Incentive Activity

In a partnership, bonuses maybe give to partners in spite of a net loss.

• TRUE

• FALSE

If a retiring partner receives more than his adjusted capital balance before retirement,

what is the logical reason if the capital balances of the remaining partner decrease after

the said retirement?

• Bonus is given by remaining partners to retiring partner

• Bonus is given by retiring partner to remaining partners

• Impairment loss of an existing asset is recognized at the time of retirement.

When shall entity recognize revenue from contract with customers?

• When the entity becomes a party to a contract

• When the entity satisfies a performance obligation

• Upon collection of the transaction price

• When the collection of the transaction price is probable

In the zero-profit method, generally, revenue is not recognize until the construction is 100%, unless the contract will result to a net loss.

• TRUE

• FALSE

In the absence of a profit agreement, how shall the profits of the partnership be distributed to capitalist partners assuming there is no industrial partner?

• Based on the loss agreement ratio

• Based on the capital contribution ratio

• Divided equally

• Based on ending capital ratio

A&B Partnership is undergoing liquidation. Before the liquidation, A&B Co. had P40,000 cash, liabilities of P60,000, and capital balances of A P200,000 and B P400,000. If the partnership incurred a loss of P240,000 on the sale of non-cash assets, how much were the proceeds from the sale of such assets?

• P 380,000

• P 560,000

• P 620,000

• P 1,100,000

ABC Partnership shows the capital balances of A, B, and C as P400,000, P300,000, and P100,000 respectively with P/L ratio of 1:4:5. C retired and received P80,000 . If an asset is overvalued, what is the capital balance of B after the retirement of C?

• 284,000

• 308,000

• 316,000

• 320,000

Which of the following does not share in the free assets of the corporation?

• Unsecured claims with priority

• Unsecured claims without priority

• Fully secured claims

• Partially secured claims

On Jan. 1, 2022, BBB Company started the construction of a building at a fixed contract price of P2,000,000. On Jan. 1, 2023, the contract price increased by P1,500,000.

Based on the table, determine the gross profit recognized for the year 2023.

• 1,200,000

• 800,000

• 1,600,000

• 1,900,000

The partner's capital balances before liquidation are

A (20%) P200,000

B (30%) P340,000

C (50%) P400,000

If P112,000 are available to partners, compute for the share of A if only B is solvent

• 112,000

• 83,200

• 28,800

• 34,400