Easy Round

1. (not recorded)
2. (not recorded)
3. On December 1, 2019, Earl and Far formed a partnership, agreed to share profits and losses in
the ratio of 2:3, respectively. Earl invested a parcel of land that cost him P25,000. Far invested
P30,000 cash. The land was sold for 50,000 pesos on the same day, 3 hours after the formation
of the partnership. How much should be the capital balance of Earl right after formation?
a. 25,000
b. 30,000
c. 60,000
d. 50,000
4. Jesus and Maria formed Mexico Partnership and agreed to divide initial capital equally. Jesus
contributed P500,000, and Maria contributed P300,000 and identifiable assets. Under the
bonus method, to adjust the capital accounts, Maria’s intangible asset should be debited for:
a. 400,000
b. 200,000
c. 100,000
d. 0
5. A liability is recognized in the balance sheet when:
a. Recognized in the balance sheet when it is highly probable that an outflow of resources
embodying economic benefits will result from the settlement of the present obligation
and the amount at which the settlement will take place can be measured reliably.
b. Recognized in the balance sheet when it is probable that an outflow of resources
embodying monetary benefits will result from the settlement of the present obligation,
and the amount at which the settlement will take place can be measured reliably.
c. Recognized in the balance sheet when it is probable that an outflow of resources
embodying economic benefits will result from the settlement of past obligation and the
amount at which the settlement will take place can be measured reliably.
d. Recognized in the balance sheet when it is probable that an outflow of resources
embodying economic benefits will result from the settlement of a present
obligation and the amount at which the settlement will take place can be measured
reliably.
6. Manny, Olivia and Louie are partners in a company that is being liquidated. They share profits
and losses, 50%,25%,25%, respectively. When the liquidation begins, they have a capital
account balances of P100,000 , P50,000 , and P58,000, respectively. The partnership just sold
equipment with the historical cost and accumulated depreciation of P30 000 and P50 000,
respectively, for P10000. What is the balance in Olivia’s capital account, after the transaction is
completed?
a. P55,000
b. P51,250
c. P48,750
d. P45,000
7. It is the conduct that may consist of giving, doing or not doing something.
a. obligation
b. juridical necessity
c. prestation
d. contract
8. This a complete comprehensive and single document promulgated by IASB established the
concepts that underlie financial reporting?
a. Conceptual framework for financial statements
b. Conceptual framework for financial reporting
c. Conceptual framework for business entities
d. Conceptual framework
9. It is a valuation account form which credit balances or added to another account. It normally
increases the book value of a liability account
a. contra-account
b. nominal account
c. junk account
d. balancing account
10. Demand must be made on the due date on the obligation in order for the thing to exist in one of
the following cases. Which is it?
a. When it is stipulated by the parties that demand need not be made
b. When the law provides the demand need not be made
c. When the obligation does not indicate whether demand must be made or not on due
date
d. When time is of the essence of a contract

Average Round
1. Jane, Joe, Janet and Joey are solidary debtors of Jerry for P120,000. Jerry released Joey from the
payment of the share. When the obligation became due and demandable, Janet turned out to
be insolvent. Should the share of Janet be divided only between Jane and Joe?
a. Yes, remission of Joey’s share carries with its total extinguishment of his obligation to
the benefit of the solidary debtors.
b. Yes, the civil code recognizes remission as a mode of extinguishing an obligation which
clearly applies to Joey.
c. No, the rule is that, gratuitous act should restrictedly construed allowing only …
d. No, as the release of Joey’s share would then decrease the burden of Jane and Joe without
their consent.
2. In 2016, Carlo, Charle, Carol, Caesar, and Cherry formed 5C’s Partnership. Carla, Charlie and
Carol are capitalist partners and contributed P500,000 each. While Ceasar , a limited partner,
contributed P1,500,000. Cherry joined as an industrial partner contributing only her services.
The articles of partnership, registered in the Securities and Exchange Commission (SEC)
designated Carla and Caesar as managing partners. Caesar was liable only to the extent of his
capital contribution and Cherry was not liable for losses. In 2017, 5C’s partnership earned a net
profit of P10,000,000. In the same year, cherry engage in a different business with the consent
of all the partners. However, in 2018, the partnership incurred a net loss of P1,500,000. In 2019,
the partners dissolve the partnership. The proceeds of the sale of partnership assets were
insufficient to settle its obligation. After liquidation, the partnership had an unpaid liability of
P500,000. Assuming the industrial partner, Cherry, in the profit in 2017 amounted to
P1,000,000. How much is the share of Caesar a limited partner, in the P10,000,000 net profit?
a. P1,250,000
b. P1,500,000
c. P3,750,000
d. P4,500,000
3. Which of the following is/are true?
I. The effectivity of a suspensive condition retroacts to the day of the constitution
of the obligation
II. The casual condition is dependent on the sole role of one partner, if such a
condition is dependent on the part of the debtor and is suspensive, the condition
is rendered void.

a. I only
b. II only
c. Both I and II
d. Neither I nor II
4. Which is not included in the scope of the conceptual framework?
a. Qualitative characteristics of useful financial accounting information
b. The recognition, derecognition and measurements of the elements of financial
statements
c. Objective of financial reporting
d. Supplementary information
5. One who does not have a real interest in the partnership but lends his name to the firm without
any capital contributions and doesn’t share profits of the business.
a. Managing partner
b. Dormant partner
c. Nominal partner
d. Silent partner
6. Si, Joe and Koi liquidated their partnership. At the date of the liquidation begins, Si, Joe and Koi
have a capital balances of P162,000 , P192,000 , P250,000 , respectively, and the partner share
profit and losses 40 35 25, respectively. In addition, the partnership has P36,000 notes payable
to Si and a P20,000 notes receivable from Koi. When the liquidation begins, what is the loss
absorption power with respect to Joe?
a. P192,500
b. P67,375
c. P550,000
d. P770,000
7. Which of the following is an application of the principle of systematic and rational allocation?
a. Amortization of intangible asset
b. Sales commission
c. Electricity to light office building
d. Officer’s salaries
8. Obligations are extinguished by:
a. Payment or performance
b. Laws of the thing due
c. Condemnation or remission
d. Confusion or Merger of the rights of creditor and debtor
e. All of the above
f. All except B
9. Lucy and Manny are partners who share income and losses with a ratio of 3:2, respectively. On April
31, their capital balances were: Lucy, P225,000 and Manny, P125,000 . On that day, they agree to admit
newmen as a partner with the ⅓ capital interest. If newman invest P100,000 in the partnership, what
is Lucy’s capital balance after they … xxx
a. P270,000
b. P195,000
c. P225,000
d. P210,000
10. During a flood, the properties of Flora, was saved from destruction by Donna without the
knowledge of Flora was then away. Donna incurred a necessary and useful expenses in the act
of saving Flora’s properties. For such expenses,
a. Flora must reimburse Donna although Donna acted without the consent of Flora
b. Flora is not required to reimburse Donna because Donna acted without the consent of
Flora
c. Flora must reimburse Donna because there was an implied contract between
d. Flora need not reimburse Donna because Donna’s act of saving Flora’s properties is
gratuitous act that requires no compensation

Difficult Round
1. The contestants that was granted a loan by Diaz Bank for the purpose of improving a building
which Diaz leased for him. Julio executed a promissory note in favor of the bank with his friend,
Rosa as co-signatory. In the promissory note, they both acknowledge that they are individually
and collectively liable and waived the need of prior demand. To secure the P/N, Rosa executed
a real estate mortgage on his own property. When Julio defaulted on the P/N, Diaz stopped
payment on the rentals of the building on the ground that legal compensation had set in. Since
there was still a balance on the P/N after applying the rentals, Diaz foreclose the real estate
mortgage of Rosa’s property. Rosa opposed the foreclosure on the grounds that she is only a co-
signatory that no demand was made upon her for payment and assuming she is liable, her
liability should not go beyond half the balance of the loan. Further, Rosa said that when the bank
invoke compensation between the rentals and the amount of the loan, it amounted to a new
contract or novasion and had an effect of extinguishing the security since she did not give her
consent as owner of the property under the real estate mortgage, thereto. Can Diaz bank validly
ascert legal compensation?
a. Yes, all the elements of legal compensation are present
b. Yes, but no foreclosure can be made
c. No, since both debts do not consist in a sum of money
d. No, novasion took place
2. Prokopio is a partner and has an annual salary of P30,000 per year but he actually draws P3,000
per month. The other partner in the partnership has the annual salary of P40,000 and draws
P4,000 per month. What is the total annual salary that should be used to allocate annual net
income among the partners?
a. P14,000
b. P15,000
c. P70,000
d. P84,000
3. The net income of Charlie and Charlotte partnership for 2019, amounted to P1,150,000.
Charlotte is the managing partner. Assume that the partners agree on the allocation of the net
income as follows: bonus of 20% to Charlie, salaries to Charlie, P350,500 and Charlotte, P275,125
, 15% interest on average capital balances shall be based on Charlotte initial investment of
P500,000 , a drawing on August 1 for P100,000 and an additional investment on December 31
of P200,000. For Charlie, initial investment of P500,000 , additional investment on September
1 for P150,000 and a drawing on November 1 for P110,000. Residual balance in net income shall
be allocated to charlie and charlotte, the ratio of 1:1. Compute the income allocated to Charlotte.
a. P722,188
b. P427,813
c. P733,188
d. P416,813
4. If the entity changes the presentation or classification of items in the financial statement, it
shall reclassify comparative amounts unless reclassification is impracticable. When it is
impracticable to reclassify comparative amounts, an entity shall disclose the following except
I. The reason for not reclassifying the amount
II. The nature of adjustments that would have been made when the amounts have been
reclassified
III. The amount of each item or class of items not reclassified
a. I only
b. II only
c. III only
d. None of the above
5. Bruno borrow from Larry P80,000. The obligation is secured by a schotel mortgage on Bruno’s
toyota car. Subsequently, Bruno paid Larry P30,000. A note to Bruno, Tata, a third person pays
Larry P80,000 believing that Bruno still owed Larry such amount.
a. Tata can recover P80,000 from Bruno. If Bruno cannot pay, Tata can foreclose a
mortgage on Bruno’s toyota car.
b. Tata can recover nothing from Bruno because he paid Larry without the knowledge and
consent of Bruno
c. Tata can recover P50,000 from bruno if Bruno cannot pay, Tata can foreclose a mortgage
in Bruno’s toyota car
d. Tata can recover P50,000 from Bruno. If Bruno cannot pay, Tata cannot foreclose a
mortgage in Bruno’s toyota car
6. On January 1, 2019, Vince, formed capital contribution as follows Vince, P100,000 ,
a. P55,000
b. P40,000