Reference no: EM132946888

Questions -

Q1. When the old partners receive a bonus upon admission of a new partner into a partnership, the bonus is allocated to: I. All the partners in their profit and loss sharing ratio; II. The existing partners in their profit and loss sharing ratio.

a. I only

b. II only

c. Either I or II

d. Neither I or II

Q2. A third person is admitted as a partner in an existing partnership through investment of a specific land. The amount credited to the capital account of the newly admitted partner is equal to the fair value of the land. However, the capital balances of the existing partners decrease after the admission of the new partner. Which of the following is the valid reason under PFRS?

a. Negative goodwill is recognized at the time of admission of a new partner

b. Impairment loss of existing intangible assets of the partnership is recognized at the time of admission of the new partner

c. Capital bonus to the newly admitted partner has been given by the old partners

d. Revaluation surplus of existing property, plant and equipment of the partnership is recognized at the time of admission of the new partner

Q3. In the liquidation of general partnership, which of the following credits shall be prioritized by the liquidating partner at the time of settlement?

a. Claim of the capitalist partners pertaining to their capital contribution

b. Claim of the industrial partner pertaining to his just and equitable share in the profit of the partnership

c. Claim of the partners arising from their advances made to the partnership

d. Claim of the capitalist partners pertaining to their share in the profit of the partnership

Q4. At the time of retirement, a retiring partner receives more than the amount of his capital contribution while the remaining partners capital increase after the retirement. Which is the most valid reason?

a. Goodwill during retirement is recognized

b. Asset revaluation upward is recognized

c. Bonus is given by retiring partner to remaining partners

d. Bonus is given by the remaining partners to retiring partner

Q5. A 1:3:2 ratio is the same as

a. 10% : 30% : 20%

b. 1/6 : ½ : 1/3

c. 1/10 : 3/10 : 2/10

d. 0.20 : 0.50 : 0.30

Q6. In the liquidation of general partnership, which of the following credits shall be prioritized by the liquidating partner at the time of settlement?

a. Claim of the capitalist partners pertaining to their capital contribution

b. Claim of the industrial partners pertaining to his just and equitable share in the partnership profits

c. Claim of the partners arising from their advances made to the partnership

d. Claim of the capitalist partners pertaining to their share in the partnership profit

Q7. If a partnership agreement does not specify how income is to be allocated, profits and loss should be allocated

a. equally

b. in accordance with their capital contribution

c. in proportion to the weighted average of capital invested during the period

d. equitably so that partners are compensated for the time and effort expended on behalf of the partnership

Q8. State the proper order of partnership liquidation: I. Outside creditors; II. Owner's interests; III. Inside creditors

a. I, II, and III

b. III, I, and II

c. II, I and III

d. I, III, and II

Q9. A partner's maximum loss absorption is calculated by

a. Dividing the partner's capital balance by his or her profit and loss-sharing percentage

b. Multiplying the partner's capital balance by his or her profit-and-loss sharing percentage

c. Multiplying the distributable assets by the partner's profit-sharing percentage

d. Dividing the partner's capital balance by his or her percentage interest in capital

Q10. How shall the net profit or loss of the partnership be divided among the partners, whether capitalist or industrial?

a. in accordance with their capital contribution ratio

b. in accordance with just and equitable sharing taking into account the circumstances of the partnership

c. equally

d. in accordance with the partnership agreement

Q11. What is the typical accounting treatment of salaries given to partners?

a. Use as a tool in profit division

b. An operating expense of the partnership

c. Drawings by the partners from the partnership

d. Reductions of the partner's capital account balances

Q12. When property other than cash is invested in a partnership, at what amount should the noncash property be credited to the contributing partner's capital account?

a. Fair value at the date of contribution

b. Contributing partner's original cost

c. Assessed valuation for property tax purposes

d. Contributing partner's tax basis

Q13. A third person is admitted as a partner in an existing partnership through investment of a specific land. The amount credited to the capital account of the newly admitted partner is equal to the fair value of the land. However the capital balances of the existing partners decrease after the admission of the new partner. Which of the following is a valid reason under Philippine Financial Reporting Standanrd?

a. Negative Goodwill is recognized at the time of admission of the new partner

b. Impairment loss of existing intangible assets of the partnership is recognized at the time of admission of the new partner

c. Capital bonus to newly admitted partner has been given by the old partners

d. Revaluation surplus of existing property, plant and equipment of the partnership is recognized at the time of admission of the new partner