No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
ICARE BATCH 6 JOSHUA 1st Preboard AFAR
1. Partner A and B share profits and losses equally after each has been credited in all
circumstances with annual salary allowances of P750,000 and P600,000,
respectively. Under this arrangement, in which of the following circumstances will A
benefit by P150,000 more than B?
a.
b.
c.
d.
Only if the partnership has earnings of at least P150,000 for the year
Only if the partnership does not incur a loss for the year
Only if the partnership has earnings of P1,350,000 or more for the year
In all earnings or loss situations
2. Partners A and B share profits and losses 50:25 ratio, respectively. Each partner
received an annual salary allowance of P P1,440,000. If salaries are recorded in the
accounts of the partnership as an expense rather than treated as an allocation of profit,
the total amount allocated to each partner for salaries and net profit would be
a.
b.
c.
d.
less for both A and B
unchanged for both A and B
more for A and less for B
more for B and less for A
3. The following balance sheet was prepared for the ABC Company on August 1, 2020:
Assets
Liabilities and Capital
Cash
50,000 Liabilities
104,000
Other
Assets
360,000 A, Cap (40%)
B, Cap (40%)
C, Cap (20%)
80,000
130,000
96,000
The partnership is being liquidated by the sale of assets in installments. The first sale
of non-cash assets having a book value of P180,000 realizes P100,000. Assume that
each partner properly received some cash after the second sale of assets. The cash
to be distributed amount to P28,000 from the third sale of assets, and unsold assets
with a P12,000 book value remain. How should the P28,000 be distributed to A, B and
C, respectively.
a.
b.
c.
d.
0; 22,400; 5,600
11,200; 11,200; 5,600
11,200; 13,000; 3,800
10,000; 10,000; 8,000
4. A, B, C and D are partners, sharing earnings in the ratio of 3:4:6:8. The balance of
their capital accounts on December 21, 2020 are as follows: A – P 25,000; BP625,000; C – P625,000 and D – P225,000. The partners decided to liquidate, and
they accordingly convert the non-cash assets into P580,000 of cash. After paying
the liabilities amounting to P75,000, they have P555,000 cash available for payment
to partners. Assume that a debit balance in any of partner’s capital account is
uncollectible. The book value of non-cash assets amounted to:
a.
b.
c.
d.
P1,525,000
1,575,000
637,500
P1,135,000
1|P a g e
RFERRER /RSoriano/PDEJESU/AT ang
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
5. A, B and C are partners. On January 2, 2020, their capital balances and profit and
loss ratio are as follows:
Capital
P&L ratio
A
P625,000 60%
B
1,250,000 25%
C
1,500,000 15%
C withdrew P250,000 during the year. Net loss on December 31, 2020 totaled
P500,000. Hence, the partners decided to liquidate the partnership. It is uncertain how
much of the assets will ultimately yield but favorable realization is expected. It is
therefore, agreed to distribute cash as it become available. There are unpaid liabilities
of P125,000 and cash of P17,500.
a.
b.
c.
d.
2,625,000
2,607,500
2,750,000
2,732,500
6. ABC transfer merchandise inventory from its home office to its branch at an amount
above cost. The average gross margin on the transfer is 40%. At the beginning of the
year, the branch held merchandise purchased from the home office in the amount of
P35,000. During the year, the home office made three shipments of inventory to the
branch at transfer prices of P30,000; P64,000 and P50,000. At the end of the year,
the branch had on hand inventory purchased from the home office of P40,000.
What entry should the home office record on the realized intercompany profit during
the year?
a. Allowance for overvaluation of inventory
Branch income summary
51,143
b. Allowance for overvaluation of inventory
Branch income summary
55,600
c. Allowance for overvaluation of inventory
Branch income summary
39,714
d. Allowance for overvaluation of inventory
Branch income summary
11,428
51,143
55,600
39,714
11,428
7. On January 1, 20x6, AVIDA was contracted to construct a townhouse for SM Corp.
for a total contract price of P50,400,000. The building was completed by November
31, 2018. The following are the data of AVIDA:
20x6
Contract cost incurred during the
year
19,200,000
Estimated cost at completion
38,400,000
Billing during the year
19,200,000
20x7
20x8
15,600,000
43,500,000
21,000,000
8,700,000
43,500,000
10,200,000
The entry to record the recognized profit in 20x8 includes credit to:
a. CIP 1,380,000
b. CIP 50,400,000
c. Contract revenue 10,080,000
2|P a g e
RFERRER /RSoriano/PDEJESU/AT ang
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
d. Contract cost 8,700,000
8. Manor Construction Corporation entered into a fixed-price contract to construct an
office building for P5,000,000 during the year 2021. Information relating to the
contract is as follows:
Year-end 2021
Year-end 2022
Percentage of completion
20%
60%
Estimated total cost of completion
3,750,000
4,000,000
Income recognized (cumulative)
250,000
600,000
Contract cost incurred during 2022 was:
a. 2,400,000
b. 1,600,000
c. 1,650,000
d. 1,750,000
9. During 2020, goods were shipped to the branch at 120% above cost. The reciprocal
account in the income statement of the home office amounted to P237,500. The
balance of the contra branch current account reports a balance of P375,000 before
adjustment. The beginning inventory of the branch from the home office at cost is
P360,000 and from outsiders, P93,000. The branch purchased goods from outsiders
during the year amounting to P125,200. If the ending inventory of the branch as
reported in the combined statement of financial position is P345,000, 20% of which
are purchased from outside suppliers, how much is the cost of goods sold to be
reported in the branch’s income statement for the year ended December 31, 2020?
a. P551,075
b. P431,700
c. P790,500
d. P470,700
10. Paul Trading Co. has a branch in Quezon City. On December 31, 2029, Quezon City
Branch account in the home office books showed a balance of P338,655. The
interoffice accounts were the same at the beginning of the year. For purposes of
reconciling the reciprocal accounts, the following facts were ascertained:
a. The home office inadvertently recorded a remittance for P4,800 from its Bacolod
branch as a remittance from its Quezon City branch.
b. The branch failed to take up a P850 debit memo from the home office representing
the share of the branch in marketing expense.
c. Home office credit memo representing a discount on merchandise for P1,200 was
not recorded by the branch.
d. Advertising expense of P1,225 charged by the home office was taken up twice by
the branch.
e. Freight charge on merchandise made by the home office for P1,125 was recorded
in the branch books as P1,215.
f. An equipment costing the home office P2,500 was picked up by the branch as
P250.
Compute the balance of unadjusted balance of the home office account as of
December 31, 2029.
a. P341,040
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b. P342,330
c. P342,870
d. P344,490
RFERRER /RSoriano/PDEJESU/AT ang
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
11. Mike and November were partners before they admitted Oscar. The share profits and
losses 7:3. Oscar was admitted into the partnership by contributing cash for 35%
interest in the partnership and 15% share in the profits and losses. The capital
balances of Mike and November combined was P390,000 after admission of Oscar.
Upon admission, Oscar had a capital credit in the amount of P60,000 in addition to his
contribution.
How much is the cash contribution of Oscar?
a.
b.
c.
d.
128,824
270,000
150,000
196,500
12. The partnership of Cruz, Amistoso, and Galicia decided to liquidate their partnership
on May 31, 2016. Before liquidating and sharing of net income, their capital balances
are as follows: Cruz (30%) P875,000, Amistoso (30%) P630,000, and Galicia (40%)
P770,000. Net income from January 1 to May 31 is P420,000. Liabilities of the
partnership amounted to P735,000 and its total assets include cash amounting to
P245,000.
Unsettled liabilities are P385,000. Cruz invested additional cash enough to settle their
partnership’s indebtedness. Amistoso is personally solvent, Galicia is personally
insolvent, and Cruz becomes insolvent after investing the cash needed by the
partnership.
How much cash will Amistoso invest in the partnership?
a. 315,000
b. 168,000
c. 294,000
d. 70,000
13. Which of the following statements concerning the dissolution of partnership business
is correct?
a. If a new partner is admitted through his investment to the existing partnership, the
capital contributed by the new partner will be higher than the amount credited to him
in the new partnership by the amount of the impairment loss of existing assets.
b. If a new partner is admitted through his investment to the exiting partnership, the
capital credited to the old partners in the new partnership will be lower than the amount
contributed by them if there is positive asset revaluation without any bonus.
c. If a new partner is admitted through his investment to the existing partnership, the
contributed capital of the new partner will be different to the amount of capital credited
to him if there is bonus and asset revaluation at the time of his admission.
d. If a new partner is admitted by purchasing a portion of an existing partner’s capital,
the total capital of old partnership will be higher than the total capital of new
partnership by the amount of selling price.
14. In accounting for corporate liquidation, which of the following statements is incorrect?
a. Fully secured creditors no longer share in the remaining free assets after payment
of unsecured liabilities without priority.
b. Unsecured credits with priority such as liabilities to employees and taxes due to
government can always be fully recovered by the said creditors in every corporate
liquidation.
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RFERRER /RSoriano/PDEJESU/AT ang
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
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: icarecpareview@gmail.com
c. Assets used as security for partially secured liabilities are offsetted to their secured
debts and can no longer be used to pay unsecured liabilities.
d. The unsecured portion of the liabilities to partially secured creditors are added to
unsecured credits without priority in the computation of recovery percentage of the
unsecured creditors without priority.
15. Jemuel, Eric and Jayson formed a partnership on January 1, 20x5,. The following are
their capital contribution: Jemuel P500,000; Eric P300,000 and Jayson P200,000.
They agreed on a capital ratio of P40:30:30 and profit and loss ratio of P55:35:10,
respectively to Jemuel, Eric and Jayson.
The partners all agreed on the following:
a. Eric and Jayson is to receive 15% interest on their beginning capital balance.
b. Jemuel is to receive a salary of P25,000.
c. Jayson is also to receive a bonus of 10% of partnership income after salary and
interest but before bonus.
d. The net income on December 31, 20x5 amounts to P230,000
What is the share of Jemuel in the net income?
a. P119,800
b. P134,725
c. P127,225
d. P112,225
16. Statement 1: Salary and interest allowances in a partnership agreement are
recognized as partnership expenses.
Statement 2: Salary and interest allowances are generally not provided when the
partnership reported loss for the period.
a.
b.
c.
d.
Only statement 1 is true.
Only statement 2 is true.
Both statements are true.
Both statements are false.
17. Which of the following is a criterion for recognizing revenue over time in accordance
with IFRS 15, Revenue from Contracts with Customers?
a. The customer simultaneously receives and consumes all of the benefits provided
by the entity as the entity performs.
b. The entity’s performance creates or enhances an asset that the entity controls as
the asset is created.
c. The entity’s performance does not create an asset with an alternative use to the
entity and the entity has does not have an enforceable right to payment for
performance completed to date.
d. The customer has the significant risks and rewards related to the ownership of the
asset particularly upon transfer of title or ownership.
18. CC is admitted into the partnership of AA and BB by investing cash equivalent ¼ of
their capital. Which of the following is true after the admission of CC?
a.
b.
c.
d.
The capital of AA and BB will decrease by ¼
Assets of the partnership will remain the same
Assets of the partnership will increase
Total partners’ equity will remain the same
5|P a g e
RFERRER /RSoriano/PDEJESU/AT ang
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
19. A branch journal entry debiting Home Office and crediting Cash may be prepared for
a. A home office’s transmittal of cash to the branch
b. A home office’s collection of branch’s accounts receivable
c. A branch’s acquisition for cash of plant assets to be carried in the home office
accounting records
d. A home office’s payment of branch expenses
20. Which of the following statements is true?
a. An income reported by the branch is recorded by the home office as a debit to
Income Summary – Branch
b. The transfer of branch net income to the home office represents a branch closing
entry
c. Upon instruction by the home office, the branch (Branch 1) sends cash to another
branch (Branch 2). The home office records the transaction by debiting the
Investment in Branch 1 and a credit to Branch 2
d. All of the above are true
21. Continuing franchise fees should be recorded by the franchisor
a. as revenue when and earned and receivable from the franchisee
b. as revenue when received
c. amortized over the franchise period when the franchisee is provided the right to
access the tradename
d. as revenue only after the balance of the initial franchise fee has been collected
For questions 22 and 23:
The partnership of AA and BB is in the process of liquidation. On January 1, 2023, the
statement of financial position of the partnership, immediately before the liquidation,
provided the following information:
Cash
P 32,000
Accounts payable P 48,000
Accounts
80,000
AA, capital (70%) 128,000
receivable
Inventories
100,000
BB, capital (30%) 36,000
During January, the following transactions occurred:
 The inventories were sold for P80,000
 P67,500 of the accounts receivable was collected.
 Remaining receivables were written-off.
 Accounts payable was liquidated.
 Liquidation expenses of P13,000 were paid.
22. How much is the cash to be received by AA as a result of partnership liquidation?
a.
b.
c.
d.
P96,150
P105,250
P22,350
P26,250
23. How much is the cash to be received by AA as a result of partnership liquidation?
a.
b.
c.
d.
P96,150
P105,250
P22,350
P26,250
6|P a g e
RFERRER /RSoriano/PDEJESU/AT ang
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
The trial balance of Waku Waku Company as of December 31, 2023, the date when the
company filed for bankruptcy, is provided the following:
Account
Cash
Accounts receivable
Inventories
Prepayments
Buildings, net
Equipment, net
Goodwill
Accounts payable
Salaries payable
Taxes payable
Loans payable
Ordinary share capital
Retained earnings/deficit
Dr. (Cr.)
P 29,500
535,000
286,500
4,500
524,100
137,300
57,000
(400,500)
(65,600)
(58,500)
(240,000)
(977,300)
168,000
Additional information:
 The loans payable is secured by inventories.
 Administrative and liquidation expenses are estimated by management to be
at P55,000.
Management made the following estimates in relation to the expected realizable
value of the assets:
Accounts receivable P451,500
Inventories
189,450
Buildings
441,250
Equipment
103,700
24. What is the estimated recovery percentage?
a.
b.
c.
d.
100%
188%
200%
0%
25. How much is the estimated amount to be paid to the bank as repayment of loans
payable?
a.
b.
c.
d.
P451,200
P240,000
P480,000
P0
For questions 26 and 27:
Net Free Assets
Cash
29,500.00
AR
451,500.00
Excess - partially
Buildings
441,250.00
Equipment
103,700.00
AP
Salaries
(65,600.00)
Taxes
(58,500.00)
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Unsecured liabilities
50,550.00
400,500.00
RFERRER /RSoriano/PDEJESU/AT ang
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Administrative
(55,000.00)
846,850.00
451,050.00
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
1.88
ABC Co. entered into a long-term construction contract for 3 years. Contract price agreed
was P8,300,000. The outcome of the contract was estimated reliably. The following data
were ascertained for the contract:
2021
2022
Percentage of completion
30%
82.5%
Estimated costs to complete P 3,920,000 P 1,680,000
26. How much is the costs of construction for 2022?
a.
b.
c.
d.
P8,957,500
P7,920,000
P6,240,000
P6,467,500
27. How much is the construction in progress as of December 31, 2022?
a.
b.
c.
d.
P4,940,000
P6,620,000
P4,130,000
P6,847,500
For questions 28 and 29:
Contract price
TEC
TEGP
%
CGP
PY
RGP
Revenue
Costs
RGP
CITD
CGP
CGP
2021
8,300,000.00
5,600,000.00
2,700,000.00
0.30
810,000.00
810,000.00
2022
8,300,000.00
9,600,000.00
(1,300,000.00)
1.00
(1,300,000.00)
(810,000.00)
(2,110,000.00)
2,490,000.00
(1,680,000.00)
810,000.00
4,357,500.00
(6,467,500.00)
(2,110,000.00)
1,680,000.00
810,000.00
2,490,000.00
7,920,000.00
(1,300,000.00)
6,620,000.00
The Home Office had two branches, Cebu and Davao. At the end of the year, December
31, 2022, the reciprocal account in Cebu Branch was P256,600. However, there were
transactions discovered to have errors.
 The home office shipped merchandise costing P87,000 to Cebu branch, but was
record by the branch in the amount of P78,000.
 Cebu collected Davao’s customer accounts worth P25,000, but Davao charged its
reciprocal account in the amount of P52,000 and the home office recorded the
correct transaction.
8|P a g e
RFERRER /RSoriano/PDEJESU/AT ang
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
28. How much is the net adjustment in the Home Office Current account of Cebu branch?
a.
b.
c.
d.
P8,900 debit
P35,900 debit
P17,900 debit
P9,000 credit
29. In the liquidation of a partnership it is necessary to (1.) distribute cash to the partners;
(2.) sell non-cash assets; (3.) allocate any gain or loss on realization to the partners;
and (4.) pay liabilities. These steps should be performed in the following order:
a.
b.
c.
d.
(2), (3), (4), (1)
(2), (3), (1), (4)
(3), (2), (1), (4)
(3), (2), (4), (1)
30. On a statement of realization and liquidation covering the six months ended in August
31:
a. "Assets to be realized" represents the liquidation value of assets still to be sold as
of August
b. "Assets realized" represents the actual amount received for assets sold during the
six months ended August 31
c. "Assets not realized" are those assets having no resale value
d. "Assets acquired" would be zero, as firms do not acquire new assets during
bankruptcy
31. The theoretical support for using the percentage – of – completion method of
recognizing revenue from long – term construction contracts is that it
a.
b.
c.
d.
Is more conservative than the completed – contract method
Reports a lower Net Income figure than the completed – contract method
More closely conforms to the cost principle
Produces a realistic matching of expenses with revenues
32. Contract revenue in construction contract comprises
a.
b.
c.
d.
The initial amount of revenue agreed in the contract only
Variation in contract work, claim, and incentive payment only
The initial amount of revenue agreed in the contract and progress billings
The initial amount of revenue agreed in the contract, variation in contract work,
claim and incentive payment
33. In accounting for sales on consignment, sales revenue and the related cost of goods
sold should be recognized by the:
a.
b.
c.
d.
Consignor when the goods are shipped to the consignee
Consignee when the goods are shipped to the third party
Consignor when notification is received the consignee has sold the goods
Consignee when cash is received from customer
34. In consignment sales, the consignee:
a. Records the merchandise as an asset on its books
b. Records a liability for the merchandise held on consignment
c. Recognizes revenue when it ships merchandise to the consignor
9|P a g e
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No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
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: 0927 283 8234
Telephone
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d. Prepares an “account report” for the consignor which shows sales, expenses, and
cash receipts.
35. Which statement id false concerning the statement of affairs?
a. Total unsecured liabilities do not include unsecured debts with priority.
b. Unsecured liabilities consist of debts for which no assets are pledged as security,
as well as debts in excess of the liquidation value of assets pledged.
c. Net free assets are the excess of liquidation value of assets pledged to fully
secured creditors over the amount of fully secured liabilities plus free assets less
unsecured liabilities with priority.
d. The estimated deficiency to unsecured creditors is total unsecured liabilities less
total free assets.
36. What is the classification of the joint arrangement when the assets and liabilities
relating to the arrangement are held by a separate vehicle or when the arrangement
is established with a separate vehicle?
a.
b.
c.
d.
It shall be classified as joint venture.
It shall be classified as joint operation.
Neither joint venture nor joint operation.
It can be either a joint operation or joint venture depending on the legal form of the
separate vehicle, terms of the contractual arrangement or other relevant facts and
circumstances.
37. A, B, and C are partners with a profit and loss ratio of 50%, 25%, and 25%
respectively. They have the capital balances of P500,000, P250,000, and P250,000
respectively.
Assume that C retires and sells his interest to A and B P250,000, how much is the
capital balance of A after the transaction?
a.
b.
c.
d.
P650,000
P666,667
P583,333
P600,000
38. The AAA Company has decided to seek liquidation after previous restructuring and
quasi - organization attempts failed. The company has the following condensed
balance sheet as of May 1, 2025:
Cash
Receivables
(net)
Inventory
Prepaid
expenses
Plant assets
Goodwill
P24,000
560,000
Accrued Payroll
Loans from Officer
P80,000
100,000
140,000
2,000
Accounts payable
Equipment Loan Payable
120,000
720,000
600,000
78,000
Total Assets
P1,404,000
Business Loan Payable
360,000
Ordinary Shares
120,000
Deficit
(96,000)
Total Liabilities and Equity P1,404,000
The equipment loan payable is secured by a specific plant asset having a book value of
P600,000 and a realizable value of P700,000. Of the accounts payable, P80,000 is
secured by inventory which has a cost of P80,000 and liquidation value of P88,000. The
balance of the inventory has a realizable value of P64,000, Receivables with a book value
10 | P a g e
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No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
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: 0927 283 8234
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and market value of P200,000 and P160,000, respectively have been pledged as
collateral to business loan payable. The balance of the receivables has a realizable value
of P300,000.
The total realizable value of free assets to unsecured creditors before unsecured creditors
before unsecured creditors with priority is:
a.
b.
c.
d.
P1,256,000
P464,000
P440,000
P396,000
39. AAA Construction enters into a contract with a customer to build a warehouse for
1,700,000 on March 30, 20x5 with a performance bonus of 100,000 if the building is
completed by July 31, 20x5. The bonus is reduced by 20,000 each week that the
completion is delayed. AAA commonly includes these completion bonuses in its
contracts and based on the prior experiences estimates the following completion
outcomes:
Completed by
July 31, 20x5
August 7, 20x5
August 14, 20x5
August 21, 20x5
Probability
65%
25%
5%
5%
The transaction price for this contract is
a.
b.
c.
d.
P1,790,000
P1,700,000
P1,170,000
P1,105,000
40. The company signed a 1,600,000 contract to build an environmentally friendly access
trail to Pedro Gil, Manila. The project was expected to take approximately 3 years.
The following information was collected for each year of the project- year 1, year 2,
and year 3:
Cost
Expected
Support Additiona
Trail feet
Additional trail
expended
additional
timbers
l support
constructed
feet to be
during the
cost to
laid
timbers
during the
constructed
year
completion
during
to be laid
year
the year
Year 1
Year 2
Year 3
200,000
300,000
500,000
900,000
560,000
--
300
600
1,000
1,700
1,040
--
6,000
15,000
16,000
30,400
16,400
--
Compute the amount of revenue to be recognized in year 3, assume that the company
employs the effort expended method of estimating percentage of completion and the
company measures its progress by the number of support timbers laid in trail
a.
b.
c.
d.
P857,732
P845,280
P700,000
Cannot be determined
41. On August 1, 20x6, AAA, Inc. consigned to BBB store 10 ladies’ handbags costing
P6,000 each, paying freight charge of P6,000. At the end of the month, BBB store
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No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
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: (043) 723 8412
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reported sales of 6 handbags at P12,000 each and expenses incurred of P5,000, and
remitted the net proceeds due to AAA after deducting a 20% commission. How much
net income did AAA realize in August on the consignment?
a.
b.
c.
d.
P15,000 net income
P13,000 net income
P13,400 net income
P13,000 net loss
42. On June 1, AAA Company shipped 25 TV sets to BBB, Inc., on consignment. The sets
are to be sold at an advertised price of P40,000. The cost of each set to the consignor
was P20,000. The cost of shipment paid by the consignor was P15,000. The consignor
agreed to absorb the consignee's expenditure for freight and also to allow the
consignee P2,000 for delivery and installation of each set. Commission is to be 25%
of the sales price. On June 30, BBB submitted the following summary of consignment
sales:
Sets received
Set sold
Sets returned to consignee (defective)
Sets on hand
25
8
2
June 3 - 30 Sales, 8 sets at P40,000
Charges:
Freight in
P10,000
Deliveries and installation expenses
16,000
Commissions of 25% of sales
80,000
Total
Remittance
Balance owed (collections from customers not yet made
(10)
15
P320,000
(106,000)
214,000
(50,000)
P164,000
Compute the units unsold in the hands of the consignee
a.
b.
c.
d.
P300,000
P306,000
P309,000
P315,000
43. On January 1, 20x5, entity AA together with another joint operator, set up a separate
vehicle to undertake a joint operation. The arrangement provides for both parties to
have a joint control over the separate vehicle. For its capital contribution, entity AA
has recorded its interest in the joint operation at P600,000, being the amount of cash
contribution upfront. Apart from recording its assets and liabilities in the joint operation
directly, entity AA has its rights to a 60% share in the property, plant, and equipment
of the separate vehicle, a 50% share in the current assets, and 75% on the Liabilities
incurred. Its share of the revenue from the sale of the output produced by the separate
vehicle is 55% while its share of the expenses incurred jointly us 60%.
Extracts of the financial statements of the separate vehicle for the first year of
operation is as follows:
Revenue
Expenses
Net income
P2,000,000
1,200,000
P800,000
Current assets
P1,200,000
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No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
PPE
Total Assets
2,000,000
P3,200,000
Liabilities
Capital
Net income
Total Liabilities and Capital
P1,600,000
800,000
800,000
P3,200,000
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
The share in net income of AA amounted to
a. 600,000
b. 480,000
c. 440,000
d. 380,000
44. The admission of a new partner effected through purchase of interest in the
partnership is
a.
b.
c.
d.
Recorded in the partnership books as a transfer within equity
Not recorded in its entirety
Recorded in the partnership books as a transfer from equity to liability
Recorded in the partnership books as a debit to cash or other asset and a credit
to the incoming partner’s capital account
45. In all cases of dissolution, the partnership assets and liabilities at date of dissolution
may need to be revalued to their values. Any revaluation increase or decrease is
a.
b.
c.
d.
Allocated to all of the existing partners as at the date of dissolution
Allocated only to the partners’ existing after the dissolution
Allocated only to the partner ceasing to be associated with the partnership
No revaluation shall be made
46. It is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on of the business
a.
b.
c.
d.
Dissolution
Liquidation
Incorporation
Break-up
47. The estimated recovery of partially secured creditors is equal to
a. The realizable value of the assets pledged plus the excess amount multiplied by
the estimated recovery percentage
b. The realizable value of the assets pledged
c. The realizable value of the assets pledged minus the excess amount multiplied by
the estimated recovery percentage
d. Their claims multiplied by the estimated recovery percentage
48. The total unsecured liabilities without priority can be computed as
a. Unsecured creditors without priority plus deficiency of assets pledged to partially
secured creditors
b. Sum of administrative expenses, unpaid employee salaries and benefits, and taxes
and assessments
c. Total liabilities minus priority claims
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Lipa City, Batangas, Philippines
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d. Unsecured creditors without priority less estimated realizable value of assets
pledged to partially creditors
49. The estimated recovery of unsecured creditors without priority is equal
a. To their claims multiplied by the estimated recovery percentage
b. To the realizable value of the assets pledged minus the excess amount multiplied
by the estimated recovery percentage
c. To the realizable value of the assets pledged plus the excess amount multiplied by
the estimated recovery percentage
d. To the total free assets
50. H and I formed a partnership agreeing to share profits equally. H contributed P10,000
cash and P400,000 newly purchased equipment. I contributed P15,000 cash and a
parcel of land acquired 5 years ago for P100,000. Three hours after formation, the
land was sold for P200,000.
How much is the capital balance of I?
a.
b.
c.
d.
P215,000
P115,000
P150,000
P165,000
51. The following transactions and agreements relate to the formation of the ABC
Partnership:
 Andrea contributed a delivery truck which costs her P300,000 but now has
a second-hand value half of its cost.
 Brenda has P500,000 personal assets but she contributed only P80,000
cash.
 Carlene contributed P150,000 cash. P120,000 of these were borrowed
money from Brenda.
 The partners agreed to share in profit equally despite differences in capital
contribution.
What should be the correct capital balances of partners Andrea, Brenda and Carlene?
a.
b.
c.
d.
P150,000; P80,000; P150,000
P300,000; P80,000; P120,000
P150,000; P500,000; P120,000
P300,000; P500,000; P150,000
For questions 52 and 53:
Bob and Bitz contributed P10,000 and P20,000 cash, respectively. Bob further
contributed a used equipment which cost him P50,000. Bitz contributed his delivery truck
which also cost him P120,000. Bob and Bitz agreed to share profit equally but to share
capital on the ratio of 40:60, respectively. A valuation report rendered by Pal Appraisal
Company indicates that the truck and equipment have fair values of P70,000 and
P40,000, respectively.
52. If the partners agreed to adjust their capital by cash re-investment, which is true?
a. Bob shall contribute P10,000.
b. Bob shall contribute P60,000.
c. Bitz shall contribute P15,000.
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d. Bitz shall contribute P60,000.
53. If the partners agreed to adjust their capital by cash withdrawal, which is true?
a. Bitz shall withdraw P15,000.
b. Bob shall withdraw P15,000.
c. Bob shall withdraw P40,000.
d. Bitz shall withdraw P40,000.
54. The December 31, 2018 balance sheet of Reynante’s proprietorship business showed
the following:
Cash
P
Accounts receivable
Inventory
Equipment, net (10 year-useful life)
Accounts payable
20,000
35,000
40,000
36,000
42,000
An audit was required in pursuant to the partnership agreement before the admission of
Herbo and Primo. The audit disclosed the following:
 The cash include equity investments with a fair value in excess of its recorded
cost by P3,000.
 The receivable includes P5,000 uncollectible items.
 A P1,000 prepayments and P8,000 accrued expense was omitted from the
records.
Per agreement:
 The equipment was depreciated for 2 years but is to be depreciated by
additional two years.
 Herbo and Primo shall contribute cash for their ¼ and 1/5 interest respectively.
Compute the total cash investment of the incoming partners.
a.
b.
c.
d.
P58,091
P65,455
P63,900
P72,667
55. Cabrera, Mateo and Ampil agreed to the following profit sharing:
 Salary of P20,000 and P30,000 to Mateo and Ampil, respectively.
 Residual profit sharing of 50:30:20 to Cabrera, Mateo and Ampil, respectively.
 Guaranteed minimum profit sharing of P40,000 to Cabrera and P30,000 to Mateo,
respectively.
Compute the partnership profits if Ampil received P40,000 profit sharing.
a.
b.
c.
d.
P115,000
P135,000
P120,000
P100,000
56. On January 1, 2018, the partnership of D, E and F started with an initial contribution
from the partners of P100,000, P200,000 and P300,000, respectively. The partners
stipulated that in case of death of any partner, the parties will compute profits up to
the nearest month and to provide for 20% annual interest for the deceased partner
interest prior to its settlement.
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No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
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: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
On July 1, 2018, D was heart-attacked and instantly died. The newly hired accountant
of the partnership prepared the following entries during the year:
7/1/18 D, capital
12/31/18
12/31/18
12/31/18
100,000
Payable to D’s estate
To set-up D’s capital as a liability
100,000
Interest expense
10,000
Payable to D’s estate
To recognize interest on D’s estate
10,000
Sales
Inventory, end
Purchases
Operating expenses
Interest expense
Profit and loss summary
To close nominal accounts
700,000
50,000
300,000
160,000
10,000
280,000
Profit and loss summary
280,000
E, capital (40%)
160,000
F, capital (30%)
120,000
To close profit and loss to E and F’s remaining P&L sharing ratio.
Profits were evenly earned throughout the year.
Compute the correct capital balances of E and F as of December 31, 2018,
respectively.
a.
b.
c.
d.
P332,657; P399,493
P301,367; P452,050
P302,333; P453,500
P298,666; P440,500
57. Partners A, B and C share profits and losses in the ratio of 5:3:2. At the end of a very
unprofitable year, they decided to liquidate the firm. The partners capital account
balances at this time are as follows:
A, P123,200 ;
B, P139,440 ;
C, P84,000
The liabilities accumulate to P168,000, including a loan of P56,000 from A. The cash
balance is P33,600. All the partners are personally solvent. The partners plan to sell
the assets in installment.
If B received P20,160 from the first distribution of cash, how much did C receive at
that time?
a.
b.
c.
d.
P4,480
P11,200
P6,720
P -0-
58. The following were taken from the Statement of Affairs of Gael Corporation:
Assets pledged with fully secured creditors (current fair value is P 208,000
P166,000)
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Lipa City, Batangas, Philippines
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: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
Assets pledged with partially secured creditors (current fair value is 144,000
P112,000)
Free assets (current fair value is P104,000)
124,000
Liabilities with priority
26,000
Fully secured creditors
76,000
Partially secured creditors
136,000
Unsecured creditors without priority
276,000
Determine the estimated amount to be paid to partially secured creditors:
a.
b.
c.
d.
P125,440
P112,000
P136,000
P144,000
59. On January 1, 2019, the partners of Cobb, Davis, and Eddy, who share profits and
losses in the ratio of 5:3:2, respectively, decided to liquidate their partnership. On this
date the partnership condensed balance sheet was as follows:
Assets
Cash
Other assets
P
50,000
250,000
P 300,000
Liabilities and Capital
Liabilities
Cobb, capital
Davis, capital
Eddy, capital
P
60,000
80,000
90,000
70,000
P 300,000
On January 15, 2019, the first cash sale of other assets with a carrying amount of
P150,000 realized P120,000. Safe installment payments to the partners were made
the same date. How much cash should be distributed to each partner?
a.
b.
c.
d.
Cobb
P15,000
P40,000
P55,000
P60,000
Davis
P51,000
P45,000
P33,000
P36,000
Eddy
P44,000
P35,000
P22,000
P24,000
60. Q, R and S are partners with capital balances on December 31, 2018 of P300,000,
P300,000 and P200,000, respectively. Profits are shared equally. S wished to
withdraw and it is agreed that she is to take certain furniture and fixture with second
hand value of P50,000 and note for the balance of his interest. The furniture and
fixtures are carried in the books at P65,000. Brand new, the furniture and fixtures may
cost P80,000. S acquisition of the second-hand furniture will result to
a.
b.
c.
d.
reduction in capital of P5,000 to each partner
reduction in capital of P10,000 for S.
reduction in capital of P15,000 each for Q and R.
reduction in capital of P7,500 each for Q and R.
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