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Father Saturnino Urios University

Butuan City
Business Administration Program
Acctg 202C Partnership and Corporation Accounting
Mid Term Examination
Name:
Student Number: 9. Which of the following partnership characteristics is a
disadvantage?
Instruction: Choose the letter of your best answer. Use the a. Unlimited liability c. Ease of dissolution
answer sheet provided. b. Voluntary association d. Participation in P/L

1. When a partner invests non-cash assets into partnership, 10. All of the following are true for both general and limited
these assets should be listed on the statement of financial partnerships except
position at a. both are easily dissolved.
a. their original cost. c. their fair market value. b. both must have at least one general partner.
b. their carrying amount. d. partners agreed value c. all partners can be personally liable for all debts of the
partnership.
2. A partnership d. all partners have the right to participate in the profits
a. may be constituted in any form, except where of the business.
immovable property or real rights are contributed, in
which case, the law requires that a public instrument 11. One who takes charge of the winding of partnership affairs
be executed. upon dissolution:
b. has a personality like that of each of the partner. a. Dormant partner c. Liquidating partner
c. is created by agreement of the partners in writing only. b. Silent partner d. Ostensible partner
d. all of these.
12. A partnership records a partners investment of assets in
3. A partner whose liability for partnership debts is limited to the business at
his capital contribution is called a. a value set by the partners.
a. secret partner. c. limited partner. b. the market value of the assets invested.
b. general partner. d. industrial partner. c. the partners book value of the assets invested.
d. any of the above.
4. A partner invested into a partnership a building with a
P250,000 carrying value and P400,000 fair market value. 13. An advantage of the partnership as a form of business
The related mortgage payable of P125,000 was assumed organization would be:
by the partnership. As a result of the investment, the a. A partnership is bound by the acts of the partners.
partners capital account will be credited for b. A partnership is created by mere agreement of the
a. P125,000 c. P250,000 partners.
b. P275,000 d. P400,000 c. Partners do not pay income taxes on their share in
partnership profit.
5. Lintao and Pido formed a partnership, each contributing d. The death or withdrawal of a partner may terminate a
assets to the business. Lintao contributed inventory with partnership.
a current market value in excess of its cost. Pido
contributed real estate with a cost in excess of its current 14. Two sole proprietors formed a partnership. Non-cash
market value. At what amount should the partnership assets forming part of the initial investment in the
record each of the following assets? partnership would be recorded at the
Inventory Real Estate Inventory Real Estate a. Fair value of the property at the date of the
a. Cost Cost c. Cost Market Value investment.
b. Market Value Cost d.Market Value Market Value b. Proprietors book values of the property at the date of
the investment.
6. Which of the following is not a characteristic of most c. Proprietors book values or fair value of the property
partnerships? at the date of the investment, whichever is higher.
a. Ease of formation c. Limited liability d. Proprietors book values or fair value of the property
b. Mutual agency d. Limited life at the date of the investment, whichever is lower.

7. Which of the following is not a characteristic of 15. Partners investment may include which of the following?
partnerships? a. Cash d. All of the above
a. Voluntary association c. Mutual agency b. Non-cash assets with liabilities to be assumed
b. Limited liability d. Limited life c. Non-cash assets e. Only a and b

8. A partner who contributes his work, labor or industry to 16. A partner to a partnership that takes active participation in
the common fund of the partnership is called the running of affairs of the partnership but is not known
a. limited partner. c. capitalist partner. to the public as partner
b. industrial partner. d. managing partner. a. Silent Partner c. Dormant Partner
b. Secret Partner d. Partner by Estoppel
17. A partner to a partnership that do not take active with the remainder being divided at a 2:1:1 ratio,
participation in the running of affairs of the partnership but respectively?
is not known to the public as partner a. P20,000 debit balance c. P20,000 credit balance
a. Silent Partner c. Dormant Partner b. P80,000 debit balance d. P80,000 credit balance
b. Secret Partner d. Partner by Estoppel
33. If the partnership agreement does not specify how profit
18. A partner to a partnership that do not take active is to be allocated, profits or losses should be allocated
participation in the running of affairs of the partnership but a. equitably so that partners are well compensated for
may be known to the public as partner their time and effort.
a. Silent Partner c. Dormant Partner b. in proportion to the average of capital invested during
b. Secret Partner d. Partner by Estoppel the period.
c. in accordance with their capital contribution.
19. A partner to the partnership who is liable only up to his d. equally.
total contribution to the partnership only.
a. Industrial Partner c. Capitalist Partner 34. Partners Manalo and Capuno receive an interest
b. Limited Partner d. None of these allowance of P100,000 and P150,000, respectively, and
divide the remaining profits and losses in a 3:1 ratio. If the
20. Budd and Lou's partnership agreement is silent about the company sustained a loss of P110,000 during the year,
income and loss sharing ratio. The income for 2006 was what is the effect on Manalos capital?
P125,000. Lou's capital account was P65,000 and Budd's a. P170, increase c. P270,000 decrease
was P60,000. How much income is Budd entitled too: b. P270,000 increase d. P170,000 decrease
a. P25,000 c. P62,500
b. P20,000 d. P100,000 35. Partners De Guzman and Tugade receive a salary
allowance of P30,000 and P70,000, respectively, and
[For items 21 30, choose A if true and C if False] share the remainder equally. If the company earned
21. A partnership in a general entity separate and apart from P40,000 during the period, what is the effect on Tugades
its owners. capital?
22. A partner who invests assets into a partnership retains a. P40,000 increase c. P40,000 decrease
control over those specific assets. b. P30,000 increase d. P30,000 decrease

23. A partnership should always be constituted in writing. 36. Partners Lusterio and Advincula receive a salary of
24. A dormant partner is one who does not take active part in P150,000 and P 300,000, respectively, and share profit
the partnership business and is not known as a partner. and losses in a 2:1 ratio, respectively. If the partnership
suffered a P150,000 loss in 2012, by how much would
25. The limited partners are liable only to the extent of their Lusterios account increase/decrease?
personal contributions. a. P400,000 increase c. P250,000 decrease
26. A dormant partner is one who does not take active part in b. P200,000 increase d. P400,000 decrease
the partnership business though may be known as a
partner. 37. Which of the following best describes the nature of salary
27. A partnership has a limited life because any change in the and interest allowances in a partnership profit and loss
relationship of the partners dissolves in the partnership. sharing agreement?
a. A means of determining reasonable monthly
28. A silent partner takes active part in the business of the withdraws by each partner.
partnership and is not known by outsiders to be a partner. b. The amount upon which partner will have to pay
29. A secret partner is one who does not take active part in personal income tax.
the partnership business and is known as a partner. c. A means of distributing profit in relation to
services rendered and capital invested by
30. A partnership has a juridical personality separate and partners.
distinct from that of each of the partners. d. None of these
(Use the following information for item 1-2) 38. A, B and C are partners. Their contributions are as follows:
Partners Del Mundo, Burgos, and Gonzales have capital A, P600,000; B, P400,000 and C, services. Partners A, B
balances in a partnership of P150,000, P100,000, and and C agreed to divide profits or losses in the ratio of
P200,000, respectively. Loss for the year was P330,000. 35:25:40, respectively. How should a loss of P100,000 be
shared by the partners?
31. What will be the capital balance of Burgos if the three a. A, P30,000; B, P20,000 and C, P50,000.
partners share a profits and losses at a 4:3:3 ratio, b. A, P35,000; B, P25,000 and C, P40,000.
respectively? c. A, P35,000; B, P35,000 and C, P30,000.
a. P1,000 credit balance c. P1,000 debit balance d. A, P60,000; B, P35,000 and C, nothing.
b. P99,000 debit balance d. P99,000 credit balance
(Use the following information for questions 39-44)
32. What will be Burgoss capital balance if Del Mundo gets X,Y and Z started a 10-stage water refilling business on
an P180,000 salary, Burgos gets a P70,000 salary, and July 1, 2016. Initial investment of partners X, Y and Z at
Gonzales gets a 10% interest on his beginning balance was: X, P200,000.00; Y, P500,000.00; and Z,
P300,000.00. The partnership contract provided for the a. P198,000 increase c. P180,000 increase
distribution of profit or loss in the following manner: b. P198,000 decrease d. P180,000 decrease

a. X and Z are to receive monthly salary of P2,500.00 49. If Y is paid P162,000 by the partnership, how much was
and 3,000.00, respectively; the bonus?
b. Interest at 10% on beginning capital balances of the a. P18,000 to Y c. P8,000 to X
partners; b. P18,000 to X & Z d. P10,000 to Z
c. Bonus will be given to Y at 10%.
d. Any remainder will be shared 20:50:30. 50. Using the same information, what is the capital balance of
partner X after the withdrawal of Y.
Net income of XYZ Partnership as of December 31, 2016 a. P720,000 c. P738,000
was P180,000.00. b. P730,000 d. P748,000

39. How much was credited to Y as his share of net income? 51. Using the same information, what is the capital balance of
a. P41,400 c. P54,600 partner Z after the withdrawal of Y.
b. P84,000 d. P180,000 a. P360,000 c. P368,000
b. P378,000 d. P370,000
40. How much was credited to X as his share of net income?
a. P41,400 c. P54,600 52. Using the same information, what is the effect of Ys
b. P84,000 d. P180,000 withdrawal to the total equity of the partnership?
a. P198,000 increase c. P162,000 increase
41. How much was credited to Z as his share of net income? b. P198,000 decrease d. P162,000 decrease
a. P41,400 c. P54,600
b. P84,000 d. P180,000 53. If Z is paid P210,000 to Y a full payment of his equity in
the partnership, how much was the bonus?
42. If the result of operation was a net loss of P180,000, how a. P30,000 to X c. P30,000 to Y
mush was credited to Z as his share? b. P30,000 to Z d. None
a. P27,000 c. P180,000
b. P105,000 d. P48,000 54. Using the same information, what is the capital balance of
partner X after the withdrawal of Y.
43. If the result of operation was a net loss of P180,000, how a. P720,000 c. P690,000
mush was credited to X as his share? b. P750,000 d. P0
a. P27,000 c. P180,000
b. P105,000 d. P48,000 55. Using the same information, what is the capital balance of
partner Z after the withdrawal of Y.
44. If the result of operation was a net loss of P180,000, how a. P360,000 c. P330,000
mush was credited to Y as his share? b. P390,000 d. P540,000
a. P27,000 c. P180,000
b. P105,000 d. P48,000 56. Using the same information, what is the effect of Zs
payment to Y for his withdrawal to the total equity of the
partnership?
[Use the following information for the items 45 60] a. P180,000 decrease c. P180,000 increase
b. P210,000 decrease d. None
XYZ Enterprises is a partnership owned by X, Y and Z. Y
decided to retire from the partnership. The partners capitals 57. If Y accepts cash of P75,000 and an equipment with a
are: X P720,000; Y P180,000; and Z P360,000. The book value of P150,000 from the partnership, how much
partnership profits and loss is distributed in the ratio of 5:1:4. was the bonus?
a. P45,000 to Y c. P20,000 to X
45. If Y is paid P198,000 by the partnership, how much was b. P45,000 to X & Z d. P25,000 to Z
the bonus to partners?
a. P18,000 to Y c. P8,000 to X 58. Using the same information, what is the capital balance of
b. P18,000 to X & Z d. P10,000 to Z partner X after the withdrawal of Y.
a. P720,000 c. P695,000
46. Using the same information, what is the capital balance of b. P745,000 d. P700,000
partner X after the withdrawal of Y.
a. P720,000 c. P738,000 59. Using the same information, what is the capital balance of
b. P730,000 d. P710,000 partner Z after the withdrawal of Y.
a. P360,000 c. P340,000
47. Using the same information, what is the capital balance of b. P380,000 d. P385,000
partner Z after the withdrawal of Y.
a. P360,000 c. P352,000 60. Using the same information, what is the effect of Ys
b. P378,000 d. P370,000 withdrawal to the total equity of the XYZ Enterprises?
a. P180,000 decrease c. P225,000 increase
48. Using the same information, what is the effect of Ys b. P180,000 increase d. P225,000 decrease
withdrawal to the total equity of the partnership?