Contestants Copy BASIC ACCOUNTING AND PARTNERSHIP AND CORPORATION EASY

E1. Recording expiration of prepaid expense that was originally recorded in an asset account would require A. A debit to the appropriate prepaid asset account B. A debit to the appropriate expense account C. A credit to cash D. A credit to accounts payable

E2. If the accountant fails to make an adjusting entry at the end of the fiscal period to record expired insurance, the omission will cause A. Total assets to be understated C. Total revenue to be understated B. Total expenses to be understated D. Total liabilities to be overstated

E3. Closing entries are journalize and posted before A. Adjusting entries are journalized B. The post-closing trial balance is prepared C. The financial statements are prepared D. Adjusting entries are posted

E4. The non-cash contributions of the partners to form a partnership are recorded by the partnership at their A. Book value C. Agreed value B. Dissolution value D. Original cost

E5. Among the various options available for determining the partners share of net income are the following except A. Capital contributions and service to the partnership B. Capital contributions C. Loans to the partnership D. Stated fraction or ratio

E6. The buyer actually paid the freight charges but is not legally responsible for the same A. FOB Destination, Freight prepaid B. FOB Destination, Freight collect C. FOB Shipping point, Freight prepaid D. FOB Shipping point, Freight collect

E7. When shares of stocks are subscribed above par value, the debit to subscription receivable should be at A. Subscription Price C. Fair market value B. Par Value D. All of the above

E8. The following would affect the balance of the retained earnings except A. Prior period error B. Declaration of cash dividend C. When there are appropriations made D. Payment of cash dividend

E9. Which of the following statements describing a corporation is not true? A. Stockholders are owners of a stock corporation B. When ownership of a corporation changes, the corporation does not terminate. C. Stockholders own the business and manage its day-to-day affairs. D. A corporation is subject to a greater governmental regulation than a single proprietorship.

E10. A corporation declared dividend on December 1 payable on January 15 to stockholders of record as of December 30. The balance of retained earnings A. Decreases on December 30 C. In not affected on December 30 B. Decreases on January 15 D. Is not affected on December 1

AVERAGE A1. The following adjusted account balances are taken from the ledger of SIMORA MERCHANDISE COMPANY as of December 31, 2010:

Freight in 70,000 Inventory Beginning 560,000 Purchase Discounts 30,000 Purchase Returns 25,000 Purchases 1,020,000 Sales Discounts 43,000 Sales Allowances 37,000 Sales Revenue 1,915,000 A physical count revealed ending inventory of P578,000. The adjusting entry required to close the beginning inventory will include a 1) Debit to Income Summary of 560, 000 2) Credit to Income Summary of 560, 000 3) Debit to Inventory of 560, 000
A. 1 Only B. 2 Only C. 3 only D. Both 2 and 3

A2. A corporation has experienced losses greater than profits in the past three years since incorporation. Which of the following statements is true? A. Retained Earnings has a credit balance at the end of the third year. B. Retained Earnings has a debit balance and is reported as an asset on the Balance Sheet. C. Retained Earnings has a debit balance and it appears as a reduction in the Stockholders Equity on the Balance Sheet. D. Retained Earnings has a credit balance at the end of the third year and the corporation may choose how to report a deficit.

A3. Partners D and C share income and losses equally after each has been credited with annual salary allowances of P30, 000 and P24, 000, respectively. Under this agreement, D will benefit by P6, 000 more than C in which of the following circumstances? A. Only if the partnership has earnings of P54, 000 or more for the year. B. Only if the partnership does not incur a loss for the year. C. In all earnings or loss situations D. Only if the partnership has earnings of at least P6, 000 for the year.

A4. DOVE Company was organized on January 2, 2009 at which date it issued 200, 000 shares at P10 Par Ordinary share at P15 per share. During the period January 2, 2009 to December 31, 2011, DOVE reported cumulative net income of P900, 000 and paid cash dividends of P460, 000. On January 2, 2011, DOVE purchased 12, 000 of its ordinary share at P12 per share. On December 31, 2011, DOVE sold 8, 000 treasury shares at P8 per share. What is the total shareholders equity at December 31, 3011? A. 3, 360, 000 C. 3, 408, 000 B. 3, 376, 000 D. 3, 440, 000

A5. Goods totaling P500, 000 were purchased November 2 with terms 2/10, n/30. Returns of P100, 000 were made on November 10. What discounts, if any, can be availed of if the invoice was paid on November 12? A. None C. 8, 000 B. 10, 000 D. 2, 000

A6. In preparing a ten-column worksheet for a merchandising firm that uses the periodic inventory system A. The beginning inventory is extended as a credit in the income statement columns B. The beginning inventory is extended as a credit in the Balance sheet columns C. The ending inventory is shown as a debit in the income statement columns and as a credit in the balance sheet columns D. The ending inventory is shown as a credit in the income statement columns and as a debit in the balance sheet columns

A7. Which of the following is true? A. Stockholders are personally liable for the liabilities of the corporation if the company is unable to pay. B. Normally, stockholders can only sell their ownership interests when the corporation terminates. C. Partners are personally liable for the liabilities of the partnership if the partnership is unable to pay. D. Partners can normally transfer their partnership interests with ease.

A8. After all adjusting entries are posted, the balances of all asset, liability, income and expense accounts correspond exactly to the amounts in the A. Worksheet trial balance C. Financial statements B. Post-closing trial balance D. Unadjusted trial balance

A9. The plant and machinery account(at cost) of a business for the year ended 31 December 2010 was as follows:

Plant and Machinery- Cost 1 January balance 240, 000 31 March Transfer disposal account 30 June Cash- Purchase of Plant 160, 000 31 December balance 400, 000

60, 000 340, 000 400, 000

The companys policy is to charge depreciation at 20% per year on a straight line basis, with proportionate depreciation in the years of purchase and disposal.

What should be the depreciation charge for the year ended 31 December 2010: A. 68, 000 C. 61, 000 B. 64, 000 D. 55, 000

A10. FB Company paid dividends of P400, 000 and P600, 000 at the end of 2010 and 2011, respectively. The corporation has not paid any other dividends since its organization on January 2, 2010. The outstanding shares are: 40, 000, 12% Preference shares, par P100 60, 000 Ordinary shares, par P100 If preference shares were cumulative and nonparticipating, how much would the preference and ordinary shareholders, respectively receive in 2011? A. 300, 000 and 300, 000 B. 480, 000 and 120, 000 C. 560, 000 and 40, 000 D. 600, 000 and 0

DIFFICULT

D1. OVA Traders purchased merchandise from San Jose Enterprises for P36, 000 list price, subject to a trade discount of 25%. The goods were purchased on terms of 2/10, n/30, FOB Destination. OVA paid P1, 000 transportation costs. OVA returned P4, 000(list price) of the merchandise to San Jose and later paid the amount due within the discount period. The total amount paid is A. 22, 540 C. 22, 460 B. 22, 520 D. 23, 520

D2. The records of Susan Trading for the year 2011 included the following: Assets, Jan. 1 Php500,000 Liabilities, Jan.1 150,000 Assets, Dec. 31 300,000 Liabilities, Dec. 31 50,000 During the year, the owner made withdrawals from the business amounted to Php240,000. How much is the taxable income of Susan for year 2011? a. Php240,000 b. Php190,000 c. Php140,000 d. 0

D3. During 2010, JAM Corp. issued 10,000 shares of P100 par value convertible preference share for P110 per share. One preference share can be converted into three shares of JAMs P25 ordinary share at the option of the preference shareholder. On December 31, 2011, when the market value of the ordinary share was P40, How much should JAM credit to Share Premium as a result of the conversion?

A. None

B. P100,000

C. P350,000

D. P450,000

D4. Theta prepares its financial statements for the year to 30 April each year. The company pays rent for its premises quarterly in advance on 1 January, 1 April, 1 July, and 1 October each year. The annual rent was P84,000 per year until 30 June 2010. It was increased from that date to P96,000 per year. What rent expense and end of the year prepayments should be included in the financial statements for the year ended 30 April 2011? Expense P93,000 P93,000 P94,000 P94,000 Prepayment P8,000 P16,000 P8,000 P16,000

A. B. C. D.

D5. P and Q are in partnership, sharing profits equally, On 30 June 2011, R joined the partnership and it was agreed that from that date, all partners shall share the equally in the profit. In the year ended 31 December 2011 the profit amounted to P300,000, accruing evenly over the year, after charging a bad debt of P30,000 which it was agreed should be borne equally by P and Q only. What should Ps total profits share be for the year ended 31 December 2011? A. P95,000 B. P122,500 C. P125,000 D. P110,000

D6. The depreciable amount of BARD Companys equipments amount to P7,000,000 with a useful life of 20 years. The equipments were bought by the company on January 1, 2003. What is the carrying amount of the equipments as of December 31, 2013 assuming the salvage value is P250,000 and straight line method of depreciation is being used? a. b. c. d. P3,150,000 P3,287,500 P3,400,000 Some other amount

D7. The following accounts pertain to Bandana Partnership: Capital P/L Ratio Harvin P200,000 40% Cris 240,000 60% Kilabot is admitted by purchase of one-half interest of both Harvin and Cris for P240,000. The 240,000 is divided among Harvin and Cris as follows: Harvin P96,000 P108,000 P109,090 P120,000 Cris P144,000 P132,000 P130,910 P120,000

A. B. C. D.

D8. SMC reported an ending balance of its inventory for P300,000 in 2012. On February 2, 2013, SMC purchased a total worth of P320,000 of inventory and sold P290,000 for 150% of cost. On the night of February 2, thieves broke into the warehouse of SMC. Upon the inventory count the next morning, it was determined that there is P100,000 worth of inventories still on hand, How much inventory were stolen? A. P230,000 B. P85,000 C. P395,000 D. None of the given

D9.On January 1, 2013, the accountant debited to Insurance Expense the P36,000 that the company paid for an insurance policy covering the next three years. Assume that the reporting period ends on June 30, 2013, how much should be debited to insurance expense in the related adjusting entry? A. P9,000 B. P27,000 C. P18,000 D. None

D10. Jose Co. sold P1,200,000 worth of inventory for the year 2010. The net income before tax for the related year was P185,000, which was 25% of the gross profit. The prevailing tax rate for the year is 30%. The sales were a. Seven times the net income b. Ten times the net income c. 2.6 times the cost d. None of the above