AKLAN STATE UNIVERSITY

SCHOOL OF MANAGEMENT SCIENCES

Banga, Aklan

Final Examination in BEC 1/ BCC 2

Name: Course: Date:

TEST I: IDENTIFICATION Write your answer in the space given before the number.
__________________1. The change in the relation of the partner ceasing to be associated in the carrying on the
business. (Dissolution)
__________________2. Method in dissolution where contributed capital is equal to agreed capital. (Bonus Method)
__________________3. Method in dissolution where contributed capital is less than the agreed capital. (Goodwill
method).
__________________4. The process of converting all assets of the business into cash. (Realization)
__________________5. The process where final payment to the outside creditor and partners made. (Liquidation)
__________________6. A financial report that shows the summary of winding up the affairs of the partnership including
the priority of cash distribution. (Statement of Liquidation)
__________________7. When non-cash assets of the partnership are sold at a lesser price than their recorded value the
partnership incurred. (Loss on Realization)
__________________8. Also known as piecemeal Liquidation which involved payments to creditors and partners as
proceeds of sale of non-cash assets are made. Cash payments to creditors and partners are on
installment basis as cash becomes available. (Installment Liquidation)
__________________9. Conservative approach to liquidation. It is prepared when there is availability of cash after
payment to the outside creditors was made. It indicates how the available cash should distributed to
partners. (Schedule of Safe Payment)
__________________10. An artificial being created by operation of law having the right of succession and the
powers, attributes and properties expressly provided by the law or incident to its existence.
(Corporation)
__________________11. Corporations issues shares of stock to the shareholders, who are entitled to receive
dividends representing their earnings from the corporation. (Stock Corporation)
__________________12. Corporations do not issue shares of stocks because they are created for civic, charitable
or religious purpose. (Non-Stock Corporation)
__________________13. They are called the founders of corporation. (Incorporators)
__________________14. Those who have made an agreement with the corporation to buy the corporate capital
stock at future payments. (Subscribers)
__________________15. Regulations, ordinances, rules or law adopted by any association or corporation for its
government. (By Laws)
__________________16. Shares that reacquired but not retired. (Treasury shares)
__________________17. It is also called excess over par value. (Share Premium)
__________________18. A shares that issued below its par value. (Watered Stock)
__________________19. A corporation that fails to comply with the requirements of law. (De Facto Corporation)
__________________20. A corporation established for charitable institution. (Eleemosynary Corporation)
(By Laws) (Non-Stock Corporation) (Schedule of Safe Payment)
(Loss on Realization) (Bonus Method) (Dissolution)
(Liquidation) (Corporation) (Statement of Liquidation)
(Installment Liquidation) (Realization) (Goodwill method)
(Stock Corporation) (Incorporators) (Subscribers)
(De Facto Corporation) (Watered Stock) (Treasury shares)
(Eleemosynary Corporation) (Share Premium)

TEST II: Multiple Choice Choose the letter that correspond to the best answer.

______1. The following instances dissolve a partnership.

a. Admission of a new partner c. Conversion of a partnership
b. Change in the name of the partnership d. Revaluation of partnership assets.
______2. Which of the following is not a caused of partnership dissolution?
a. Retirement of a partner c. Death of a partner
b. Admission of a new partner d. Change in civil status of a partner.

______3. If bonus is traceable to the existing partners, it is allocated among them according to the
a. Profit or loss agreement of existing partnership
b. Profit or loss agreement of new partnership
c. Capital ratio of existing partners
d. Goodwill to incoming partner.

______4. When a new partner is admitted by his direct investment in the partnership and if his agreed capital
credit is more than his total contributed capital.
a. Bonus to new partner c. No bonus to all partners
b. Bonus to old partners d. Claim from new partner

______5. The following transaction will affect the balance of the partnership total capital except
a. Retirement of a partner by settlement equal to his interest.
b. The partnership generates net income for the year.
c. Admission by purchase without implied goodwill, but bonus.
d. Permanent withdrawals by partners.

______6. The admission of new partner by direct investment in the partnership will result in the increase
a. In the partnerships assets
b. In total partnerships capital
c. The old partners capital
d. The partnerships assets and total capital

______7. If the new partner is admitted by purchase of interest of an old partner at an amount higher than its
book value, this will result in
a. Increase in total partnerships capital c. No change in partnerships net assets
b. Decrease in total partnerships net assets d. No change in old partners capital

______8. A capital deficiency can be eliminated by the following except

a. Offsetting against a partners loan c. Selling non-cash asset a gain
b. Additional investment d. Loss to the other partners

______9. A partners interest includes

a. Capital balances c. A only
b. Partners loan to the partnership d. A and B

______10. The order of partnership liquidation process is

i. Disburse cash
ii. Pay liabilities
iii. Sell assets
a. I, II, III c. III, II, I
b. II, I, III d. III, I, II

______11. In a partnership liquidation, a loss from sale of non-cash assets is allocated to the
a. Partner with the lowest capital balance
b. Partnership liabilities
c. Partners based on their capital balances
d. Partners based on the profit and loss sharing ratio

______12. Which of the following would not be considered a characteristic of a corporation?

a. Separate legal entity c. Mutual agency
b. Limited liability of shareholders d. Both A and B

______13. The maximum number of shares that the government gives a corporation permission to issue is the
a. Granted shares c. Issued shares
b. Authorized shares d. Outstanding shares
______14. A non-cash assets received in exchange for share capital is recorded at
a. Book value
b. Fair market value of non-cash assets received
c. Fair market value of shares
d. Par value of shares

______15. The Security and Exchange Commission (SEC) 25%, 25% rule means that
a. At least 25% of the total authorized share has been subscribed
b. At least 25% of the total subscriptions have been paid
c. A only
d. Both A and B

______16. Choose the situation that illustrate the minimum requirement of the law for corporate formation. Refer
your answer in #15.
Authorized Capital Subscribed Capital Paid in Capital
a P 100,000 P 5,0000 P 3, 125
b P 100,000 P 15,000 P 5, 000
c P 50, 000 P 12,500 P 3, 125
d P 50,000 P 12,500 P 5, 000

______17. It is the regulations ordinances, rules or laws adopted by any association or corporation for its
government
a. By-laws c. Articles of Incorporation
b. Policy d. Trustees or BOD rules and regulations

______18. Which of the following is not a characteristic of a corporation?

a. Separate legal existence c. Unlimited liability
b. Transferability of ownership d. Artificial being

______19. Z Company received P 750,000 for 25,000 share subscription 5 peso above par from its incorporators to
comply with the minimum incorporation paid-up share capital requirement. How much is the amount of share
premium above par?
a. P 125,000 c. P 187,500
b. P 150,000 d. P 200,000

______20. Using the given in # 19, how much is the par value per share.
a. P 10 c. P 25
b. P 20 d. P 30

______21. Which of the following is a disadvantage of the corporate form of business?

a. Corporation lacks mutual agency
b. Ownership shares can be easily transferred.
c. Ownership is separated from control of operation
d. Owners liability is limited.

______22. Person who compose the corporation whether as stockholders or members.

a. Incorporators c. Promoters
b. Corporators d. Subscriber

______23. Which of the following persons agrees to take or buy stocks from the corporations
a. Incorporators c. Stockholder
b. Member d. Subscriber

______24. A partnership liquidates and finds an excess cash, after payment of liabilities of P 100,000. The four
partners have equal capital balances and share profit and losses in the ratio of 10:20:30:40. The four partners
will receive a final distribution of cash as follows.
a. P 25,000; P 25,000; P 25,000; P 25,000
b. P 10,000; P 20,000; P 30,000; P 40,000
c. P 12,000; P 20,000; P 8,000; P 60,000
d. P 100,000; P 100,000; P 100,000; P 100,000
 ______25. When the partnership purchases a retiring partners interest, the settlement to retiring partners
includes the following except
a. Cash c. Depreciation expense
b. Equipments d. Notes payable

______26. Conn and Cass form a partnership and have capital balances of P100,000 and P200,000, respectively. If
they agree to admit Charr into the partnership, how much will he have to invest to have one-third interest?
a. P100,000 c. P150,000
b. P120,000 d. P200,000

______27. Castro contributes P120,000 for a 1/6 interest in a partnership. The total capital balances of the partners
prior to the admission of Castro is P360,000. If there is no assets revaluation is made prior to the admission of
Castro, what amount is credited to the capital account of Castro upon his admission?
a. P80,000 c. P120,000
b. P96,000 d. P160,000

______28. B company issued 20,000 share capital receiving land with fair value of P500,000. If the share capital is
no par and no stated value and the cost of the land is P200,000 for how much is the land to be recorded?
a. P 500,000 c. P 200,000
b. P 0 d. P 300,000

______29. C company have an authority to issue 100,000 shares at P10.00 par value. There is P550,000 share
issued. How many share is still unissued?
a. 55,000 shares c. 100,000 shares
b. 50,000 shares d. 45,000 shares

______30. D company issued 1,000 of its ordinary shares with P10 par for an equipment with book value of
P11,000 and a market value of P12,000. Ds ordinary shares was selling at 15 per share at the date of issuance.
The amount to be credited to share premium should be.
a. P1,000 c. P5,000
b. P2,000 d. P 0

GOODLUCK & GOD BLESS

Prepared by:

DOREEN D. LACHICA
Instructor III

ARJAY D. VILLANUEVA, CPA

Instructor

Noted by:

CECILE O. LEGASPI, PH,D.

Dean