BSA221P/AST
ACCOUNTING FOR SCPECIAL TRANSACTIONS MIDTERM ASSESSMENT
INSTRUCTIONS: Select the correct answer for each of the
questions. Choose only one answer for each item by
clicking the circle corresponding to the letter of your
choice on the options provided. BEST OF LUCK!
THEORIES
1. Which of the following is a characteristic of a partnership?
A) Limited liability
B) Separate legal entity
C) Unlimited liability
D) Issuance of stock
2. In a partnership, profits and losses are typically shared based
on:
A) Capital contributions
B) Number of partners
C) Years of experience
D) Seniority
3. When partners contribute assets other than cash to a partnership,
these assets are recorded at:
A) Market value
B) Historical cost
C) Net realizable value
D) Book value
4. Which financial statement is prepared to distribute partnership
net income to the partners?
A) Income statement
B) Statement of changes in equity
C) Statement of financial position
D) Statement of cash flows
5. A partner's capital account is increased by:
A) Net income
B) Net loss
C) Drawing withdrawals
D) All of the above
6. Which method allocates partnership net income or loss based on a
predetermined ratio?
A) Profit-sharing ratio
BSA221P/AST
B) Salary ratio
C) Capital ratio
D) Equal sharing
7. How are partner salaries typically treated in the partnership
accounting records?
A) As an expense
B) As a reduction to capital
C) As additional paid-in capital
D) As a contra-equity account
8. When a new partner is admitted to a partnership, the existing
partners' capital accounts are adjusted by:
A) Increasing them proportionally
B) Decreasing them proportionally
C) Keeping them unchanged
D) Eliminating them
9. Which type of partnership agreement specifies how profits and
losses will be divided among partners?
A) Operating agreement
B) Articles of incorporation
C) Bylaws
D) Partnership deed
10. Which partner is responsible for debts and obligations of
the partnership up to the amount of their investment?
A) General partner
B) Limited partner
C) Silent partner
D) Nominal partner
11. The dissolution of a partnership involves:
A) Converting into a corporation
B) Selling all partnership assets
C) Ending the business operations
D) Transferring ownership to employees
12. Which method of partnership dissolution involves the sale
of assets and payment of liabilities?
A) Compulsory dissolution
B) Voluntary dissolution
C) Winding up
D) Termination
13. In partnership accounting, goodwill is:
A) Recorded as an expense
B) Ignored in financial statements
C) Recorded based on market value
BSA221P/AST
D) Recorded as an intangible asset
14. When a partner's withdrawal exceeds their current capital
balance, the partner's capital account becomes:
A) Negative
B) Zero
C) Frozen
D) Liability
15. Which method of partnership dissolution involves a court
order to end the partnership?
A) Voluntary dissolution
B) Involuntary dissolution
C) Winding up
D) Partnership termination
16. In a limited liability partnership (LLP), partners are
shielded from:
A) Salary deductions
B) Personal liability for partnership debts
C) Profit sharing
D) Business expenses
17. Which type of partnership allows partners to share profits
and losses based on their ownership percentage?
A) General partnership
B) Limited partnership
C) Limited liability partnership
D) Limited liability company
18. The dissolution of a partnership occurs when:
A) A new partner is admitted
B) A partner withdraws
C) A partner becomes incapacitated
D) The partnership is sued
19. How are partner withdrawals typically recorded in the
partnership accounting records?
A) As an expense
B) As a reduction to capital
C) As additional paid-in capital
D) As a contra-equity account
20. A partnership deed includes provisions related to:
A) Profit-sharing ratios
B) Stock issuance
C) Board resolutions
D) Bond ratings
BSA221P/AST
21. Which partner has management authority and assumes
unlimited liability for partnership debts?
A) General partner
B) Limited partner
C) Silent partner
D) Nominal partner
22. A partner's capital balance is calculated as:
A) Assets minus liabilities
B) Equity plus withdrawals
C) Equity minus withdrawals
D) Liabilities minus equity
23. Which financial statement shows the division of net income
or loss among partners?
A) Income statement
B) Statement of changes in equity
C) Statement of financial position
D) Statement of cash flows
24. Partnership dissolution involves:
A) Ending business operations
B) Filing for bankruptcy
C) Merging with another partnership
D) Hiring additional employees
25. In partnership accounting, the division of profits and
losses is based on:
A) Capital contributions
B) Employee seniority
C) Market share
D) Regional sales
26. A partner's withdrawal of assets from the partnership
typically includes:
A) Capital assets
B) Depreciation expenses
C) Dividends payable
D) Unrealized gains
27. Partnership goodwill represents:
A) Tangible assets
B) Intangible assets
C) Retained earnings
D) Accumulated depreciation
28. When a partner's withdrawal exceeds their current capital
balance, the partner's capital account becomes:
A) Negative
BSA221P/AST
B) Zero
C) Frozen
D) Liabilities
29. Which type of partnership allows partners to share profits
and losses based on their ownership percentage?
A) General partnership
B) Limited partnership
C) Limited liability partnership
D) Limited liability company
30. In partnership accounting, goodwill is:
A) Recorded as an expense
B) Ignored in financial statements
C) Recorded based on market value
D) Recorded as an intangible asset
CASE PROBLEMS
Items 1 to 3 are based on the following information:
On May 1, 2024, the business assets XX and YY were as summarized below:
XX YY
Cash P 11,000 P 22,354
Accounts Receivable 234,536 567,890
Inventories 120,035 260,102
Land 603,000 -0-
Building -0- 428,267
Furniture and Fixtures 50,345 34,789
Other Assets 2,000 3,600
Total P1,020,916 P1,317,002
Accounts payable P 178,940 P 243,650
Notes payable 200,000 345,000
XX, capital 641,976 -0-
YY, capital -0- 728,352
Total P1,020,916 P1,317,002
XX and YY agreed to form a partnership, contributing their
respective assets and equities subject to the following adjustments:
• Accounts receivable of P20,000 in the books of XX and
P35,000 in YY’s books are
uncollectible.
• Inventories of P5,500 and P6,700 are worthless in books of XX and
YY, respectively.
• Other assets of P2,000 and P3,600 in the respective books of
XX and YY are to be written- off.
1. How much assets does the partnership have?
A. P2,337,918 C. P2,265,118
BSA221P/AST
B. 2,237,918 D. 2,365,218
2. ZZ offered to invest sufficient cash to give him a 20% interest in the
firm. How much cash should ZZ contribute?
A. P330,870 C. P344,237
B. 337,487 D. 324,382
3. Using the same information in No. 3, after ZZ’s admission, the
profit and loss sharing ratio was agreed to be 4:4:2 based on
capital credits. How much should the cash settlement be between XX
and YY?
A. P33,602 C. P32,272
B. 32,930 D. 34,288
4. On September 1, 2025, the business assets of XX and YY were as
follows:
XX YY
Cash P 28,000 P 62,000
Accounts Receivable 200,000 600,000
Inventories 120,000 200,000
Land 600,000 -0-
Building -0- 500,000
Furniture and Fixture 50,000 35,000
Other Assets 2,000 3,000
Accounts payable 180,000 250,000
Notes payable 200,000 350,000
XX and YY agreed to form a partnership contributing their
respective assets and equities subject to the following
adjustments:
A. Accounts receivable of P20,000 in XX’s books and P40,000 in
YY’s books are uncollectible.
B. Inventories of P6,000 and P7,000 are worthless in XX’s and
YY’s respective books.
C. Other assets of P2,000 and P3,000 in XX’s and YY’s
respective books are to be written-off.
D. Accrued expenses of P1,000 and P2,000 in XX’s
and YY’s books are not yet recorded. The capital
accounts of the partners after adjustments will be:
a. XX, P598,000 and YY, c. XX, P591,000 and YY,
P748,000 P748,000
b. XX, P591,000 and YY, d. XX, P599,000 and YY,
P754,300 P699,000
5. On September 1, 2024, the business assets of XX and YY were as
follows:
XX YY
Cash P 28,000 P 62,000
Accounts Receivable 200,000 600,000
BSA221P/AST
Inventories 120,000 200,000
Land 600,000 -0-
Building -0- 500,000
Furniture and Fixture 50,000 35,000
Other Assets 2,000 3,000
Accounts payable 180,000 250,000
Notes payable 200,000 350,000
XX and YY agreed to form a partnership contributing their
respective assets and equities subject to the following
adjustments:
A. Accounts receivable of P20,000 in XX’s books and P40,000 in YY’s
books are uncollectible.
B. Inventories of P6,000 and P7,000 are worthless in XX’s and YY’s
respective books.
C. Other assets of P2,000 and P3,000 in XX’s and YY’s respective
books are to be written-off.
D. Accrued expenses of P1,000 and P2,000 in XX’s and YY’s books are
not yet recorded.
The capital accounts of the partners after adjustments will be:
A. XX, P598,000 and YY, P748,000
B. XX, P591,000 and YY, P754,300
C. XX, P591,000 and YY, P748,000
D. XX, P599,000 and YY, P699,000
