SECTIONA Instructions: On the computerized answer sheet provided, shade the letter that corresponds with the most appropriate response for each of the following. 1. A and B are in partnership sharing profits and losses equally. They admit C as a partner and adjusted the profit-sharing ratio to 2:2:1 for A,B,C respectively. Goodwill is valued at $10000 but no goodwill is to be recorded in the books. The entries in the capital accounts will be: A. debit A and B with $1000 each and credit C with $2000. B. credit A and B with $1000 each and debit C with $2000 c. debit A and C with $1000 each credit B with $2000. d. credit B and C with $1000 each and debit A with $1000. 2. Gain or losses on revaluation are adjusted in the existing partners' capital accounts by using the A. new profit-sharing ratio. B. old profit-sharing ratio. C. now capital balances. D. old capital balances. 3. S and A are in partnership sharing profits and losses equally. They admit W as a partner and conducted a revaluation of the assets which resulted in a loss of $18000. The new profit-sharing ratio is 2:2:1 for S,A and W respectively. The revaluation loss will be recorded in the capital accounts as A. debit S and A with $9000 each. B. credit S and A with $9000 each C. debit S and A with $9000 each and credit W with 18000 . D. credit S and A with $9000 each and debit W with $18000. 4. J,F and M are in partnership sharing profits and losses in the ratio 3:2:1. M retired and left J and F to continue running the business. The new profit-sharing ratio is 3:2. Goodwill is valued at $9000. The entries to adjust goodwill in the capital accounts are A. Debit J with $900, debit F with $600 and credit M with $1500. B. Credit J with $900, debit F with $600 and debit M with $1500. C. Debit J with $900, credit F with $600 and debit M with $1500. D. Credit J with $900, credit F with $600 and credit M with $1500. 5. Upon admission of a new partner, goodwill can be adjusted through A. appropriation account or current account. B. revaluation account or capital account. C. capital account or current account. D. revaluation account or current account. 6. The net worth of a partnership is reflected in which of the following? A. Current accounts B. Goodwill account C. Capital accounts D. Appropriation account 7. The correct entry for recording losses on revaluation would be 8. Goodwill is A. the total value of a business' staff loyalty, brand name and clientele. B. the difference between the par value of an ordinary share and its market value. C. the difference between the purchase price of a business and its net asset value. D. the difference between the historical cost and the market value of a business' assets. 9. If a partnership ceases operations and is dissolved, this is recorded in a A. revaluation account B. appropriation account C. realization account D. goodwill account 10. In closing off the partner's capital accounts after dissolution, a partner with a debit balance will: A. Be paid cash by the partnership B. Be declared insolvent by the partnership C. Transfer the balance to his current account D. Be required to pay in cash to the partnership 11. The rule in Garner vs. Murray states that when a partner is insolvent, any debit balance on his capital account must be borne by the solvent partners in their: A. Current capital sharing ratio B. Last capital sharing ratio C. Old profit sharing ratio D. New profit sharing ratio 12. What are the accounting entries for assets taken over by a partner on dissolution? A. Dr Bank a/c Cr Partners 3 capital a/c B. Dr Partners' Capital a/c Cr Bank a/c C. Dr Realization a/cCr bank a/c D. Dr Partners' Capital a/c Cr Realization a/c 13. Which of the following items could appear in a company's statement of cash flows? I) Surplus on revaluation of non-current assets II) Bonus issue of shares III) Proceeds of issue of shares IV) Dividends received A. I and II only B. III and IV only C. I and III only D. II and IV only 14. Which of the following is NOT a capital reserve? A. Share premium B. Capital Redemption Reserve C. Retained Earnings D. Revaluation Reserve 15. Which of the following should appear in a company's statement of changes in equity? I) Amortisation of capitalised development costs II) Dividends paid III) Total comprehensive income for the year A. I, II and III only B. I and III only C. I and II only D. II and III only 16. If a company wishes to raise capital without increasing its debt, it should issue A. ordinary shares B. bonus shares C. debentures D. mortgage 17. The authorised share capital of a limited company is: A. The amount of shares issued to shareholders B. The amount paid for shares by the shareholders C. The maximum amount of shares that can be issued D. The minimum amount of shares that can be issued 18. Which of the following IASs deals with Presentation of financial statements? A. IAS1 B. IAS7 C. IAS 10 D. IAS 33 19. Which of the following is generally the first to be disclosed in the notes to the accounts? A. General balance sheet disclosures B. Accounting policies C. Shareholders' interests D. Property, plant and equipment