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Polytechnic University of the Philippines

COLLEGE OF ACCOUNTANCY & FINANCE
Final Departmental Examination
ACCO 2026 – March 21, 2018 REVISED

TRUE OR FALSE. Shade A when the statement is TRUE and B when the statement is FALSE – 1 PT EACH.

1. A partner who desires to withdraw from the partnership may do so as long as he gets the consent of all
of the other partners.
2. Preference Share Capital is usually recorded at Par Value while Ordinary share Capital is at stated
value.
3. Subscribers are persons who purchase stocks and agree to pay at a later date, while undertakers are
those who agree to dispose of the shares to the general public
4. Share Capital amount shown in the Statement of Financial Position is the difference between
Authorized Share Capital and Unissued Share Capital
5. Another term used for Share Capital is Additional Paid-in Capital.
6. Quasi-public corporations are actually government corporations.
7. When share capital are reacquired and then retired by the issuing corporation, the related additional
paid in capital from the original issuance of stock is also cancelled.
8. Share Capital includes issued shares at its par or stated value, subscribed shares (net of short-term
subscription receivables), and stock dividend distributable.
9. Retained Earnings with debit balance is called Deficit.
10. If the FMV of stocks is greater than the PV at the time of stock declaration of 18%, the gain from the
issuance of stock dividends at more than par has no effect on Total Stockholder’s Equity.
11. Share Capital issued at Stated value and Additional Paid-in Capital is known as the legal capital
12. To compute for Earnings per Share, subtract from the Net Income the earnings attributable to ordinary
shares divided by the outstanding ordinary shares.
13. Equity identified with Preference share Capital (cumulative) generally includes the liquidation value of
the outstanding shares and any claim on current and dividend in arrears.
14. The account Retained Earnings Appropriated for Dividends is debited at the date of declaration.
15. All the partners in a Limited Partnership are only liable up to their contributions to the partnership
only.
16. When the value of the asset received in exchange for stocks is overstated, the share capital is said to
hold secret reserves.
17. Partnership liquidation is always preceded by partnership dissolution.
18. A corporator whose name is mentioned in the Articles of Incorporation is an incorporator.
19. The chronological and numerical records of stock certificates issued are listed in the stockholder’s
ledger.
20. The Articles of incorporation enumerates the powers and limitations conferred upon the corporation
by the government which includes the name of corporation, the authority and duties of the directors
and the principal office of the corporation.
21. When preference share capital is participating, ordinary shares are always given regular dividends with
the same rate as that of preference shares, whether they are cumulative or not, as long as there are
available dividends.
22. The Retained Earnings Account of the corporation has a credit balance of P500,000. 80% of this was
appropriated for the expansion of the company, while the Cash account has a balance of P150,000.
The corporation can only declare dividends up to P150,000 Cash dividends.
23. The highest bidder is the one who is willing to pay the unsettled subscription plus any expense
incurred in relation with the delinquency sale and is agreeable to receive the least number of stocks.
24. Dividend in arrears on preference shares are reported in the financial statement as a liability.
25. A corporation may never earn a profit or incur a loss by selling or buying its own stock.
26. When two classes of shares capital are issued for a lump-sum amount, the total amount received
should be allocated to the two classes of share capital based on the par or stated value of the shares
issued.
27. An eleemosynary corporation is a non-stock corporation
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28. The following are transaction costs: stock exchange listing fees, road show presentation and PR
consultant’s fee.
29. Bonus issue are one and the same as share premium.
30. Appropriation of Retained earnings does not require the setting up of a separate cash fund
31. Deferred Cash dividends are also called script dividends
32. Treasury stocks result from defaulted shares, donated shares and redeemed shares.
33. To compute for EPS, the dividend requirement for Cumulative Preference share is deducted from the
Net profit to get the profit identified with ordinary shares then divided by the outstanding shares. This
method is done when only when the dividends are declared.
34. The 3 for 2 stock split means that the Issued Ordinary Share capital of 20,000 shares with par value of
P60 will be replaced by 60,000 shares with P20 par value.
35. Pre-emptive right is the right of the stockholder to maintain his percentage share (advantage) in the
corporation

MULTIPLE CHOICE. 2.167 PTS EACH

36. The Kardo Corporation shows the following information its shareholder’s equity:
Ordinary Share Capital, 25,400 authorized shares, 20,000 shares issued
18,000 shares outstanding, P 60 par. - - - - - - - - - - - - - - - - - - - - - - - -- P _____________
What will be the amount written on the space above?
a. P1,200,000 b. P1,524,000 c. P1,080,000 d. P120,000

37. Based on Alice in Kardo Corporation, if P33,372 were declared as dividends, what would be the dividends
per share?
a. P1.31 b. P1.67 c. P16.69 d. P1.85

38. The Shareholder’s Equity of Allyana Corp shows the following information as of December 31, 2018.
10% Preference Share Capital, P100 par P500,000
Preference Share Premium 7,500
Ordinary Share Capital, 10,000 shares 400,000
Ordinary Share Premium 50,000
Retained Earnings 200,000
The corporation has P35,150 dividend in arrears at the end of 2017. Preference shares were
noncumulative but participating up to an additional 6%. Dividends declared was P180,000. Dividends per
share for Preference & Ordinary share capital (respectively) would be -
a. P16.00; P10.00 b. P20.00; P8.00 c. P16.00; P2.50 d. P23.12; P6.44

39. What would be the Dividends per share for Preference & Ordinary share capital (respectively) of Allyana
Corp. assuming the preference share capital was cumulative and fully participating?
a. P23.12; P6.44 b. P22.52; P6.74 c. P20.00; P8.00 d. P100.00; P40.00

40. The following information were taken from the books of Enzo Incorp. Compute for the total
shareholder’s equity.
Cash, P300,000
Dividends payable, P25,000
Treasury shares, P52/sh
Retained Earnings - Appropriated, P450,000
Input tax, P8,500
Ordinary share capital, 50,000 shares issued, P20 par
Ordinary share premium, P91,500
Ordinary Shares subscribed, 20,000 shares
Ordinary Shares Subscription Receivable - due in 3 years, P100,000
Preference Share Capital, 10,000 share outstanding, P50 par, 1,000 shares in treasury
Retained Earnings - Unappropriated, P150,000
Preference Share dividend distributable, 5,000 shares

a. P2,689,500 b. P2,839,500 c. P2,739,500 d. P2,791,500

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41 How much would be the Retained Earnings appropriated for Treasury shares in the Enzo Incorp?
a. P450,000 b. P52,000 c. P50,000 d. Not given

42. The Godson Corporation owns 40,000 shares in the Antoni Group of Companies. The Godson Corp is to
distribute 3 shares of Antoni for every 2 shares of The Godson owned. At the date of declaration the
financial statements show that Investment in Antoni Group of Companies has a debit balance of
P1,060,000, while The Godson Corp. has reported 15,000 P160-par outstanding Ordinary shares. On the
date of declaration, the Retained Earnings account will be recorded at -
a. P532,650 debit b. P265,000 debit c. P397,500 debit d. P596,250 debit

43. Hazel Corporation has authorized ordinary shares of 150,000 with par value of P250/share. As of the
date of incorporation 37,500 shares were subscribed at P275/share. How much should be reported to
the Securities and Exchange Commission as paid up?
a. P2,343,750 b. P2,578,125 c. 937,500 d. P37,500,000

44. Using the information from Hazel Corporation. The company undertakes a 5 for 2 share split. The new
number of authorized shares and par value would be:
a. 375,000 shares at P100.00/share c. 60,000 shares at P625.00share
b. 375,000 shares at P110.00/share d. 60,000 shares at P687.50/share

45. Upon partnership liquidation, the total non-cash assets of GenBorja, Ltd were sold with a gain on
realization amounting P150,000. Liabilities of P110,000 were all paid. The partners, Onyok, Makmak and
Delfin share income and loss in the ratio 3:2:5. GenBorja, Ltd had a beginning balance of P120,000
invested equally by the partners. Upon liquidation, Makmak would receive -
a. P30,000 b. P70,000 c. P14,000 d. P32,000

46. The Retained Earnings account of Gael Corp. has a credit balance of P85,000 as of December 31, 2017.
During that year 20% stock dividends were declared to 5,000 outstanding Ordinary shares with par value
of P50/sh (fair market value of P55/sh). It has been noted that the retained earnings had a deficit of
P5,000 at the beginning of the year (2017). No other stock transactions were made. Compute for the
Earnings Per Share.
a. P29/sh b. P28/sh c. P26/sh d. Incomplete data

47. Homer, Inc. issued 4,000 to Ordinary shareholders for cash (at par) and another 2,000 stocks to lawyers
during incorporation as payment for legal fees amounting to P150,000. It also issued 2,500 shares in
exchange for an equipment with book value of P215,000 but has FMV of P219,000. The corporation also
received subscription for 2,000 shares issued at P76/sh. If, after these transactions, Subscribed Ordinary
Shares has a balance of P130,000, what would be shown as Ordinary Share Capital in the Shareholder’s
Equity?
a. P684,000 b. P780,000 c. P552,500 d. P836,000

48. The Shareholder’s Equity of Homer, Inc. would show its Additional Paid-in Capital at -
a. P94,500 b. P72,500 c. P98,500 d. zero

49. On April 1, 2017, Mona Corp received subscription for 20,000 Ordinary Shares at P5 above the par value
of P95/sh. The subscribers gave a down payment of 30% . After a month, Mary 1, 2017, the subscribers
paid an additional 60% of the balance. How much would be reported as Subscription Receivable in the
Statement of Financial Position after these transactions?
a. P560,000 b. P200,000 c. P532,000 d. P190,000

50. Assuming only half of the subscribers of Mona Corp made a full payment on June 1, 2017, how many
shares will be issued stock certificates?
a. 10,000 shares b. 12,000 shares c. 3,211 shares d. 6,442 shares

51 Ordinary Share Capital will be reported on May 1, 2017 as

a. P1,000,000 b. P950,000 c. P342,000 d. P900,000
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52. The Shareholder’s Equity of Bagani Incorporated as of December 31, 2016 consists of 10% Preference
Shares (cumulative and participating) with outstanding shares of 6,000, P100 par value; Ordinary Shares
of 10,000 with P40 par value and Retained Earnings of P300,000. Dividends were in arrears for 2 years at
the start of 2016. Dividends declared for 2016 amounted to P200,000. How much will be in arrears at
the end of 2016?
a. P20,000 b. none c. P180,000 d. P60,000

53 Using the information from Bagani Incorporated, assuming the dividends declared for 2016 were
P250,000 instead, the dividends per share for Preference share and Ordinary share respectively would
be:
a. P31.88 and P5.88 b. P25.00 and P10 c. P37.00 and P2.80 d. P33.00; P5.20

54. Partners Lakas, Ganda and Lakam divide their profits and loss equally. Mayari is to join the partnership
and will invest sufficient amount to have 30% interest in the partnership. The new profit and loss ratio
for partners Lakas, Ganda, Lakam and Mayari (respectively) will be:
a. 23%; 23%; 24%; 30% c. 33%; 33%; 33%; 30%
b. 1/3; 1/3; 1/3; 1/3 d. Equally

55. Four thousand ordinary shares were reacquired by Dumakulem Inc. at P55/sh. A month later, 1,250
treasury shares were reissued at P59/sh. Additional information shows that all the shares were originally
issued at P10 above the par value of P40. What would be credited (debited) as Paid-in Capital (Retained
Earnings) upon the reissuance of the treasury shares?
a. P23,750 b. (P12,500) c. P5,000 d. P18,750

56. After the reacquisition and reissuance of the treasury shares of Dumakulem Inc., the total Retained
Earnings will -
a. Decrease b. increase c. Remain the same

57. Sarimaw Corporation received 2,160 Ordinary shares as donation. It later sold 1,500 shares P30/share.
Ordinary shares has par value of P25/sh. Memorandum entry method was used by the company. The
entry to record the sale will show a credit to_____ amounting to ______.
a. Donated Capital, P22,500 c. Paid in Capital from Donated Stock, P82,500
b. Donated Capital, P45,000 d. Paid in Capital from Donated Stock, P37,500

58. Josef Corporation has a Total shareholder’s Equity of P11,225,000 as of December 31, 2010, which
includes 23,000 Ordinary shares issued at P200 par and 5,000 12% Preference shares issued at P300 par.
Dividends in arrears amounted to P410,000 (including the current year). Compute for the book value per
share assuming the cumulative preference shares has a liquidation value of P333/share.
a. PSC – P415.00; OSC – P397.83 c. PSC – P423; OSC – P396.09
b. PSC – P451.00; OSC – P390.00 d. PSC – P333; OSC – P200.00

59. The Shareholder’s Equity of Fiona Corp shows the following information as of December 31, 2010.
₱8 Preference Share Capital, P40 par P325,000
Ordinary Share Capital, P30 par. 600,000
Retained Earnings 200,000
Dividends declared for the year amounted to P96,000. Preference Shares are noncumulative and non-
participating. Dividends per share (PSC and OSC respectively) for the year would be:
a. P3.20 and P2.50 b. P8 and P1.55 c. P8 and P2.40 d. P3.20 and P2.40

60. Dalisay Corporation received from Mayora partial payment of P261,000 for 5,000 subscribed P80 par
Ordinary shares. Paid in capital was recorded at P7 per share. A year later, 800 from the said shares
were declared to be delinquent after several months of no collections. A total of P2,500 was disbursed in
connection with the said 800 shares. A month after, a bidder agreed to assume the balance and would
take 550 shares. The highest bidder would pay a total amount of
a. P21,640 b. P30,340 c. P69,600 d. P24,740
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61. The following accounts are found in the trial balance of Ericka Trading Corporation as of December 31,
2016
Authorized Ordinary Share, P50 par P 2,000,000.00
Subscription Receivable- collectible on Jan 31, 2017 200,000.00
Unissued Ordinary Share 800,000.00
Subscribed Ordinary Share 400,000.00
Share Premium – Ordinary 300,000.00

What is the total number of shares issued and available, respectively, for subscription
a. 24,000; 16,000 c. 16,000; 8,000
b. 24,000; 8,000 d. 16,000; 16,000

62. The Erich Corporation was organized early in Year 1. Authorization was obtained to issue 100,000 shares
of P10 par value ordinary share capital and 20,000 shares of P100-par 10% Cumulative Preference Share
Capital.

All the Preference shares were issued at par and 80,000 Ordinary shares were sold for P15/share. During
the first five years of operations, the corporation earned a total of P3,600,000 and paid annual dividends
of P2 Per Ordinary share.

How much total dividend was being paid each year?

a. P200,000 b. P160,000 c. P360,000 d. P1,800,000

63. The Enrico Corporation received subscription from Mr. Ilocos Zur for 2,500 P80-par Ordinary shares. He
was able to pay up to 65% from the original subscription price of P90/share before he defaulted from his
payments. The corporation declared the shares as delinquent and advertised them in a public auction.
Fees totalling P8,150 was disbursed in connection with the delinquent shares. The auction-goers, Mr.
Juan, bidded for 950 shares; Mr. Tsu with 858 shares and Mr. Tres with 885 shares.

The highest bidder would be -

a. Mr. Juan b. Mr. Tsu c. Mr. Tres d. Mr. Zur

64. The highest bidder would pay a total of

a. P86,900 b. P78,750 c. P70,000 d. P78,150

65. Mr. Ilocos Zur will then receive how many shares?
a. 1,550 shares b. 1,642 shares c. 1,615 shares d. 1,625 shares

“Ituloy ang laban……may tatlong taon pa… plus summer ”

/mmd 2018