COLLEGE OF MARY IMMACULATE

BS ACCOUNTANCY
3rd YEAR SECOND SEMESTER 2016 2017

ACCTG 601 ADVANCED ACCOUNTING 1

MIDTERMS (January 29, 2017)

NAME: _______________________________________ SCORE:

___________

Choose the letter corresponding to the correct answer.

1. Generally, a corporation is owned by the:

a. Managers c. Shareholders
b. Board of Directors d. All of the choices

Items 2 to 3 are based on the following information:

Presented below is the condensed balance sheet of the partnership of Koko,
Lolo and Momo who share profits and losses in the ratio of 6:3:1, respectively:

Cash 85,000 Liabilities 80,000

Other assets 415,000 Koko capital 252,000
Lolo capital 126,000
Momo capital 42,000
Total 500,000 Total 500,000

The partners agreed to sell Nono 20% of their respective capital and profit
and loss interest for a total payment of 90,000. The payment by Nono is to
be made directly to the individual partners.

2. The capital balances of Koko, Lolo and Momo, respectively after admission of
Nono are:
a. P 198,000; P 99,000; P 33,000 c. P 255,600; P
127,800; P 42,600
b. P 216,000; P 108,000; P 36,000 d. P 201,600; P
100,800; P 33,600

3. Assuming that implied goodwill (or revaluation of asset) is to be recorded

prior to the acquisition by Nono. The capital balances of Koko, Lolo and
Momo, respectively after admission of Nono are:
a. P 198,000; P 99,000; P 33,000 c. P 255,600; P
127,800; P 42,600
b. P 216,000; P 108,000; P 36,000 d. P 201,600; P
100,800; P 33,600

4. Xen, Yen and Zen are partners who share profits and losses in the ratio of
5:3:2, respectively. They agree to sell 25% of their respective capital and
profits and losses ratio for a total payment directly to the partners in the
amount of 140,000. They agree that goodwill or revaluation of assets of
60,000 is to be recorded prior to the admission of Ana. The condensed
balance sheet of Xen, Yen and Zen partnership is as follows:

Cash 60,000 Liabilities 100,000

Non-cash assets 540,000 Xen capital 250,000

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 Yen capital 150,000
Zen capital 100,000
Total 600,000 Total 600,000

The capital of Xen, Yen and Zen, respectively after the payment and
admission of Ana area:
a. P 187,500; P 112,500; P 75,000 c. P 280,000; P
168,000; P 112,000
b. P 210,000; P 126,000; P 84,000 d. P 250,000; P
150,000; P 100,000

5. The following condensed balance sheet is presented for the partnership of La,
Pa, and Que, who share profits and losses in the ratio of 4:3:3, respectively:
Cash 90,000
Other assets 830,000
La, loan 20,000
940,000

Accounts payable 210,000

Que, loan 30,000
La, capital 310,000
Pa, capital 200,000
Que, capital 190,000
940,000
Assume that the assets and liabilities are fairly valued on the balance sheet
and that the partnership decides to admit Bes as a new partner, with a 20%
interest. No goodwill or bonus is to be recorded.

How much should Bes contribute in cash or other assets?

a. 140,000 b. 142,000 c. 175,000 d.
177,500

6. Cat and Dog are partners who share profits and losses in the ratio of 7:3,
respectively. On October 21, 2016, their respective capital accounts were as
follows:
Cat 35,000
Dog 30,000
65,000
On that date, they agreed to admit Eew as a partner with a one-third interest
in the capital and profits and losses, and upon his investment of 25,000. The
new partnership will begin with a total capital of 90,000. Immediately after
Eews admission, what are the capital balance of Cat, Dog, and Eew,
respectively?
a. P 30,000; P 30,000; P 30,000 c. P 31,667; P 28,333;
P 30,000
b. P 31,500; P 28,500; P 30,000 d. P 35,000; P 30,000;
P 25,000

7. The capital accounts for the partnership of Lou and Mah at October 31, 2016
are as follows:
Lou, capital 80,000
Mah, capital 40,000
120,000
The partners share profits and losses in the ratio of 3:2 respectively.

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 The partnership is in desperate need of cash, and the partners agree to admit
Nha as a partner with one-third in the capital and profits and losses upon his
investment of 30,000. Immediately after Nhas admission, what should be
the capital balances of Lou, Mah and Nha, respectively assuming bonus is to
be recognized?
a. P 50,000; P 50,000; P 50,000 c. P 66,667; P 33,333;
P 50,000
b. P 60,000; P 60,000; P 60,000 d. P 68,000; P
32,000; P 50,000

8. OO and TT are partners with capital balances of 60,000 and 20,000,

respectively. Profits and losses are divided in the ratio of 60:40. OO and TT
decided to form a new partnership with GG, who invested land valued at
15,000 for a 20% capital interest in the new partnership. GGs cost of the
land is 12,000. The partnership elected to use the bonus method to record
the admission of GG into the partnership. GGs capital account should be
credited for:
a. 12,000 b. 15,000 c. 16,000 d. 19,000

9. Refers mainly to a firms ability to meet its short-term obligations.

a. Liquidity b. Solvency c. Bankruptcy d.
Flexibility

10.What is defined as a condition in which a company is unable to meet debts as

the debts mature?
a. Deficit b. Liability c. Insolvency d. Credit
squeeze

11.___________ have liens, or security interests, on specific assets.

a. Secured creditors c. Unsecured
creditors
b. Creditors with priority d. Assured creditors

12.Which of the following observations concerning claims by general unsecured

creditors is NOT true?
a. They are paid only after secured creditors and unsecured creditors
with priority are satisfied to the extent of any legal limits.
b. They often receive less than the full amount of their claim.
c. They are entitled to "preference payments" at the discretion
of the debtor's management.
d. The amounts to be paid to them are usually stated as a percentage
of the total claim.

13.The payment to general unsecured creditors is often termed:

a. a "preference payment." c. a "write-off."
b. a "dividend." d. a "bonus."

14.The accounting statement of affairs is prepared:

a. at the end of the reorganization process.
b. at the end of the liquidation process.
c. at the beginning of the reorganization process.
d. at the beginning of the liquidation process

15.Which monthly report shows the results of the trustee's fiduciary actions
beginning at the point the trustee accepts the debtor's assets?
a. Statement of affairs
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 b. Statement of realization and liquidation
c. Statement of financial position
d. Statement of activities

16.The Statement of Realization and Liquidation contains sections for all the
following items except:
a. assets.
b. supplementary items.
c. liabilities.
d. stockholders equity.

17.Refers to assets that are not pledged and are available to satisfy the claims of
creditors.
a. Total assets b. Free assets c. Current assets d.
Secured assets

18.This statement is prepared as of a given point in time for a business

enterprise entering into the stage of liquidation.
a. Statement of Affairs c. Statement of Realization and
Liquidation
b. Statement of Liquidation d. Statement of Changes

19.Statement 1: The duties of the trustee in liquidations are similar to those in

a reorganization except that the focus is on a realization of liabilities and
liquidation of assets rather than on preservation and continuation of
business.
Statement 2: The trustee may continue business activities, if that is in the
interest of an orderly liquidation.
a. True; True b. False; False c. False; True d.
True; False

20.Statement 1: The basic focus of accounting for a bankrupt corporation is

that of a quitting concern rather than a going concern.
Statement 2: A business enterprise can be insolvent in the conventional
sense when it is unable to pay off its liabilities as they come due.
a. True; True b. False; False c. False; True d.
True; False

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