1. This is not a characteristic of a corporation.

A. separate legal existence

C. unlimited liability
B. transferability of ownership
D. artificial being
2. This is an artificial being created by operation of law formed by five to 15 persons.
A. corporation
C. incorporated
B. incorporation
D. organization
3. These are the persons who originally formed the corporation.
A. partners
C. managers
B. incorporators
D. shareholders
4. This is the class of share capital which entitles the holder to an equal or pro-rata division of profits without any
preference or advantage over any class of stock.
A. common stock
C. outstanding stock
B. preferred stock
D. subscribed capital
5. This is not one of the causes of partnership dissolution.
A. Incapacity of an existing partner
B. Admitting a new partner
C. Incorporating a partnership
D. Sale of more than 50% of a partners financial interest to another existing partner
6. This transfer of capital results when the agreed capital credited to the new partner is less than the amount of capital
purchased from any, some or all of the old partners.
A. Bonus to new partner
B. Bonus to old partners
C. Bonus to new and old partners
D. Bonus to any partner
7. This transaction results to an admission of a new partner.
A. Lending cash to the partnership on a long-term basis by a third party
B. Purchase from the partnership of noncurrent assets by a third party
C. Purchase from a partner of ownership interest by a third party
D. (A), (B) and (C)
8. This sale of capital by a partner does not result to any gain or loss to the partnership.
A. Selling price is equal to recorded amount of capital sold
B. Selling price is less than the recorded amount of capital sold
C. Selling price is more than the recorded amount of capital sold
D. (A), (B) and (C)
9. This mode of admitting a new partner may give rise to bonus to a new partner.
A. Admission by purchase of interest
B. Investment

C. (A) or (B)
D. Neither (A) nor (B)

10. This kind of partner is admitted as a new partner when the admission is through purchase or sale of interest.
A. Capitalist partner
B. Industrial partner

C. Capitalist-industrial partner
D. (A) or (B)

11. This event pertains to the winding up of partnership operations.

A. Liquidation
B. Dissolution

C. Operations
D. Formation

12. These transactions occur during the liquidation process.

A. Payment of liabilities to partners
B. Settlement of obligations to outside creditors
C. (A) and (B)
D. Neither (A) nor (B)
13. These partners are liable for unpaid partnership debts up to the amount of their investments only.
A. Industrial partners
C. Limited partners
B. General partners
D. Industrial and limited partners
14. This is the excess of cash proceeds over the book value of the noncash assets sold.
A. Either gain or loss on realization
C. Loss on realization
B. Gain on realization
D. Neither gain nor loss on realization
15. This schedule of cash distribution may be prepared anytime before cash settlement is made to any partner.
A. Cash priority program
C. Both (A) and (B)
B. Schedule of safe payment
D. Neither (A) nor (B)

16. This factor in distributing partnership profits or losses is based primarily on the difference in the capital balances of
the partners.
A.
B.
C.
D.

Fixed or arbitrary ratio

Interest on capital
Salary to partner
Bonus to partner

17. This is the maximum number of years in the life of a corporation.

A. 10 years
C. 50 years
B. 100 years
D. 500 years
18. This is the minimum amount upon which no-par, no-stated value share capital are to be subscribed or issued.
A.10 pesos
C. 1 peso
B. 15 pesos
D. 5 pesos
19. This statement is true for the par value of a share capital.
A. usually different from its market value
B. often higher for preference share than for ordinary share
C. an arbitrary amount assigned to a share of stock
D. all of these
20. This body is regarded as the supreme authority in matters of management of the regular business affairs of a
corporation.
A. board of directors
C. majority stockholders
B. minority stockholders
D. none of the above
21. This document regulates the various internal matters regarding the calling and conducting of meeting of
stockholders and directors.
A. by-laws
C. voting trust agreement
B. articles of incorporation
D. none of the above
(For numbers 22-29) Partners A, B and C (dividing profits and losses equally) decided to liquidate ABC Merchandising on
May 17, 2013.Consider the following relevant data.
a) The post-closing trial balance had the following amounts.
Cash
P 20,000
Non-cash assets
480,000
Payable to non-partners
80,000
Payable to A
10,000
Payable to B
15,000
A, capital
160,000
B, capital
40,000
C, capital
195,000
b) The noncash assets were sold as follows.
Date
Cost
Proceeds
October 21
P 310,000
P160,000
December 7
170,000
200,000
Settlement to partners was made once cash became available. On October 21, however, cash amounting to P 10,000 was
withheld for possible liquidation expenses.
22. How much is the total financial interest of A immediately after the October 21 realization
A. P 160,000
C. 120,000
B. 210,000
D. 110,000
23. What is the total amount of liabilities to partners immediately before the December sale of noncash assets ?
A. P 10,000
C. 25,000
B. 15,000
D. 5,000
24. In the first schedule of cash payment to partners, how much is total remaining assets to be deducted from the
partners financial interest?
A. P 180,000
C. 170,000
B. 310,000
D. 480,000
25. Compute the total cash available for payment to partners after the December realization of assets.
A. P 380,000
C. 300,000
B. 360,000
D. 210,000
26. Who did not receive any cash from the first cash distribution to partners?
A. A
C. C
B. B
D. None
27. Determine the cash payment to B after the December sale.
A.
P 5,000
C. 15,000
B.
10,000
D.
0
28. If a cash priority program is prepared on May 17, how much is the loss absorption capacity of C ?
A. P 585,000
C. 195,000
B. 510,000
D. 165,000

29. Based on a cash priority program, what is the total cash to be distributed to partners in the first priority of
payment?
A. P 230,000
C. 30,000
B. 115,000
D. 25,000
(For numbers 30 - 33)From January 1 - March 31, 2012, AB partnership earned a net income of P 90,000. On April 1, C
was admitted as a new partner after purchasing 25% ownership interest from A and B for P 50,000 each. On this date,
the partnership assets and liabilities were determined to be fairly valued. The capital balances of A and B before net
income were P 120,000 and P 170,000, respectively. Profit-loss ratio between A and B was 1:2, while between A, B and
C was 1:2:1, respectively.
30. How much is the total partnership capital immediately before admitting C as a new partner ?
A. P 290,000
B. 300,000

C. 285,000
D. 380,000

31. Compute the amount of A, capital before selling 25% to C.

A. P 165,000
B. 150,000

C. 170,000
D. 120,000

32. What is the B, capital balance after admitting the new partner ?
A. P 180,000
B. 172,500

C. 127,500
D. 120,000

33. Determine the beginning capital of the new partnership.

A. P 380,000
B. 390,000

C. 400,000
D. 480,000

(For numbers 34 - 41) After some years of unprofitable operations, partners X and Y agreed to liquidate their partnership
business, XY Merchandising, on June 30, 2013. The following data were available on this date.
a. After recording the year-end adjusting and closing entries, the assets and liabilities were reported as follows.
Cash
P
?
Non-cash assets
360,000
Liabilities, outside creditors
70,000
Liabilities, Y
10,000
X, capital
230,000
Y, capital
90,000
b. Cash proceeds from the realization of noncash assets are presented below.
Date
Cost
Proceeds
Gain (loss) on sale
July 27
P 100,000
P 120,000
?
Sept. 23
260,000
?
(80,000)
c. Partners X and Y, with profit-loss ratio of 60:40, respectively, agreed to accept cash distribution after selling all the
noncash assets.
34. What is the adjusted balance of cash on June 30, 2013 ?
A.
P
0
C. 120,000
B.
40,000
D. 160,000
35. In the July 27 realization of assets, determine the share Y in the gain or loss on sale.
A. P 20,000 loss on sale
C. 10,000 loss on sale
B. 12,000 gain on sale
D. 8,000 gain on sale
36. What is the total gain or loss on realization after the July and September sale of noncash assets ?
A. P 100,000 loss on realization
C. 20,000 gain on realization
B. 60,000 loss on realization
D. 80,000 gain on realization
37. How much is the total proceeds from the cash sale of assets ?
A. P 300,000
C. 360,000
B. 340,000
D. 400,000
38. In the distribution of partnership cash, who is the first to receive payment ?
A. X (for capital)
C. Non-partners (for liabilities)
B. Y (for capital)
D. Y (for liabilities)
39. After selling the noncash assets in September, determine the amount of total cash available for distribution to
partners.
A. P 340,000
C. 300,000
B. 270,000
D. 260,000
40. How much is the total financial interest of X and Y, respectively, immediately before payment to partners ?
A. P 194,000 and 76,000
C. 242,000 and 98,000
B.
194,000 and 66,000
D. 242,000 and 108,000
41. Based on the order of cash payment, who is the last to receive cash ?

A. Y (for liabilities)
C. X (for capital)
B. Y (for capital)
D. X and Y (for capital)
(For numbers 42 - 45) JKL Partnership had a net loss of P 72,000 for 2012. Their profit-loss sharing ratio was 1:2:3 for
partners J, K and L, respectively.
42. How much is the share of partner L if all the partners are capitalist partners ?
A. P 42,000
B. 36,000

C. 24,000
D. 12,000

43. Compute the decrease in capital of partner K if only partners J and L are capitalist partners.
A.
B.

0
12,000

E. 24,000
F. 36,000

44. What is the amount of debit to J, capital in recording the distribution of net loss to the partners if J and K are the
capitalist partners ?
A. P 48,000
B. 36,000

C. 24,000
D. 12,000

45. Calculate the decrease in partnership capital after closing the net loss for the year if partner K is an industrial
partner.
A. P 36,000
B. 48,000

C. 60,000
D. 72,000

(For numbers 46-48)

In dividing profits and losses, partners F, G and H agreed on the following terms.
Interest on partners capital
: 20% of capital
Salary to F
: P 6,000 per month
Bonus to G as managing partner
: 10% of net income
Remainder
: Equally
At the end of 2012 : (a) net income amounted to P 1,220,000 ; and (b) the capital balances of the partners were P
140,000, P 150,000 and P 190,000, for F, G and H, respectively.
46. Calculate the total share in net income of the partners on account of interest, salary and bonus.
A. P 152,000
B. 190,000

C. 252,000
D. 290,000

47. Determine the total share of the partners in net income to be divided equally among the partners.
A. P 1,220,000
B. 1,148,000

C. 1,124,000
D. 930,000

48. What is the total credit to F, capital in recording the shares of the partners in net income ?
A. P 382,000
B.
462,000
For items 49-53: Consider the Statement of Liquidation below:

C. 410,000
D. 338,000

Additional information is as follows:

a. Profit and loss ratio is 60% and 40% to B and C, respectively
b. The partnerships non-cash asset consist of Inventory amounting to P500,000
c. Personal assets of B and C amount to P100,000 and P50,000, respectively.
49. The amount of loan given by C to the partnership amounted to:
a. P50,000
b. P25,000
c. P20,000
d. P10,000
50. Non-cash asset was sold at what amount?
a. P280,100
b. P218,100
c. P305,200
c. P220,500
51. How much additional investment is to be made by C?
a. P18,940
c. P18,960
c. P17,130
d. P17,960
52. Before the additional investment of C, how much is the remaining cash available for distribution?
a. P11,100
b. P 10,100
c. P 9,100
d. P 12,100
53. How much did B receive?
a. P27,250
b. P23,220
c. P28,600
d. P28,060
54. JJ and KK are partners who share profits and losses in the ratio of 60%:40%, respectively. JJs salary is P60,000
and P30,000 for KK. The partners are also paid interest on their average capital balances. In 2011, JJ received
P30,000 of interest and KK P12,000. The profit and loss allocation is determined after deductions for the salary
and interest payments. If KKs share in the residual income (income after deducting salaries and interest) was
P60,000 in 2011, what was the total partnership income?
a. P 192,000
b. P 345,000
c. P 282,000
d. P 387,000
55. In the AA-BB partnership, AA and BB had a capital ratio of 3:1 and a profit and loss ratio of 2:1, respectively.
The bonus method was used to record CCs admittance as a new partner. What ratio would be used to allocate, to
AA and BB, the excess of CCs contribution over the amount credited to CCs capital account?
a. AA and BBs new relative ratio.
b. AA and BBs relative profit and loss ratio.
c. AA and BBs old capital ratio.
d. AA and BBs old profit and loss ratio.
56. Capital balances and profit and loss sharing ratios of the partners in the BIG Entertainment Gallery are as follows:
Betty, capital (50%).P140,000
Iggy, capital (30%)160,000
Grabby, capital (20%) 100,000
Total P400,000
Betty needs money and agrees to assign half of her interest in the partnership to Yasser for P90,000 cash. Yasser
pays directly to Betty. Yasser does not become a partner.
What is the total capital of the BIG Partnership immediately after the assignment of the interest to Yasser?
a. P310,000
b. P200,000
c. P490,000
d. P400,000
On Nov 10, 2016 A, B and C, partners had capital account balances of 20,000, 25,000 and 9,000 respectively, and
share profits or losses in a 4:2:1 ratio. Assuming that liabilities totaled 20,000 on Nov. 10, 2016.
57. If A received 4,000, how much cash was paid to all partners?
a. 17,000
c. 5,000
b. 26,000
d. 4,000
58. If A received 13,000, how much did C get?
a. 7,250
c. 7,000
b. 8,500
d. 6,250
59. If B received only 11,000 as a result of the liquidation, what was the loss on realization of partnership assets
(assuming that no partner invested any additional assets in the partnership)
a. 38,000
c. 41,000
b. 28,000
d. 51,000
60. The law that governs partnership is:
a. Philippine Constitution
b. Civil Code
c. Accountancy Law

d. Provincial Ordinance
61. A partnership is:
a. A contract
b. A promise
c. Gratuitous in character
d. Involuntary
62. Statement 1: The formation of the partnership is perfected by the mere consent of the partners.
Statement 2: The partnership is considered onerous since the partners are required to contribute money, property,
or industry.
a. Only the first statement is correct.
b. Only the second statement is correct.
c. Both statements are correct
d. Neither statement is correct.
63. All of the following will dissolve the existence of the partnership except:
a. Admission of a new partner.
b. Insolvency of a partner.
c. Death of a partner
d. Incurrence of losses.
64. A partnership is considered as:
a. Juridical person
b. Natural person
c. Both a and b
d. Neither a nor b
65. Statement 1: The formation of a partnership is always based on a contract or an agreement of partners.
Statement 2 : All contracts or agreements entered into by partners are valid.
a. Only the first statement is correct.
b. Only the second statement is correct.
c. Both statements are correct
d. Neither statement is correct.
66. Statement 1: The written agreement of the partners must be registered with the Board of Investment.
Statement 2: Specialized skills and expertise can be contributed to the partnership.
a. Only the first statement is correct.
b. Only the second statement is correct.
c. Both statements are correct
d. Neither statement is correct.
67. Statement 1: Non registration of articles of co partnership nullifies the existence of the partnership.
Statement 2: The insolvency of a partner dissolves the partnership.
a. Only the first statement is correct.
b. Only the second statement is correct.
c. Both statements are correct
d. Neither statement is correct.
68. Statement 1: The admission of a new partner in an existing partnership will dissolve the partnership.
Statement 2: A partnership is much complex to form than a corporation.
a. Only the first statement is correct.
b. Only the second statement is correct.
c. Both statements are correct
d. Neither statement is correct.
69. Statement 1: A general partner can also be considered as an industrial partner.
Statement 2: The unlimited liability of the partnership is unfavorable to the creditors.
a. Only the first statement is correct.
b. Only the second statement is correct.
c. Both statements are correct
d. Neither statement is correct.
70. A corporation is considered as:
a. Juridical person
b. Natural person
c. Both a and b
d. Neither a nor b