(SUBSIDIARY CORP ) FALSE 1.

A corporation that is controlled by another corporation, known as the parent

TRUE 2. Stock corporations are no longer required a minimum capital stock

SUBSCRIBERS 3. Refer to natural or artificial persons who have agreed to buy the original and unissued shares of
of a corporation.

4. Which of the following is true concerning organization cost? Are expenditures incurred in relation to
corporate formation and to be expensed as incurred

FALSE 5. A share certificate can be issued to those subscribers who are partially paid their subscriptions. ( A
share certificate can be issued to those subscribers who are fully paid their subscriptions.)

Authorized Share Capital 6. Refers to the maximum amount fixed by the corporate charter or articles of
incorporation to be subscribed and paid-in by the shareholders.

FALSE 7. Shares cannot be transferred without the consent of the other shareholders (Shares CAN BE
TRANSFERRED without their consent)

TRUE 8. A corporation may have a perpetual existence unless its articles of incorporation limits its life. (Section
11 of the Revised Corporation Code states tat a "Corporation shall have perpetual existence unless its Article of
Incorporation provides otherwise". This means that a corporation has an unending life of existence.)

Those who composed the corporation whether as shareholders or members. → Corporators

Those who originally formed the corporation who executed and signed the Articles of Incorporation →
Incorporators

This shows the list of shareholders with the corresponding share certificate number in numerical sequence and
shares issued to them including share certificates that were cancelled. → Stockholder's Journal

This book principally records the stock issuances and cancellations. → Stock and Transfer Book

They are the one who undertake to form a group of persons interested in organizing a corporation. They procure
subscriptions or capital for the corporation. → Promoters

The maximum life of a corporation to exist is PERPETUAL (no limit)

SHAREHOLDERS ----They are the owners and have the ultimate control of the corporation.

BY LAWS ----These refer to the rules and regulations adopted by the corporation in administering its internal
government.

De jure Corporations -----Refer to corporations that are existing in fact and in law. They are organized with strict
conformity with the law.
De facto Corporation ---- exist in fact but NOT in LAW

FALSE A corporation cannot be an incorporator of another corporation.

FALSE Under the Revised Corporation Code, if a corporation failed to operate within 2 years from date of
incorporation, its corporate powers ceased and the corporation is deemed revoke. ( 5 years)

Promotion Stage -----The following except one constitute the basic stages of formation of a corporation.

Basic stages of formation of a corporation.

a.Commencement Stage

b.Incorporation Stage

c. Organization Stage

FALSE ---The Securities and Exchange Commission is PERMITTED by law to register a corporation engage solely
in the practice practice of law. (PROHIBITED)

FALSE ----Death of a shareholder will dissolve the corporation. Not dissolve

Board of Directors -----The governing body of the corporation.

True -----A one person corporation is required to file an Article of Incorporation but no by-laws.

TRUST FUND DOCTRINES ----It is a legal principle that prohibits a private corporation to distribute its legal capital
to the shareholders for the protection of corporate creditors during the lifetime of a corporation.

One in which ownership is limited to selected persons or members of the family. → Closely-held Corporation
Is a private corporation which is given a franchise to perform public duties but is organized for profits. → Quasi-
Public Corporation

One which is organized for religious purposes. → Ecclesiastical Corporation

One that is organized under the Philippine laws. → Domestic Corporation

One which is organized "not for profit". → Non-stock Corporation

Does death, withdrawal, insolvency or incapacity of individual shareholders dissolve the Corporation created?
Why or why not?

No, under the Revised Corporation Code, corporation enjoys the right of succession. A corporation has the
capacity of continued existence subject to the period stated in the Articles of Incorporation. The death,
withdrawal, insolvency or incapacity of the individual shareholders or members will not dissolve the corporation.
The transfer of ownership of shares of stock does not dissolve the corporation

The Liabilities and Stockholder's Equity portion of the Comparative Statement of Financial Position of XYZ
Corporation as of the period ending December 31, 2021 and 2020 showed the following:

2020 2021

Liabilities 100,000.00 100,000.00

Capital Stock 400,000.00 600,000.00

Retained Earnings 300,000.00 300,000.00

Total 800,000.00 1,000,00.00

The increase of capital stock in 2021 is primarily due to the additional shares issued at Php 1 par value
amounting to Php 200,000.00 which took effect on January 1, 2021. This additional issuance of shares was
offered first to existing stockholders based on their pre-emptive rights.

As of December 31, 2020 the following are the stockholders and their respective number of shares held.

Jeslyn Clarisse Niller 150,000

Krian Jill Saldivia 200,000

Amor Louella Pinol 50, 000

The correct answer is: 50%

Assuming that all stockholders avail the offering of additional issuance in proportion to their respective
percentage of ownership. How many shares that Jeslyn Clarisse Niller be entitled to avail of?

The correct answer is: 75,000

Cite at least 2 advantages and disadvantages of a corporation.

Advantages

A corporation has the legal capacity to act as a legal entity.

Shareholder have limited liability.

Disadvantages

A corporation is relatively complicated in formation and management.

It requires a relatively high cost of formation and operation.

Mercury Corporation issued 1,000 shares of its Php 5 par value ordinary shares to Venus as compensation for
1,000 hours of legal services performed. Venus usually bills Php160 per hour for legal services. On the date of
issuance, the stock was trading on a public exchange of Php 140 per share. By what amount should the share
premium account increase as a result of this transaction?

Php 155,000

Madraza Corporation was incorporated on July 1, 20A with authorized ordinary share capital of Php 1,000,000
and preference share of Php 2,000,000 with a par value of Php 100 each. During the year, the corporation had
the following transactions affecting the Shareholders' Equity:

1st: 120 ordinary shares were issued for cash at par value.

2nd: 380 ordinary shares were issued in exchange for land. The fair market value of land is Php 50,000.

3rd: 200 ordinary shares were issued in payment of legal expenses incurred during the incorporation process,
Php 25,000.
How much is the balance of Ordinary Share Capital Account and the amount of Share Premium to be reported in
the Statement of Financial Position?

 Php 70,000 and Php 17,000 respectively

The highest bidder in a delinquency sale is the person willing to pay the "offer price" that includes the full
amount of the subscription balance plus accrued interest, cost of advertisement and expenses of auction sale in
exchange for the smallest number of shares.

All of the following are found in a corporation's shareholders' equity section except: Dividends in Arrears

Found in a corporation's shareholders' equity section: Ordinary Share, Share Premium, Retained Earnings

TRUE When a subscriber failed to pay his subscription balance after lawful calls and notices have been sent to
him, all shares covered in the said subscription will be considered "delinquent".

A corporation might repurchase it own stock for all of the following reasons except to :

-deter a takeover attempt

-vote for the board of directors

-use for employees compensation

-improve financial ratios

Reissuing treasury stock at a price above cost results in an increase in share capital

What is the entry to record issuance of shares after all cash have been received from a share subscription,
assuming an entry to record authorized ordinary shares was made at the time of incorporation?

Subscribed Ordinary Shares

Unissued Ordinary Shares

On December 1, 2022, Saturn Corporation received a donation of 2,000 shares of its Php 50 par value ordinary
shares from a stockholder. On that date, the share's market value was Php 350 per share. The stock was
originally issued for Php 250 per share. By what amount would this donation cause total shareholder's equity to
decrease? Php 0

True ---Treasury shares are shares that are issued but not outstanding.
If share capital is issued for a non-cash consideration, the proceeds is recorded at the amount equal to the
following in the order of priority:

fair value of the property received

fair value of the share capital issued

par value of the share capital

ABC Corporation issued 1,000 shares of Php 20 par value ordinary shares at Php 24 per share. ABC Corporation
reacquired 100 shares of its own stock at a cost of Php 30 per share. The entry to record the reacquisition is

Debit Treasury Stock for Php 3,000

TRUE When ordinary shares with a par value are sold for a price that exceeds par value, the Ordinary Shares
account is credited only for the par value of the shares sold.

Ordinary and preference shareholders DO NOT have the same rights and only preference shareholders enjoy the
privilege to preferred in the distribution of dividends.

Jimmy Lerios is a subscriber of JC Fruit Processing Corporation for 300 ordinary shares at Php 150 par value per
share. He failed to pay his subscription balance of Php 27,000 which is equivalent to 180 shares despite of lawful
calls and notices being sent to him.

The corporation declared all the shares to be delinquent and advertises for the auction sale. Three (3) bidders
were received and all signified their intentions to pay the balance of Php 27,000 plus advertising expenses of
Php 560.00 but differ on the share that each bidder will acquire.

Bongbong Tah - bids for 170 shares

Sarah Tu - bids for 174 shares

Manny Yu - bid for 178 shares

Who is the highest bidder in the auction sale?

Bongbong Tah
Jimmy Lerios is a subscriber of JC Fruit Processing Corporation for 300 ordinary shares at Php 150 par value per
share. He failed to pay his subscription balance of Php 27,000 which is equivalent to 180 shares despite of lawful
calls and notices being sent to him.

The corporation declared all the shares to be delinquent and advertises for the auction sale. Three (3) bidders
were received and all signified their intentions to pay the balance of Php 27,000 plus advertising expenses of
Php 560.00 but differ on the share that each bidder will acquire.

Bongbong Tah - bids for 170 shares

Sarah Tu - bids for 174 shares

Manny Yu - bid for 178 shares

How much cash that the subscriber Jimmy Lerios has paid to the corporation?

Php 18,000

How many shares are declared as "delinquent"?

300

These shares give the issuing corporation the right to purchase (retire) the shares from its holders at a specified
time. → Callable Preference Shares,

This share carries a right to exchange preference shares for a fixed number of ordinary shares. → Convertible
Preference Shares,

This share gives its owners certain advantages over ordinary shareholders. → Preference share,

This share represents the basic ownership class of the corporation. → Ordinary Share,

These are shares of stocks which have been issued and fully paid for, but subsequently reacquired by the issuing
corporation. → Treasury Stocks

When ordinary shares is sold on a subscription basis and the entire subscription price has been collected, the
issuance of the share is recorded by

Subscribed Ordinary Shares

Ordinary Shares
False ----When the ordinary shares are sold for a price higher than the par value, the ordinary shares account is
credited for the amount of consideration received.

A corporation has ordinary shares with a Php 10 par value. A new share of this stock is issued for Php 13 to an
investor.

II. The entity will debit cash for Php 13 and credit share premium for Php 3.

Ordinary shareholders usually have all of the following rights except to

-participate in day to day operations of the entity

-vote to elect the board of directors

-share in the assets in a profitable liquidation

-receive their proportional share of dividends, if dividends are declared.

The number of shares issue is equals to

outstanding shares plus treasury shares

Sunrise Corporation's records included in the following Shareholders' Equity accounts:

Preference Share, par value Php 15, authorized 200,000 Php 2,550,000
Share Premium, Preference Share 150,000
Ordinary Share, no par, Php 50 stated value, 100,000 shares authorized 3,000.000

In Sunrise Corporation's Statement of Stockholders' Equity, the number of issued and outstanding shares for
each class of stock is;

The correct answer is: Preference - 170,000 shares

Ordinary - 60,000 shares

True ---Under the journal entry method, the amount of share capital issued is determined by deducting the
balance of unissued share capital account from the balance of the authorized share capital.

TRUE Memorandum differs from journal entry method as far as authorization and issuance of certificate are
concerned.

TRUE --When no-par value shares without a stated value is issued for cash, the "Ordinary Shares" account is
credited for an amount equal to the cash proceeds.
If a corporation reissued at Php 200 per share 100 shares of treasury stock that it had previously acquired for
Php 280 per share and there wasn't any Share Premium - Treasury, it would debit

Retained Earnings for Php 8,000 (BELOW COST)

If Sunshine Corporation has 80,000 ordinary shares authorized, has 50,000 ordinary shares issued, and hold
4,000 shares as treasury stock, the total number of outstanding shares of Sunshine Corporation amounts to

46,000 (50000 – 4000)

A dividend that represents a return to the shareholders of a part of their share capital rather than a distribution
out of retained earnings is called a liquidating dividend.

Dividends in arrears pertain to cumulative preference shares.

Property dividends are charged to retained earnings at fair value of the non-cash assets distributed.

Share corporations are prohibited from retaining surplus profits in excess of 100% of their Paid-in Share Capital,
except when justified by the circumstance.

Participating preference shares entitle the holders to participate with the holders of ordinary shares pro-rata in
the remainder after the ordinary shareholders have received their initial share.

In share split, the par value of all shares in the issued class is decreased in proportion to the additional shares
issued.

TRUE When treasury shares are reissued or resold, the appropriation is being reverted to Unappropriated
Retained Earnings which can be available for dividend distribution.

Retained Earnings do not necessarily represent cash readily available for dividends.

A liquidating dividend is usually paid when a corporation is going out of business or reducing its operations.

A share dividend exceeding 20% is properly treated as large share dividend.

The Income Summary account of a proprietorship is closed to the owner's capital account; for a corporation,
Income Summary is closed to retained earnings

The book value of ordinary shares is the same as

net worth
Mercury Corporation has a 8% participating preference shares issue, along with a ordinary shares issue. Which
of the following statements is true? Participating preference shareholders receive a minimum dividend payment
of 8%.

An investor owns 1,000 shares of Venus Corporation when the corporation announces a 1 for 2 reverse share
split. Before the share split, Venus Corporation's stock was trading at Php 2.00 per share. After the share split,
what ownership position will the investor have?

500 shares at 2.00 per share

Which of the following corporation accounts are not affected by the payment of a cash dividend?

1. Shareholder's Equity
2. Total Assets
3. Liabilities
4. Retained Earnings

1 AND 4

A share split by a corporation affects which account on the statement of financial position?

Shareholder's Equity

Par Value

Share Premium

Retained Earnings

Earth Corporation has 900,000 shares outstanding. Recently, the corporation bought 100,000 shares of its own
stock. At the end of the year, the corporation has Php 320,000 available to distribute to ordinary shareholders.
How much is the dividend paid per share?

Php 0.40

When a small share dividend is declared, Retained Earnings is debited for

the fair market value of the shares to be distributed

When preference shareholders have the right to receive a specified dividend and to receive more after a
matching dividend percentage is given to ordinary shareholders, the preference shares are said to be

Participating
Which of the following statements is not correct about a restriction on retained earnings?

-decreases assets

-reduces retained earnings available for the declaration of dividends.

-has no effect on the total retained earnings

-can be reported by an entry appropriating retained earnings.

Mars Corp. issued 100,000 ordinary shares. Of these, 5,000 were held as treasury stock at Dec. 31, 2018. During
2019, transactions involving Mars Corp.'s ordinary shares were as follows:

June 3 1,000 shares of treasury stock were sold

July 6 10,000 shares of previously unissued share were sold

Nov 8 A 2 for 1 share split took effect

At Dec. 31, 2019, how many ordinary shares are issued and outstanding?

220,000 and 212,000 respectively

The following information pertained to Neptune Corporation:

Dividends on its 2,000 shares of 5%, 20 par value cumulative preference shares have not been declared for three
years.

Purchased 1,000 shares of the corporation's ordinary shares for Php 20,000.

Received donated land with a fair value of Php 100,000

Reissued 500 shares of treasury stocks for 8,000.

What amount of retained earnings should be appropriated as a result of these items?

Php 10,000
Jupiter Company statement of financial position reported the following shareholder's equity:

6% Cumulative Preference Shares, 100 par value, 2,500 shares issued and outstanding - Php 250,000

Ordinary Shares, Php 3.50 par, 100,000 shares issued and outstanding - Php 350,000

Share Premium - Ordinary Php 60,000

Retained Earnings - Php 300,000

Dividends in arrears on the preference shares amounted to Php 45,000. If Jupiter were to be liquidated, the
preference shareholders would receive par value plus the premium of Php 50,000. The book value per share of
ordinary shares is

Php 6.00

Pluto Corp.'s outstanding shares at Dec. 31, 2019, consisted of the following:

30,000 shares of 5% Cumulative Preference Shares, Php 10 par value, fully participating as to dividends. No
dividends were in arrears.

200,000 Ordinary shares, Php 1 par value.

On December 15, 2019, Pluto declared dividends of Php 100,000. What was the amount of dividends payable to
Pluto's preference shares and ordinary shares?

60,000 and 40,000 respectively

Zeus Corporation, a corporation with listed shares, declares a 10% share dividend. It has 10,000 shares issued
and outstanding with par value of Php 100. On the date of declaration, the market value per share is Php 105.

What amount of the retained earnings be capitalized or transferred to share capital?

Php 105,000
 By what amount did Jolly Bee's current liabilities increase as a result of this dividend declaration?

Php 650,000

Seashore Corp. had 100,000 ordinary shares issued and outstanding on January 1, 2019. During 2019, Seashore
took the following actions:

March 15 Declared a 2 for 1 share split, when the fair market value of the share was Php 80 per share.

Declared a Php 1 per share cash dividend.

In Seashore Corp.'s statement of changes in shareholder's equity for 2019, what amount should Seashore report
as dividends?

Php 100,00

On Jan. 5, 2019, Seahorse Corp. declared a cash dividend of Php 6,000,000 to shareholders of record on Jan. 21,
2019. It was payable on February 11, 2019. The following date pertained to 2018:

Profit for year ended 12/31/2018 Php 1,900,000

Share premium, 12/31/2018 6,750,000

Retained Earnings, 1/1/2019 4,250,000

The Php 6,000,000 dividend included a liquidating dividend of

Php 1, 750,000

The following data were taken from the records of Starfish Corporation.

10% Cumulative and Participating Preference Shares, Php 100 par, 1,000 shares were issued and outstanding -
Php 100,000

Ordinary Shares, Php 50 par, 3,000 shares were issued and outstanding - Php 150,000

Retained Earnings:

Appropriated for Plant Expansion Php 80,000

Total Retained Earnings 200,000

The unappropriated Retained Earnings of Php 120,000, 90,000 was declared as cash dividends in 20x1. No cash
dividends were declared and paid in the past 2 years.

How much are the dividends per share for preference shares and ordinary shares?

Php 48.00 and 14.00 respectively

The company recorded a loss from sale of building for the period of Php 20,000. → Decrease,

2,000 shares of Php 100 par value convertible preference shares, which had originally been issued at par, were
converted to ordinary shares. Each share of preference shares was convertible into four shares of ordinary
shares. → No Effect,

Paid the preference share and ordinary shares cash dividends. → No Effect,

Sold 5,000 shares of treasury stock above its cost. → No Effect,

The Board of Directors declared during the year 2 for 1 ordinary shares split. → No Effect,

Sold one-half of the treasury shares at Php 100 per share. These shares was previously acquired at Php 110 per
share. → Decrease,

Issued 12,000 ordinary shares for a building appraised at Php 96,000. → No Effect,

Statement of Operations showed a company's net income after tax of Php 500,000. → Increase,

A 5% share dividend was declared and issued by the board of directors. → Decrease

The accountant of Mali Corporation failed to record the 2020 depreciation of a new building in the amount of
Php 50,000. The error was discovered in 2021. → Decrease

QUIZ 6
In a limited partnership all partners are limited partners. In limited partnership, not all partners
can be limited partners. There should be at least be one general partner who will absorbs the
unpaid obligation after partnership assets are all exhausted. 
The correct answer is 'False'.

A 1:3:2 ratio is the same as 1/6;1/2;1/3

The partner's capital account is debited for additional investments and credited for his share in
profit. The partner's capital account is credited for additional investments and credited for the
credit balance of the drawing account at the end of the period. 
The correct answer is 'False'.

A and B's partnership agreement stipulates that partnership profits shall be shared between them on a
70:30 basis. However, the agreement is silent regarding the sharing of losses. If the partnership incurs
loss, how would the loss be distributed to A and B? The correct answer is:

70:30
James and Reed formed a partnership. The partnership agreement stipulates the following:
 Annual salary allowances of Php 48,000 for James and Php 30,000 for Reed.
 Bonus to James of 10% of the profit and after partner's salaries and bonus. 
 The partners share on profits and losses on a 60:40 ratio.
During the period, the partnership earned profit of Php 100,000 before deductions for salaries
and bonus. How much was Reed's share?
The correct answer is:

Php 38,000
A statement of changes in partner's equity should include all of the following exceptPartner's payments
of loans. 

Mikel Alberto and Richard Michael established a partnership business engaged in selling of "dried fish"
in Taboan, Cebu City aside from their modest accounting practice. Their venture attained a considerable
success so that at the end of the year 20x1, Mikel Alberto receives Php 150,000 as his share in profit. If
the profit and loss ratio is 3:2, how much amount of profit that Mikel Alberto and Richard Michael
shared? Php 250,000

There is a need for a partnership contract to be in writing and same shall appear in the public
instrument to be recorded in the Office of the Securities and Exchange Commission (SEC) when
the capital of the partnership is Php 3,000 or less in money or property and immovable
property or real rights are contributed into the partnership. There is a need for a partnership
contract to be in writing and same shall appear in the public instrument to be recorded in the
Office of the Securities and Exchange Commission (SEC) when the capital of the partnership is
Php 3,000 or more in money or property and immovable property or real rights are
contributed into the partnership. 
The correct answer is 'False'.

A summary of changes in the capital accounts of Do, Re, Mi partnership for 2020, before
closing, follows: The partnership's profit for the year is Php 400,000 and the partnership
agreement provided the following:
1. Bonus to Do and Re of 25% each of profit after salaries and interest but before bonus;
2. Annual salaries for Do, Re and Mi of Php 50,0000, Php 30,000 and Php 20,000 respectively. 
3. Interest of 10% on the average capital balance of each partner. 
4. Balance to be divided in the ration of their respective average capital balance. 
How much is the total average capital of Do, Re, Mi partnership at the end of the year? Php 240,000

What is cash flow? Cash flow = profit – depreciation

X had a Php 500,000 capital balance for eight months and a Php 650,000 balance for four months. Y
had Php 380,000 capital balance for five months and a Php 500,000 balance for seven months. How
much of the year's Php 800,000 profit should Y receive if profits and losses are distributed based on the
ratio of the average capital balances? Php 360,000

A partnership is relatively easy to form but also easy to dissolve. True

A, B, and C are partners. Their contributions are as follows: A, Php 600,000; B, Php 400,000 and C,
services. The partners did not agree on how to divide profits or losses. If there is a loss of Php 100,000,
how should the loss be shared by the partners? A, Php 60,000; B, Php 40,000 and C, nothing. 

By fair market value, we mean the " estimated price of asset that the seller is willing to sell and the
buyer is willing to buy in an open market". TRUE

Which of the following items in the property, plant and equipment section of the statement of financial
position are not depreciated? LAND

Which of the following is not a component of the formula used to distribute profit? Interest on notes to
partners. 

On March 1, 20x1, Jon Ramon formed a partnership with Roberto and made the following
contributions:
 Cash                   Php 350,000
 Equipment                 100,000
At the end of the year, Jon Ramon received a share of Php 32,000 on the Php 80,000 profit. 
What should the share of Roberto on the partnership profit?
60%

The accounting for partnerships differs from the accounting for sole proprietorships, corporations and
cooperatives in regard to the accounting for equity but not for assets and liabilities. True

Jeslyn and Yani formed a partnership in 20x1. The partnership agreement provides for annual salary
allowances of Php 55,000 for Jeslyn and Php 45,000 for Yani. The partners share profits equally and
losses in a 60/40 ratio. The partnership had earnings of Php 80,000 for 20x1 before any allowance to
partners. What amount of these earnings should be credited to each partner's capital account? Jeslyn -
Php 43,000; Yani - Php 37,000

Ms. A contributed equipment with carrying amount of Php 100 and fair value of Php 200 to a
partnership. If no bonus is given to any partner, Ms. A's capital account should be credited for Php 200.
TRUE

Which of the following best describes the nature of salary and interest allowances in a partnership profit
and loss sharing agreement? A means of distributing profit in relation to services rendered and capital
invested by partners. 

Under which of the following circumstance that a capital account of a partner is effected by a credit?
when there is additional investment

A summary of changes in the capital accounts of Do, Re, Mi partnership for 2020, before

closing, follows:
The partnership's profit for the year is Php 400,000 and the partnership agreement provided
the following:
1. Bonus to Do and Re of 10% each of profit after salaries and interest but before bonus;
2. Annual salaries for Do, Re and Mi of Php 50,0000, Php 30,000 and Php 20,000 respectively. 
3. Interest of 10% on the average capital balance of each partner. 
4. Balance to be divided in the ration of their respective average capital balance. 
How much is the total share of Re, including salary, interest and bonus? Php 129,000

Closing entries of a partnership include entries to The correct answer is:

close income and expense accounts to the income summary account; and then close the
profits or losses to the drawing accounts. 

When the non-cash assets are invested in the partnership these are recorded at cost. When the
non-cash assets are invested in the partnership these are recorded at values agreed upon by
the partners. In the absence of any agreement, the contributions will be recognized at their fair
market values at the date of transfer to the partnership. 
The correct answer is 'False'.

A partner has a capital balance of Php 450,000 for five months, Php 300,000 for four months, and Php
600,000 for three months. The average capital balance is Php 437,500

The most equitable distribution of partnership profit based on capital contributions uses which
of the following capital concept? Average capital

When a partner's liability is assumed by the partnership, the capital credit of the partnership
reduces equal to the amount of liability assumed by the partnership.  TRUE

The partner's capital account is debited for the debit balance of the drawing account at the end
of the period. TRUE