Answered: 1. Cash dividends are paid on the basis…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. Cash dividends are paid on the basis of the number of shares *

A. Authorized

B. Issued

C. Outstanding

D. Outstanding less the number of treasury shares

2. Factors that shape an accounting information system include *

A. Nature of business

B. Size of the entity and nature of business

C. Volume of data to be handled and size of entity

D. Nature of business, size of entity and volume of data to be handled

3. Debits *

A. Increase assets and decrease expenses, liabilities, revenue and equity

B. Increase assets and expenses and decrease liabilities, revenue and equity

C. Increase assets and equity and decrease liabilities, expenses and revenue

D. Decrease assets and expenses and increase liabilities, revenue and equity

4. Which accounts measure economic flows over a period of time?

A. Real accounts

B. Nominal accounts

C. Mixed accounts

D. Contra accounts

5. A trial balance may prove that debits and credits are equal except

A. An amount could be entered in the wrong account

B. A transaction could have been entered twice

C. A transaction could have been omitted

D. All of these may prove that debits and credits are equal

6. The IASB declared that the merits of proposed standards are assessed *

A. From a position of neutrality

B. From a position of materiality

C. Based on possible impact on behavior

D. Based on arguments of lobbyist

7. The accounting for partnership differs from the accounting for sole proprietorships, corporations and cooperatives in regard to the accounting for *

A. equity

B. liabilities

C. assets

D. all of these

8. A and B agreed to form a partnership. A contributed cash of P60,000, while B contributed a machine costing P1,700,000 but with a current fair value of P1,900,000. The partners agreed that since A will be bringing in his expertise and experience to the business, A and B shall have a 60:40 interest, respectively. The initial credits to the partners respective capital accounts shall reflect this agreement. What is the balance of B's capital account immediately after the formation of the partnership? *

A. 600,000

B. 1,000,000

C. 1,500,000

D. 1,900,000

9. The partners share in partnership profit or losses in accordance with their partnership agreement. If there is no stipulation on how the partners should share in the profits or losses of the partnership, *

A. they should share equally

B. they should let one of the partners decide unilaterally on how the profits should be divided among the partners.

C. their respective shares would be in proportion to their contributions

D. they should not share at all but donate their profits to the worlD

10. A and B formed a partnership. The partnership agreement stipulates the following: Annual salary allowances of P80,000 for A and P40,000 for B. The partners share in profits and losses equally. The partnership earned profit of P100,000 after salaries. How much is the share of B? *

A. 70,000

B. 30,000

C. 130,000

D. 90,000

11. It is the change in the relation of the partners caused by any partner being disassociated from the business. *

A. Liquidation

B. Operation

C. Formation

D. Dissolution

12. C purchases 20% interest in the partnership from A for P120,000. How much is the capital balance of A after the admission of C? *

A. 133,333

B. 24,000

C. 96,000

D. 148,000

13. C acquires 20% interest in the partnership by investing P120,000 to the business. No bonus is given to C. How much is the capital balance of A after the admission of C. *

A. 200,000

B. 264,000

C. 240,000

D. 0

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