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SUMMER TUTORIAL FOR INCOMING 3RD YEAR BS ACCOUNTANCY
PRE-QUALIFYING EXAMINATION
1. The following are characteristics of a partnership, except;
a. Separate Legal personality
b. Mutual Agency
c. Ease of formation
d. Right of succession
2. Which of the following statement is incorrect?
a. Partnership creditors are preferred as to partnership assets.
b. Partnership creditors are preferred as to each partners separate assets.
c. A partners separate creditors are preferred as to the partners separate assets.
d. A partners separate creditors may attach a partners share in the partnership
assets.
3. The change in the relation of the partners caused by any ceasing to be associated
in the carrying on the business is known as:
a. Termination of the partnership
b. Winding up of partnership affairs
c. Liquidation of the partnership business
d. Dissolution of the partnership
4. What is the order of payment of liabilities of a dissolved general partnership using
the code number representing each liability?
I.
Those owing to partners other than for capital or for profits.
II.
Those owing to creditors other than partners.
III.
Those owing to partners in respect of profits.
IV.
Those owing to partners in respect of capital.
a. I,II,III,IV
b. II,I,IV,III
c. II,I,III,IV
d. I,II,IV,III
5. On February 25, 2016 Jef and Dom formed a partnership. Jef contributed cash.
Dom, previously a sole proprietor, contributed property other than cash, including
realty subject to a mortgage, which the partnership assumed. Doms capital
account of February 25, 2016 should be recorded at:
a. Doms book value of the property at February 25, 2016.
b. Doms book value of the property less mortgage payable at February 25, 2016.
c. The fair value of the property less mortgage payable at February 25, 2016.
d. The fair value of the property at February 25, 2016.
6. If the partnership agreement provides for the division of loss only. Profit should be
divided:
a. Equally
10.
During liquidation, a partners capital account drops below zero. What should
happen?
a. The other partners should file a legal suit against the partner with the deficit
balance.
b. The partner with the highest capital balance should contribute sufficient assets
to eliminate the deficit.
c. The deficit balance balance should be removed from the accounting records
with only the remaining partners sharing in the future gains and losses.
d. The partner with a deficit should contribute enough assets to offset the deficit
balance.
11.
A corporations articles of incorporation establish the total number of shares
that may be issued. What is the term applied to these shares?
a. Outstanding Share
b. Issued shares
c. Common Shares
d. Authorized Shares
12.
What are shares that carry voting rights called?
a. Preferred Shares
b. Voting Shares
c. Common Shares
d. Contributed Capital
13.
The Retained Earnings account has a debit balance of 3,000 at the beginning
of 2010. During 2010 net income totaled 12,000 and dividends of 8,000 were paid.
During 2011, no dividends were paid and an economic slowdown caused the
business to lose 25,000. What was the balance of the retained Earnings account at
the end of 2011?
a. 18,000
b. 18,000 deficit
c. 24,000
d. 24,000 deficit
14.
The following may be the consideration of the share of stock of a corporation
except:
a. Actual cash paid to the corporation
b. Previously incurred indebtedness of the corporation
c. Amounts transferred from unrestricted retained earnings
d. Service to be performed by a lawyer on the proposed increase in capital stock of
the corporation.
15.
Their names are mentioned in the articles of incorporation as originally
forming the corporation and are signatories thereof.
a. Corporators
b. Stockholders
c. Incorporators
d. Members
16.
a.
b.
c.
d.
17.
When a treasury share is reissued above its cost, any excess above cost is
credited in what account?
a. Share Premium Ordinary Shares
b. Retained Earnings
c. Gain on share issuance
d. Share Premium Treasury Shares
18.
When a treasury share is reissued below its cost, any deficiency is debited to
what account?
a. Loss on share issuance
b. Retained Earnings
c. Share Premium Ordinary share
d. Ordinary Share Capital
19.
a.
b.
c.
d.
20.
During retirement of Treasury share, any excess of cost over par value is
debited in the following order;
I.
Share Premium Treasury Shares
II.
Share Premium Ordinary Shares
III.
Retained Earnings
IV.
Loss on retirement of Treasury Shares
a. IV,II,I,III
b. I,II,IV,III
c. II,I,III
d. II,I,IV,III
PROBLEM
1. As part of the initial investment, a partner contributes office equipment that has
cost 20,000 an on which accumulated depreciation of 12,500 had been recorded. If
the partners agree on a valuation of 9,000 for the equipment. What amount should
be debited to the office equipment account?
a. 7,500
b. 9,000
c. 12,500
d. 20,000
2. Chip and Dale agree to form a partnership. Chip is to contribute 50,000 in asset
and to devote one-half time to the partnership. Dale is to contribute 20,000 and to
devote full time to the partnership. How will Chip and Dale share in the division of
net income or net loss?
a. 5:2
b. 1:2
c. 1:1
d. 2:5:1
3. Tracy and Hepburn invest 100,000 and 50,000 respectively in a partnership and
agree to a division of net income that provides for an allowance of interest at 10%
on original investment, salary allowances of 12,000 and 24,000 respectively, with
the remainder divided equally. What would be Traceys share of a net income of
45,000?
a. 22,500
b. 22,000
c. 19,000
d. 10,000
4. Lee and Stills are partner who share income in the ratio of 2:1 and who have
capital balance of 65,000 and 35,000 respectively. If Morr, with the consent of
Stills, acquired one-half of Lees interest for 40,000, for what amount Morrs Capital
account be credited.
a. 32,500
b. 40,000
c. 50,000
d. 72,500
5. C, admits D as a partner in the business. Accounts in the ledger for C on November
30, 2015, just before the admission of D, show the following balances:
Cash
P 6,800
Accounts Receivable
14,200
Merchandise inventory
20,000
Accounts payable
8,000
C, Capital
33,000
It is agreed that for the purpose of establishing C interest, the following adjustment
shall be made:
(a) An allowance for doubtful accounts of 3% of accounts receivable is to be
established.
(b)The Merchandise inventory is to be valued of 23,000
(c) Prepaid salary expense of 600 and accrued rent expense of 800 are to be
recognized.
D is to invest sufficient cash to obtain 1/3 interest in the partnership.
Compute for: (1) C adjusted capital before the admission of D: and (2) the amount
of cash investment by D:
a.
b.
c.
d.
(1)
(1)
(1)
(1)
35,347
36,374
35,374
28,174
(2)
(2)
(2)
(2)
11,971
18, 487
17, 687
14, 087
6. The partnership agreement of X,Y & Z provides for the year-end allocation of net
income in the following order:
- First, X is to receive 10% of net income up to 200,000 and 20% over 200,000.
- Second, Y and Z each are to receive 5% of the remaining income over 300,000
- The balance of income is to be allocated equally among the three partners.
The partnerships 2011 net income was 500,000 before any allocations to
partners. What amount should be allocated to X?
a. 202,000
b. 216,000
c. 206,000
d. 220,000
10,000. For the six months period ending June 30, 2015, the partnership generated
a net income of 28,000, further, partners agreed to pay P, 39,000 for his interest
and that the remaining partners capital accounts, would be adjusted for whatever
goodwill the settlement would generate. The payment of P included a goodwill of:
a. 3,000
b. 5,000
c. 10,000
d. 8,500
11.
The assets and equities of the Queen, Reed and Stac partnership at the end
of its fiscal year in October 31, 2015 are as follows:
ASSETS
Cash
15,000
Liabilities
50,000
Receivable- net
Inventory
45,000
Plant asset Net
30,000
Loan to Reed
15,000
TOTAL ASSETS
150,000
20,000
40,000
10,000
70,000
150,000
The partners decide to liquidate the partnership. They estimate that the non cash assets,
other than the loan to Reed, can be converted into 100,000 cash over the two months
period ending December 31, 2015. Cash is to be distributed to the appropriate parties as
it becomes available during the liquidation process.
The partner most vulnerable to partnership losses on liquidation is:
a.
b.
c.
d.
Queen
Reed
Reed and Queen equally
Stac
12.
Using the information above, if 65,000 is available for first distribution, it
should be paid to:
a.
b.
c.
d.
Priority Creditors
60,000
60,000
50,000
50,000
Queen
5,000
1,500
5,000
12,000
Reed
0
2,500
0
0
Stac
0
1,000
10,000
3,000
13.
The partnership of A, B and C was dissolved on June 30, 2015 and account
balances after non-cash assets were converted into cash on September 1, 2015
are:
ASSETS
Cash
50,000
90,000
81,000
79,000
None
14.
After all partnership assets were converted into cash and all available cash
was distributed to creditors, the ledger of D, O and M partnership showed the
following balances:
Debit
Accounts payable
D, Capital (40%)
O, Capital (30%)
M, Capital (30%)
Credit
20,000
10,000
60,000
90,000
90,000
90,000
15.
Roy and Gil are partners sharing profits and losses in the ratio 1:2,
respectively. On July 1, 2015, they decided to form the R&G Corporation by
transferring the asset and liabilities from the partnership to the Corporation in
exchange of its shares. The following is the post-closing trial balance of the
partnership.
Cash
Accounts Receivable Net
Inventory
Fixed asset net
Liabilities
Roy, Capital
Gil, Capital
TOTAL
Debit
45,000
60,000
90,000
174,000
369,000
Credit
60,000
94,800
214,200
369,000
40,000
68,000
180,600
The R&G Corporation was authorized to issue 100 par preferenced shares and 10
par ordinary shares. Roy and Gil to receive for their equity in the partnership 720
ordinary share each, plus even multiples of 10 shares for their remaining interest.
The total number of shares of preference and ordinary shares issued by the
corporation in exchange of the assets and liabilities of the partnership are:
a.
b.
c.
d.
Preference Share
Ordinary Shares
2,540 shares 1,500 shares
2,592 shares 1,440 shares
2,642 shares 1,440 shares
2,642 shares 1,550 shares
16.
Walang Forever Company was organized on January 1, 2013 with authorized
capital of 100,000 shares of 200 par value.
January 10
Issued 25,000 shares at 220 a share.
March 15
Issued 1,000 shares for legal services when the fair value was
240 a share.
September 30
Issued 5,000 shares for a tract of land when the fair value
was 260 a share.
What amount should be reported for Share premium?
a. 840,000
b. 800,000
c. 540,000
d. 500,000
17.
Broken hearted Company held 10,000 shares of 10 par value as treasury
reacquired in 2012 for 120,000. On December 31, 2013 entity reissued all 10,000
shares for 190,000. Under the cost method of accounting for treasury shares, what
is credited for the excess of the issue price over the cost of treasury shares?
a. Share Capital of 100,000
b. Retained Earnings of 70,000
c. Gain on sale of investment of 70,000
d. Share Premium of 70,000
18.
On January 1, 2013, No Boyfriend Since Birth Company had 125, 000 share
issued which include 25,000 shares held as treasury.
January 1 through October 31 - 13,000 Treasury shares were distributed to officers
as part of a share
compensation plan.
November 1 A 3 for 1 share split took effect.
December 1 The entity purchased 5,000 of its own shares to discourage an
unfriendly takeover. These share were not retired
On December 31, 2013, how many shares were issued and outstanding,
respectively?
a. 375,000 and 334,000
b. 375,000 and 324,000
c. 334,000 and 334,000
d. 324,000 and 324,000
19.
Break Na Sila Company issued all of the outstanding shares for 390 per share
in 2013. On January 1, 2014, the entity reacquired 200,000 shares at 360 per
shares and retired them. The entity reported the following shareholders equity on
December 31, 2013:
Retained Earnings
75,000,000
Share Premium
162,000,000
Share Capital, 300 par value, 2,000,000 shares authorized,
1,800,000 shares issued and outstanding
540,000,000
What is the balance of the share premium immediately after the retirement of the
shares?
a. 156,000,000
b. 150,000,000
c. 144,000,000
d. 168,000,000
20.
Bitter Company was organized on January 1, 2013 at which date it issued
100,000 ordinary shares of 10 par value at 15 per share. During the period January
1, 2013 through December 31, 2014, the entity reported net income of 450,000
and paid cash dividends of 230,000. On January 10, 2014, the entity purchased
6,000 treasury shares at 12 per share. On December 31, 2014, the entity sold
4,000 treasury shares at 8 per share and retired the remaining treasury shares.
What is the total shareholders equity on December 31, 2014?
a. 1,720,000
b. 1,704,000
c. 1,688,000
d. 1,680,000
21.
Hopia Company provided the following information in January 1, 2013:
Share Capital, 250,000 shares authorized; 100,000 shares issued and outstanding
3,000,000
Share Premium
4,000,000
Retained Earnings
8,000,000
The entity declared a 10% dividend on April 1, 2013 when the market value of the
share was 70. The stock dividend was issued on July 1, 2013 when the market
value of the share was 100. The share has a par value of 30. The entity sustained a
net loss of 1,200,000 for 2013. What amount should be reported as retained
earnings on December 31, 2013?
a. 6,100,000
b. 6,500,000
c. 6,800,000
d. 5,050,000
22.
On November 1, 2013, Paasa Company declared a property dividend of
equipment payable on March 1, 2014. The carrying amount of the equipment is
3,000,000 and the fair value is 2,500,000 on November 1, 2013.
However, the fair value less cost to distribute the equipment is 2,200,000 on
December 31, 2013 and 2,000,000 on March 1, 2014.
What is the dividend payable on December 31,2013?
a. 2,500,000
b. 2,200,000
c. 3,000,000
d. All of the choices is incorrect
23.
On January 1, 2013, Hugotboy Company had ordinary and preference shares
outstanding. The incorporators or original shareholders own ten ordinary shares
but no preference shares. On December 31, 2013, the entity declared dividends on
the ordinary shares. The entity decided to give the ordinary shareholders a choice
between receiving a cash dividend of 500,000 per share or a property dividend in
the form of a noncash asset. The noncash asset is a standard model from the
entitys car fleet. Each car has a fair value of 600,000. The entity estimated that
80% of the ordinary shareholders will take the option of cash dividend and 20% will
elect the noncash asset. What is the dividend payable that should be recognized
on December 31, 2013?
a. 5,500,000
b. 5,200,000
c. 4,000,000
d. 6,000,000
24.
5,000,000
2,240,000
1,500,000
12% preference share is cumulative and participating. The 14% preference share is
noncumulative and participating. Dividends are in arrears for 3 years. What is the
book value per ordinary share?
a. 132
b. 126
c. 100
d. 112
25.
4,000,000
Preference dividends have been in arrears for 2011 and 2012. On December 31,
2013, a cash dividend of 900,000 was declared. What is the dividend payable on
the preference and ordinary shares, respectively?
a. 324,000 and 576,000
b. 220,000 and 672,000
c. 276,000 and 624,000
d. 180,000 and 720,000
26.
Choosy Company was organized on January 1, 2013 with the following capital
structure:
10% cumulative preference share capital, par value 10, liquidation value 12,
authorized, issued and outstanding 100,000 shares, 1,000,000.
Ordinary Share capital, par value 100, authorized 40,000 shares issued and
outstanding 30,000 shares, 3,000,000.
The net income for 2013 was 6,000,000 and no dividends were declared in 2013.
What is the book value per ordinary share?
a. 290
b. 293
c. 300
d. 333
27.
During 2013, Kiligmuch Company had the following two classes of share
capital issued and outstanding for the entire year:
Ordinary Share Capital, 200,000 shares, 10 par
2,000,000
Preference share capital, 2,000 shares, 100 par,
12% convertible share for share into ordinary share
200,000
The net income for 2013 was 1,800,000 and the income tax rate was 30%.What is
the basic earnings per share?
a. 8.88
b. 6.18
c. 9.0
d. All of the answers are incorrect
28-30
Hunter X Hunter Company provided the following statement of financial position on
December 31, 2013 and 2012 and information relating to 2013 activities:
2013
2012
ASSETS
Cash
Trading securities
Accounts receivable (net)
Inventory
Long-term investment
Property, plant and equipment
Accumulated depreciation
Patent
Total assets
460,000
600,000
1,020,000
1,360,000
400,000
3,400,000
(900,000)
180,000
6,520,000
1,650,000
1,440,000
650,000
1,600,000
1,400,000
740,000
500,000
1,880,000
980,000
6,520,000
4,320,000
28.
a.
b.
c.
d.
200,000
1,020,000
1,200,000
600,000
2,000,000
(900,000)
200,000
4,320,000
29.
What is the net cash used in investing activities?
a. 2,230,000
b. 1,790,000
c. 1,730,000
d. 1,630,000
30.
a.
b.
c.
d.
BONUS QUESTION
31.
480,000
525,000
350,000
420,000
P - Pray
F - Focus
R Be Responsible
S Self Discipline
Good Luck Future CPA!! Apply PFRS in your studies.
You must be prepared to face the worst possible scenarios because
harsh reality strikes without warning. You must be prepared for the
day your paths diverge. Hunter X Hunter Episode 2
jmd,cpa2016