For numbers 6-7

A, B and C decided to form ABC Partnership. It was agreed

NAME :
that A will contribute an equipment with assessed value of
DATE : P100,000 with historical cost of P800,000 and accumulated
depreciation of P600,000. A day after the partnership
formation, the equipment was sold for P 300,000. B will
ADVANCE FINANCIAL ACCOUNTING AND REPORTING contribute a land and building with carrying amount of
P1,200,000 and fair value of P1,500,000. The land and
1. Which of the following procedures is not a necessary step building are subject to a mortgage payable amounting to
affecting a dissolution of partnership? P300,000 to be assumed by the partnership. The partners
A. Revaluing partnership assets agreed that B will have 60% capital interest in the
B. Recognizing undistributed profit or loss share of partnership. The partners also agreed that C will contribute
partner at dissolution date sufficient cash to the partnership.
C. Closing of partnership books
D. Revising partners’ equity 6. What is the total agreed capitalization of the ABC
Partnership?
2. A, B, C are partners with average capital balances during A. 1,500,000 C. 2,500,000
2017 of P472,500; P238,650 and P162,350; respectively. B. 2,000,000 D. 3,000,000
The partners receive 10% interest on their average capital
balances; after deducting salaries of P122,325 to A and 7. What is the cash to be contributed by C in the ABC
P82,625 to C, the residual profit or loss is divided equally. Partnership?
In 2017, the partnership had net loss of P125,624 before A. 500,000 C. 700,000
interest and salaries to partner. What amount should a B. 600,000 D. 800,000
and C capital change respectively?
A. 40,844 decrease and P31,237 decrease For numbers 8-9
B. 30,267 increase and 40,448 decrease On January 1, 2018, A, B and C formed ABC Partnership with
C. 29,476 increase and 17,536 increase total agreed capitalization of P1,000,000. The capital interest
D. 28,358 increase and 3,458 increase ratio of the ABC Partnership is 5:1:4 while the profit or loss
ratio is 3:2:5, respectively for A, B and C. During 2018, A and B
3. In case of general partnership liquidation, which of the made additional investments of P200,000 and P500,000,
following credits shall be settled first by the liquidating respectively. At the end of 2018, B and C made drawings of
partner? P300,000 and P100,000, respectively. On December 31, 2018,
A. Those owing for partner’s capital contribution the capital balance of B is reported at P200,000.
B. Those owing to third persons
C. Those owing for the share in partnership profits 8. What is the net income or net loss of ABC Partnership for
D. Those owing to partners for their advances to the year ended December 31, 2018?
partnership A. 500,000 loss C. 800,000 income
B. 1,000,000 loss D. 1,200,000 income
4. Which of the following transactions will not affect the
total equity of a partnership? 9. What is the capital balance of C on December 31, 2018?
A. Recognition of impairment loss in case of admission A. 150,000 C. 200,000
of a new partner by investment B. 50,000 D. 250,000
B. Withdrawal by a partner
C. Admission of a new partner by purchase of existing For numbers 10-12
partner’s interest below its book value On January 1, 2018, A, B and C formed ABC Partnership with
D. Retirement of an existing partner with payment of original capital contribution of P300,000, P500,000 and
above the book value of such interest P200,000. A is appointed as managing partner. During 2018,
A, B and C made additional investments of P500,000,
5. A partner was admitted in an existing partnership through P200,000 and P300,000, respectively. At the end of 2018, A, B
investment of cash equivalent to ¼ of the new and C made drawings of P200,000, P100,000 and P400,000,
Capitalization. If the capital balance of the old partners respectively. At the end of 2018, the capital balance of C is
increases, what is the most valid reason Philippine GAAP? reported at P320,000. The profit or loss agreement of the
A. Asset revaluation of existing partnership’s assets partners is as follows:
B. Impairment loss of existing partnership assets • 10% interest on original capital contribution of the partners.
C. recognition of goodwill of existing partnership • Quarterly salary of P40,000 and P10,000 for A and B,
D. Receipt of bonus from the new partner respectively.
• Bonus to A equivalent to 20% of Net Income after interest
and salary to all partners
• Remainder is to be distributed equally among the partners.
 16. If the all the assets of the existing partnership are properly
10. What is the partnership profit for the year ended valued, what is the capital balance of C after the
December 31, 2018? admission of D?
A. 900,000 C. 1,050,000 A. 960,000 C. 840,000
B. 1,020,000 D. 960,000 B. 900,000 D. 1,200,000

11. What is A’s share in partnership profit for 2018? For numbers 17-18
A. 190,000 C. 540,000 On December 31, 2018, the Statement of Financial Position of
B. 340,000 D. 200,000 ABC Partnership provided the following data with profit or
loss ratio of 5:1:4: Current Assets 1,500,000 Total Liabilities
12. What is B’s share in partnership profit for 2018? 500,000 Noncurrent Assets 2,000,000 A, Capital 1,100,000 B,
A. 200,000 C. 50,000 Capital 1,200,000 C, Capital 700,000 On January 1, 2019, D is
B. 290,000 D. 90,000 admitted to the partnership by investing P500,000 to the
partnership for 10% capital interest. The total agreed
On December 31, 2018, the Statement of Financial Position of capitalization of the new partnership is P3,000,000.
ABC Partnership provided the following data with profit or
loss ratio of 1:6:3: Current Assets 1,000,000 Total Liabilities 17. What is the capital balance of D after his admission to the
600,000 Noncurrent Assets 2,000,000 A, Capital 900,000 B, partnership?
Capital 800,000 C, Capital 700,000 On January 1, 2019, D is A. 500,000 C. 350,000
admitted to the partnership by purchasing 40% of the capital B. 300,000 D. 400,000
interest of B at a price of P500,000.
18. What is the capital balance of C after the admission of D
13. What is the capital balance of B after the admission of D to the partnership?
on January 1, 2019? A. 580,000 C. 500,000
A. 540,000 C. 420,000 B. 820,000 D. 780,000
B. 480,000 D. 300,000
For numbers 19-20
On December 31, 2018, ABC Partnership’s Statement of On December 31, 2018, the Statement of Financial Position of
Financial Positions shows that A, B and C have capital ABC Partnership with profit or loss ratio of 6:1:3 of partners
balances of P500,000, P300,000 and P200,000 with profit or A, B and C respectively, revealed the following data:
loss ratio of 1:3:6. On January 1, 2019, C retired from the Cash 1,000,000 Other Liabilities 2,000,000 Receivable from A
partnership and received P350,000. At the time of C’s 500,000 Payable to B 1,000,000 Other noncash assets
retirement, an asset of the partnership is undervalued. 2,000,000 Payable to C 100,000 A, Capital 700,000 B, Capital
(650,000) C, Capital 350,000 On January 1, 2019, the partners
14. What is the capital balance of A after the retirement of C? decided to liquidate the partnership. All partners are legally
A. 462,500 C. 562,500 declared to be personally insolvent. The other noncash assets
B. 537,500 D. 525,000 were sold for P1,500,000. Liquidation expenses amounting to
P100,000 were incurred.
On December 31, 2018, ABC Partnership’s Statement of
Financial Position shows that A, B and C have capital balances 19. How much cash was received by B at the end of
of P400,000, P300,000 and P100,000 with profit or loss ratio partnership liquidation?
of 1:4:5. On January 1, 2019, C retired from the partnership A. 250,000 C. 290,000
and received P80,000. At the time of C’s retirement, the B. 150,000 D. 270,000
assets and liabilities of the partnership are properly valued.
20. How much cash was received by C at the end of
15. What is the capital balance of B after the retirement of C? partnership liquidation?
A. 284,000 C. 316,000 A. 270,000 C. 350,000
B. 308,000 D. 320,000 B. 150,000 D. 220,000

On December 31, 2018, the Statement of Financial Position of

ABC Partnership provided the following data with profit or ---Nothing Follows---
loss ratio of 1:6:3: Current Assets 1,300,000 Total Liabilities
300,000 Noncurrent Assets 2,000,000 A, Capital 1,400,000 B,
Capital 700,000 C, Capital 900,000 On January 1, 2019, D is
admitted to the partnership by investing P1,000,000 to the
partnership for 20% capital interest.
KEY ANSWERS:

1. D
2. B
3. B
4. C
5. A
6. B
7. A
8. A
9. B
10. C
11. C
12. B
13. B
14. D
15. C
16. A
17. B
18. A
19. A
20. B