PHINMA – Rizal College of Laguna, Inc.

National Highway (Manila South Road), Parian, Calamba City, Laguna

PARTNERSHIP AND CORPORATION

QUIZZER 1

1. A partner who does not take active part in running the partnership affairs but he is a general partner, and a
partner not known as a partner but actively participate in running the partnership affairs, respectively are
known as
A. Secret Partner and Silent Partner
B. Silent Partner and Dormant Partner
C. Silent Partner and Secret Partner
D. Secret Partner and Dormant Partner

2. “Limited life" means

A. A partnership may be dissolved as the result of any change in the ownership.
B. A partnership may be dissolved if the location of the business is changed.
C. A partnership is limited to the amount of revenue it can earn.
D. A partnership is limited in the amount of debit it is liable for in the course of the business

3. Regina, Jessica and Nataly entered into a contract of partnership with a total contribution of P5,000. The
parties failed to register its articles of co-partnership with SEC. Which of the following statements is correct?
A. The contract of partnership is void because the law provides that when the capital contribution is at least
P3,000 it must be registered with SEC.
B. The contract of partnership will bind third persons.
C. The contract of partnership remains to be valid.
D. The partnership business does not obtain juridical personality for failure to register with SEC.

4. In the absence of agreement as to distribution of profit, how shall the partnership profit be distributed to the
partners?
A. The industrial partner shall receive a share equivalent to the least share of a capitalist partner while the
capitalist partners shall share based on capital contribution ratio.
B. The industrial partner shall receive a just and equitable share and the remainder shall be distributed to the
capitalist partners on the basis of capital contribution ratio.
C. The profit shall be distributed on the basis of loss contribution ratio which may have been agreed upon by
the partners.
D. The profit shall be distributed equally to all partners including the industrial partner.

5. An advantage of the partnership as a form of business organization would be

A. Partners do not pay income taxes on their share in partnership income.
B. A partnership is bound by the act of the partners.
C. A partnership is created by the mere agreements of the partners.
D. A partnership may be terminated by the death or withdrawal of a partner.

6. Which of the following is false?

A. The partnership contract can be oral or written
B. There is no limit as to the number of partners who can form a partnership.
C. A person can be a partner although he has no capital contribution.
D. All partners should share in the profits or losses. (Industrial partners do not share in losses.)
E. None of the above.

7. The following are the inherent rights of a partner except the right to ___________________.
A. Share in the profits

PARCOR – QUIZZER 1
 B. Participate in management
C. Demand salaries
D. Share in the partnership assets

8. How many of the following statements is/are false?

1. A partnership is easier to organize than a corporation.
2. A corporation is easier to dissolve than a partnership.
3. A partnership is less expensive to organize than a corporation.
4. A corporation has more legal requirements than a partnership.
5. A limited partner cannot invest his skill, knowledge, and industry in a partnership.
A. One
B. Two
C. Three
D. Four
E. None of these

9. An industrial partner contributes his _____________________.

A. Labor and skill only
B. Personal assets
C. money and intellectual property
D. All of the choices

10. Which of the following is a characteristic of most partnerships?

A. Limited liability
B. Mutual contribution
C. Unlimited life
D. Division of profits only

11. On May 1, 2019, Gonzaga and Balace formed a partnership and agreed to share profits and losses in the
ratio of 3: 7, respectively, Gonzaga contributed a parcel of land that cost P 10,000. Balace contributed
P40,000 cash. The land was sold for P18,000 on May 1, 2019, immediately after formation of the partnership.
What amount should be recorded in Gonzaga's capital account on formation of the partnership?
A. P15,000
B. P17,400
C. P10,000
D. P18,000

12. Orcajada invested in a partnership a parcel of land which cost his father P200,000. The land had a
market value of P300,000 when Orcajada inherited it three years ago. Currently, the land is independently
appraised at P500,000 even though Orcajada insisted that he "wouldn't take P900,000 for it." The land
should be recorded in the accounts of the partnership at
A. P300,000
B. P500,400
C. P900,000
D. P200,000

13. Pedernal, Pating, and Liggayu are forming a new partnership. Pedernal is to invest cash of P100,000 and
stapling equipment originally costing P120,000 but has a second-hand market value of P50,000. Pating is to
invest cash of P160,000. Liggayu, whose family is engaged in selling stapling equipment, is to contribute
cash of P50,000 and a brand new stapling equipment to be used by the partnership with a regular price of
120,000 but which cost their family's business P 100,000. Partners agreed to share profits equally. The
capital balances upon formation are
A. Pedernal, P220,000; Pating, P 160,000; and Liggayu, P150,000.
B. Pedernal, P 150,000; Pating, P 160,000; and Liggayu, P170,000.

PARCOR – QUIZZER 1
 C. Pedernal, P160,000; Pating, P160,OOO; and Liggayu, P160,000.
D. Pedernal, PI76,666; Pating, P 176,666; and Liggayu, P176,668.

14. On July 1, Faminial and Fetalvero formed a partnership, agreeing to share profits and losses in the ratio
of 4:6 respectively. Faminial contributed a parcel of land that cost P25,000. Fetalvero contributed P50,000
cash. The land was sold for P50,000 on July 1, three hours after formation of the partnership. How much
should be recorded in Faminial's capital account on formation of the partnership?
A. P50,000
B. P20,000
C. P25,000
D. P10,000

15. Lacson and Solis started a partnership. Lacson contributed a building that she purchased 10 years ago
for P100,000. The accumulated depreciation on the building on the date of formation of the partnership is P
25,000 and the fair value P110,000. For what amount will Lacson's capital account be credited on the bocks
of the partnership?
A. P100,000
B. P75,000
C. P110,000
D. P25,000

II. Problem Solving:

Directions: Read and understand each question carefully, and provide the answers required for each
problem.

Problem 1. Froilan Labausa contributed land, inventory, and P 280,000 cash to a partnership. Th land has a
book value of P650,000 and a market value of P 1,350,000. The inventory ha a book value of P600,000 and
a market value of P510,000. The partnership also assumed a P350,000 note payable owed by Labausa that
was used to purchase the land Rosalie Balhag agreed to put up cash equivalent to Labausa's net
investment.

Required: Prepare the journal entry to record Labausa's and Balhag's investment in the partnership.

Problem 2. Gogola and Paglinawan have just formed a partnership. Gogola contributed cash of P1,260,000
and computer equipment that cost P540,000. The fair value of the computer is P360,000. Gogola has notes
payable on the computer of P120,000 to be assumed by the partnership. Gogola is to have 60% capital
interest in the partnership. Paglinawan contributed only P900,000. The partners agreed to share profit and
loss equally.

Gogola should make an additional investment or (withdrawal) of __________________.

PARCOR – QUIZZER 1