Advance Accounting (Source A)

36. Which of the following statements is FALSE?

a. The ratio called dividend to general unsecured creditors is calculated by net estimated proceeds available to unsecured creditors
divided by total claims of unsecured creditors.
b.In the accounting statement of affairs, the gain and losses upon liquidation would be equal to net book value of assets
minus book value of liabilities.
c. The document used by a trustee to report periodically on the status of fiduciary activities is called statement of affairs.
d. The statement of realization and liquidation differs from statement of affairs due to the statement of realization reports actual
liquidation results rather than estimated realizable value.

Problem19 Partnership Which of the following statements about partnership is FALSE?

a. Partnership can more easily generate significant amount of capital is one of the reasons for the popularity of partnerships
as a legal form for businesses.
b. A partnership limited liability is not a characteristics of the proprietary theory that influences accounting for partnership .
c. Under the entity theory, a partnership is viewed as having its own existence apart from the partners.
d. One of the advantages of the partnership form of business organization, compared to corporations is single taxation.

Problem 21 Partnership Which of the following statements are TRUE?

a. If A is the total capital of a partnership before the admission of a new partner, B is the total capital of the partnership after the
investment of a new partner, C is the amount of the new partner’s investment, and D is the amount of capital credit to the new partner,
then there is Goodwill to the old partners if B> (A+C) and D=C.
b. Transferrable interest of a partner includes the authority to transact any of the partnership’s business operations.
c. Under the bonus method, when a new partner is admitted to the partnership, the total capital of the new partnership is equal to the
book value of the previous partnership plus the fair market value of the consideration paid to the existing partnership by the incoming
partner.
d. When the goodwill method is used and the book value acquired is less than the value of the assets invested, total implied capital is
computed by dividing the new partner’s investment by his(her) capital interest.
a. a,b and c b. b and d c. a,c and d d. all statements are true

Problem 24 Corporate Liquidation Which among the following statements are INCORRECT?
a. Insolvency in the bankruptcy sense is a financial status in which the aggregate current fair value of the assets of a business
enterprise is not sufficient to pay the enterprise’s liabilities.
b. An order for relief prohibits creditors from taking action to collect from an insolvent company without court approval.
c. The duties of the trustee include approving creditor’s committees in liquidation cases.
d. In the accounting statement of affairs, the gains or losses upon liquidation would equal to net book value of assets minus book value
of liabilities.

a. b,c and d b. a and c c. a,c and d d. all are incorrect

36. Which of the following statements is FALSE?

a. The ratio called dividend to general unsecured creditors is calculated by net estimated proceeds available to unsecured creditors
divided by total claims of unsecured creditors.
b.In the accounting statement of affairs, the gain and losses upon liquidation would be equal to net book value of assets
minus book value of liabilities.
c. The document used by a trustee to report periodically on the status of fiduciary activities is called statement of affairs.
d. The statement of realization and liquidation differs from statement of affairs due to the statement of realization reports actual
liquidation results rather than estimated realizable value.

7. Which of the following statements are TRUE?

a. If A is the total capital of a partnership before the admission of a new partner, B is the total capital of the partnership after the
investment of a new partner, C is the amount of the new partner’s investment, and D is the amount of capital credit to the new partner,
then there is Goodwill to the old partners if B> (A+C) and D=C.
b. Transferrable interest of a partner includes the authority to transact any of the partnership’s business operations.
c. Under the bonus method, when a new partner is admitted to the partnership, the total capital of the new partnership is equal to the
book value of the previous partnership plus the fair market value of the consideration paid to the existing partnership by the incoming
partner.
d. When the goodwill method is used and the book value acquired is less than the value of the assets invested, total implied capital is
computed by dividing the new partner’s investment by his(her) capital interest.
a. a,b and c b. b and d c. a,c and d d. all statements are true

40. Which among the following statements are INCORRECT?

a. Insolvency in the bankruptcy sense is a financial status in which the aggregate current fair value of the assets of a business
enterprise is not sufficient to pay the enterprise’s liabilities.
b. An order for relief prohibits creditors from taking action to collect from an insolvent company without court approval.
c. The duties of the trustee include approving creditor’s committees in liquidation cases.
d. In the accounting statement of affairs, the gains or losses upon liquidation would equal to net book value of assets minus book value
of liabilities.
a. b,c and d b. a and c c. a,c and d d. all are incorrect

Problem 2 Which of the following statements about partnership is FALSE?

a. Partnership can more easily generate significant amount of capital is one of the reasons for the popularity of partnerships
as a legal form for businesses.
b. A partnership limited liability is not a characteristics of the proprietary theory that influences accounting for partnership .
c. Under the entity theory, a partnership is viewed as having its own existence apart from the partners.
d. One of the advantages of the partnership form of business organization, compared to corporations is single taxation.

Problem 6. The following statements are true except one.

a) Article 1772 of the law on partnership provides that when the capital is 3,000 or more, it must be in public instrument
b) Article 1773 likewise, provides for a written contract when the investment is in the form of immovable properties
c) Article 1778 of the New Civil Code states that , a universal partnership of property is one where all partners invest all their
properties into a common fund
d) Article 1769 of the New Civil code provides that the partnership is a separate distinct personality.
e) Article 1818 of the New Civil Code states that every partner is an agent of the partnership for the purpose of business

19. In a bankruptcy, which of the following statement is TRUE?

a. An order of relief results only from a voluntary petition.
b. creditors entering an involuntary petition must have debts totaling at least P20,000
c. secured notes payable are considered liabilities with priority on a statement of affairs.
d. none
20. In the accounting statement of affairs, the gains or losses upon liquidation would equal
a. net book value of assets minus book value of liabilities
b. the book value of assets minus their realizable value.
c. total estimated realizable value of assets minus the amount assigned to secured creditors.
d. total estimated realizable value of assets minus the amount remaining for unsecured creditor
21. the ratio called dividend to general unsecured creditors is calculated by which of the following formulas?
a. estimated amount available for unsecured creditors with/without priority divided by total claims of all unsecured creditors
with without priority.
b. estimated realizable value of all debtor assets divided by book value of debtor assets.
c. estimated gain/loss on liquidation divided by total estimated net realizable value of debtor assets.
d. net estimated proceeds available to unsecured creditors divided by total claims of unsecured creditors.
22. a composition agreement is an agreement between the debtor and its creditors whereby the creditors agree to:
a. accept less than the full amount of their claims.
b. delay settlement of the claim until a later date.
c. force the debtor into liquidation
d. accrue interest at a higher rate
23. The duties of a trustee include:
a. appointing creditors committee’s in liquidation cases.
b.delay settlement of the claim until a later date.
c. force the debtor into a liquidation.
d. accrue interest at a higher price.
24. which of the following is not a characteristics of a partnership?
a. the partnership itself pays no income taxes.
b. it is easy to form
c. any partner can be held personally liable for all debts of the business.
d. a partnership requires written articles of partnership
e. each partner has the power to obligate the partnership for liabilities.
25. under the entity theory, a partnership is
a. viewed through the eyes of the partners.
b. viewed as having its own existence apart fro the partners.
c. a separate legal and tax entity
d. unable to enter into contracts in its own name.
26 if the partnership agreement provides a formula for the computation of a bonus to the partners, the bonus would be computed
a. next to last, because the final allocation is the distribution of the profit residual
b. before income tax allocation are made.
c. after the salary and interest allocations are made.
d. in any manner agreed to by the partners.
27which of the following is an advantage of a partnership?
a. mutual agency c. unlimited liability
b. limited life d. none of these
28i If goodwill is traceable to the incomoing partner, the new partner’s capital balance equals
a. the fair market value of consideration paid by the incoming partner.
b. the book value of older partnership divided by the existing partners’ ownership percentage in the new partnership
minus the book value of the old partnership
c. incoming partner’s ownership percentage multiplied by the capital of the new partnership
d. none of the above.
29. the bonus and goodwill methods of recording the admission of a new partner will produce the same result if the:
1. new partner’s profit-sharing ratio equals his capital interest.
11. old partners profit-sharing ratio in the new partnership is the same relatively as it was in the old partnership
a. 1 b. 11 c. both 1 and 11 d. none of these
30. in a partnership liquidation, the final cash distribution to the partners should be made in accordance with the
a. partner’s profit and loss sharing ratio
b. balances of the partners’ capital accounts.
c. ratio of the capital contributions by the partners
d. ratio of capital contributions less withdrawals by the partners.
*******All the statements are TRUE except? ( show solution to justify your answer)
a. Assuming the partners will either invest or withdraw cash, using LL as the base, DD and BB will both invest cash with a total amount
of P560,800
b. If the transfer of capital method is used, the capital accounts of DD and LL will be debited in the amount of P30,320 and P140,200,
respectively.
c. Assuming the partners will either invest or withdraw cash using DD as the base, BB and LL will both invest cash with a
total amount of P75,800
d. Assuming the partners will either invest or withdraw cash using BB as the base, DD and LL will both withdraw cash with a total
amount of P487,200.