Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Office of the Vice President for Academic Affairs
COLLEGE OF ACCOUNTANCY AND FINANCE

First Evaluation Exams

Practical Accounting 2

1. Charlie and Delta formed a partnership. Charlie invested cash worth P85,000 and a machine. On the other
hand, Delta contributed cash worth P55,000 and an equipment which has a mortgage of P35,000 which
Delta will pay personally. The total capital after formation was P360,000. They also further agreed to reflect
55:45 ratio as to their capital balances respectively. No other investment or withdrawal occurred other than
mentioned to reflect their capital ratio agreement.

How much is the fair value of the machine?

a. P113,000
b. P105,000
c. P107,000
d. P115,000

2. Using the preceding information, how much is the fair value of the equipment?
a. P115,000
b. P107,000
c. P150,000
d. P142,000

3. On January 1, 2020, Len, May and Nancy decided to form a business partnership to operate supermarket.
Len and May both owned a grocery business with the Statements of Financial Position as of December 31,
2019:
LEN MAY
Cash P 10M P 20M
Accounts Receivable 20M 30M
Inventories 70M 40M
Property, Plant and Equipment 50M 10M
Accounts Payable 40M 20M
Notes Payable
10% 30M
5% 50M
Capital 80M 30M

The following additional notes are provided:

a. Len and May will contribute all its assets and liabilities to the newly formed partnership.
b. The parties agree to provide 10% and 20% allowance for bad debts to the accounts receivable of
Len and May, respectively.
c. The inventories of Len and May are reported at historical cost and have net realizable value of
P60M and P45M, respectively.
d. The PPR of Len and May have not been depreciated and should be depreciated by 40% and 30%,
respectively.
e. The interest payable on both notes payable were unrecorded and unpaid since the date of contract.
Len’s note payable is dated April 1, 2019 while May’s note payable is dated June 30, 2019.
f. Nancy shall have 20% interest in the partnership upon contribution of sufficient cash.

What is the amount of cash to be contributed by Nancy on January 1, 2020?

a. P16,375,000
b. P17,625,000
c. P15,825,000
d. P18,475,000
4. On January 1, 2019, A, B and C formed ABC Partnership with original capital contribution of P300,000,
P500,000 and P200,000. A is appointed as managing partner.

During 2019, A, B and C made additional investments of P500,000, P200,000 and P300,000, respectively.
At the end of 2019, A, B and C made drawings of P200,000, P100,000 and P400,000, respectively. At the
end of 2019, the capital balance of C is reported at P320,000. The profit or loss agreement of the partners is
as follows:
 10% interest on original capital contribution of the partners.
 Quarterly salary of P40,000 and P10,000 for A and B, respectively.
 Bonus to A equivalent to 20% of Net Income after interest and salary to all partners.
 Remainder is to be distributed equally among the partners.

What is the partnership profit for the year ended December 31, 2019?
a. P900,000
b. P1,020,000
c. P1,050,000
d. P960,000

5. What is A’s share in partnership profit for 2019?

a. P190,000
b. P340,000
c. P540,000
d. P200,000

6. What is B’s share in partnership profit for 2019?

a. P200,000
b. P290,000
c. P50,000
d. P90,000

7. DD and EE was organized and began operations of March 1, 2019. On that date, DD invested P75,000 and
EE invested land and building with current fair value of P40,000 and P50,000, respectively. EE also
invested P30,000 in the partnership on November 1, 2019 because of its shortage of cash. The partnership
contract includes the following remuneration plan:

DD EE
Annual Salary P 9,000 P 12,000
Annual interest on average capital account balance 10% 10%
Remainder 60% 40%

The annual salary was to be withdrawn by each partner in 12 monthly instalments. During the fiscal year
ended, February 28, 2020. DD and EE had net sales of P250,000, cost of goods sold of P140,000 and total
operating expenses of P50,000 (excluding partners’ salaries and interest on average capital account
balances). Each partner made monthly cash drawings in accordance with partnership contract.

What is the share of partner DD in the net income?

a. P29,400
b. P33,000
c. P23,400
d. P36,000

8. Assuming that the annual salary are to be recognized as operating expenses and the total operating expenses
of P50,000 includes the partners’ salaries expenses but excluding interest on partners’ average capital
account balances. The share of partner DD in the net income in 2020:
a. P29.400
b. P33,000
c. P36,000
d. P23,400

9. Using the same information from the preceding number, the capital balance of each partner on March 1,
2020 is:
a. DD, P95,400; EE, P138,600
 b. DD, P66,000; EE, P82,000
c. DD, P108,000; EE, P147,000
d. DD, P99,000; EE, P135,000

10. Juliet and Kilo have capital balances of P200,000 and P220,000 respectively before admission of Lima.
Their profit and loss agreement was 35:65. Lima was to be admitted for 40% interest in the partnership and
20% in the profits and losses by contributing a used machine which had a cost of P205,000 and an
appraised value of P180,000. After admission of Lima, Juliet and Kilo agreed to share profits and losses
equally. At the end of the year, the new partnership generated net income of P130,000.

How much is the capital balance of Juliet after admission of Lima?

a. P224,500
b. P221,000
c. P231,000
d. P247,000

11. E and M are partners with capital balances of P30,000 and P70,000, respectively. E has a 30% interest in
profits and losses. At this time, the partnership has decided to admit R and L as new partners. R contributes
cash of P55,000 for a 20% interest in capital and a 30% interest in profits and losses. L contributes cash of
P10,000 and an equipment for a 25% interest in capital and 35% interest in profits and losses.

If bonus amounting to P18,250 is given to old partners, what is the value of the equipment contributed by
L?
a. P31,750
b. P43,750
c. P50,000
d. P50,138

12. The following are the capital account balances and the profits and loss ratio of the partners in Motor
Company on December 31, 2019:
Capital Account
Profit and Loss Ratio
Balances
MM P 60,000 25%
TT 80,000 50%
RR 200,000 25%

On January 1, 2020, LL is admitted to the partnership under the following agreement:

a. LL is to share 1/3 in the profits and los while the other partners continue to participate in profits and
loss ratio in their original ration.
b. LL is to pay TT, P24,000 for a ¼ interest of the latter’s equity in the partnership net assets and is to
invest P140,000 cash in the partnership.
c. LL’s capital account after the admission is to show P150,000 and the total capital is P520,000.

The capital account balances of the partners after LL’s admission are:
a. MM, P73,500; TT, P83,000; RR, P213,500; LL, P150,000
b. MM, P62,500; TT, P65,000; RR, P202,500; LL, P150,000
c. MM, P69,183; TT, P78,372; RR, P209,168; LL, P150,000
d. MM, P72,500; TT, P85,000; RR, P212,500; LL, P150,000

13. The new profit and loss ratio of all partners after LL’s admission:
a. MM, 25.00%; TT, 50.00%; RR, 25.00%; LL, 33.33%
b. MM, 18.75%; TT, 37.50%; RR, 18.75%; LL, 25.00%
c. MM, 25.00%; TT, 25.00%; RR, 25.00%; LL, 25.00%
d. MM, 16.67%; TT, 33.33%; RR, 16.67%; LL, 33.33%

14. XX and YY are partners who have capital of P300,000 and P240,000 sharing profits in the ratio of 3:2. ZZ
is admitted as a partner upon investing P250,000 for 25% interest in the firm. Profits are allocated equally.
Given the choice between goodwill and bonus method, ZZ will:
a. Prefer bonus method due to ZZ’s gain of P17,500
b. Prefer bonus method due to ZZ’s gain of P70,000
c. Prefer goodwill method due to ZZ’s gain of P70,000
d. Be indifferent for the goodwill and bonus method are the same.
15. On December 31, 2019, the Statement of Financial Position of UFC Partnership shows the following data
with profit or loss sharing of 2:3:5.
Cash P 15M Liabilities to others P 20M
Non Cash Assets 40M U, Capital 15M
F, Capital 12.5M
C, Capital 7.5M

On January 1, 2020, the partners decided to wind up the partnership affairs. During the winding up,
liquidation expenses amounted to P2,000,000 were paid. Non-cash assets with book value of P30,000,000
were sold during January. 40% of total liabilities were also paid during January. P3,000,000 cash was
withheld during January for future liquidation expenses. On January 31, 2020, partner U received
P10,000,000.

What is the amount received by partner F on January 31, 2020?

a. P2,500,000
b. P7,500,000
c. P5,000,000
d. P3,000,000

16. Using the same data, what is the net proceeds from the sale of non-cash assets during January 2020?
a. P25,000,000
b. P20,000,000
c. P22,000,000
d. P23,000,000

17. Silverio, Domingo, Reyes, and Pascual are partners sharing earnings in the ratio of 3/21; 4/21; 6/21 and
8/21. The balances of their capital accounts on December 31, 2019 are as follows:
Silverio P 500
Domingo 12,500
Reyes 12,500
Pascual 4,500
P 30,000
The partners decided to liquidate and they accordingly convert the non-cash assets into P11,600 of cash.
After paying the liabilities amounting to P1,500, they have P11,100 to divide. Assume that a debit balance
of any partner’s capital is uncollectible.

The book value of the non-cash assets amounted to:

a. P12,600
b. P22,700
c. P40,500
d. P31,500

18. Using the same data, the share of Silverio in the loss upon conversion of the non-cash assets into cash was:
a. P2,486.00
b. P2,628.50
c. P2,700.00
d. None

19. Finish Corporation has been undergoing liquidation since January 1. Its condensed statement of realization
and liquidation for the month of June is presented below:
Interest received in cash on investment P 10,500
Purchases on account 105,000
Liabilities liquidated 2,450,000
Assets realized 2,100,000
Payment of expenses of trustee 525,000
Liabilities to be liquidated, June 4,574,500
Sales on Account 50,000
Assets to be realized, July 1 2,940,000
Liabilities not liquidated, June 30 2,229,500
Sales for cash 1,750,000
Assets not realized, May 31 6,650,000

What is the net gain (loss) on realization and liquidation?

 a. 1,225,000
b. (479,500)
c. (1,225,000)
d. 479,500

20. On November 1, 2020, Speed Motor which maintains a perpetual inventory records sold a new automobile
to Rapids for P6,800,000. The cost of the car to the seller was P5,815,000.

The buyer paid 30% down and received P640,000 allowance on an old car traded, the balance being
payable in equal monthly installment payments commencing the month of sale.

The monthly amortization was P240,000 inclusive of 12% interest on the unpaid amount of the obligation.

The car traded-in has a wholesale value of P900,000 after expending reconditioning cost of P180,000.
Normal gross profit for trade-in is 20%.

How much is the realized gross profit on instalment sales during 2020 under PFRS 15?
a. 820,596
b. 855,596
c. 885,000
d. 804,897

21. On January 1, 2018, Solid Company accepted a long-term construction project for an initial contract price
of P1,000,000 to be completed on June 30, 2020. On January 1, 2019, the contract price was increased to
P1,500,000 by reason of change in the design of the project. The outcome of the construction contract can
be estimated reliably. The project was completed on December 31, 2020 which resulted to penalty
amounting to P200,000. The entity provided the following data concerning the direct costs related to the
said project for 2018 and 2019:

2018 2019
Cost during the year 440,000 680,000
Remaining estimated costs to complete at year-end 660,000 280,000

What is the realized gross profit for the year ended December 31, 2019?
a. 200,000
b. 80,000
c. 180,000
d. 100,000

22. What is the balances of construction in progress on December 31, 2019?

a. 1,200,000
b. 1,020,000
c. 1,120,000
d. 900,000

23. On January 1, 2018, Hardrock Company started the construction of a building at a fixed contract price of
P1,000,000. On the same date, the customer paid a mobilization fee equal to 5% of contract price that will
be deductible from the first billing. The outcome of construction contract cannot be estimated reliably.

During 2018, the entity billed the customer equivalent to 30% of the contract price. During 2019, the entity
billed again the customer amounting to 20% of the contract price. During 2020, the entity billed again the
customer amounting to 40% of the contract price. The remaining billing was made at the year of completion
of the project.

The entity made collection from the customer at the end of 2018, 2019 and 2020, in the amount of
P120,000, P450,000 and P180,000, respectively. The entity provided the following data concerning the
direct costs related to the said project:

2018 2019 2020

Cumulative costs incurred at year-end 360,000 800,000 870,000
Remaining estimated costs to complete at year-end 840,000 250,000 50,000
 What is the realized gross profit for the year ended December 31, 2019?
a. 50,000
b. 200,000
c. 150,000
d. -0-

24. What is the excess of construction in progress over progress billings or excess of progress billings over
construction in progress on December 31, 2020?
a. 30,000 excess billings
b. 80,000 excess billings
c. 20,000 excess construction in progress
d. 50,000 excess construction in progress

25. What is the balance of accounts receivable on December 31, 2020?

a. 150,000
b. 100,000
c. 120,000
d. 50,000

26. Filvida Inc. entered into a long-term construction contract in January 1, 2020 to construct shopping mall at
a fixed contract price of P10M. Filvida determined that the outcome of the construction cannot be estimated
reliably. Filvida normally bills its customer 50% at the middle of first year, 20% at the middle of second
year and the balance at the date of completion of project. A mobilization fee of 10% of the contract price
(deductible from the 2021 bill) is payable 30 days after the contract signing. The contract provides that the
customer shall pay 80% of the amount billed during the year on or before the December 31 subject to
retention/withholding by customer of 5% of amount to be paid by the customer which is intended to protect
the customer from the contractor failing to adequately complete its obligation under the contract. The
customer satisfactorily complied with the contractual provision. Filvida’s accountant provide the following
data for the years ended December 31, 2020 and December 31, 202:

Dec. 31, 2020 Dec. 31, 2021

Cost incurred the date P 4,000,000 P 7,000,000
Estimated costs to complete as of this date 9,000,000 4,000,000

What is the 12/31/2021 (1) Due from/(to) Customer, 12/31/2021 (2) excess of construction in progress over
progress billings and 2021 (3) realized gross profit/(loss), respectively to be presented by Filvida Inc.?
a. 680,000 and (1,000,000) and 2,000,000
b. 400,000 and (3,000,000) and -0-
c. 1,400,000 and 4,000,000 and (3,000,000)
d. 320,000 and (2,000,000) and (1,000,000)

27. On April 1, 2020, GOOD Inc. entered into a franchise agreement with BEST franchisee. The initial
franchise fees agreed upon is P246, 900, of which P46,900 is payable upon signing and the balance to be
covered by a non-interest bearing note payable in four equal annual installments. The down payment is
refundable within 100 days. BEST Inc. has a high credit rating, thus, collection of the note is reasonably
assured. Out-of-pocket costs of P125,331 and P12,345 were incurred for direct expenses and indirect
expenses respectively. Prevailing market rate is 9%. PV factor is 3.2397.

For the fiscal year ended June 30, 2020, how much revenue from franchise fee will the franchisor
recognize?
a. -0-
b. 208,885
c. 246,900
d. 83,554

Use the following information for questions 41 to 44.

The following information was available on March 31, 2019 for Bankrupt Corporation, which they cannot
pay their liabilities when they are due:
Carrying
Amount
Cash P 16,000
 Trade accounts receivable (net): Current fair value equal to carrying amount 184,000
Inventories: Net realizable value, P72,000; pledged on P 84,000 of notes payable 156,000
Plant assets: Current fair value, P296,600; pledged on mortgage payable 536,000
Accumulated depreciation of plant assets 108,000
Supplies: Current fair value, P6,000 8,000
Wages payable, all earned during March 23,200
Property taxes payable 4,800
Trade accounts payable 240,000
Notes payable, P84,000 secured by inventories 160,000
Mortgage payable, including accrued interest of P1,600 201,600
Common stock, P5 par 400,000
Deficit (237,600)

Determine:
28. The estimated losses on realization of assets:
a. -0-
b. 84,000
c. 158,400
d. 244,400

29. The estimated gains on realization of assets:

a. -0-
b. 84,000
c. 158,400
d. 244,400

30. DJD Builders Construction Company enters into a contract with a customer to build a 50 kilometers road
for P100,000,000 with a performance bonus of P60,000,000 that will be paid based on the timing of
completion. The amount of the performance bonus decreases by 10% per week for every week beyond the
agreed-upon completion date. The contract requirements are similar to contracts that DJD Builders has
performed previously and management believes that such experience is predictive for this contract.
Management estimates that there is a 60% probability that the contract will be completed by the agreed-
upon completion date, a 30% probability that it will be completed one week late, and only a 10%
probability that it will be completed two weeks late. Determine the probability-weighted amount for the
management to determine the transaction price.
a. 96,000,000
b. 111,000,000
c. 142,200,000
d. 157,000,000

31. PB Corp, which began operation on January 1, 2019, appropriately uses the installment sales method for all
its sales to customers. The following information is available for the years ended December 31:
2019 2020
Cost of installment sales P 960,000 P 1,920,000
Gross Profit realized on sales made in:
2019 144,000 86,400
2020 -0- 192,000
Gross Profit Rate (based on sales) 30% 40%

How much is the total balance of installment receivable at December 31, 2020 using the old standard?
a. 2,265,600
b. 3,323,429
c. 1,632,000
d. 1,176,000

32. The following amounts were taken from the statements of affairs for ABC Company:

Unsecured liabilities with priority P131,250

Stockholders’ equity 472,500
Unrecorded liquidation expenses 59,060
Unsecured liabilities without priority 1,181,250
Loss on realization of assets 590,625

How much is the net free assets?

 a. P1,004,065 b. P1,021,685 c. P1,063,125 d. P1,135,315

A company that was to be liquidated had the following liabilities:

Income Taxes P 10, 000
Notes Payable secured by land 100, 000
Accounts Payable 51, 050
Salaries Payable (P10, 950 for employees 1 and P2, 000 for employee 2) 12, 950
Administrative expenses for liquidation 20, 000

The company had the following assets: Book Value Fair Value
Current Assets P 100, 000 P 95, 000
Land 50, 000 75, 000
Building 150, 000 200, 000

33. Free assets after payment of liabilities with priority are calculated to be what amount?
a. P252, 050 b. P251, 000 c. P226, 000 d. P247, 050

34. Zero Corp has been undergoing liquidation since January 1. As of March 31, the condensed statement of
liquidation and realization is presented below:

Assets
Assets to be realized P1,375,000
Assets acquired 750,000
Assets realized 1,200,000
Assets not realized 1,375,000

Liabilities
Liabilities to be liquidated P1,875,000
Liabilities assumed 1,700,000
Liabilities liquidated 2,250,000
Liabilities not liquidated 1,625,000

Revenues and expenses

Supplementary debits P375,000
Supplementary credits 200,000

Net gain/(loss) for the period ending March 31 amounted to

a. 150,000b. (175,000) c. 25,000 d. (25,000)

35. LOTUS Bank holds a P150,000 note secured by a building owned by FEET Manufacturing, which has filed
for bankruptcy. If the property has a book value of P90,000 and a fair market value of P180,000, what is the
best way to describe the note held by LOTUS Bank? The bank has a(n)
a. unsecured claim of P150,000.
b. secured claim of P150,000 and an unsecured claim of P30,000.
c. secured claim of P150,000.
d. secured claim of P90,000 and an unsecured claim of P60,000.

36. During liquidation, the sale of all the assets of liquidated corporation resulted to net proceeds of
P1,000,000. Liquidation expense amounting to P60,000 has been paid at the start of liquidation. Before the
liquidation, the following data are provided concerning the financial position of the said financially
distressed corporation:
 The corporation has total assets with book value of P2,000,000 and deficiency amounting to
(P340,000.)
 An investment property with book value of P500,000 and realizable value of P300,000 secured a
loan payable amounting to P200,000.
 Salaries payable and income tax payable amounted to P100,000 and 40,000 respectively.
What is the amount received by partially secured creditor?
a. P100,000 b. P120,000 c. P140,000 d. P130,000

37. Using the preceding information, what is the amount received by pure unsecured creditors without priority?
a. P600,000
b. P570,000
 c. P700,000
d. P800,000

38. Aircon Inc. consigned 12 one-horse power air-condition units to Argy Trading and paid P2,000 freight out.
Gross margin is 25% of selling price which was set for P12,000. The consignee is allowed a commission of
5% on sales but is required to give an advance payment to be deducted proportionately based on sales
made. Argy Trading’ account sales on December 2020, gave a remittance for 6 units sold after deducting
selling expenses of P800, delivery and installation of P1,200 and the appropriate commission and advances.
How much profit should be recognized by Aircon Inc for the year then ended?
a. 11,400 b. 72,000 c. 18,000 d. 14,400

39. JAN, Inc began work in 2018 on a contract for P12.6M. Other data were as follows:

2018 2019
Costs incurred to date P5,400,000 P8,400,000
Estimated costs to date 3,600,000 -
Billings to date 4,200,000 12,600,000
Collections to date 3,000,000 10,800,000

If JAN uses the cost recovery method, the gross profit to be recognized in 2019 is?
a. P4,200,000 b. P2,100,000 c. P2,040,000 d. P0

40. ROBLES Constructions had a contract starting April 2018, to construct a P12M building that is expected to
be completed in September 2021 at an estimated costs of P11M. At the end of 2018, the costs to date were
P5,060,000 and the estimated total costs to complete had not changed. The progress billings during 2018-
2021 were in the ratio of 2:3:5 and the cash collected during 2018 was P1.6M. At December 31, 2018,
ROBLES would report net inventory balance of:
a. P4,720,000 b. P3,120,000 c. P5,520,000 d. P3,920,000

41. The percentage of completion of a construction contract is based on all of the following except
a. The proportion that contract costs incurred for work performed to date bear to the estimated total
contract costs
b. Survey of work performed
c. Completion of a physical proportion of the contract work
d. Progress payments and advances received from customers.

42. In case of admission of a new partner in an existing partnership through investment to the partnership,
which of the following scenario will result to bonus to new partner and asset revaluation?
a. The total contributed capital of all partners is equal to the total agreed capital of new partnership
while the agreed capital of new partner is higher than the amount he has contributed.
b. The total contributed capital of all partners is more than the total agreed capital of new partnership
while the agreed capital of new partner is lower than the amount he has contributed.
c. The total contributed capital of all partners is less than the total agreed capital of new partnership
while the agreed capital of new partner is higher than the amount he has contributed.
d. The total contributed capital of all partners is more than the total agreed capital of new partnership
while the total agreed capital of old partners is equal to the amount they contributed.

43. When the outcome of a construction contract can be estimated reliably, how shall contract revenue and
contracts costs associated with the construction contract be recognized?
a. They shall be recognized as revenue and expense respectively by reference to the state of
completion of the contract activity at the end of the reporting period also known as by percentage of
completion method.
b. They shall be recognized as revenue and expenses respectively by reference to the percentage of
collection of receivables from customers also known as by installment method.
c. They shall be recognized as revenue and expenses respectively by the date of earning of revenue or
incurring of expenses also known as accrual method.
d. Revenue shall be recognized only to the extent of contract cost incurred that it is probable will be
recoverable and the contract cost shall be recognized as an expense in the period in which they are
incurred also known as cost recovery or zero-profit method.

44. Under IFRS 15, when shall a franchisor recognize revenue from contingent franchise fee or revenue for a
sales-based royalty?
a. When the sales of the franchisee occurs.
 b. When the performance obligation to which some or all of the contingent franchise fees or sales-
based royalty has been satisfied or partially satisfied.
c. When both A and B events occur.
d. When A or B event occurs.

45. On January 1, 2019, Silver Construction Company signed a contract to build a custom garage for a
customer and received P10,000 in advance for the job. The new garage will be built on the customer’s land.
To complete this project, Silver must first build a concrete floor, construct wooden pillars and walls, and
finally install a roof. Silver normally charges stand-alone prices of P3,000, P4,000 and P5,000, respectively,
for each of these three smaller tasks if done separately. How many performance obligations exist in this
contract?
a. 0
b. 1
c. 2
d. 3

46. When a new partner is admitted to an existing partnership through the purchase of a portion of existing
interest of incumbent partner, which of the following is correct?
a. The total capital of the old and new partnership will be the same.
b. The partnership will recognize gain or loss on the difference between the amount paid and capital
transferred.
c. Goodwill may be recognized by virtue of the admission.
d. There will be increase in the total assets of the partnership equivalent to the amount paid by the
newly admitted partner.

47. How shall the long-term constructor account for change in the percentage of completion of a project?
a. It shall be applied and accounted for prospectively as a change in accounting estimate.
b. It shall be applied and accounted for retroactively as a change in accounting policy.
c. It shall be retrospectively restated as correction of prior period error.
d. It shall be retrospectively adjusted in retained earnings.

48. Which of the following statements is correct regarding a partner’s debit capital balances?
a. The partner should make contributions to reduce the debit balance to whatever extent possible.
b. If contributions are not possible, the other partners with credit capital balances will be allocated a
portion of the debit balance based on their proportionate profit and loss sharing percentages.
c. Partners who absorb another’s debit capital balance have a legal claim against the deficient partner.
d. All of these statements are correct.

49. A special-purpose statement prepared to show financial condition of an insolvent business is the
a. Charge and Discharge Account
b. Deficiency Statement
c. Realization and Liquidation Account
d. Statement of Affairs

50. Under IFRS 15, an entity recognizes revenue from contract with customers when or as the entity satisfies
the performance obligation. Any of the following criteria is considered satisfaction by an entity of
performance obligation over time, except
a. The customer simultaneously receives and consumes all of the benefits provided by the entity as the
entity performs
b. The entity’s performance creates or enhances an asset that the customer controls as the asset is
created
c. The entity’s performance does not create an asset with an alternative use to the entity and the entity
has an enforceable right to payment for performance completed to date
d. The entity has already transferred the control, title, and risk/rewards of ownership of the asset to the
customers upon delivery of the asset.