuming Three is paid 39,000 in full settlement of
his interest?
A. ₱1,600
B. ₱2,400
C. ₱3,000
D. ₱4,000
50. On December 30, 2013, the statement of financial position of Danger Company had the following
balances: Total assets ₱450,000; Willie, loan ₱25,000, Willie, capital ₱103,750; Manny, capital
₱96,250 and Loren, capital ₱225,000. The partners share profits and losses in the ratio of 25% to
Willie, 25% to Manny and 50% to Loren. Willie retires from the partnership and the partnership assets

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shall be adjusted to their fair values of ₱510,000 as of December 31, 2013. The partnership also
suffered net loss of ₱150,000 for the year 2013. The partnership would pay Willie ₱108,500 cash for
his total interest in the partnership
What is the total capital of Manny after retirement of Willie assuming the use of bonus method?
A. ₱73,000
B. ₱73,750
C. ₱76,000
D. ₱76,750
For items 51-55

Sy, Tan and GoKong are partners with capital balances of ₱500,000, ₱400,000 and ₱300,000,
respectively. Profits and losses have been shared equally. GoKong wishes to retire from the firm.
(Each item is being taken independently)
51. GoKong's interest is sold to Consunji, a new partner for ₱360,000. How much is the total
partnership capital after GoKong's retirement from the firm?
A. ₱900,000
B. ₱1,160,000
C. ₱1,200,000
D. ₱1,500,000
52. GoKong's interest is sold to the remaining partners, each partner paying ₱180,000. How much is
the capital of Tan after GoKong's retirement from the firm?
A. ₱525,000
B. ₱550,000
C. ₱560,050
D. ₱620,000
53. GoKong receives ₱340,000 of partnership funds for his interest. The excess payment is
attributable to an undervaluation of the firm's land. All other assets are fairly valued. How much is
Sy's capital after the retirement of GoKong?
A. ₱480,000
B. ₱510,500
C. ₱540,000
D. ₱590,090
54. GoKong receives ₱380,000 of partnership funds. The remaining partners agree to absorb the
excess payment to GoKong. How much is the firm's total capital after the retirement of GoKong?
A. ₱790,000
B. ₱820,000
C. ₱870,000
D. ₱920,000
55. GoKong receives ₱240,000 of partnership funds for his interest, bonus being credited to the
remaining partners' account. How much is the capital of Sy after the retirement of GoKong?
A. ₱505,000
B. ₱512,000
C. ₱520,000
D. ₱530,000

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For items 56-60

A condensed statement of financial position prepared for the AA Partnership, owned by Alma and AJ
at October 31, 2013 is shown below. Alma and AJ invited Alona to their partnership. Alma and AJ
have been dividing profits and losses in the ratio of 3:2, respectively, and this ratio will continue
between the two after the admission of Alona. Then the new partnership will have a profit and loss
ratio of Alona, 50%; Alma, 30% and AJ, 20%.
AA Partnership
Statement of Financial Position
October 31, 2013
Current Assets ₱360,000 Liabilities ₱320,000

Property, Plant and Equipment 840,000 Alma, Capital 560,000
AJ, Capital 320,000
Total Assets ₱1,200,000 Total Equity ₱1,200,000
Below are five conditions under which Alona may be admitted into the partnership.
56. Alona purchases one-half equity in the partnership from Alma and AJ for ₱550,000. Payment is to
be made directly to Alma and AJ. Alma and AJ each will retain one-half of their respective equities
and transfer the other halves to Alona. How much would be the capital balances of Alma and AJ,
respectively after Alona's admission?
A. ₱280,000 and ₱160,000
B. ₱230,000 and ₱170,000
C. ₱250,000 and ₱180,000
D. ₱245,000 and ₱195,000
57. Alona invests ₱1,000,000 to the partnership receiving 50% interest in the partnership. By how
much was the capital of Alma increased?
A. ₱36,000
B. ₱38,000
C. ₱42,000
D. ₱45,000
58. Alona invests ₱1,000,000 to the partnership receiving 50% interest. The amount of Alona's
investment implies that the property, plant and equipment were carried at amount less than their fair
values. How much would be the capital of AJ after the revaluation of PPE?
A. ₱312,000
B. ₱320,000
C. ₱368,000
D. ₱390,000
59. Alona invests ₱600,000 in the partnership receiving 50% interest in capital and income. All
partnership assets and liabilities are fairly valued. How much is total partnership capital after the
admission of Alona?
A. ₱1,050,100
B. ₱1,325,000
C. ₱1,420,050
D. ₱1,480,000

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60. Alona invests ₱720,000 in the partnership and receives 50% interest in capital and profit. The
bonus to Alona will be charged against Alma and AJ in the ratio of 3:2, respectively. How much would
be the capital balance of Alma after the admission of Alona?
A. ₱512,000
B. ₱525,000
C. ₱615,000
D. ₱640,000
61. Red and White are partners who share profits and losses in the ratio of 7:3, respectively. On June
30, 2013, their capital accounts were as follows: Red, ₱700,000; White, ₱600,000. On that day, they
agreed to admit Blue as a partner with one-third interest in the capital and profits upon his investment
of ₱500,000. All partnership assets are fairly valued
Immediately after Blue's admission, what are the capital balances of Red, White and Blue, respectively?
A. ₱630,000; ₱570,000; ₱600,000
B. ₱670,000; ₱520,000; ₱650,000
C. ₱720,000; ₱610,000; ₱520,000
D. ₱700,000; ₱600,000; ₱500,000
For items 62-63

Daisy wishes to purchase one-fourth interest in the capital and profits in the partnership of Mickey,
Minnie and Donald. The three partners agreed to sell one-fourth of their respective capital and profit
and loss interests for a total payment of ₱400,000. The capital accounts and the respective
percentage interests in the profits and losses immediately before the sale to Daisy follow:
Capital Balance Profit/Loss Ratio

Mickey ₱800,000 40%
Minnie 400,000 30%
Donald 200,000 30%
All assets and liabilities of the partnership are fairly valued.
62. What should be the capital balances of Mickey, Minnie, Donald and Daisy, immediately after
Daisy's admission?
A. ₱660,000; ₱295,000; ₱95,000; and ₱350,000, respectively
B. ₱600,000; ₱300,000; ₱150,000; and ₱350,000, respectively
C. ₱620,000; ₱315,000; ₱175,000; and ₱300,000, respectively
D. ₱690,000; ₱310,000; ₱125,000; and ₱350,000, respectively
63. What is the new profit and loss ratio between Mickey, Minnie, Donald and Daisy, respectively?
A. Mickey (25%); Minnie (25%); Donald (25%); Daisy (25%)
B. Mickey (40%); Minnie (30%); Donald (10%); Daisy (20%)
C. Mickey (30%); Minnie (30%); Donald (20%); Daisy (20%)
D. Mickey (30%); Minnie (22.5%); Donald (22.5%); Daisy (25%)
64. Bobot is admitted to a partnership with 25% interest by a cash investment of ₱400,000. If the total
partnership capital is ₱1,400,000 before admitting Bobot, how much is the bonus to Bobot?
A. ₱40,000
B. ₱45,000
C. ₱50,000
D. ₱65,000

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65. Reyes and Santiago are partners who share profits and losses in the ratio of 7:3, respectively. On
January 2, 2014, their capital accounts are:
Reyes ₱1,200,000
Santiago 800,000
Total ₱2,000,000
During the first three months of 2014, the partnership earned profit of ₱500,000. On April 1, 2014,
Torres is to be admitted for a 30% interest in the partnership by direct purchase from the partners for
800,000.
How should the ₱800,000 cash be divided between Reyes and Santiago?
A. ₱400,000 and ₱400,000
B. ₱500,000 and ₱300,000
C. ₱600,000 and ₱200,000
D. ₱700,000 and ₱100,000
For items 66-67

Jack and Poy are partners who profits and losses in the ratio of 60:40, respectively. On December 31,
2013, the capital balances of Jack and Poy were ₱800,000 and ₱700,000, respectively. On that date,
they agree to admit Hoy a partner with a 30% capital interest.
66. If Hoy invests ₱500,000 in the partnership, what is Jack's capital balance immediately after the
admission of Hoy?
A. ₱740,000
B. ₱765,000
C. ₱820,000
D. ₱890,000
67. If Hoy invests ₱800,000 in the partnership, how much is Poy's capital balance immediately after
Hoy's admission?
A. ₱722,000
B. ₱744,000
C. ₱866,000
D. ₱875,000
For items 68-69

Bianca, Celine and Diana are partners sharing profits and losses in the ratio of 3:2:1, respectively. On
December 31, Bianca decides to withdraw from the partnership. The capital balances on this date
after dividing profit for the year are Bianca, ₱346,000; Celine, ₱213,000; and Diana, ₱133,000. It is
agreed that Bianca should be paid 400,000 for her interest.
68. Assume that the excess amount paid shall be treated as bonus to Bianca, what would be the
capital balances of Celine and Diana after Bianca's retirement?
A. ₱170,000 and ₱105,000
B. ₱175,000 and ₱110,000
C. ₱177,000 and ₱115,000
D. ₱182,000 and ₱122,000
69. Assume instead that Bianca is to be paid ₱310,000 and that assets are fairly valued. What would
be the capital balances of Celine and Diana immediately after Bianca's retirement?
A. ₱237,000 and ₱145,000

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B. ₱254,000 and ₱135,000

C. ₱345,000 and ₱162,000
D. ₱370,000 and ₱172,000
70. R.Romero and S.Sandoval are partners who share profits and losses in the ratio of 7:3,
respectively. On May 1, 2013, their respective capital balances were as follows:
R. Romero ₱900,000
S. Sandoval 800,000
Total ₱1,700,000
On that date, they agreed to admit Q.Quizon as partner for a 40% interest in the capital and profits
upon his investment of ₱800,000. All assets and liabilities of the partnership are fairly valued.
Immediately after Q.Quizon's admission, what would be the capital balances of R,Romero, S.Sandoval
and Q.Quizon, respectively?
A. ₱760,000; ₱740,000; and ₱1,000,000
B. ₱780,000; ₱760,000 and ₱800,000
C. ₱790,000; ₱780,000 and ₱1,000,000
D. ₱820,000; ₱790,000 and ₱1,100,000
71. Cristine and Cecille are partners who share profits and losses equally. The capital accounts of
Cristine and Cecille have doubled in three years and at present have the following balances:
Cristine ₱1,100,000
Cecille 700,000
Ciara desires to join the firm and offered to invest ₱600,000 for one-third interest. Cristine and Cecille
declined his offer but they extended a counter-offer with Ciara investing ₱800,000 for one-fourth
interest in the capital and profits and losses of the firm.
If Ciara accepted their offer, what should be the capital balances of Cristine and Cecille after Ciara's
admission?
A. ₱1,125,000 and ₱735,000
B. ₱1,330,000 and ₱740,000
C. ₱1,175,000 and ₱775,000
D. ₱1,440,000 and ₱780,000
72. Arthur, Bernie and Carlo are partners who share profits and losses in the ratio of 5:3:2,
respectively. They agree to sell 25% of their respective capital and profit and loss ratio to Dwight for a
total payment directly to the partners in the amount of ₱130,000. The condensed statement of
financial position of the ABC Partnership is as follows:
Cash ₱60,000 Liabilities ₱100,000

Non-Cash assets 540,000 Arthur, Capital 250,000
Bernie, Capital 150,000
Carlo, Capital 100,000
Total ₱600,000 Total ₱600,000
What would be the capital balances of Arthur, Bernie and Carlo after the admission of Dwight?

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A. ₱175,500; ₱110,000; and ₱70,000

B. ₱185,550; ₱105,000; and ₱75,000
C. ₱187,500; ₱112,500; and ₱75,000
D. ₱190,500; ₱124,000; and ₱85,000
73. Howard and Ivan are partners with capital balances of ₱300,000 and ₱250,000 sharing profits
and losses 3:1, respectively. They agreed to admit Jasper as partner. Jasper invests ₱150,000 for a
40% interest in the firm. Howard and Ivan transfer part of their capital to Jasper as bonus.
What would be the capital balances of the partners after Jasper's admission?
A. ₱202,500; ₱217,500; and ₱280,000, respectively
B. ₱210,500; ₱220,000; and ₱280,000, respectively
C. ₱225,500; ₱225,550; and ₱260,000, respectively
D. ₱230,000; ₱230,000; and ₱270,000, respectively
74. Oliver and Patrick are partners with a profit and loss ratio of 3:1 and capital balances of
₱1,000,000 and ₱500,000, respectively. Nicks is to be admitted into the partnership by purchasing a
20% interest in the capital, profits and losses for ₱500,000.
What would be the capital balances of Oliver and Patrick after the admission of Nicks?
A. ₱800,000 and ₱400,000, respectively
B. ₱700,000 and ₱300,000, respectively
C. ₱950,000 and ₱350,000, respectively
D. ₱980,000 and ₱450,000, respectively
75. The capital accounts for the partnership of Ulysses and Voltaire on September 1, 2013 are as
follows:
Ulysses, Capital ₱800,000

Voltaire, Capital 400,000
The partners share profits and losses in the ratio of 6:4, respectively. The partnership is in desperate
need of cash, and the partners agree to admit Walter as a partner with a 1/3 interest in the capital and
profits and losses upon his investment of ₱300,000.
Immediately after the admission of Walter, what would be the capital balances of Ulysses, Voltaire
and Walter?
A. ₱670,000; ₱340,000; and ₱500,000, respectively
B. ₱675,000; ₱335,000; and ₱300,000, respectively
C. ₱680,000; ₱320,000; and ₱500,000, respectively
D. ₱720,000; ₱350,000; and ₱300,000, respectively
76. Cordova and Decena are partners who share profits and losses equally. The capital accounts of
Cordova and Decena are ₱90,000 and ₱60,000, respectively. Eleria desires to join the firm and
invested ₱70,000 for a 1/4 interest in the capital of the firm.
What would be the balances in the capital accounts of Cordova and Decena after Eleria's admission?

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77. On July 1, 2015, the statement of financial position for the partnership of Karl, Lester and Miles
with their respective profit and loss ratio was as follows:
Assets, at cost ₱1,800,000
Karl, Loan ₱90,000

Karl, Capital 420,000
Lester, Capital 390,000
Miles, Capital 900,000
Karl died. The partnership would settle his interest with his heirs. By mutual agreement, the assets
are to be adjusted to their fair market value of ₱2,160,000 at July 1, 2013. It was agreed that the
partnership would pay Karl's heirs ₱650,000 cash for his interest including Karl's loan which is to be
repaid in full.
After settlement with Karl's heirs, what would be the respective capital balances of Lester and Miles?
A. ₱440,000 and ₱1,055,000, respectively
B. ₱445,000 and ₱1,065,000, respectively
C. ₱550,000 and ₱1,100,000, respectively
D. ₱575,000 and ₱1,125,000, respectively
78. Angela, a partner of the accounting firm ABC and Company decided to withdraw from the
partnership. Angela had 30% share in the profits and losses. In final settlement of Angela's interest,
the partnership paid her ₱86,000 although her capital balance before her retirement was only
₱80,000. The ₱6,000 difference implied that an equipment was undervalued for which an appropriate
adjustment was taken up in the books of the partnership. The total of the partners' capital before
Angela's withdrawal and before the adjustment of equipment to fair value was ₱270,000.
What would be the partnership's net assets after the withdrawal of Angela?
A. ₱200,500
B. ₱202,550
C. ₱204,000
D. ₱210,000
79. Aseng, Lareng and Lelang are partners sharing profits in the ratio of 3:2:1, respectively. Capital
accounts are ₱500,000; ₱300,000; and ₱200,000 on December 31, 2015, when Lelang decides to
withdraw. It is agreed to pay ₱300,000 for Lelang's interest. Profits after the retirement of Lelang are
to be shared equally.
What are the capital balances of Aseng and Lareng after the retirement of Lelang?
A. ₱330,000 and ₱236,000
B. ₱375,000 and ₱240,000
C. ₱425,000 and ₱250,000
D. ₱440,000 and ₱260,000
80. Partners Santos, Salonga and Salazar share profits and losses 50:30:20, respectively. The
statement of financial position of the partnership at July 31, 2016 follows:
Cash ₱40,000 Accounts Payable ₱100,000

Other assets 360,000 Santos, Capital 74,000
Salonga, Capital 130,000
Salazar, Capital 96,000

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Total ₱400,000 Total ₱400,000
The assets and liabilities are recorded and presented at their respective fair values. Santana is to be
admitted as a new partner with a 20% capital interest and a 20% share of profits and losses in
exchange for a cash contribution.
How much should Santana contribute?

A. ₱70,000
B. ₱72,000
C. ₱75,000
D. ₱78,000
CHAPTER 4: PARTNERSHIP LIQUIDATION

1. What refers to the winding up of partnership business characterized by sale of non-cash assets,
settlement of liabilities and distribution of cash to partners?
A. Formation
B. Operation
C. Dissolution
D. Liquidation
2. If the partnership liquidation is completed within a reasonably short period of time such that the
non-cash assets are immediately realized and cash is immediately distributed to creditors and
partners, _________ takes place.
A. Lump-sum liquidation
B. Installment liquidation
C. Partnership liquidation
D. Corporate liquidation
3. If the partnership liquidation extends over a considerable period of time because of the difficulty of
converting all non-cash assets into cash, ________ takes place.
B. Installment liquidation
C. Partnership liquidation
D. Corporation liquidation
4. Which of the following might be a reason/s of liquidating a partnership?

A. A partnership was organized with a fixed term
B. An agreement of all partners to voluntarily terminate their operation
C. A partnership organized for a specific undertaking or purpose
D. All of these
5. What refers to the process of converting of non-cash assets into cash?

A. Liquidation
B. Realization
C. Dissolution
D. Conversion
6. What characteristics of a partnership justify the absorption of by other partners of the deficiency
that cannot be made good by an insolvent partner?
A. Limited life and mutual agency

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B. Limited life and co-ownership of property

C. Mutual agency and partnership non-taxability
D. Mutual agency and unlimited liability
7. In the final liquidation transaction, the remaining cash is distributed to the partners. The partners'
share in the cash distribution is according to their _________
A. Capital balances
B. Cash balances
C. Profit-sharing ratios
D. Withdrawals
8. Which of the following transactions would not take place in the partnership liquidation?
A. A partner settles his deficiency by contributing cash
B. A partner settles his deficiency by contributing non-cash
C. A partner settles his deficiency by declaring bankruptcy
D. The other partners absorbs a partner deficiency
9. A deficiency in the capital of the insolvent partner is _______

A. A loss to the other partners
B. A gain to the other partners
C. The result of the loss of operations
D. The result of the sale of non-cash assets at a gain
10. The process of liquidation of a partnership includes all the following steps, except which one?
A. Distributing the remaining cash
B. Obtaining court approval
C. Paying the partnership liabilities
D. Selling the assets
11. The order of the partnership liquidation process is _________

A. distribute cash to partners, pay liabilities, sell assets
B. pay liabilities, sell assets, distribute cash to partners
C. sell assets, distribute cash to partners, pay liabilities
D. sell assets, pay liabilities, distribute cash to partners
12. In a partnership liquidation, a gain from the sale of assets is credited to the ________
A. partners with the lowest capital balance
B. partners based on the profit-sharing ratio
C. partners based on their capital balances
D. partnership liabilities
13. In the final partnership liquidation transaction, remaining cash is distributed to ________
A. partners based on the capital balances
B. partners based on the profit-sharing ratios
C. the partners with the greatest capital balance
D. the partners with the lowest capital balance
14. The ABC Partnership is terminated when the claims of company creditors exceed partnership
assets by 50,000. The capital balances of A,B and C are 35,000; 5,000; and (90,000), respectively. Who
among the partners is/are personally and individually liable for all partnership liabilities?
A. A
B. B

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C. A and B
D. A, B and C
15. In the liquidation of the partnership, the gains and losses from assets sold are ________
A. divided equally among the partners
B. divided among the partners in the stated income ratio
C. divided among the partners in proportion to their capital equity interests
D. ignored
16. What refers to the excess of a partner's share of losses over his capital credit balance?
A. Capital deficiency
B. Insolvency
C. Deficit balance
D. Solvency
17. A partner whose personal assets are more than his personal liabilities is called ___________
A. Solvent partner
B. Insolvent partner
C. Liquidating partner
D. Secret partner
18. A partner whose personal assets is less than his personal liabilities is called ________
A. Solvent partner
B. Insolvent partner
C. Liquidating partner
D. Secret partner
19. It is the right of the partnership to deduct immediately the partner's capital deficiency from the
partner's loan to the partnership, so that only the net amount would be paid to the partner in
settlement of his interest. What is it?
A. Right of offset
B. Right of the partners
C. Right of the solvent partner
D. Right of the partnership
20. It is a statement prepared to summarize the process of liquidating the partnership. What is it?
A. Statement of Changes in Equity
B. Statement of Liquidation
C. Statement of Financial Position
D. Statement of Comprehensive Income
21. If a partner is insolvent, his personal properties shall be first distributed _______
A. to partnership creditors
B. to the partners by way of additional contributions when the assets of the partnership were
insufficient to settle all obligations
C. to partnership and separate creditors in the ratio of their loan exposures
D. to separate creditors
22. In a partnership liquidation, the assets of the partnership shall be applied lastly to ________
A. those owing the outside creditors
B. those owing to the partners with respect to their share in the profits
C. those owing to the partners with respect to their capital contribution

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D. those owing to inside creditors in the form of loans or advances for business expenses by
the partners
23. Which of the following statements is correct regarding a partner's capital deficiency?
A. Partners who absorb another's capital deficiency have a legal claim against the deficient
partner
B. The partner should contribute to reduce the debit balance to the extent possible
C. If contributions are not possible; the other partners with credit capital balances will be
allocated a portion of debit balance
D. All of these statements are correct
24. The following is the priority sequence in which liquidation proceeds will be distributed for a
partnership
A. Partnership liabilities, partnership loans and partnership capital balances
B. Partnership drawings, partnership liabilities, partnership loans and partnership capital
balances
C. Partnership liabilities, partnership loans, partnership drawings and partnership capital
balances
D. Partnership liabilities, partnership capital balances and partnership loans
25. Claims against partner's personal assets by creditors if the partnership can't pay debts refers to
_______
A. Liquidation
B. Dissolution
C. Mutual agency
D. Unlimited liability
26. Statement 1: A resulting capital deficiency after realization indicates that the partner's capital
before liquidation is not sufficient to cover his share in the loss on realization
Statement 2: In partnership liquidation, any gains or losses on the sale of non-cash assets must
be divided equally among the partners.
26. Statement 1: In liquidation, cash should be distributed to partners on the basis of partners' profit
and loss ratio
Statement 2: Only cash can be distributed to the partners upon the liquidation of the partnership
28. Statement 1: The process of liquidating the partnership is summarize in the statement of
partnership liquidation
Statement 2: After the distribution of cash to the partners in a lump-sum liquidation, the
business has no assets, liabilities or owner's equity.

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29. Statement 1: The general partners shall absorb the capital deficiency that cannot made good by
an insolvent partner
Statement 2: Partnership dissolution always leads to partnership liquidation
30. Statement 1: In statement of partnership liquidation, assets are generally classified as cash and
non-cash assets
Statement 2: When a deficient partner has a loan balance to the partnership, the deficiency shall
be set off against the loan at the higher between the loan balance and the capital deficiency.
31. A liquidation differs from dissolution in that the liquidation

A. assets may be revalued
B. the business will not continue
C. there may be an adjustment of partners' capital accounts
D. gains and losses are to distributed according to the partnership agreement
32. A partner's loss absorption balance is calculated by _______

A. dividing the partner's capital balance by the percentage interest in capital
B. multiplying distributable assets by the partner's profit sharing percentage
C. dividing the partner's total interests by his profit and loss sharing percentage
D. multiplying the partner's total interests by his profit and loss sharing percentage
33. In accounting for liquidation of partnership, cash payment to partners after all outside creditors'
claims have been satisfied but before final cash distribution, should be according to
A. Relative profit and loss sharing ratio
B. Safe payments computation
C. The final balances in partners' capital accounts
D. The relative share in gain or loss in liquidation
34. Which of the following is not correct regarding with respect to an instalment liquidation of a
partnership?
A. All remaining liquidation expenses are anticipated
B. All non-cash assets are assumed to be worthless
C. Distribution to partners are always made according to their profit sharing percentage
D. Partners with the greatest ability to absorb losses and expenses are the first to receive
instalment distribution
35. In a partnership liquidation, the final cash distribution to the partners should be made in
accordance with their ______
A. Safe payments computation
B. Partner's profit and loss sharing ratio
C. Balances of partners' capital accounts
D. Ratio of the capital contributions by partners

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36. In a liquidation, the liabilities of the partnership should be paid _______

A. Before any sale of assets
B. Before the distribution of cash to partners
C. Before the distribution of gains and losses on the disposal of assets
D. After a revaluation of assets
37. Which of the following assumptions is/are considered in preparing a schedule of safe payments?
A. Inability to dispose the remaining non-cash assets
B. Insolvency of the partnership
C. Failure to make additional cash contribution of partners with capital deficiency
D. A and C
38. Which of the methods will be most likely useful in ensuring the equitable distribution of cash to
partners assuming that the realization of non-cash assets might take for a long period of time?
B. Schedule of safe payments
C. Cash priority program
D. Sale of non-cash assets
39. It refers to the maximum loss that the partner can absorb without reducing the equity below zero.
What is it?
A. Loss absorption balance
B. Schedule of safe payments
C. Cash priority program
D. Lump-sum liquidation
40. The sale of non-cash assets may result in _____

A. gains
B. losses
C. either gains or losses
D. neither gains or losses
For items 41-42

Celine and Dion are partners with capital balances of 24,500 and 15,500, respectively. They share
profits and losses in the ratio of 3:2, respectively. The partners decided to liquidate their partnership.
The firm's liabilities amount to ₱36,000 including ₱4,000 owing to Celine and ₱3,500 owing to Dion
After the realization of assets, the cash on hand amounted to ₱37,500
41. How much was the loss on realization?

A.₱38,500
B.₱37,500
C.₱36,500
D.₱34,450
42. How much should Celine and Dion receive in final settlement of their respective interest?
A. Celine, ₱5,600; Dion, ₱3,800
B. Celine, ₱5,400; Dion, ₱3,600
C. Celine, ₱1,400; Dion, ₱100
D. Celine, ₱1,440; Dion, ₱110

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For items 43-45

Diana, Ella and Francine are partners with a profit and loss ratio of 5:4:1, respectively. The partnership
is to be liquidated. Prior to the liquidation, the statement of financial position shows the following
balances

Other Assets 180,000 Diana, Capital 80,000
Ella, Capital 60,000
Francine, Capital 40,000
Total ₱200,000 Total ₱200,000
After realization, Ella received ₱30,000 as settlement of her interest.
43. How much was the loss on the sale of assets?

A. ₱73,000
B. ₱74,000
C. ₱75,000
D. ₱77,000
44. How much did Francine receive in final settlement of her interest?
A. ₱32,500
B. ₱30,000
C. ₱40,000
D. ₱42,500
45. What amount of total cash was distributed to the partners?

A. ₱125,000
B. ₱105,000
C. ₱120,000
D. ₱110,000
For items 46-47

The statement of financial position of Leslie, Miles and Nicole just before the liquidation shows the
following
Cash ₱5,000 Accounts Payable ₱10,000

Non-Cash assets 60,000 Nicole, Loan 10,000
Leslie, Capital 15,500
Miles, Capital 22,000
Nicole, Capital 7,500
Total ₱65,000 Total ₱65,000
Leslie, Miles and Nicole share profits and losses in the ratio of 3:2:5, respectively. The non-cash
assets were sold for ₱40,000
46. How much cash is available for distribution to partners in settlement of their capital balances?
A. ₱33,450
B. ₱34,000
C. ₱35,000
D. ₱37,500

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47. How much cash is received by Nicole in full settlement of her total interests in the partnership,
including loan?
A. ₱7,500
B. ₱9,500
C. ₱10,500
D. ₱18,000
For items 48-50

Partners Desiree, Angela and Irish who share profits and losses in the ratio of 2:2:1, respectively
decided to liquidate. The condensed statement of financial position immediately prior to the
liquidation shows the following:

Non-cash assets 400,000 Desiree, Loan 10,000
Desiree, Capital 45,000
Angela, Capital 105,000
Irish, Capital 200,000
Total ₱500,000 Total ₱500,000
After paying liabilities to partnership creditors, cash of ₱207,500 is available for distribution to
partners. Any capital deficiency is made good by the deficient partner, since all three partners are
personally solvent.

A. ₱140,000
B. ₱145,550
C. ₱150,500
D. ₱152,500
49. How much would Angela receive in final settlement of her interest?
A. ₱44,000
B. ₱48,000
C. ₱52,000
D. ₱61,000
50. How much would Irish receive in final settlement of her interest?
A. ₱168,000
B. ₱169,500
C. ₱171,050
D. ₱173,000
For items 51-52

Bruno and Mars are partners. They share profits and losses in the ratio of 3:7, respectively. The
business has been encountering financial difficulties lately. The partners therefore, mutually agreed
to liquidate the business. Immediately before liquidation proceedings started on March 31, 2013, the
ledger accounts of the partners showed the following balances:
Debit Credit
Bruno, Drawing ₱30,000
Bruno, Capital ₱280,000

lOMoARcPSD|25397162
Mars, Drawing 40,000

Mars, Capital 400,000
At this time, the records show that the total partnership assets are ₱910,000, of which ₱60,000 is
cash. After the non-cash assets were sold and the cash settlement was completed, Mars was trying
to figure out why he received only ₱66,000.
51. How much was the gain or loss on realization?

A. ₱420,000, gain
B. ₱420,000, loss
C. ₱430,000, gain
D. ₱430,000, loss
52. How much was the cash settlement to Bruno?

A. ₱123,000
B. ₱124,000
C. ₱125,000
D. ₱127,000
For items 53-55

Nicole, Rio, Ailil and Karen are partners sharing profits in the ratio 3/21, 4/21, 6/21 and 8/21,
respectively. Their capital balances are as follows:
Nicole ₱10,000 Ailil ₱250,000

Rio 250,000 Karen 90,000
The partners decide to liquidate. They converted the non-cash assets into ₱233,000 cash. After
paying the liabilities amounting to ₱30,000, they have ₱222,000 to divide. Assume that a debit
balance of any partner's capital account is uncollectible.
53. How much was the amount of cash before the conversion of non-cash assets?
A. ₱19,000
B. ₱22,000
C. ₱25,000
D. ₱32,000
54. How much was the book value of the non-cash assets?
A. ₱611,000
B. ₱623,000
C. ₱712,000
D. ₱733,000
55. How much was received by Rio in final settlement?

A. ₱138,800
B. ₱168,220
C. ₱127,330
D. ₱178,000
For items 56-57

Ryan, Ivan and Mark are partners sharing profits and losses in the ratio of 1:1:2, respectively. They
decided to liquidate the business. The assets were sold and liabilities amounting to ₱20,000 were
paid. At this point, the capital balances of the partners are as follows:

lOMoARcPSD|25397162
Debit Credit
Ryan ₱20,000
Ivan ₱15,000
Mark 30,000
Ivan is personally insolvent
56. How much is the cash available for distribution to partners?

A. ₱15,000
B. ₱35,000
C. ₱55,000
D. ₱65,000
57. How much cash would receive by Ryan and Mark?

58. Connie and Miriam are partners sharing profits and losses in the ratio of 7:3, respectively. On
October 1, 2013, they decided to liquidate the business when the account balances are:

Non-Cash assets 150,000 Connie, Capital 90,000
Miriam, Capital 60,000
Total ₱200,000 Total ₱200,000
During the same month, the non-cash assets were sold for ₱100,000.
After paying the liabilities, Connie and Miriam, in final settlement of their interest would receive cash
of
59. Lito, Ray and Ronnie decided to liquidate their partnership. Non-cash assets were sold for
₱128,000 and all creditors were paid. Profit sharing ratios were: 20%, 30% and 50%, respectively.
Balances in each capital account before and after the sale follow:
Lito Rey Ronnie

Before the sale ₱48,000 ₱12,000 ₱62,000
After the sale 32,800 10,800 24,000
The carrying amount of the assets sold is _______

A. ₱60,400
B. ₱182,400
C. ₱195,600
D. ₱204,000

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For items 60-61

Partners Arnie and Jovy who have been dividing profits and losses in the ratio of 3:2, respectively
decided to liquidate their partnership. Capital balances before liquidation was: Annie, ₱40,000; and
Jovy, ₱30,000. After paying in full liabilities of ₱30,000, they have ₱49,000 cash to divide.

A. ₱9,000
B. ₱21,000
C. ₱51,000
D. ₱89,000
61. In full settlement of their equities, Annie and Jovy must receive cash of _______
For items 62-63

In a partnership liquidation, balances prior to the distribution of cash to the partners are: Cash,
₱240,000; Mikee, Capital, ₱112,000; Teeny, Capital, ₱104,000; and Jenny, Capital, ₱24,000. The
income ratio is 6:2:2, respectively.
62. How much cash should be distributed to Mikee?

A. ₱100,000
B. ₱109,000
C. ₱112,000
D. ₱120,000
63. Assume that there is only ₱204,000 in cash and Jenny has a capital deficiency of ₱12,000. How
much cash should be distributed to Teeny?
A. ₱98,000
B. ₱101,000
C. ₱95,000
D. ₱104,000
For items 64-65

Lorna, Aida and Fe decided to dissolve their partnership on August 31, 2013. They have been dividing
profits and losses in the ratio of 40%; 30%; 30%, respectively and their capital balances as of January
1, 2013 were as follows:
Lorna ₱75,000
Aida 90,000
Fe 30,000
The operations of the partnership for the period January 1- August 31 resulted to a profit of ₱66,000.
As of August 31, 2013, cash balance is ₱60,000 and the liabilities are ₱135,000.
64. The total partnership assets as of August 31, 2013 are ________
A. ₱396,000
B. ₱336,000
C. ₱330,000

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D. ₱261,000
65. For Lorna to receive ₱60,000 in final settlement of her equity, the non-cash assets must be sold
for ________
A. ₱157,500
B. ₱232,500
C. ₱255,000
D. ₱358,500
66. D, T and M Partnership became insolvent on December 31, 2013 and is to be liquidated. D, T and
M have the following capital balances respectively, ₱65,000; (₱30,000); (₱4,000). After paying their
personal liabilities, D had ₱10,000 while T had ₱15,000 of their personal assets. However, M had still
unpaid personal liabilities amounting to ₱40,000 and his personal assets amounted only to ₱30,000.
The partners share profits and losses equally.
How much is the maximum amount that D can expect to receive from the partnership?
A. ₱31,000
B. ₱35,000
C. ₱46,000
D. ₱61,000
67. DD, EE and FF decided to dissolve the partnership on July 31, 2013. Their capital balances and
profit ratio on this date follow: DD, ₱33,600 (45%); EE, ₱43,200 (25%); FF, ₱19,200 (30%). The net
income from January 1 to July 31, 2013 was ₱7,200. Also, on this date, cash and liabilities were
₱25,200 and ₱34,800, respectively. FF received ₱24,960 in full settlement of his interest.
Which of the following statements is true?

A. ₱115,200 was realized from the sale of non-cash assets
B. DD received 42,240 in full settlement of his interest
C. ₱124,800 was the total distribution to the outsiders and to the partners
D. EE's share in the loss on realization was ₱3,000
68. The accounts of the partnership of Reyes, Santiago and Torres at the end of its fiscal year on
November 30, 2013 are as follows:

Other non-cash assets 707,500 Loan from Santiago 20,000
Loan to Reyes 15,000 Reyes, Capital (30%) 266,250
Santiago, Capital (50%) 136,250
Torres, Capital (20%) 141,250
Total Assets ₱826,250 Total Assets ₱826,250
Santiago received ₱50,000 in settlement of his equity.
Which of the following statements is incorrect?

A. Total amount distributed to partners is ₱336,250
B. Total amount paid to creditors is ₱262,500
C. Total amount realized from the non-cash assets is ₱598,750
D. Reyes received an amount equal to ₱187,500
69. On January 31, 2013, ACJ Partnership entered into liquidation. The partners' profit sharing and

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capital balances on this date were as follows: Alicia (25%), ₱2,500,000; Celine (35%), ₱5,400,000;
Jessica (40%), ₱3,700,000. The partnership has liabilities amounting to ₱4,400,000, including a loan
from Celine ₱600,000. Cash on hand prior to the liquidation process is ₱800,000.
Non-cash assets amounting to ₱7,400,000 were sold at their carrying amount and the rest of the non-
cash assets were sold at a loss of ₱4,200,000.
29. How much cash will be distributed to the partners?

A. ₱4,400,000
B. ₱7,400,000
C. ₱8,000,000
D. ₱11,800,000
70. On January 1, 2013, ACJ Partnership entered into the liquidation. The partnership capital balances
on this date were as follows: Angela (25%), ₱2,500,000; Cristine (35%), ₱5,400,000; Jechelle (40%),
₱3,700,000. The partnership has liabilities amounting to ₱4,400,000, including a loan from Cristine
₱600,000. Cash on hand before the start of liquidation is ₱800,000
Cristine received ₱2,255,000 in full settlement of her interest.
How much was the loss from the realization of the non-cash assets?
A. ₱5,255,000
B. ₱9,945,000
C. ₱10,525,000
D. ₱10,700,000
71. The condensed statement of financial position of Rivera, Reyes and Rosales partnership as of
March 31, 2013 follows:

Non-cash assets 265,000 Rivera, Capital 95,000
Reyes, Capital 80,000
Rosales, Capital 70,000
Total Assets ₱293,000 Total Equity ₱293,000
Profit and loss ratio is 50:25:25, respectively. The partners voted to dissolve the partnership and
liquidate by selling the assets in instalments. ₱70,000 were realized on the first cash sale of non-cash
assets which has a book value of ₱150,000. After settlement with creditors, all cash available was
distributed to partners. How much cash did Rosales receive?
A. ₱10,500
B. ₱20,000
C. ₱32,500
D. ₱21,250
72. The statement of financial position of the partnership of Desiree, Deborah and Dexter who share
in the profits and losses in the ratio of 5:3:2, respectively is as follow:

Other assets 320,000 Desiree, Capital 80,000
Deborah, Capital 115,000
Dexter, Capital 105,000

lOMoARcPSD|25397162
The partners agreed to liquidate the partnership by instalment. Immediately, there was a realization of
₱100,000 cash in selling other assets with book value of ₱150,000. On the cash available, priority is
the payment of liabilities and the balance is to be distributed to partners. How the remaining cash
should is to be distributed?
A. Desiree, ₱50,000; Deborah, ₱30,000; Dexter, ₱20,000
B. Desiree, ₱40,000; Deborah, ₱24,000; Dexter, ₱16,000
C. Desiree, ₱0; Deborah, ₱48,000; Dexter, ₱32,000
D. Desiree, ₱0, Deborah, ₱31,000; Dexter, ₱49,000
For items 73-75

The assets and equities of Sabido, Santos and Somido partnership at the end of its fiscal year ended
October 31, 2019 are as follows:

Receivable-net 20,000 Loan from Somido 10,000
Inventory 40,000 Sabido, Capital (30%) 45,000
Property, Plant and Equipment 70,000 Santos, Capital (50%) 30,000
Loan to Santos 5,000 Somido, Capital (20%) 15,000
Total ₱150,000 Total ₱150,000
The partners decided to liquidate the partnership. They estimated that the non-cash assets other than
the loan to Santos can be converted to ₱100,000 cash over the two-month period ending December
31, 2019. Cash is to be distributed to the appropriate parties as it becomes available during the
liquidation process.
73. Who among the partners is/are most vulnerable to partnership losses on liquidation?
A. Sabido
B. Santos
C. Somido
D. Sabido and Santos equally
74. If 65,000 are available for the first distribution, it should be paid to ________
A. Creditors, ₱60,000; Sabido, ₱5,000; Santos, ₱0; Somido, ₱0
B. Creditors, ₱50,000; Sabido, ₱12,000; Santos, ₱0; Somido, ₱3,000
C. Creditors, ₱60,000; Sabido, ₱1,500; Santos, ₱2,500; Somido, ₱1,000
D. Creditors, ₱50,000; Sabido, ₱5,000; Santos, ₱0; Somido, ₱10,000
75. If a total amount of ₱7,500 is available for distribution to partners after all outside liabilities are
paid, it should be paid as follows:
A. Sabido, ₱7,500; Santos; ₱0; Somido, ₱0
B. Sabido, ₱0; Santos, ₱3,750; Somido, ₱3,750
C. Sabido, ₱2,250; Santos, ₱3,750; Somido, ₱1,500
D. Sabido, ₱2,500; Santos, ₱2,500; Somido, ₱2,500
76. Pepito, Patrick and Tommy have capital balances of ₱40,000, ₱50,000 and ₱18,000, respectively
and a profit sharing ratio of 4:2:1, respectively. If Pepito received ₱8,000 upon liquidation, the total
amount received by all partners was _________

lOMoARcPSD|25397162
A. ₱108,000
B. ₱56,000
C. ₱24,000
D. ₱52,000
77. Assume the same facts in No.76 except that Pepito received ₱26,000 as a result of the liquidation.
How much was the amount received by Tommy as part of the liquidation?
A. ₱26,000
B. ₱18,000
C. ₱14,500
D. ₱14,000
78. Celine, Sarah and Bianca are partners sharing profits and losses in the ratio of 4:3:3, respectively.
The condensed statement of financial position of CSB Partnership as of December 1, 2019 is

Other assets 130,000 Celine, Capital 60,000
Sarah, Capital 40,000
Bianca, Capital 40,000
The CSB Partnership was dissolved and liquidated by instalments. The first realization of ₱40,000
cash was on the sale of other assets with book value of ₱80,000. After the payment of liabilities, the
cash available is distributed to Celine, Sarah and Bianca, respectively as follows:
A. ₱36,000; ₱27,000; ₱27,000
B. ₱16,000; ₱12,000; ₱12,000
C. ₱44,000; ₱28,000; ₱28,000
D. ₱24,000; ₱13,000; ₱13,000
79. After all non-cash assets have been converted into cash in the liquidation of the Patricia and
Marie partnership, the ledger contains the following account balances:
Debit Credit
Cash ₱47,000
Accounts Payable ₱32,000
Loan Payable to Patricia 15,000
Patricia, Capital 7,000
Marie, Capital 7,000
Available cash should be distributed with ₱32,000 going to accounts payable and
A. ₱7,000 to Patricia and ₱8,000 to Marie
B. ₱7,500 each to Patricia and Marie
C. ₱8,000 to Patricia and ₱7,000 to Marie
D. ₱15,000 to the loan payable to Patricia
80. Mama and Papa formed a partnership on July 1, 2019. They invested ₱30,000 and ₱40,000 and
agreed to share profits and losses 60% and 40%, respectively. All their transactions were for cash and
all their subsequent transactions were handled through their respective bank accounts summarized
as follows:
Mama Papa
Cash receipts ₱79,100 ₱65,245

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Cash disbursements 62,275 70,695
On October 31, 2019, the partnership was dissolved and all the remaining non-cash assets were sold
for cash of ₱60,000 and cash settlement was effected. How much was the cash received by Mama?
A. ₱24,000
B. ₱26,000
C. ₱34,000
D. ₱36,000
DISCLAIMER: SOME QUESTIONS PROVIDED IN THIS MATERIAL WERE ADAPTED FROM DIFFERENT
AUTHORS AND PROFESSORS OF BASIC ACCOUNTING. THIS DOCUMENT SHALL SERVE AS A
REVIEW MATERIAL ONLY AND DO NOT USE THIS FOR ANY UNNECESSARY ACTS SUCH SENDING
THIS TO OTHERS IN EXCHANGE OF PAYMENT. THE AUTHOR OF THIS MATERIAL WANTS TO HELP
THOSE STUDENTS WHO HAVE DIFFICULTIES IN UNDERSTANDING ACCOUNTING TOPICS. ALSO,
THIS MATERIAL WILL SOMEHOW HELP STUDENTS IN IMPROVING THEIR KNOWLEDGE IN THE
WORLD OF ACCOUNTING. GOODLUCK AND GOD BLESS
Prepared by:
NIXON D. TORRES JR.
Bachelor of Science in Accountancy (BSA) student
San Mateo Municipal College
TESDA NCIII Bookkeeping Passer

Far Partnership Bs Accountancy

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FINANCIAL ACCOUNTING AND REPORTING- PARTNERSHIP (QUESTIONNAIRE/REVIEWER)

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partners is called _________

9. A partnership contract is perfected by mere consent which makes it _______

14. Which of the following would not be considered a characteristic of a partnership?

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18. Partner's investment may include which of the following?

20. A partnership agreement should include which of the following?

23. Which of the following accounts has a normal credit balance?

24. Which of the following items is NOT collectible from a partner?

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31. The drawing account is debited, except for

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32. Which of the following is debited directly to capital?

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How much is the cash should Martin invest?

Carrying Value Fair Market Value

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For items 49-51

49. How much is King's adjusted capital?

For items 52-54

52. How much is the total agreed capital?

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For items 56-57

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For items 58-59

Total ₱826,000 ₱1,046,000

Accounts Payable ₱150,000 ₱320,000

Total ₱826,000 ₱1,046,000

Their unadjusted trial balances showed the following balances at August 1:

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Assets ₱150,000 ₱226,000

For items 61-64

For items 65-66

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the following adjustments are to be taken up in the books of Sephora

65. How much is Sephora's adjusted capital balance?

66. How much cash should Sandra invest in the partnership?

For items 67-70

68. How much is the Prepaid Rent after adjustment?

69. How much is the adjusted capital of Ralph?

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70. How much is the cash contributed by Vilma?

For items 71-75

Total Assets ₱3,070,000

B. Go and C. Sy agreed to the following adjustments on BG Company's accounts:

72. How much is the capital of B.Go before adjustments?

73. How much is the capital of B. Go after adjustments?

74. How much is the total assets of B. Go after adjustments?

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75. How much is the cash contributed by C. Sy to the partnership?

The amount of Rachelle's cash contribution should be _______

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CHAPTER 2: PARTNERSHIP OPERATION

4. Why is it general professional partnership exempted from 30% income tax?

7. Partnership financial statements are much like those of _______

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10. In a partnership, partners' salaries are considered as _______