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CHAPTER 2 Partnership Operations

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Carmela Esquivel Taguilid
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63 views4 pages

CHAPTER 2 Partnership Operations

Uploaded by

Carmela Esquivel Taguilid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 2 Partnership Operations

1. How should the partners in a business partnership share in the profits


or losses of the partnership?
a. Equally.
b. At whatever basis of allocation that the dominating partner
deems reasonable.
c. In accordance with the partnership agreement.
d. Based on "rock, paper, scissors;" winner takes all.
2. According to the Philippine Civil Code, if only the share of each partner
in the profits has been agreed upon, the share of each in the losses
shall be
a. in equal amounts.
b. in equal amounts, but excluding the industrial partner.
c. in proportion to the partners' contributions.
d. the same as the sharing in profits.
3. According to the Philippine Civil Code, in the absence of a stipulation
on the sharing of profits or losses, partnership profits and losses shall
be shared by the partners
a. equally.
b. in accordance with the partnership agreement.
c. in proportion to what the partners may have contributed.
d. in proportion to what the partners may have contributed, but the
industrial partner shall not be liable for the losses.
4. Which of the following is not a component of the formula used to
distribute partnership profits to the partners?
a. Salary allocation to those partners working.
b. After all other allocation, the remainder divided according to the
profit and loss sharing ratio.
c. Interest on the average capital investments.
d. Interest on notes to partners.
(Adapted)

5. When allocating a partnership loss to the partners which the following


items is provided first?
a. salaries
b. bonuses to partners
c. interest on the capital contribution of an industrial partner
d. all of these
COMPUTATIONAL

6. 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 profits equally and losses on a 60:40 ratio.

During the period, the partnership earned profit of P100,000 before


salary allowances. How much was the share of A?

a. 72,000 c. 52,000
b. 68,000 d. 32,000
7. A, B and C are partners, sharing in partnership profits in the ratio of
2:3:4. A, the managing partner, is entitled to an annual salary of
P80,000 and a 10% bonus on profit after deducting the salary but
before deducting the bonus. The partnership earned profit of P560,000
before salary. How much is the share of A?
a. 214,400 c. 224,000
b. 196,000189,667
8. The partnership agreement of A, B and C stipulates following:
 A, the managing partner, shall receive a bonus of 10% of profit.
 Each partner shall receive a 6% interest on average capital
investments.
 Any remaining profit or loss shall be shared equally.

The average capital investments of the partners during the year were
P80,000 for A, P50,000 for B, and P30,000 for C. The partnership
earned profit of P100,000 during the period. How much was A's share?

a. 23,800 c. 29,800
b. 28,600 d. 41,600
c.
(AICPA - adapted)

9. A and B's partnership agreement stipulates the following:


 Annual salary allowance of P100,000 for A.
 Bonus to A of 10% of the profit after partner's salaries and bonus.
 The partners share in profits and losses on a 60:40 ratio.

The partnership incurred loss of P40,000 before deduction for salaries.


How much is the change in A's capital account?

a. 56,000 decrease c. 16,000 increase


b. 15,000 decrease d. 9,000 increase
10. In its first year of operations, A and B's partnership business
earned profit of P2,500,000. It was agreed that A is to have an annual
salary allowance of P100,000 and a 20% bonus based on profit after
deducting the salary and the bonus. However, there has been no
stipulation on how the remaining profit is to be shared between A and
B. A contributed P300,000, while B contributed P500,000. How much is
the share of B?
a. 1,250,000 c. 1,350,000
b. 1,060,000 d. 1,080,000
11. Billy and Sheehan are partners in Bass Co. Their partnership
agreement states that Billy is entitled to an annual salary of P100,000
and a bonus of 10% of profit after salary but before bonus. The
remainder is shared in the ratio of 7:2. Sheehan's share in partnership
profit for the year was 296,000. How much was the partnership profit
before Billy's salary and bonus?
a. 1,580,000 c. 1,751,348
b. 1,672,342 d. 1,420,000
12. A&B Partnership earns profit of P240,000 in 20x1. The
movements in the capital accounts of the partners are shown below:
A, Capital B, Capital
Dr. Cr. Dr. Cr.
Jan. 1 120,000 80,000
May 1 20,000 10,000
July 1 20,000
Aug 1 10,000 How
much Oct. 1 10,000 5,000 is the
share of A if
profits are to be divided based on average capital?

a. 108,333 c. 103,457
b. 121,500 d. 136,543
(RPCPA)

13. Partner A first contributed P50,000 of capital into an existing


partnership on March 1, 20x1. On June 1 20x1, Partner A contributed
another P20,000. On September 1, 20x1, Partner A withdrew P15,000
from the partnership. Withdrawal in excess of P10,000 is charged to
the partner's capital account. The annual interest rate applicable to
capital contributions is 12%. How much is the interest on the weighted
average capital balance of Partner A in 20x1?
a. 6,200 c. 7,567
b. 6,667 d. 8,993
(AICPA)

14. A and B share in partnership profits and losses on a 40:60 ratio.


During the year, A's capital account had a net increase P50,000.
Partner A made contributions of P10,000 and capita withdrawals of
P60,000 during the year. How much was the share of B in the
partnership profit for the year?
a. 100,000 c. 200,000
b. 150,000 d. 180,000
15. The Articles of Partnership of partners A and B stipulates t
following:
 Annual salary of P60,000 each.
 Bonus to Partner A of 20% of the profit after partners’ salaries. The
bonus and salaries are treated as expenses.
 Balance to be divided equally.

The partnership earned profit of P480,000 before partners' salary and


bonus. How much is the total share of A, including salary a bonus?

a. 270,000 c. 230,000
b. 250,000 d. 210,000
(AICPA)

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