OUR LADY OF FATIMA UNIVERSITY
QUEZON CITY CAMPUS
COLLEGE OF BUSINESS AND ACCOUNTANCY
FUNDAMENTALS OF ACCOUNTING 2
PRELIM EXAMINATION
FIRST SEMESTER: A.Y.2017-2018
GENERAL INSTRUCTIONS:
1. Use no.2 pencil only.
2. Supply all the information needed in the answer card.
3. Read each question carefully.
4. Shade the circle that corresponds to your answer.
5. Do not use your mobile while the exam is going on.
6. Sign the attendance sheet before you leave the examination room.
1. 1st statement: A general partner is not
bound by the obligation of the partnership.
2nd statement: Two or more persons may
form a partnership for the exercise of
profession.
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
2. 1st statement: A partnership begins from the
time the partnership contract is registered
with SEC.
2nd statement: A partnership has a juridical
personality separate and distinct from that
of the partners.
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
3. 1st statement: Partnership may exist for an
indefinite period time.
2nd statement: Partnership is created by
voluntary agreement of the partners.
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
4. 1st statement: Partnership is formed to make
profit.
2nd statement: Partners can contribute only
money or property to a common fund of a
partnership
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
5. 1st statement: The number of personalities
in a partnership is equal to the number of
partners.
2nd statement: all partners are liable up to
their personal properties.
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
Fundamentals of Accounting 2
6. 1st statement: Cash contributions of partners
are recorded at Fair value
2nd statement: Non-cash assets contributed
to the partnership can be recorded at Fair
Value.
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
7. 1st statement: Skills contributed by an
industrial partner should be recorded by
debiting an asset and crediting his capital.
2nd statement: An agreement stating that
one partner will not share in the profit is
valid.
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
8. 1st statement: Five persons can for a
partnership.
2nd statement: A partnership may be
dissolved at any time by any of the partners.
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
9. 1st statement: Liability of a partner assumed
by the partnership is recorded by debiting
the liability and crediting his capital.
2nd statement: Liability of a partner not
assumed by the partnership is recorded by
crediting the liability and debiting his capital.
a. Both are true
b. Both are false
c. 1st is true, 2nd is false
d. 1st is false, 2nd is true
10. 1st statement: if a partner received a bonus
in the distribution of the partnership income,
he is entitled to receive that bonus in cash.
2nd statement: The purpose, nature, and
other provision of the partnership are stated
in a public instrument called Articles of
Incorporation.
a. Both are true
b. Both are false
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 c. 1st is true, 2nd is false PROBLEM 1: (Rounding off: 2 digits)
d. 1st is false, 2nd is true
11. One who contributes money or property to One June 1, 2017, Elsa and Anna decided
the partnership: to form a partnership. Elsa contributed a parcel of
a. Capital Partner c. Capitalist Partner land that cost her P20,000 and P500,000 cash.
b. General Partner d. Dormant Partner Anna contributed her inventories costing P300,000
12. Partnership in which no time is specified and P200,000 cash. The partners agreed that the
and not formed for specific undertaking: inventories should be write-down to its Net
a. Partnership of will c. Partnership at will Realizable Value of P250,000. The Fair Value of
b. Partnership in will d. Partnership at well Inventories is P275,000. Immediately after the
13. A partnership that complied with all legal formation of the Partnership, the land was sold for
requirements: P35,000.
a. De Hure c. De Jure On July 31, Elsa made an additional
b. De Fecto d. De facto investment of P150,000. Anna withdrew P50,000
14. One whose liability extends to his separate cash on September 1 and made an additional
personal property: investment of P150,000 on October 31.
a. Limited Partner c. General Partner
b. Unlimited Partner d. Major Partner On December 31, 2017, the partnership
15. One who contributes labor, skills, talent or earned P800,000 of income. The partners agreed
service: to divide the profit by providing monthly salaries of
a. Industrious Partner P20,000 to Elsa and P25,000 to Anna, 10% interest
b. Skillful Partner on weighted average capital to each partners, a
c. Talented Partner bonus of 20% of income after salaries and interest
d. Industrial Partner but before bonus should be given to Elsa and the
16. One who is designated to wind up or settle balance is to be divided equally.
the affairs of the partnership after
dissolution:
a. Managing Partner
1. How much is the capital credited to Anna on
b. Liquidating Partner
June 1, 2017?
c. Dissolution Partner
2. How much is the capital credited to Elsa on
d. Silent Partner
June 1, 2017?
17. One who is liable only to the extent of his
3. How much is the total asset of the
Capital Contribution:
partnership after formation on June 1,
a. Dormant Partner c. Unlimited Partner
2017?
b. Limited Partner d. Secret Partner
4. How much is the total Interest distributed to
18. On June 1, 2017, Pahe and Nante formed
the partners?
Fajenante Partnership. Pahe contributed a
5. How much is the bonus given to Elsa?
land that cost him P10, 000. Nante
6. How much is the share of Elsa in the
contributed P30, 000 cash. Four hours after
partnership’s income?
the formation of the partnership, the land
7. How much is the share of Anna in the
was sold for P30, 000. How much should be
partnership’s income?
recorded in Pahe’s Capital account on
formation of the partnership?
a. P30, 000 c. P25, 000
b. P15, 000 d. 10, 000
19. There cannot a partnership without
contribution of money, property or industry:
a. Co-ownership of asset
b. Mutual agency
c. Mutual Contribution
d. limited life
20. Sometimes termed Dormant Partner.
a. Limited Partner c. Capitalist Partner
b. Secret Partner d. None of the above

Fundamentals of Accounting 2 Page 2

PROBLEM 2: PROBLEM 3:

On January 1, 2017, James and Jones On January 1, 2017, A and B agreed to

formed a partnership. James invested P500,000 form a partnership contributing their respective
cash while Jones contributed his equipment with a assets and equities subject to adjustments. On that
mortgage payable that the partnership will date, the following were provided:
assumed. Mortgage payable is P120,000 while the
equipment has a carrying value amount of A B
P750,000. The partners agreed that the equipment Cash P28,000 P62,000
should be measured at P680,000. Accounts Receivable 200,000 600,000
At the end of the year, the partnership has a Inventories 120,000 200,000
profit of P575,000. The following are their Land 600,000
agreement with regards to division of profit and Building 500,000
loss: Furniture and Fixtures 50,000 35,000
Intangible assets 2,000 3,000
a. Annual salary or P90,000 and P60,000 to Accounts Payable 180,000 250,000
James and Jones respectively. Other Liabilities 200,000 350,000
b. interest of 10% based on initial capital Capital 620,000 800,000
c. 15% bonus to James on excess income
after salaries, interest and bonus.
d. Jones will receive twice the amount of what The following adjustments were agreed upon:
James will receive in the remaining balance.
a. Accounts receivable of P20,000 and
1. How much is the total assets of the partnership P40,000 are uncollectible in A’s and B’s
after formation? respective books.
2. How much is the share of James in the b. Inventories of P6,000 and P7,000 are
partnership’s profit? worthless in A’s and B’s respective books.
c. Intangible assets are to be written off in both
3. How much is the share of Jones in the books.
partnership’s profit?
The partners agreed that monthly salary of P12,000
4. If the partnership profit is P256,000, how much is and P15,000 is to be given A and B respectively,
the share of James? 10% interest on initial investment for each partners,
a 12% bonus to A on excess income after salaries
5. based on No. 4, how much is the share of and interest but before bonus and the balance in
Jones? 1:2 ratio for A & B respectively.

The partnership’s profit at year end is P900,000.

1. How much is the partnership’s total capital

after formation?
2. How much is the share of A in the
partnership’s profit?
3. How much is the share of B in the
partnership’s profit?
4. If the income summary has a debit balance
of P50,000 before closing, How much is the
ending capital of A?
5. Based on No. 4, How much is the share of
B?

Fundamentals of Accounting 2 Page 3

PROBLEM 4:

On January 1, 2017, Carla and Carlo

decided to form a partnership.

The following is the agreement of partners Carla

and Carlos with regards to the division of profit or
loss of their partnership:

a. Carla will receive annual salary of 120, 000

while Carlo will have P7, 500 monthly.
b. Each partner will receive P25, 000 as
interest on their initial capital.
c. Balance is to be divided in a ratio of 1:3 for
Carla and Carlo respectively.

1. If Carla’s Capital was debited for P40,000

after the division of profit or loss, How much
is the partnership’s Profit or Loss?
2. Based on No. 1, How much is the share of
Carlo?
3. If Carla’s capital is neither to be debited nor
credited after the division of profit or loss,
how much is the partnership’s profit or loss?
4. Assuming that the partners agreed to give
Carla a bonus of 5% on excess income after
salaries, interest and bonus, how much is
the partnership’s profit if the bonus allocated
to Carla is P5, 000?
5. Based on No. 4, how much is the share of
Carlo?

PREPARED BY:

JAY RODANTE NANO

Faculty/CBA

CHECKED AND APPROVED BY:

VICTOR JEROD ANDRES

Program Head-Accountancy

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