Question 1

Explain the type of information needed to prepare journal entries to record the formation of a partnership.

Accepted Answer

When partners invest in a partnership,the current fair value of their individual contributions is credited to each partner's capital account.Partners normally contribute assets which are debited to the appropriate asset account.Partners may contribute assets that have related liabilities.The liabilities assumed by the partnership are credited to the appropriate liability account.

Question 2

When a partner is unable to pay a capital deficiency

Accepted Answer

A) The partner must take out a loan to cover the deficiency. 
B) The deficiency is absorbed by the remaining partners. 
C) The partnership ends. 
D) The deficient partner has a personal liability to the other partners. 
E) The deficiency is absorbed by the remaining partners and the deficient partner has a personal liability to the other partners. 
A) The partner must take out a loan to cover the deficiency. 
B) The deficiency is absorbed by the remaining partners. 
C) The partnership ends. 
D) The deficient partner has a personal liability to the other partners. 
E) The deficiency is absorbed by the remaining partners and the deficient partner has a personal liability to the other partners. E

Question 3

Discuss the options for the allocation of income and loss among partners.

Accepted Answer

In the absence of a partnership agreement,income and losses are shared equally by the partners.A partnership agreement should specify how to allocate partnership income or loss among partners.Allocation can be made based on a fractional share of ownership,salary allowances,and/or interest allowances.

Question 4

Salary and interest allowances are reported as expenses on a partnership income statement.

Accepted Answer

A) True 
 B)False

Question 5

Partnership accounting

Accepted Answer

A) Is the same as accounting for a sole proprietorship 
B) Is the same as accounting for a corporation 
C) Is the same as accounting for a sole proprietorship,except that separate capital and withdrawal accounts are kept for each partner 
D) Is the same as accounting for a not-for profit organization 
E) None of these 
A) Is the same as accounting for a sole proprietorship 
B) Is the same as accounting for a corporation 
C) Is the same as accounting for a sole proprietorship,except that separate capital and withdrawal accounts are kept for each partner 
D) Is the same as accounting for a not-for profit organization 
E) None of these

Question 6

A partner can withdraw from a partnership by

Accepted Answer

A) Selling his/her interest to another person who pays for it in cash 
B) Selling his/her interest to another person who pays for it with non-cash assets 
C) Receiving cash or other assets of the partnership equal to the amount of his/her capital account 
D) Receiving cash or other assets of the partnership greater than the amount of his/her capital account 
E) All of these 
A) Selling his/her interest to another person who pays for it in cash 
B) Selling his/her interest to another person who pays for it with non-cash assets 
C) Receiving cash or other assets of the partnership equal to the amount of his/her capital account 
D) Receiving cash or other assets of the partnership greater than the amount of his/her capital account 
E) All of these

Question 7

If partners devote their time and services to their partnership,their salaries are expenses on the income statement.

Accepted Answer

A) True 
 B)False

Question 8

Assets invested by a partner into a partnership remain the property of the individual partner.

Accepted Answer

A) True 
 B)False

Question 9

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a

Accepted Answer

A) Partnership 
B) Proprietorship 
C) Partnership contract 
D) Mutual agency 
E) Divided authority 
A) Partnership 
B) Proprietorship 
C) Partnership contract 
D) Mutual agency 
E) Divided authority

Question 10

Lauren and Jenna formed a partnership with capital contributions with a fair value of $145,000 and $125,000,respectively.Their partnership agreement calls for Lauren to receive a $10,000 annual salary allowance.Also,each partner is to receive a share of earnings equal to a 5% return on capital investments.The remaining income or loss is to be divided equally.If the profit for the year is $148,000,then Lauren and Jenna's respective shares are

Accepted Answer

A) $79,500; $68,500 
B) $74,000; $74,000 
C) $78,000; $70,000 
D) $145,000; $3,000 
E) $80,000; $68,000 
A) $79,500; $68,500 
B) $74,000; $74,000 
C) $78,000; $70,000 
D) $145,000; $3,000 
E) $80,000; $68,000

Question 11

The TJR Partnership recorded the following journal entry: $\begin{array}{|l|r|r|}
\hline \text { Cash } & 20,000 \
\hline \text { B. Tara, Capital } & 2,000 \
\hline \text { R. Jillian, Capital } & 2,000 \
\hline\text { S. Rose, Capital }&&24,000\\hline
\end{array}$ The transaction reflects

Accepted Answer

A) Withdrawal of $2,000 each by Tanner and Jackson 
B) Withdrawal of a partner who pays a $2,000 bonus to each of the other partners 
C) Addition of a partner who pays a bonus to each of the other partners 
D) Additional investment into the partnership by Tara and Jillian 
E) Acceptance of a new partner who invests $20,000 and receives a $4,000 bonus 
A) Withdrawal of $2,000 each by Tanner and Jackson 
B) Withdrawal of a partner who pays a $2,000 bonus to each of the other partners 
C) Addition of a partner who pays a bonus to each of the other partners 
D) Additional investment into the partnership by Tara and Jillian 
E) Acceptance of a new partner who invests $20,000 and receives a $4,000 bonus

Question 12

In the absence of a partnership agreement,the law says that income of a partnership will be shared equally by the partners.

Accepted Answer

A) True 
 B)False

Question 13

Unlimited liability of partners is

Accepted Answer

A) The agreement between partners that sets forth the terms under which the affairs of the partnership will be conducted 
B) In the absence of a contrary agreement,the legal responsibility of partners in a partnership to share all losses equally 
C) The legal relationship between partners in which all the partners must share liability for the partnership debts,but only up to the amount of their capital accounts 
D) The legal relationship among the partners whereby each partner is an agent of the partnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business 
E) The legal relationship among general partners that makes each of them responsible for paying all the debts of the partnership if the other partners are unable to pay their shares 
A) The agreement between partners that sets forth the terms under which the affairs of the partnership will be conducted 
B) In the absence of a contrary agreement,the legal responsibility of partners in a partnership to share all losses equally 
C) The legal relationship between partners in which all the partners must share liability for the partnership debts,but only up to the amount of their capital accounts 
D) The legal relationship among the partners whereby each partner is an agent of the partnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business 
E) The legal relationship among general partners that makes each of them responsible for paying all the debts of the partnership if the other partners are unable to pay their shares

Question 14

With the consent of the other partners,Frank decides to sell one half of his $50,000 interest in the DDB Partnership to Bob privately for $22,500.Prepare the journal entry to record the transaction.

Accepted Answer

The answer of With the consent of the other partners,Frank...

Question 15

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

Accepted Answer

A) True 
 B)False

Question 16

Rachel,Jenna and Lauren are partners with capital balances of $80,000,$10,000,and $10,000,respectively.Profit for the year is $150,000.Prepare the necessary journal entries to close Income Summary to the capital accounts if:(a)The partners agree to divide income based on their beginning-of-year capital balances.(b)The partners agree to divide income based on the ratio of 5:3:2,respectively.(c)The partnership agreement is silent as to division of income.

Accepted Answer

The answer of Rachel,Jenna and Lauren are partners with capital...

Question 17

When a partner leaves a partnership,the partnership ends.

Accepted Answer

A) True 
 B)False

Question 18

In a limited partnership the general partner has unlimited liability.

Accepted Answer

A) True 
 B)False

Question 19

If at the time of partnership liquidation,Claire has a $7,000 capital deficiency and pays the partnership $7,000 to cover the deficiency,then Claire is entitled to share in the final distribution of cash.

Accepted Answer

A) True 
 B)False

Question 20

Cook and Parker formed a partnership with capital contributions of $50,000 and $60,000 respectively.Their partnership agreement called for Cook to receive a $9,000 annual salary allowance,and each partner to receive a share of profit equal to a 5% return on capital investments.The remaining income or loss is to be divided 50% to Cook and 50% to Parker.If the profit for the year is $105,000,what are Cook and Parson's respective shares? Prepare the required closing entry.

Accepted Answer

The answer of Cook and Parker formed a partnership with...

Explain the type of information needed to prepare journal entries to record the formation of a partnership.

When a partner is unable to pay a capital deficiency

Discuss the options for the allocation of income and loss among partners.

Salary and interest allowances are reported as expenses on a partnership income statement.

Partnership accounting

A partner can withdraw from a partnership by

If partners devote their time and services to their partnership,their salaries are expenses on the income statement.

Assets invested by a partner into a partnership remain the property of the individual partner.

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a

The TJR Partnership recorded the following journal entry: Cash 20,000 B. Tara, Capital 2,000 R. Jillian, Capital 2,000 S. Rose, Capital 24,000 The transaction reflects

In the absence of a partnership agreement,the law says that income of a partnership will be shared equally by the partners.

Unlimited liability of partners is

With the consent of the other partners,Frank decides to sell one half of his $50,000 interest in the DDB Partnership to Bob privately for $22,500.Prepare the journal entry to record the transaction.

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

When a partner leaves a partnership,the partnership ends.

In a limited partnership the general partner has unlimited liability.

If at the time of partnership liquidation,Claire has a $7,000 capital deficiency and pays the partnership $7,000 to cover the deficiency,then Claire is entitled to share in the final distribution of cash.

Property, plant and Equipment Intangibles

Current Liabilities

Organization and Operation of Corporations

Corporate Reporting: Income, earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

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Exam 3: Partnerships

Explain the type of information needed to prepare journal entries to record the formation of a partnership.

When a partner is unable to pay a capital deficiency

Discuss the options for the allocation of income and loss among partners.

Salary and interest allowances are reported as expenses on a partnership income statement.

Partnership accounting

A partner can withdraw from a partnership by

If partners devote their time and services to their partnership,their salaries are expenses on the income statement.

Assets invested by a partner into a partnership remain the property of the individual partner.

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a

The TJR Partnership recorded the following journal entry: Cash 20,000 B. Tara, Capital 2,000 R. Jillian, Capital 2,000 S. Rose, Capital 24,000 The transaction reflects

In the absence of a partnership agreement,the law says that income of a partnership will be shared equally by the partners.

Unlimited liability of partners is

With the consent of the other partners,Frank decides to sell one half of his $50,000 interest in the DDB Partnership to Bob privately for $22,500.Prepare the journal entry to record the transaction.

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

When a partner leaves a partnership,the partnership ends.

In a limited partnership the general partner has unlimited liability.

If at the time of partnership liquidation,Claire has a $7,000 capital deficiency and pays the partnership $7,000 to cover the deficiency,then Claire is entitled to share in the final distribution of cash.

Property, plant and Equipment Intangibles

Current Liabilities

Organization and Operation of Corporations

Corporate Reporting: Income, earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

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