COLLEGE OF ACCOUNTANCY

Preliminary Examination
Acctg Integ 3B
Instructions:
o Show your solutions on a separate sheet of paper;
o make a summary of answers; and
o send to my messenger account the picture of the summary of answers and solutions.
Part 1: Multiple Choice Theory
1. A performance obligation is satisfied over time if:
a. The entity does not have an enforceable right to payment for the performance that has been
completed to date
b. The entity's performance creates an asset that the customer controls as it is created
c. The entity's performance creates an asset which has an alternative use to the entity
d. The customer does not receive or consume the benefits provided by the entity's performance
until the obligation is completely satisfied
2. Step 1 of the "five-step model" states that certain conditions must be satisfied before an entity
can account for a contract with a customer. Which of the following is not one of these
conditions?
a. Each party's rights with regard to the goods or services concerned can be identified
b. It is certain that the entity will collect the consideration to which it is entitled
c. The entity and the customer have approved the contract and are committed to perform their
contractual obligations
d. The payment terms can be identified
3. If the total debits in the statement of realization and liquidation exceeds the total credits, there
is
a. net gain for the period c. either a or b
b. net loss for the period d. none of these
4. “Liabilities liquidated” is placed on which side of a statement of realization and liquidation?
a. credit side, measured at realizable value
b. credit side, measured at actual settlement amount
c. debit side, measured at book value
d. debit side, measured at actual settlement amount
5. The estimated recovery of partially secured creditors is equal to
a. the realizable value of the assets pledged plus the excess amount multiplied by the estimated
recovery percentage.
b. the realizable value of the assets pledged minus the excess amount multiplied by the
estimated recovery percentage.
c. their claims multiplied by the estimated recovery percentage.
d. any of these
6. Which of the following statements is false concerning the Schedule of Liquidation?
a. Liquidations may take a considerable length of time to complete.
b. Frequent reporting by the accountant is rarely necessary.
c. The Schedule of Liquidation provides a listing of transactions to date, current cash, and
capital balances.
d. The Schedule of Liquidation provides a listing of property still being held by the partnership
and liabilities remaining unpaid.
e. The Schedule of Liquidation keeps creditors and partners apprised of the results of the
process of dissolution.
7. What accounting transactions are not recorded by an accountant during liquidation?
a. The conversion of partnership assets into cash.
b. The allocation of the resulting gains and losses.
c. The payment of liabilities and expenses.
d. Remaining unpaid debts settled, and the distribution of any remaining assets to the partners
based on their profit and loss ratio.
8. The estimated recovery of unsecured creditors without priority is equal
a. to the realizable value of the assets pledged plus the excess amount multiplied by the
estimated recovery percentage.
b. to the realizable value of the assets pledged minus the excess amount multiplied by the
estimated recovery percentage.
c. to their claims multiplied by the estimated recovery percentage.
d. any of these
9. The estimated recovery of partially secured creditors is equal to
a. the realizable value of the assets pledged plus the excess amount multiplied by the
estimated recovery percentage.
b. the realizable value of the assets pledged minus the excess amount multiplied by the
estimated recovery percentage.
 c. their claims multiplied by the estimated recovery percentage.
d. any of these
10. Statement I - If there is no separate set of books of accounts used for the joint venture
transactions, the balance of the Income summary account represents either the venture profit or
loss;
Statement II - If there is a separate set of books of accounts used for the joint venture, the
amount due to or from each participant is represented by his capital account
a. both statements are true c. only the first statement is true
b. both statements are false d. only the second statement is true.
11. When Mill retired from the partnership of Mill, Yale, and Lear, the final settlement of Mill's
interest exceeded Mill's capital balance. Under the bonus method, the excess
a. Was recorded as goodwill.
b. Was recorded as an expense.
c. Reduced the capital balances of Yale and Lear.
d. Had no effect on the capital balances of Yale and Lear.
12. “Liabilities not liquidated” is placed on which side of a statement of realization and liquidation?
a. debit side, measured at realizable value c. debit side, measured at book value
b. credit side, measured at book value d. no side
13. “Liabilities liquidated” is placed on which side of a statement of realization and liquidation?
a. credit side, measured at realizable value
b. credit side, measured at actual settlement amount
c. debit side, measured at book value
d. debit side, measured at actual settlement amount
14. A Co. and B Co. are national distributors of textbooks. A and B enters into a contract to acquire
a warehouse in a particular region. Each party will use the warehouse to store its own
inventories. The parties agree to share in the costs of acquiring and maintaining the warehouse.
The arrangement between A and B is most likely a
a. joint operation c. joint venture
b. jointly controlled asset d. none of these
15. In a Statement of Affairs, assets pledged for partially secured creditors are:
a. included with assets pledged for fully secured creditors
b. offset against partially secured creditors
c. included with free assets
d. disregarded.
16. The estimated amount available for free assets in a statement of affairs for a company
undergoing liquidation is equal to the assets:
a. carrying amounts less current fair values
b. carrying amount plus gain or less loss on realization
c. carrying amount plus loss or less gain on realization
d. current fair values less carrying amounts.
17. Insolvency in the bankruptcy sense means:
a. Book value of assets is greater than liabilities
b. Fair value of assets is less than liabilities
c. Inability to meet financial obligations as they become due
d. Liabilities are greater than book value of assets.
18. Which is not a characteristic of the statement of affairs?
a. Estimated realizable values are the relevant measure of assets
b. Liabilities are presented according to preference
c. Specific claims against assets are presented and amounts available for unsecured creditors
are indicated
d. It shows the transactions of the trustee in paying the liabilities with available assets.
19. In preparing the cash priority program for installment method of liquidation, the maximum loss
absorption amount is computed by
a. Multiplying the total claims of the partner in the partnership by his profit and loss
percentage
b. Multiplying the capital balance of the partner by his profit and loss percentage
c. Dividing the total claims of the partner in the partnership by his profit and loss percentage
d. Dividing the capital balance of the partner by his profit and loss percentage.
20. When a partner is personally insolvent and has a debit balance in his or her partnership capital
account, his personal assets should be distributed as follows
a. To the personal creditors in full payment of their claims first, second to the partnership
creditors, and to the other partners last
b. Proportionally to the personal and partnership creditors
c. To the partnership creditors first to the extent of the debit balance and to the personal
creditors second
d. Proportionally to the personal creditors and the other partners with credit balances.
Part 2: Multiple Choice Problem
In May 2021, A, a partner of an accounting firm decided to withdraw when the partners’ capital
balances were: B, P600,000; C, P600,000; A, P400,000. It was agreed that A is to take the
partnership’s fully depreciated computer with a second hand value of P24,000 that cost the
partnership P36,000.
21. If profits and losses are shared equally, what would be the capital balances of the remaining
partners after the retirement of A?
B C
a. P600,000 600,000
b. 592,000 592,000
c. 608,000 608,000
d. 612,000 612,000
Emily, Daniel and Victoria have capital balances of P120,000, P200,000 and P72,000, respectively
and they share profits in the respective ratio of 4:2:1. Daniel received P104,000 as a result of the
liquidation of the partnership.
22. Loss on asset realization is
a. P 236,000
b. P 336,000
c. P 288,000
d. P 264,000
ABC Inc. Has forced into bankruptcy and has begun to liquidate. Unsecured claims will be paid at
the rate of 40 cents on the peso. P Co. Holds a non-interest bearing note receivable from ABC in the
amount of P100,000, collateralized by equipment with a liquidation value of P25,000.
23. The total amount to be realized by P Co. On this note receivable is
a. P25,000
b. P40,000
c. P55,000
d. P65,000
A and B agreed on a joint operation to purchase and sell car accessories. They agreed to contribute
P25,000 each to be used in purchasing the merchandise, share equally in any gain or loss, and
record their joint operation transactions in their individual books. After one year, they decided to
terminate the joint operation, and data from their records were:
  A B
Joint operation 18,000 Cr. 20,200 Cr.
Expenses paid from JO cash 1,850 2,600
Value of inventory taken 1,000 1,800
24. How much is the joint operation sales?
a. 84,670
b. 88,450
c. 92,650
d. 93,350
25. How much is the joint operation profit?
a. 32,880
b. 34,650
c. 41,000
d. 42,750
Partners A, B and C share profits and losses 5:3:2, respectively. The balance sheet at April 30, 2005
follows:
Cash P 40,000 Accounts payable P 100,000
Non-cash assets 360,000 A, capital 74,000
B, capital 130,000
_______ C, capital 96,000
Total assets P 400,000 Total liab. & equity P 400,000
The assets and liabilities are recorded and presented at their respective fair values. D 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.
26. If no bonus is to be recorded, how much cash must D contribute?
a. P 60,000
b. P75,000
c. P 80,000
d. P 72,000
A and B are partners with capital of P60,000 and P20,000, respectively. Profits and losses are
divided in the ratio of 60:40. A and B decided to form a new partnership with C, who invested land
valued at P15,000 for a 20% capital interest in the new partnership. C’s cost of the land was
P12,000 the partnership elected to use the bonus method to record the admission of C into the
relationship.
27. C’s capital account should be credited for
a. P12,000
b. P16,000
c. P15,000
d. P19,000
A and B are joint venturers of ABM. A and B, each have a 50% interest in the net assets of ABM
During the year, A Co. earns revenue of P450,000 from its own operations while ABM Co. reports
revenue of P60,000.
28. How much total revenue shall be reported in A Co.’s statement of profit or loss for the year?
a. P450,000
b. P480,000
c. P420,000
d. None of the above
On January 1, 2021, ABC Co. entered into a joint agreement classified as a joint venture. For an
investment of P100,000, ABC Co. obtained 40% interest in ABC Joint Venture, Inc. During the year,
ABC Joint Ventures, Inc. reported profit of P50,000. ABC Joint Venture, Inc. declared dividends of
20,000 in July 1,2021 and 15,000 on September 30, 2021.
29. How much is the carrying amount of the investment in joint venture on December 31, 2021?
a. P100,000
b. P114,500
c. P120,000
d. P106,000
Mark and Michelle are partners with capitals of P200,000 and P100,000 and sharing profits and
losses at 3:1 respectively. Mike purchased half of Marks capital for P120,000.
30. After Mike’s admission, the total capital of partnership would be
a. 320,000
b. 280,000
c. 300,000
d. None of these

The assets and equities of the EFM Partnership at the end of its fiscal year on October 31, 2021 are
as follows:

Cash P 150,000 Liabilities P500,000

Receivables- net 200,000 Loan from M 100,000
Inventory 400,000 E, capital (30%) 450,000
Plant assets- net 700,000 F. capital (50%) 300,000
Loan to F. 50,000 M. capital (20%) 150,000
P1,500,000 P1,500,000
The partners decide to liquidate the partnership. They estimate that the noncash assets other than
the loan to F can be converted into P1,000,000 cash over the two- month period ending December
31,2021. Cash is to be distributed to the appropriate parties as it becomes available during the
liquidation process.
31. If P650,000 is available for the first distribution, it should be paid to
Priority creditors E. F. M.
a. P600,000 P 50,000 P 0 P 0
b. P600,000 P15,000 P25,000 P 10,000
c. P500,000 P50,000 P 0 P100,000
d. P500,000 P120,00 P 0 P 30,000
32. If a total Amount of P75,000 is available for distribution to partners after all non-partner
liabilities are paid, it should be paid as follows
E. F. M.
a. P75,000 P 0 P 0
b. 0 P37,500 P37,500
c.P22,500 P37,500 P15,000
d.P25,000 P25,000 P25,000
ABC company filed a voluntary bankruptcy petition on September 30, 2009 and the statement of
affairs reflects the following amounts:
Estimated
Book Value Current Value
Assets
Assets pledged with fully secured creditors P910,000 P1,080,625
Assets pledged with partially secured 511,875 341,250
creditor
Free Assets 1,137,500 796,250
Liabilities
Liabilities with priority 113,750
Fully secured creditors 739,375
Partially secured creditors 568,750
Unsecured creditors 1,478,750
Assume that the assets are converted into cash at the estimated current values and the business is
liquidated.
33. The estimated percentage of recovery is:
a. 69.23%
b. 66 2/3 %
c. 46 2/3 %
d. 60%
e. None of the above
34. How much is the total free asset of the corporation?
a. 796,250
b. 1,023,750
c. 1,137,500
d. 341,250
35. What total amount of cash should partially secured creditors receive?
a. 341,250
b. P492,917
c. P477,750
d. P379,168
e. 447,417
36. What total amount of cash should unsecured creditors receive?
a. 985,838
b. 885,250
c. 1,023,750
d. 1,137,505
e. 688,688
37. What total amount of cash should fully secured creditors receive?
a. 739,375
b. 443,625
c. 429,919
d. 345,044
e. None of the above

The A, B and C Partnership was formed on January 2, 2011. The original cash investments of
partner A, 96,000, B 144,000 and C 216,000.
According to the general partnership contract, the partners were to be remunerated as follows:
o Salaries of P14,400 for A, P12,000 for B and P13,600 for C.
o Interest at 12% on the average capital account balances during the year.
o Remainder divided 40% to A, 30% to B and 30% for C
o Income before partners’ salaries for the year ended December 31, 2011 was P92,080.
o A invested an additional P24,000 in the partnership on July 1; C withdrew P36,000 from the
partnership on October 1; and as authorized by the partnership contract, A, B and C each
withdrew P750 monthly against their shares of net income for the year.
38. If the salaries to partners are to be recognized as operating expenses by the partnership, the
capital balance of C on December 31, 2011 is?
a. 200,224
b. 208, 540
c. 194, 940
d. 217, 540
ABC Partnership has assets of cash of P13,000 and land worth P70,000. All liabilities have been
paid and the partners are all insolvent. The partners’ capital accounts are as follows A, P50,000, B,
P30,000 and C 3,000. The partners share profits and losses 5:3:2.
39. If the land is sold for P45,000, how much cash will C receive in the final settlement?
a. P0.
b. P1,500.
c. P3,000.
d. P21,750.
e. P36,250.
A and B formed a partnership. The partnership agreement stipulates the following:
 Annual salary allowances ofP10,000 for A andP40,000 for B.
 Bonus to A of 10% of the profit after partner’s salaries but before bonus and interest.
 Interest of 12% on the beginning capital balance of A.
 The partners share profits and losses on a 60:40 ratio.
During the period the partnership earned profit ofP200,000 before deduction for salaries. B’s
beginning capital balance wasP60,000.
40. How much is the share of A in the profit?
a. 101,680
b. 110,820
c. 98,320
d. 96,720

“We must prepare for every fight that we’re going to face. When at times you feel you wanted
to give up, make a rest but never stop pursuing your d reams. Every winning is worthy when we
strive hard to achieve it.”