Name:

12. Non-cash assets into a partnership are recorded at

1. When a partner invests assets other than ash into a. zero. c. their original cost.
partnership, these assets should be listed on the b. their carrying value. d. their fair market value.
statement of financial position at
a. their original cost. 13. All of the following are true for both general and limited
b. their fair market values. partnerships except
c. their carrying (book) value. a. both are easily dissolved.
d. the value that investing partner assigns to them. b. both must have at least one general partner.
c. all partners are liable for all debts of the firm.
2. A partnership d. all partners have the right to participate in the profits
a. has a juridical personality separate and distinct from of the business.
that of each of the partners?
b. is created by agreement of the partners. 14. Which of the following is a characteristic of most
c. is dissolved by death of a partner. partnerships?
d. all of the above. a. Unlimited life c. Limited liability
b. Mutual contribution d. Division of profits only
3. A partner whose liability for partnership debts is limited to
his capital contribution is called 15. One who takes charge of the winding of partnership affairs
a. secret partner. c. limited partner. upon dissolution:
b. general partner. d. industrial partner. a. Dormant partner c. Liquidating partner
b. Silent partner d. Ostensible partner
4. A partner invested into a partnership a building with a
P250,000 carrying value and P400,000 fair market value. 16. A partnership records a partners investment of assets in
The related mortgage payable of P125,000 was assumed the business at
by the partnership. As a result of the investment, the a. a value sets by the partners.
partners capital account will be credited for b. the market value of the assets invested.
a. P125,000 c. P250,000 c. the partners book value of the assets invested.
b. P275,000 d. P400,000 d. any of the above.

5. A partnership agreement should include 17. An advantage of the partnership as a form of business
a. the method of allocating profits and losses. organization would be:
b. the purpose of the business. a. A partnership is bound by the acts of the partners.
c. each partners duties. b. A partnership is created by mere agreement of the
d. all of these. partners.
c. Partners do not pay income taxes on their share in
6. Lintao and Pido formed a partnership, each contributing partnership profit.
assets to the business. Lintao contributed inventory with d. The death or withdrawal of a partner may terminate a
a current market value in excess of its cost. Pido partnership.
contributed real estate with a cost in excess of its current
market value. At what amount should the partnership 18. Two sole proprietors formed a partnership. Non-cash
record each of the following assets? assets forming part of the initial investment in the
Inventory Real Estate partnership would be recorded at the
a. Cost Cost a. Fair value of the property at the date of the
b. Market Value Cost investment.
c. Cost Market Value b. Proprietors book values of the property at the date of
d. Market Value Market Value the investment.
c. Proprietors book values or fair value of the property
7. The partnership agreement is contained in the articles of at the date of the investment, whichever is higher.
partnership, an express contract among the partners. d. Proprietors book values or fair value of the property
Such agreement ordinarily does not include at the date of the investment, whichever is lower.
a. the rights and duties of the partners.
b. a limitation on a partners liability to the creditors. 19. Partners investment may include which of the following?
c. the allocation of income between the partners. a. Cash
d. the rights and duties of the partners in the event of b. Non-cash assets
partnership dissolution. c. Non-cash assets with liabilities to be assumed
d. All of the above
8. Which of the following is not a characteristic of most e. Only a and b
partnerships?
a. Ease of formation c. Limited liability 20. Which of the following partnership characteristic is an
b. Mutual agency d. Limited life advantage?
a. Ease of formation c. Unlimited liability
9. Which of the following is not a characteristic of b. Mutual agency d. Limited life
partnerships?
a. Voluntary association c. Mutual agency 21. A partner to a partnership that takes active participation in
b. Limited liability d. Limited life the running of affairs of the partnership but is not known
to the public as partner
10. A partner who contributes his work, labor or industry to a. Silent Partner c. Dormant Partner
the common fund of the partnership is called b. Secret Partner d. Partner by Estoppel
a. limited partner. c. capitalist partner.
b. industrial partner. d. managing partner. 22. A partner to a partnership that do not take active
participation in the running of affairs of the partnership but
11. Which of the following partnership characteristics is a is not known to the public as partner
disadvantage? a. Silent Partner c. Dormant Partner
a. Unlimited liability c. Ease of dissolution b. Secret Partner d. Partner by Estoppel
b. Voluntary association d. share in net loss
23. A partner to a partnership that do not take active start of the year was: X, P200,000.00; Y, P500,000.00; and Z,
participation in the running of affairs of the partnership but P300,000.00.
may be known to the public as partner
a. Silent Partner c. Dormant Partner 43. How much was credited to Y as his share of net income?
b. Secret Partner d. Partner by Estoppel a. P39,600 c. P8,000
b. P72,000 d. P68,400
24. A partner to the partnership who is liable only up to his
total contribution to the partnership. 44. How much was credited to X as his share of net income?
a. Industrial Partner c. Capitalist Partner a. P39,600 c. P8,000
b. Limited Partner d. None of these b. P72,000 d. P68,400

25. A partner who contributes money or property as well as 45. How much was credited to Z as his share of net income?
his work or industry to the capital of the partnership is a. P39,600 c. P8,000
called b. P72,000 d. P68,400
a. Managing partner c. Industrial partner
b. Capitalist d. Capitalist-industrial partner 46. If the result of operation was a net loss of P180,000, how
mush was credited to Z as his share?
26. This type of business buys products at wholesale price a. (P28,800) c. (P334,000)
and sells the same at retail price. They are known as "buy b. (P34,200) d. (P117,000)
and sell" businesses. They make profit by selling the
products at prices higher than their purchase costs. 47. If the result of operation was a net loss of P180,000, how
a. Service concern c. Manufacturing mush was credited to X as his share?
b. Merchandising concern d. All of these a. (P28,800) c. (P334,000)
b. (P34,200) d. (P117,000)
27. This form of business organization is usually adopted by
small business entities. 48. If the result of operation was a net loss of P180,000, how
a. Partnership c. Corporation mush was credited to Y as his share?
b. Sole proprietorship d. Service type of business a. (P28,800) c. (P334,000)
b. (P34,200) d. (P117,000)
For items 28-42, Choose A if true and C if false.
28. There are three types of business organization namely (Use the following information for items 49-51. 2 points each)
sole proprietorship, partnership and corporation. Partners A B and C have capital balances in a partnership of
29. A partnership in a general entity separate and apart from P150,000, P100,000, and P200,000, respectively. Loss for the
its owners. year was P330,000.
30. Examples of service businesses are: salons, repair shops,
schools, banks, accounting firms, and law firms. 49. What will be the capital balance of A if the they share a
31. A partner who invests assets into a partnership retains profits and losses at a 4:3:3 ratio, respectively?
control over those specific assets. a. P18,000 credit c. P18,000 debit
32. A partnership should always be constituted in writing. b. P 1,000 credit d. P 1,000 dedit
33. A dormant partner is one who does not take active part in
the partnership business and is not known as a partner. 50. What will be the capital balance of C if the they share a
34. The limited partners are liable only to the extent of their profits and losses at a 4:3:3 ratio, respectively?
personal contributions. a. P101,000 credit c. P101,000 debit
35. A dormant partner is one who does not take active part in b. P 18,000 credit d. P 18,000 dedit
the partnership business though may be known as a
partner. 51. What will be the capital balance of B if the they share a
36. A partnership has a limited life because any change in the profits and losses at a 4:3:3 ratio, respectively?
relationship of the partners dissolves in the partnership. a. P 1,000 credit c. P 1,000 debit
37. A silent partner takes active part in the business of the b. P18,000 credit d. P18,000 dedit
partnership and is not known by outsiders to be a partner.
38. A secret partner is one who does not take active part in 52. Budd and Lou's partnership agreement is silent about the
the partnership business and is known as a partner. income and loss sharing ratio. The income for 2016 was
39. A partnership has a juridical personality separate and P100,000. Lou's capital account was P65,000 and Budd's
distinct from that of each of the partners. was P60,000. How much income is Budd entitled too:
40. A partnership may be constituted in any form, except a. P10,000 c. P25,000
where immovable property or real rights are contributed, b. P20,000 d. P50,000
in which case, the law requires that a public instrument
be executed. 53. If the partnership agreement does not specify how profit
41. One cannot be a partner in a partnership if his only is to be allocated, profits or losses should be allocated
contribution is labor. a. According to capital contribution
42. Unlimited liability is one of the disadvantages of a b. Depending on their participation in the business
partnership form of business organization. c. Equally for all capitalist partners.
d. Equally for all partners capitalist and industrial
(Use the following information for items 43-48. 2 points each)
The partnership contract of X, Y and Z provided for the 54. Which of the following best describes the nature of salary
distribution of profit or loss in the following manner: and interest allowances in a partnership profit and loss
a. X and Z are to receive monthly salary of P1,500.00 and sharing agreement?
3,000.00, respectively; a. A means of determining reasonable monthly
b. Interest at 10% on beginning capital balances of the withdraws by each partner.
partners; b. The amount upon which partner will have to pay
c. Bonus will be given to Y at 10%. personal income tax.
d. Any remainder will be shared 20:50:30. c. A means of distributing profit in relation to services
rendered and capital invested by partners.
Net income of XYZ Partnership for the calendar year was d. Expenses of the business that should be deducted
P180,000.00. Capital balances of partners X, Y and Z at the from revenue in determining profit.