1.

Organizational expenses are classified as intangible assets on the Statement of

Financial Position.

Retained earnings represents past net incomes less past dividends, the balance of
this account is presented in the income statement.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

2. K, P and R have capital balances of ₱150,000, ₱250,000 and ₱90,000,

respectively and they share profits in the respective ratio of 4:2:1. P received
₱130,000 as a result of the liquidation of the partnership. The loss on realization
is:

a. 295,000
b. 330,000
c. 360,000
d. 420,000

3. Primary source(s) of shareholders' equity is:

A. income retained by the corporation.

B. appropriated retained earnings.
C. contributions by stockholders.
D. both A and c

4. How should a "gain" from the sale of treasury stock be reflected when using
the cost method of recording treasury stock transactions?

A. As paid-in capital from treasury stock transactions.

B. As ordinary earnings shown on the income statement.
C. As an increase in the amount shown for common stock.
D. As an extraordinary item shown on the income statement.

5. Shareholders' equity is generally classified into two major categories:

A. contributed capital and appropriated capital.

B. appropriated capital and retained earnings.
C. retained earnings and unappropriated capital.
D. contributed capital and earned capital.
6. Which dividends do not reduce shareholders' equity?

A. Cash dividends
B. Property dividends
C. Stock dividends
D. Liquidating dividends

7. Presented below is information related to Rio Grande, Inc.:

December 31
2014
2013

Ordinary Share
Capital P 75,000 $ 60,000

6% Preference
Shares 350,000 350,000

Retained earnings (includes net income for current

year) 90,000 75,000

Net income for

year 45,000 32,000

What is Rio Grande’s rate of return on ordinary shares equity for 2014?

A. 30.0%
B. 16%
C. 15.4%
D. 13.8%

8. A corporation acts under its own name rather than in the name of its
shareholders.

A shareholder has the right to vote in the election of the board of directors.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.
9. The pre-emptive right enables a shareholder to

A. share proportionately in any new issues of stock of the same class.

B. receive cash dividends before other classes of stock without the pre-emptive right.
C. sell capital stock back to the corporation at the option of the shareholder.
D. receive the same amount of dividends on a percentage basis as the preferred shareholders.

10. At December 31, 2013 and 2014, Slane Corp. had outstanding 9,000 shares of
P100 par value 8% cumulative preferred stock and 30,000 shares of P10 par value
ordinary shares of stock. At December 31, 2013, dividends in arrears on the
preferred stock were P36,000. Cash dividends declared in 2014 totaled P135,000.
What amounts were payable on each class of stock?

Preference Shares Ordinary shares

A. P72,000 P63,000
B. P99,000 P36,000
C. P108,000 P27,000
D. P135,000 P0

11. The number of outstanding shares of stock is equal to the number of shares
authorized minus the number of shares issued.

The amount of capital paid in by the shareholders is called legal capital.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

12. The accounts of AB Partnership after its noncash assets were realized are as
follows:

Debit Credit

Cash 34,000
Accounts Payable 25,000
Loan payable to A 9,000
A, Capital 8,000
B, Capital 8,000
How much cash did B receive from the settlement of the partners’ interest in the
partnership?

a. 0
b. 1,000
c. 8,000
d. 9,000

13. Pearson Corp. owned 20,000 shares of Dixieland Corp. purchased in 2010 for
P420,000. On December 15, 2014, Pearson declared a property dividend of all of
its Dixieland shares on the basis of one share of Dixieland for every 10 shares of
Pearson ordinary shares held by its stockholders. The property dividend was
distributed on January 15, 2015. On the declaration date, the aggregate market
price of the Dixieland shares held by Pearson was P700,000. The entry to record
the declaration of the dividend would include a debit to Retained Earnings of:

A. P0.
B. P280,000.
C. P420,000.
D. P700,000.

14. Common shares issued would exceed common shares outstanding as a result
of

A. Declaration of a stock dividend

B. Declaration of stock split
C. Payment in full of subscribed stock
D. Purchase of treasury stock

15. At December 31, 2013 the shareholders’ equity section showed the following:

Ordinary share capital, P5 par value; 1,320,000 shares issued

and 1,200,000 shares outstanding..................................................... P6,600,000

Additional paid-in capital.......................................................................... 1,400,000

Retained earnings...................................................................................... 500,000

Treasury stock, (120,000 shares) …………………………… . 700,000
The book value per share is:

a. P5.91.
b. P6.50.
c. P7.08.
d. P6.44.

16. Franco Company acquired 16,000 shares of its own ordinary shares at P20 per
share on February 5, 2013, and sold 8,000 of these shares at P27 per share on
August 9, 2014. The market value of Franco's stock was P24 per share at
December 31, 2013, and P25 per share at December 31, 2014. The cost method is
used to record treasury stock transactions. What account(s) should Franco credit
in 2014 to record the sale of 8,000 shares?

A. Treasury Stock for P216,000.

B. Treasury Stock for P160,000 and Paid-in Capital from Treasury Stock for P56,000.
C. Treasury Stock for P160,000 and Retained Earnings for P56,000.
D. Treasury Stock for P192,000 and Retained Earnings for P24,000.

17. On January 1, 20x1, the partners of ABC Co. decided to liquidate their
partnership. The following information was made available:

Cash 80,000 Accounts payable 120,000

Accounts receivable 240,000 Payable to B 80,000
Inventory 480,000 A, Capital (20%) 400,000
Equipment 1,200,000 B, Capital (30%) 600,000
Total 2,000,000 C, Capital (50%) 800,000

Information on the conversion of non-cash assets is as follows:

· ₱200,000 was collected on accounts receivable; the balance is
uncollectible.
· ₱280,000 was received for the entire inventory.
· The equipment was sold for ₱1,000,000.
· ₱8,000 liquidation expenses were paid.

How much did C receive from the settlement of his interest in the partnership?
a. 310,400
b. 545,600
c. 576,000
d. 587,400

18. Moon Inc. has 5,000 shares of 6%, P100 par value, cumulative preferred stock
and 50,000 shares of P1 par value common stock outstanding at December 31,
2013. What is the annual dividend on the preferred stock?

A. P60 per share

B. P30,000 in total
C. P3,000 in total
D. P0.60 per share

19. A partnership liquidates and finds an excess cash, after payment of liabilities
of ₱100,000. The four partners have equal capital balances and share profits and
losses in the ratio of 10:20:30:40. The four partners will receive a final distribution
of cash as follows:

a. 25,000; 25,000; 25,000; 25,000

b. 12,000; 20,000; 8,000; 60,000
c. 10,000; 20,000; 30,000;40,000
d. 100,000; 100,000; 100,000; 100,000

20. Cash dividends are paid on the basis of the number of shares

A. authorized.
B. outstanding.
C issued.
D. outstanding less the number of treasury shares.

21. The balance in Ordinary Share Dividend Payable should be reported as a(n)

A. reduction from ordinary shares issued.

B. addition to ordinary share capital.
C. current liability.
D. contra current asset.

22. The term restricted retained earnings refers to both statutory and contractual
restrictions.

Appropriating retained earnings reduces total shareholders’ equity.

A. Only the first statement is true.
B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

23.Costs of public offering of shares or costs that relate to "stock market listing of
shares" should be

A. Deducted from equity.

B. Expensed immediately.
C. Deducted from equity, net of any related income tax benefit.
D. Considered as component of other comprehensive income.

24. Stated value stock is par stock that is assigned a value per share by the
corporation's Board of Directors.

A corporation can issue two kinds of stock – ordinary and preferred.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

25. When a corporation issues its capital stock in payment for services, the best
appropriate basis for recording the transaction is the

A. market value of the services received.

B. par value of the shares issued.
C. market value of the shares issued if market value of services received is not known.
D. Any of these provides an appropriate basis for recording the transaction.

26. A corporation is a separate entity for accounting purposes but not for legal
purposes.

The financial loss that each shareholder can incur is usually limited to the
investment made by the shareholder.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.
27. A gain or loss from one of the following transactions should not be included
in determining income:

A. Receipt of Interest from bank deposits

B. Sale of plant and equipment.
C. Sale of products.
D. Sale of treasury shares

28.Which of the below statements is incorrect?

I. Stock subscriptions receivable is usually presented as part of the current

asset section of the statement of financial position.

II. Preferred stock is issued with a par value.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

29. Two financial requirements that the Board of Directors must consider when
declaring cash dividends are

A. sufficient retained earnings and no treasury shares

B. sufficient cash and sufficient retained earnings
C. sufficient cash and sufficient additional paid in capital
D. sufficient retained earnings and sufficient premium on stock

30. If the dividend amount of preferred stock, P50 par value, is quoted as 8%,
then the dividends per share would be P4.

Preferred stock with a preferential right to dividends in arrears is referred to as

participating preference share.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

31. Partners Bee, Cee, Dee and Gee, who share profits in the ratio of 5:3:1:1,
respectively, decided to liquidate their partnership. The capital balances before
the liquidation are as follows:

Bee 60,000
Cee 40,000
Dee 30,000
Gee 10,000

The partners agreed on the following:

· Partnership’s computer equipment with a book value of ₱12,000 is to be
taken over by partner Bee at a price of ₱15,000.
· Partnership’s liabilities are to be paid off and the balance of cash on hand
of ₱30,000 is to be divided in a manner that will avoid the need for any possible
recovery of cash from a partner.

How much of the ₱30,000 cash is distributed to Cee?

a. 0
b. 10,000
c. 15,000
d. 20,000

32. The issuance of shares of preferred stock to shareholders

A. Increases preferred stock outstanding.

B. Has no effect on preferred stock outstanding.
C. Increases preferred stock authorized.
D. Decreases preferred stock authorized.

33. Upon receipt from a shareholder, which of the following donations involve a
credit to donated capital?

I. Donation of cash
II. Donation of shares of another entity
III. Donation of entity’s own shares

A. I and II
B. II and III
C. I and III
D. I, II and III
34. Represents the portion of the authorized share capital that is subscribed but
not yet issued.

A. Unissued share capital

B. Subscribed share capital.
C. Share capital
D. Discount on share

35. If Victory Corporation issues 2,000 ordinary shares of P5 par value stock for
P140,000.

A. Common Stock will be credited for P140,000.

B. Paid-In Capital in Excess of Par Value will be credited for P10,000.
C. Paid-In Capital in Excess of Par Value will be credited for P130,000.
D. Cash will be debited for P130,000

36. The amount of a cash dividend liability is recorded on the date of record
because it is on that date that the persons or entities who will receive the
dividend are identified.

A 10% stock dividend will increase the number of shares outstanding but the
book value per share will decrease.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

37. Fame Corporation owns 4,000,000 shares of stock in BPI Corporation. On

December 31, 2013, Fame distributed these shares of stock as a dividend to its
stockholders. This is an example of a:

A. property dividend.
B. liquidating dividend.
C. stock dividend.
D. cash dividend.

38. Which of the following is included as legal capital of a par value share?
I. Share Capital III. Subscribed Share Capital
II. Share Premium in excess of par.

A. I and II
B. II and III
C. I and III
D. I, II and III

39. When preferred stock is cumulative, preferred dividends not declared in a

period are

A. considered a liability.
B. called dividends in arrears.
C. distributions of earnings.
D. never paid.

40. On June 30, 2014, when Vida Corporation’s stock was selling at P65 per share,
its equity accounts were as follows:

Share Capital (par value P25; 40,000 shares issued P1,000,000

Premium on share capital 600,000
Retained earnings 4,200,000

If a 100% stock dividend were declared and distributed, share capital will
become

A. P1,000,000.
B. P2,600,000.
C. P2,000,000.
D. P3,200,000.

41. The cost of treasury shares acquired for noncash consideration is usually
measured by carrying amount of the noncash asset surrendered

If treasury shares are reissued for noncash consideration, the proceeds shall be
measured by carrying amount of the noncash consideration received

Which of the above statements is (are) incorrect?

A. Only the first statement

B. Only the second statement
C. Both statements
D. None from the statements

42. Which of the following is included in shareholder’s equity as part of

contributed capital?

I. Preference Share Capital – Redeemable Preference Shares

II. Preference Share Capital – Callable Preference Shares
III. Share Dividends Payable

A. I and II
B. II and III
C. I and III
D. I, II and III
E. Answer not given.

43. The amount of equity distributed to shareholders out of its profitable

operations is called

A. share capital
B. subscribed capital.
C. retained earnings.
D. dividends

44. The statement of financial position of the partnership of A, B and C shows the
following information:

Cash 40,000 Liabilities 300,000

Noncash assets 720,000 B, Loan 64,000
C, Loan 20,000
A, Capital (50%) 250,000
B, Capital (30%) 86,000
C, Capital (20%) 40,000
Total 760,000 Total Liab. & Equity 760,000

The non-cash assets are sold for ₱320,000. Partner C is the only solvent partner.
In the settlement of the partners’ claims, how much did Partner B receive?
a. 50,000
b. 30,000
c. 22,500
d. None

45. In 2013, Good Corp. acquired 15,000 shares of its own P10 par value ordinary
share at P18 per share. In 2014, David issued 10,000 of these shares at P25 per
share. David uses the cost method to account for its treasury stock transactions.
What accounts and what amounts should David credit in 2014 to record the
issuance of the 10,000 shares?

Treasury Additional Retained Common

Stock Paid-in Capital Earnings Stock

A. P180,000 P70,000
B. P180,000 P 70,000
C. P240,000 P10,000
D. P170,000 P70,000 $10,000

46. If a corporation is authorized to issue 1,000 shares of P50 ordinary stock, it is

said to have P50,000 of stock outstanding.

Minimum legal capital requirements are intended to protect creditors by

requiring a minimum level of net assets.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

47. The shareholders' equity section of Melrose Corporation as of December 31,

2013, was as follows:

Ordinary share capital, par value P2; authorized 20,000 shares;

issued and outstanding 10,000 shares P 20,000
Paid-in capital in excess of
par 30,000
Retained
earnings 90,000
$140,000
 On March 1, 2014, the board of directors declared a 10% stock dividend, and
accordingly 1,000 additional shares were issued. On March 1, 2014, the fair
market value of the stock was P6 per share. For the two months ended February
28, 2014, Melrose sustained a net loss of P10,000.

What amount should Melrose report as retained earnings as of March 1, 2014?

A. P74,000.
B. P78,000.
C. P84,000.
D. P88,000.

48. Tommy, Inc. has outstanding 200,000 shares of P2 par ordinary shares and
40,000 shares of no-par 8% preferred stock with a stated value of P5. The
preferred stock is cumulative and nonparticipating. Dividends have been paid
yearly except for the past two years and the current year. Assuming that P42,000
will be distributed as a dividend in the current year, how much will the preferred
sharehollders receive?

A. P14,000.
B. P16,000.
C. P32,000.
D. P42,000.

49. A, B, and C are partners in ABC Partnership and share profits and losses in the
ratio of 5:3:2, respectively. The partners have agreed to liquidate the partnership.
Prior to liquidation, the partnership balance sheet shows the following book
values.

Cash 25,200
Non-cash 297,600
Notes payable to C 38,400
Other liabilities 184,800
A, capital 72,000
B, capital (12,000)
C, capital 39,600

Liquidation expenses of ₱16,800 are paid. Non-cash assets with a book value of
₱240,000 are sold for ₱216,000. All the partners are personally insolvent. How
much cash should C receive?

a. 37,600
b. 39,600
c. 46,458
d. 74,571

50. An analysis of shareholders' equity of Knowledge Corporation as of January 1,

2014, is as follows:

Ordinary share capital, par value P20; authorized 200,000 shares;

issued and outstanding 180,000
shares P3,600,000
Paid-in capital in excess of
par 1,800,000
Retained
earnings 1,520,00
0
Total P6,920,000

Knowledge uses the cost method of accounting for treasury stock and during
2014 entered into the following transactions:

Acquired 5,000 shares of its stock for P150,000.

Sold 4,000 treasury shares at P35 per share.
Sold the remaining treasury shares at P20 per share.
Assuming no other equity transactions occurred during 2014, what should
Knowledge report at December 31, 2014, as total additional paid-in capital?

A. P1,790,000
B. P1,800,000
C. P1,810,000
D. P1,830,000

51. Ten thousand shares of P10 par, 8% cumulative, participating preferred stock
are outstanding. If dividends have been passed for the preceding 2 years and no
dividend has been paid in the current year, how much should the preferred
shareholders receive as dividends before a dividend can be declared on ordinary
shares for the current year?

A. P32,000
B. P24,000
C. P80,000
D. ordinary shares should first receive dividends.

52. The declaration and issuance of a stock dividend larger than 25% of the
shares previously outstanding

A. increases ordinary shares outstanding and increases total shareholders' equity.

B. decreases retained earnings but does not change total shareholders' equity.
C. may increase or decrease paid-in capital in excess of par but does not change total shareholders'
equity.
D. increases retained earnings as well as total shareholders' equity.

53. At the date of declaration of a small ordinary share dividend, the entry
should not include

A. credit to Ordinary Share Dividend Payable.

B. a credit to Paid-in Capital in Excess of Par.
C. a debit to Retained Earnings.
D. All of these are acceptable.

54. On August 11, 20x1, Anton, Moira and Kelly form a partnership investing cash
of ₱30,000, ₱27,000 and ₱8400, respectively. The partners share profits and losses
30%, 20% and 20%, respectively. On December 31, 20x1, they have cash of ₱2,000
and non-cash assets of ₱95,000; liabilities are ₱51,200. On this date, they decide
to go out of business and sell all the assets for ₱60,000. Kelly has personal assets
of ₱3,000 that may, if necessary, be used to meet partnership obligations. How
much should be distributed to Moira upon liquidation of the partnership?

a. 0
b. 4,080
c. 8,000
d. 9,720

55. Which of the following is not a right or preference associated with preferred
stock?
A. The right to vote.
b. First claim to dividends
C. Preference to corporate assets in case of liquidation
D. To receive dividends in arrears before common stockholders receive dividends.

56. Cumulative preferred stock carries the right to be paid both current and all
prior periods' unpaid dividends before any dividends are paid to ordinary
shareholders.

Retained earnings generally consist of a company's cumulative net income less

any net losses and dividends declared since its inception.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

57. Creditors have no right over the personal assets of the investor(s) of a/an

A. sole proprietorship
B. general partnership
C. limited partnership
D. corporation

58. The purchase of treasury shares does not affect

I. Total shareholders’ equity

II. Total amount of shares outstanding
III. Total amount of shares issued.

A. I and II
B. II and III
C. I and III
D. Answer not given.

59. Partners Edong, Sally and Zarah decided to liquidate their partnership on
November 30, 2017. Their capital balances and profit and loss are as follows:

Capitals P&L ratio

Edong P 600,000 40%
 Sally 784,000 40%

Zarah 240,000 20%

The net income from January 1, 2017 to November 30, 2017 is P656,000. On
November 30, 2017, the cash balance is P520,000, and that of liabilities is
P1,160,000.

Edong is to receive P706,560 in the settlement of his interest.

Calculate the amount to be realized from the sale of non-cash assets?’

A. P2,530,400
B. P5,100,000
C. P3,860,000
D. P3,860,000

60. Organizational expenses of a corporation often include legal fees and

promoter fees.

Ordinary shareholders always share equally with all other shareholders in all
dividends.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

61. The initial owners of stock of a newly formed corporation are called directors.

By-laws are part of the articles of incorporation.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

62. The rate of return on common stock equity is calculated by dividing

A. net income less preferred dividends by average ordinary shareholders’ equity.
B. net income by average ordinary shareholders’ equity, if there are no preference shares.
C. net income less preferred dividends by ending ordinary shareholders’ equity.
D. a and b are acceptable.

63 .If shares are issued for a non-cash consideration, the measure should be

A. Fair value of shares issued.

B. Fair value of property received.
C. Par value of shares issued.
D. Carrying amount of asset received.

64. Starbright Corporation’s December 31, 2013 statement of Financial Position

showed the following:

8% preferred stock, P20 par value, cumulative, 20,000 shares

authorized; 10,000 shares
issued P 200,000
Ordinary stock, P10 par value, 2,000,000 shares authorized;
1,300,000 shares issued, 1,280,000 shares
outstanding 13,000,000
Paid-in capital in excess of par value – preferred
shares 40,000
Paid-in capital in excess of par value – ordinary
shares 18,000,000
Retained
earnings 5,100,000
Treasury stock (20,000
shares) 420,000

Total paid-in capital was:

A. P31,240,000.
B. P31,660,000.
C. P30,820,000.
D. P18,040,000.

65. The residual interest in a corporation belongs to the

A. management
B. creditors
C. preferred shareholders
D. ordinary stockholders

66. Sun Corporation was organized on January 1, 2013, with an authorization of

400,000 ordinary shares of stock with a par value of P6 per share. During 2013,
the corporation had the following capital transactions:

January 5 issued 225,000 shares @ P10 per share

July 28 issued 30,000 shares for land acquired with an appraised value
of P250,000

August 15 issued 10,000 shares for consultancy services rendered by Trias A- 1

Consultancy Services for a bill received by Sun Corporation for P120,000.

What is the total amount of additional paid-in capital as of December 31,

2014?

A. P900,000
B. P1,030,000
C. P70,000
D. P60,000

67. Each shareholder has a separate capital account in the shareholders' equity
section of the Statement of Financial Position.

The number of ordinary shares outstanding can never be greater than the
number of shares issued.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

68. What is the proper accounting treatment if two classes of shares are issued
for a lump-sum consideration?

I. The prioritized approach is to allocate the consideration using the fair values of
both shares.
II. If either of the two classes of shares only has the determinable fair value,
allocate the consideration using the residual approach.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

70. A dividend which is a return to stockholders of a portion of their original

investments is a

A. scrip dividend.
B. liability dividend.
C. property dividend.
D. liquidating dividend.

71. The investor receives a proportionate share in the profits earned by the
business except for the

A. proprietor
B. capitalist partner
C. industrial partner
D. shareholder

72. Contributed capital consists of:

I. Additional paid-in capital III. Retained Earnings

II. Donated Capital

A. I and II
B. II and III
C. I and III
D. I, II and III

73. A corporation has the following account balances: Ordinary share capital, P10
par value, P300,000; Paid-in Capital in Excess of Par Value, P1,350,000; Retained
earnings deficit of P100,000. Based on this information, the

A. legal capital is P300,000.

B. number of shares issued and outstanding are 20,000.
C. contributed capital is P1,350,000
D. total shareholders’ equity is P1,750,000

74. At the date of the financial statements, ordinary shares issued would exceed
outstanding common stock shares because of the
A. subscription price being higher than the par value.
B. declaration of a stock dividend.
C. purchase of treasury shares.
D. payment in full of subscribed stock.

75. Dividends may be declared and paid in cash, property, or stock.

Cash dividends are not a liability of the corporation until they are declared by the
Board of Directors

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

76. Noncumulative preferred dividends in arrears

A. are not paid or disclosed.

B. must be paid before any other cash dividends can be distributed.
C. are disclosed as a liability until paid.
D. are paid to preferred stockholders if sufficient funds remain after payment of the current
preferred dividend.

77. As soon as a corporation is authorized to sell stock, under the journal entry
method, an entry should be made recording the total value of the shares
authorized.

When no-par value stock does not have a stated value, the entire proceeds from
the issuance of the stock becomes legal capital.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.
78. ABC Co. is undergoing liquidation. Relevant information follows:

Receivable from A 7,200

Payable to B 14,400
A, Capital (50%) 59,400
A, Drawings (Dr.) 12,000
B, Capital (30%) 44,400
C, Capital (20%) 39,000
C, Drawings (Cr.) 4,800

· Total partnership assets are ₱211,200 (including ₱64,200 cash).

· C received ₱33,000 in the final settlement of the partners’ claims.

How much is the total loss on the liquidation?

a. 10,800
b. 31,200
c. 54,000
d. 64,200

79. The following data are provided:

December 31
2014
2013
10% Cumulative preferred shares, P50
par P200,000 P200,000
Ordinary shares, P5
par 240,000 180,000
Additional paid-in
capital 160,000 130,000
Retained
earnings 480,000 430,000
Net income 150,000

Additional information:
On May 1, 2014, 12,000 ordinary shares of stock were issued. The preferred
dividends were not declared during 2014. The market price of the ordinary stock
was P100 at December 31, 2014.
The book value per share of common stock at 12/31/14 is

A. 860 ÷ 48.
B. 400 ÷ 48.
C. 660 ÷ 48.
D. 880 ÷ 44.
80. Although preferred shareholders have a greater chance of receiving a regular
dividend, common shareholders have a greater chance of receiving large
dividends.

When the Board of Directors declares a cash or stock dividend, this action
decreases assets and retained earnings.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

81. Tommy, Inc. has outstanding 200,000 shares of P2 par ordinary shares and
40,000 shares of no-par 8% preferred stock with a stated value of P5. The
preferred stock is cumulative and nonparticipating. Dividends have been paid
yearly except for the past two years and the current year.

Assuming that P100,000 will be distributed as a dividend in the current year, how
much will the ordinary shareholders receive?

A. Zero.
B. P52,000.
C. P68,000.
D. P84,000.

82. Special rights often granted to preference shares include a preference for
receiving dividends and for the distribution of assets if the corporation is
liquidated.

Another key preference rights for preferred stock is the right to vote.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

83. Shares of stock are attractive to investors because these are easily
transferable and shareholders are not liable for the corporation's actions and
debts.

The price at which a share of stock is bought or sold is called par value.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

84. Paid-in capital is the total amount of cash and other assets the corporation
receives from its stockholders in exchange for common stock.

Authorized stock is the total number of shares outstanding.

A. Only the first statement is true.

B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

85. Tommy, Inc. has outstanding 200,000 shares of P2 par ordinary shares and
40,000 shares of no-par 8% preferred stock with a stated value of P5. The
preferred stock is cumulative and nonparticipating. Dividends have been paid
yearly except for the past two years and the current year. Assuming that P122,000
will be distributed, and the preferred stock is also participating, how much will
the ordinary shareholders receive?

A. P74,000.
B. P60,000.
C. P62,000.
D. P32,000.

86. A corporation is a legal entity separate from its owners.

Corporations are subject to substantially fewer regulations and laws than are
proprietorships and partnerships.
A. Only the first statement is true.
B. Only the second statement is true.
C. Both statements are true.
D. Both statements are false.

87. If management wishes to "capitalize" part of the earnings, it may issue a

A. cash dividend.
B. property dividend.
C. stock dividend.
D. liquidating dividend

88. Total shareholders' equity represents

A. a claim to specific assets contributed by the owners.

B. the maximum amount that can be borrowed by the enterprise.
C. a claim against a portion of the total assets of an enterprise.
D. only the amount of earnings that have been retained in the business.

89. The corporation may bids and pay for the delinquent subscription if there are
no bidders. The entry will require a debit to

A. treasury shares at the delinquent amount.

B. subscribed share capital at the delinquent subscription price.
C. paid in capital at the premium price.
D. debited to share capital at the par value.

90. Subscriptions receivable and other receivables from sale of shares which are
not collectible currently shall be presented as

A. Other asset
B. Current asset
C. Long-term investment
D. Deduction from the related subscribed share capital in the shareholders' equity section

91. Which of the following statements in relation to treasury shares is true?

A. Treasury shares shall be reported as a deduction, at cost, from the total paid in capital.
B. Treasury shares and unissued shares can be reported as total shares not outstanding with no
distinguishing comments.
 C. No reference need be made to donated treasury shares since the acquisition of such shares does
not restrict retained earnings.
D. Treasury shares shall be reported as a deduction, at cost, from the total shareholders' equity, and
the restriction on retained earnings occasioned by their acquisition must also be stated.

92. Loss on retirement of treasury shares shall be debited to

A. Retained earnings.
B. Share premium from treasury shares and then retained earnings.
C. Share premium from treasury shares, share premium from original issuance and then retained
earnings.
D. Share premium from original issuance, share premium from treasury shares and then retained
earnings.

93. Which of the following best describes a possible effect of treasury stock
transaction by a corporation?

A. May increase but not decrease retained earnings.

B. May increase net income if the cost method is used.
C. May decrease but not increase retained earnings.
D. May decrease but not increase net income.

94. Which of the following represents the largest number of ordinary shares?

A Treasury shares.
B. Issued shares.
C. Outstanding shares
D. Authorized shares

95. In accounting for issuance and subscription of shares, determine whether the
following statements are true or false:

I. If the entity is using the memorandum entry approach, share capital is a

residual account rather than a maintained account.
II. Any share premium or additional paid-in capital in relation to subscription
shall be recorded upon full payment of such subscription.

A. True, false
B. False, true
C. False, false
D. True, true
96. Starbright Corporation’s December 31, 2013 statement of Financial Position
showed the following:

8% preferred stock, P20 par value, cumulative, 20,000 shares

authorized; 10,000 shares
issued P 200,000
Ordinary stock, P10 par value, 2,000,000 shares authorized;
1,300,000 shares issued, 1,280,000 shares
outstanding 13,000,000
Paid-in capital in excess of par value – preferred
shares 40,000
Paid-in capital in excess of par value – ordinary
shares 18,000,000
Retained
earnings 5,100,000
Treasury stock (20,000
shares) 420,000

Total shareholders’ equity was:

A. P36,760,000.
B. P31,240,000.
C. P36,340,000.
D. P35,920,000.

97. When treasury share is purchased for more than the par value of the stock
and the cost method is used to account for treasury share, what account(s)
should be debited?

A. Treasury share for the par value and paid-in capital in excess of par for the excess of the purchase
price over the par value.
B. Paid-in capital in excess of par for the purchase price.
C. Treasury share for the purchase price.
D. Treasury share for the par value and retained earnings for the excess of the purchase price over
the par value.

98. The partnership of Jenson, Smith, and Hart share profits and losses in the
ratio of 5:3:2, respectively. The partners voted to dissolve the partnership when its
assets, liabilities, and capital were as follows:
Assets
Cash ₱ 40,000
Other assets 210,000
₱250,000
Liabilities and Capital
Liabilities ₱ 60,000
Jenson, Capital 48,000
Smith, Capital 72,000
Hart, Capital 70,000
₱250,000

The partnership will be liquidated over a prolonged period of time. As cash

becomes available, it will be distributed to the partners. Jenson is insolvent. The
first sale of noncash assets having a book value of ₱120,000 realized ₱90,000.
How much cash should be distributed to each partner after this sale?

a. Jenson ₱0; Smith ₱28,800; Hart ₱41,200.

b. Jenson ₱0; Smith ₱30,000; Hart ₱40,000.
c. Jenson ₱35,000; Smith ₱21,000; Hart ₱14,000.
d. Jenson ₱45,000; Smith ₱27,000; Hart ₱18,000.

99. Dividends are not paid on

A. noncumulative preferred stock.

B. treasury shares.
C. nonparticipating preferred stock.
D. Dividends are paid on all of these.

100. Partners Edong, Sally and Zarah decided to liquidate their partnership on
November 30, 2017. Their capital balances and profit and loss are as follows:

Capitals P&L ratio

Edong P 600,000 40%

Sally 784,000 40%

Zarah 240,000 20%

The net income from January 1, 2017 to November 30, 2017 is P656,000. On
November 30, 2017, the cash balance is P520,000, and that of liabilities is
P1,160,000.
Edong is to receive P706,560 in the settlement of his interest.
Calculate: (1) The loss on realization?
A. P 389,600
B. P 248,000
C. P 620,000
D. P 522,000