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School: COC
PEN Code: ACC 009
PEN Subject Title: Advanced Financial Accounting and Reporting, Part 1
Directions: Please type your questions, choices and comments in the corresponding boxes.
Kindly follow the example below.
Example:
Please type your question in the upper box followed by the choices Please type
in the lower box. Do not forget to highlight the answer. your comments
here.
1. “Begin with the end in mind.” What is the implication of this
statement to the work of a teacher?
a. Come to class prepared for all eventualities.
b. Master the subject matter.
c. Understand the nature of each learner.
d. Define the lesson objective clearly.
Comments
Item Questions and Answers from UPANG
and UI
1. Characteristic of a partnership where specific assets contributed by a
partner lose their identity as to source and become shared property of
the partnership is:
a. a fiduciary relationship
b. tenancy in partnership
c. mutual agency
d. the proprietary theory
2. The characteristic of a partnership where a partner is an agent for other
partners and the partnership when transacting partnership business is:
a. a fiduciary relationship
b. tenancy in partnership
c. mutual agency
d. the proprietary theory
3. Which of the following statements is true when comparing corporations and
partnerships?
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COC – ACC 009 Page 2 of 20
Which partner has the largest capital balance at April 30, 2010?
a. Al
b. Ben
c. Ces
d. All balances are equal
8. On January 1, 2013, Lhuma and Lhagare agreed to form a partnership
contributing their respective assets adn equities subject to
adjustments. On that date, the following were provided:
Lhuma Lhagare
Cash P 28,000 P 62,000
Accounts receivable 200,000 600,000
Inventories 120,000 200,000
Land 600,000
Building 500,000
Furniture and fixtures 50,000 35,000
Intangible assets 2,000 3,000
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COC – ACC 009 Page 3 of 20
Lhuma Lhagare
a. 592,000 750,000
b. 600,000 700,000
c. 592,000 756,300
d. 600,000 750,000
9. Partner Alta had a capital balance on January 1, 2008 of P45,000 and made
additional capital contributions during 2008 totaling P50,000. During the
year 2008, Alta withdrew P8,000 per month. Alta's post-closing capital
balance on December 31, 2008 is P30,000. Alta's share of 2008 partnership
income is ____.
a. P96,000
b. P50,000
c. P31,000
d. P8,000
A10.
partnership has the following accounting amounts:
a. P20,000
b. P18,000
c. P5,000
d. P(3,000)
11. Partner A began the year with P20,000 in capital. On June 1, 2008, the
partner contributed another P20,000. On September 1, 2008, the
partner withdrew P15,000 from the partnership. Withdrawals in
excess of P5,000 are charged to the partner's capital account. The
partnership's fiscal year end is December 31. The annual weighted-
average capital balance is ____.
a. P25,000
b. P26,667
c. P28,334
d. P30,000
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COC – ACC 009 Page 4 of 20
12. Partner A began the year with P20,000 in capital. On June 1, 2008, #11 and 12
the partner contributed another P20,000. On September 1, 2008, the have the same
partner withdrew P15,000 from the partnership. Withdrawals in Problems/Quest
excess of P5,000 are charged to the partner's capital account. The ion
partnership's fiscal year end is December 31. The annual weighted-
average capital balance is ____.
a. P25,000
b. P26,667
c. P28,334
d. P30,000
13. Changes in partnership ownership are presumed to be arm's length
transactions that may require which of the following actions?
a. P2,250
b. P9,667
c. P3,000
d. P5,000
17. Assume that the capital of an existing partnership is P90,000 and all
existing assets reflect fair market values. If an incoming partner
acquires a 40% interest in the partnership for P55,000, the goodwill
traceable to the incoming partner is
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COC – ACC 009 Page 5 of 20
a. P15,000
b. P5,000
c. P3,000
d. P2,000
18. Callie is admitted to the Adams & Beal Partnership under the
goodwill method. Callie contributes cash of P20,000 and non-cash
assets with a market value of P30,000 and book value of P15,000 in
exchange for a 20% ownership interest in the new partnership. Prior
to the admission of Callie, the capital of the existing partnership was
P130,000 and an appraisal showed the partnership net assets were
fairly stated. Adams & Beal shared profits and losses at a ratio of
80/20, respectively.
a. P36,000
b. P50,000
c. P35,000
d. P45,000
20. Verst, Brown and Sullivan have a partnership. Pertinent information
is as follows:
Verst Brown Sullivan
Capital balance 50,000 120,000 30,000 30,000
Profit and loss 25% 50% 25% 25%
percentage
a. 80,000
b. 58,750
c. 85,000
d. 65,000
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COC – ACC 009 Page 6 of 20
Sullivan retires and the partnership pays him P35,000. What is the
balance in Verst’s capital account after the sale assuming this
transaction was accounted for using the bonus method?
a. 50,000
b. 51,667
c. 45,000
d. 48,333
22. On June 30, 2012, the balance sheet for the partnership of Coll,
Maduro, and Prieto, together with their respective profit and loss
ratios, were as follows:
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On December 31, 2010, the fair values of the asets and liabilities
were appraised at P240,000 and P20,000, respectively, by an
independent appraiser. On January 2, 2011, the partnership was
incorporated and 1,000 shares of P5 par value common stock were
issued. Immediately after the incorporation, what amount should the
new corporation report as additional paid in capital?
a. 275,000
b. 260,000
c. 215,000
d. 0
25. Hetzer and Whalen partnership is insolvent and has liabilities of
P5,000. Other information follows:
Hetzer Whalen
Personal assets P20,000 P 8,000
Personal liabilities 8,000 10,000
Partnership capital 10,000 (5,000)
balance
a. P4,800
b. P12,000
c. P5,000
d. P0
26. Assume that a partnership had assets with a book value of P240,000
and a market value of P195,000, outside liabilities of P70,000, loans
payable to partner Able of P20,000, and capital balances for partners
Able, Baker, and Chapman of P70,000, P30,000, and P50,000. How
much would Able receive upon liquidation of the partnership
assuming profits and losses are allocated equally?
a. P70,000
b. P90,000
c. P75,000
d. P55,000
27. Assume that a partnership had assets with a book value of P240,000 and a
market value of P195,000, outside liabilities of P70,000, loans payable to
partner Able of P20,000, and capital balances for partners Able, Baker, and
Chapman of P70,000, P30,000, and P50,000. If all outside creditors and
loans to partners had been paid, how would the balance of the assets be
distributed assuming that Chapman had already received assets with a value
of P30,000 assuming profits and losses are allocated equally?
a. Each of the partners would receive P25,000.
b. Each of the partners would receive P40,000.
c. Able: P70,000, Baker: P30,000, Chapman: P20,000
d. Able: P55,000, Baker: P15,000, Chapman: P5,000
28. Below are steps in which partnership distribution takes place:
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COC – ACC 009 Page 8 of 20
a. 3,1,2,4
b. 1,3,4,2
c. 1,3,2,4
d. 3,1,4,2
29. Which of the following statements is correct regarding a partner's debit
capital balances in a liquidation?
a. P15,000
b. P50,000
c. P166,667
d. P300,000
32. A partner's maximum loss absorbable is calculated by
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COC – ACC 009 Page 9 of 20
33. Partners Thomas, Adams and Jones have capital balances of P24,000,
P45,000, and P90,000 respectively. They split profits in the ratio of 3:3:4,
respectively. Under a predistribution plan, one of the partners will get the
following total amount in liquidation before any other partners get
anything:
a. P22,500
b. P30,000
c. P40,000
d. P75,000
34. Assume that a partnership had assets with a book value of P240,000 and a
market value of P195,000, outside liabilities of P70,000, loans payable to
partner Able of P20,000, and capital balances for partners Able, Baker, and
Chapman of P70,000, P30,000, and P50,000. How would the first P100,000
of available assets be distributed assuming profits and losses are allocated
equally?
a. P70,000 to outside liabilities, P20,000 to Able, and the balance
equally among the partners
b. P70,000 to outside liabilities and P30,000 to Able
c. P70,000 to outside liabilities, P25,000 to Able, and P5,000 to
Chapman
d. P40,000 to Able, P20,000 to Chapman, and the balance equally
among the partners
35. Partners Abaka, Bayani and Kulay have capital balances of P20,000,
P50,000, and P90,000, respectively. They split profits in the ratio of
2:4:4, respectively. Under a safe cash distribution plan, one of the
partners will get the following total amount in liquidation before any
other partners get anything?
a. 0
b. 15,000
c. 40,000
d. 180,000
36. The following are those identified by PAS 31 as broad types of Joint
Ventures, except:
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COC – ACC 009 Page 10 of 20
a. The interest is classified as held for sale in accordance with Based on the
PFRS 5, in which case it is accounted for under that standard; TOS, the types
b. The venture is a parent (i.e. an entity with one or more of the items are
subsidiaries) exempt from preparing consolidated financial APPLICATIO
statements under PAS 27; N and
c. An investor in an associate that is not a parent exempted from ANALYSIS for
equity accounting for its investment under PAS 28. # 37-44.
d. All of the above Correct me if
e. None of the above i’m wrong, I
think what we
should give are
problems to be
solved
(Problem
Solving)
39. A and B enter into a contractual arrangement to buy a building that
has 12 floors, which they will lease to other parties. A and B are
responsible for leasing five floors each, and each can make all
decisions related to their respective floors and keep all of the income
with respect to their floors. The remaining two floors will be jointly
managed – all decisions with respect to those two floors must be
unanimously agreed between A and B, and they will share all profits
equally.
With the question and answer posed above, what will be the arrangement’s
classification?
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COC – ACC 009 Page 11 of 20
a. Both I and II
b. I only
c. II only
d. None of the above
42. A jointly controlled operation is
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COC – ACC 009 Page 12 of 20
a. P7,000
b. P6,000
c. P7,500
d. P6,200
47. The amount to be paid to fully secured creditors is
a. P30,000
b. P32,000
c. P20,000
d. P35,000
48. A trustee has been appointed by SEc for ABU, Inc., which is being
liquidated. The following transactions occurred after the assets were
transferred to the traustee:
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COC – ACC 009 Page 13 of 20
a. P(6,800)
b. P8,600
c. P11,100
d. P2,500
50. Lakeside Bank holds a P100,000 note secured by a building owned by Fly-
By-Night Manufacturing, which has filed for bankruptcy. If the property
has a book value of P120,000 and a fair market value of P90,000, what is
the best way to describe the note held by Second City Bank? The bank has
a(n)
a. secured claim of P100,000.
b. unsecured claim of P100,000.
c. secured claim of P90,000 and an unsecured claim of P10,000.
d. secured claim of P100,000 and an unsecured claim of P20,000.
51. Equipment with a book values of P120,000 is sold in a liquidation
process for cash of P110,000. This equipment was security for a
P150,000 bank loan. Any remainder is consider unsecured without
priority. How would this transaction be reported on the Statement of
Realization and Liquidation?
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COC – ACC 009 Page 15 of 20
a. P600,000
b. P500,000
c. P250,000
d. P1,250,000
58. Under which of the following circumstances is the installment sales
method appropriate for the recognition of revenue in the income
statement?
a. P0
b. P30,000
c. P60,000
d. P140,000
60. Gentry Co. uses the installment sales method. When an account had a
balance of P3,500, no further collections could be made and the
dining room set was repossessed. At that time, it was estimated that
the dining room set could be sold for P1,000 as repossessed, or for
P1,300if the company spent P125 reconditioning it. The gross profit
rate on this sale was 70%. What is the gain or loss on repossession?
a. 2,450 loss
b. 2,500 loss
c. 300 gain
d. 125 gain
61. Word Corp. has a normal gross profit on installment sales of 30%. A
2007 sale resulted in a default early in 2009. At the date of default,
the balance of the installment receivable was P8,000, and the
repossessed merchandise had a fair value of P4,500. Assuming the
repossessed merchandise is to be recorded at fair value, the gain or
loss on repossession should be
a. 0
b. 1,100 loss
c. 1,100 gain
d. 2,500 loss
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COC – ACC 009 Page 16 of 20
2008 2009
Installment receivables at year end on 2008 sales 60,000 30,000
Installment receivables at year end on 2009 sales 69,000
Installment sales 80,000 90,000
Cost of sales 40,000 60,000
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a. 2,350,000
b. 1,900,000
c. 2,450,000
d. 2,500,000
70. Cordova Builders, Inc. has consistently used the percentage of
completion method of accounting for construction type contracts.
During 2008, Cordova started work on a P9,000,000 fixed price
construction contract that was completed in 2010. Cordova’s
accounting records disclosed the following:
December 31
2008 2009
Cumulative contract costs incurred P3,900,000 P6,300,000
Estimated total cost at completion 7,800,000 8,100,000
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Collections 1,050,000
Estimated cost to complete 2,700,000
How much revenue should C &J recognize on this contract last year?
a. 105,000
b. 150,000
c. 300,000
d. 350,000
74. Occasionally a franchise agreement grants the franchisee the right to make future
bargain purchases of equipment or supplies. When recording the initial franchise
fee, the franchisor should
a. increase revenue recognized from the initial franchise fee by the amount
of the expected future purchases.
b. record a portion of the initial franchise fee as unearned revenue which
will increase the selling price when the franchisee subsequently makes
the bargain purchases.
c. defer recognition of any revenue from the initial franchise fee until the
bargain purchases are made.
d. None of these.
75.On January 3, 2014, Continental Services, Inc., signed an agreement
authorizing Peen Company to operate as a franchisee over a 20-year
period for an initial franchise fee of P200,000 received when the
agreement was signed. Peen commenced operations on July 1, 2014,
at which date all of the initial services required of Continental had
been performed. The agreement also provides that Peen must pay a
continuing franchise fee equal to 6% of the revenue from the
franchise annually to Continental. Peen's franchise revenue for 2014
was P900,000. For the year ended December 31, 2014, how much
should Continental record as revenue from franchise fees from the
Peen franchise?
a. P100,000
b. P106,000
c. P254,000
d. P266,000
76. Which of the following should be expensed as incurred by the
franchisee for a franchise with an estimated useful life of 10 years?
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- - - End - - -
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