Question 1

If a partnership has a loss for the period the closing entry to transfer the loss to the partners will require a credit to the Income Summary account.

Accepted Answer

A) True 
 B)False

Question 2

The liquidation of a partnership is a process containing the following steps:
1) Pay partnership liabilities in cash.
2) Allocate the gain or loss on realization to the partners on their income ratios.
3) Sell noncash assets for cash and recognize a gain or loss on realization.
4) Distribute remaining cash to partners on the basis of their remaining capital balances.
Identify the proper sequencing of the steps in the liquidation process.

Accepted Answer

A)  3 2 4 1. 
B)  3 2 1 4. 
C)  1 3 2 4. 
D)  1 4 3 2. 
A)  3 2 4 1. 
B)  3 2 1 4. 
C)  1 3 2 4. 
D)  1 4 3 2.

Question 3

Which of the following would not be recorded in the entry for the formation of a partnership?

Accepted Answer

A)  Accumulated depreciation 
B)  Allowance for doubtful accounts 
C)  Accounts receivable 
D)  All of these would be recorded. 
A)  Accumulated depreciation 
B)  Allowance for doubtful accounts 
C)  Accounts receivable 
D)  All of these would be recorded.

Question 4

The function of the Partners' Capital Statement is to explain the changes in partners' capital account balances during a period.

Accepted Answer

A) True 
 B)False

Question 5

An income ratio based on ______________ balances may be appropriate when the amount of funds invested in the partnership is critical to the partnership.

Accepted Answer

The answer of An income ratio based on ______________ balances...

Question 6

The Jamison and Stephens partnership reports net income of $50000. Partner salary allowances are Jamison $18000 and Stephens $12000. Any remaining income is shared 60:40.
Instructions
Determine the amount of net income allocated to each partner.

Accepted Answer

The answer of The Jamison and Stephens partnership reports net...

Question 7

A partner's share of net income is recognized in the accounts through

Accepted Answer

A)  adjusting entries. 
B)  closing entries. 
C)  correcting entries. 
D)  accrual entries. 
A)  adjusting entries. 
B)  closing entries. 
C)  correcting entries. 
D)  accrual entries.

Question 8

An income ratio based on capital balances might be appropriate when

Accepted Answer

A)  service is a primary consideration. 
B)  some but not all partners plan to work in the business. 
C)  funds invested in the partnership are considered the critical factor. 
D)  little net income is expected. 
A)  service is a primary consideration. 
B)  some but not all partners plan to work in the business. 
C)  funds invested in the partnership are considered the critical factor. 
D)  little net income is expected.

Question 9

A general partner in a partnership

Accepted Answer

A)  has unlimited liability for all partnership debts. 
B)  is always the general manager of the firm. 
C)  is the partner who lacks a specialization. 
D)  is liable for partnership liabilities only to the extent of that partner's capital equity. 
A)  has unlimited liability for all partnership debts. 
B)  is always the general manager of the firm. 
C)  is the partner who lacks a specialization. 
D)  is liable for partnership liabilities only to the extent of that partner's capital equity.

Question 10

Jon Winek started the year with a capital balance of $135000. During the year his share of partnership net income was $120000 and he withdrew $22500 from the partnership for personal use. He made an additional capital contribution of $37500 during the year. The amount of Jon Winek's capital balance that will be reported on the year-end balance sheet will be

Accepted Answer

A)  $120000. 
B)  $292500. 
C)  $225000. 
D)  $270000. 
A)  $120000. 
B)  $292500. 
C)  $225000. 
D)  $270000.

Question 11

Partnership ______________ occurs whenever a partner withdraws or a new partner is admitted.

Accepted Answer

The answer of Partnership ______________ occurs whenever a partner withdraws...

Question 12

R. Schoen purchases a 25% interest for $60000 when the Hise Poole Lagos partnership has total capital of $540000. Prior to the admission of Schoen each partner has a capital balance of $180000. Each partner relinquishes an equal amount of his capital balance to Schoen. The amount to be relinquished by Lagos is

Accepted Answer

A)  $30000. 
B)  $38000. 
C)  $45000. 
D)  $75000. 
A)  $30000. 
B)  $38000. 
C)  $45000. 
D)  $75000.

Question 13

Partnership income is shared in proportion to each partner's capital equity interest unless the partnership contract specifically indicates the manner in which net income or net loss is to be divided.

Accepted Answer

A) True 
 B)False

Question 14

Jackson is admitted to a partnership with a 25% capital interest by a cash investment of $360000. If total capital of the partnership is $1560000 before admitting Jackson the bonus to Jackson is

Accepted Answer

A)  $120000. 
B)  $60000. 
C)  $180000. 
D)  $240000. 
A)  $120000. 
B)  $60000. 
C)  $180000. 
D)  $240000.

Question 15

Limited partnerships

Accepted Answer

A)  must have at least one general partner. 
B)  guarantee that a partner will receive a return. 
C)  guarantee that a partner will get back his original investment. 
D)  are limited to only three partners. 
A)  must have at least one general partner. 
B)  guarantee that a partner will receive a return. 
C)  guarantee that a partner will get back his original investment. 
D)  are limited to only three partners.

Question 16

A partnership characteristic which enables each partner to act on behalf of the partnership when engaging in partnership business is called ______________.

Accepted Answer

The answer of A partnership characteristic which enables each partner...

Question 17

The admission of a new partner to an existing partnership

Accepted Answer

A)  may be accomplished only by investing assets in the partnership. 
B)  requires purchasing the interest of one or more existing partners. 
C)  causes a legal dissolution of the existing partnership. 
D)  is almost always accompanied by the liquidation of the business. 
A)  may be accomplished only by investing assets in the partnership. 
B)  requires purchasing the interest of one or more existing partners. 
C)  causes a legal dissolution of the existing partnership. 
D)  is almost always accompanied by the liquidation of the business.

Question 18

In BigEasy Co. capital balances are Adrienne $60000 and Dino $75000. The partners share income equally. Javier is admitted to the firm with a 40% interest by an investment of cash of $85000. Journalize the admission of Javier.

Accepted Answer

None

Question 19

A ______________ allowance or ______________ on partners' capital accounts are not expenses of the partnership when they are specified as the basis for sharing income and losses.

Accepted Answer

The answer of A ______________ allowance or ______________ on partners'...

Question 20

A detailed listing of all the assets invested by a partner in a partnership appears on the Partners' Capital Statement.

Accepted Answer

A) True 
 B)False

Exam 12: Accounting for Partnerships

If a partnership has a loss for the period the closing entry to transfer the loss to the partners will require a credit to the Income Summary account.

Which of the following would not be recorded in the entry for the formation of a partnership?

The function of the Partners' Capital Statement is to explain the changes in partners' capital account balances during a period.

An income ratio based on ______________ balances may be appropriate when the amount of funds invested in the partnership is critical to the partnership.

The Jamison and Stephens partnership reports net income of $50000. Partner salary allowances are Jamison $18000 and Stephens $12000. Any remaining income is shared 60:40. Instructions Determine the amount of net income allocated to each partner.

A partner's share of net income is recognized in the accounts through

An income ratio based on capital balances might be appropriate when

A general partner in a partnership

Partnership ______________ occurs whenever a partner withdraws or a new partner is admitted.

Partnership income is shared in proportion to each partner's capital equity interest unless the partnership contract specifically indicates the manner in which net income or net loss is to be divided.

Jackson is admitted to a partnership with a 25% capital interest by a cash investment of $360000. If total capital of the partnership is $1560000 before admitting Jackson the bonus to Jackson is

Limited partnerships

A partnership characteristic which enables each partner to act on behalf of the partnership when engaging in partnership business is called ______________.

The admission of a new partner to an existing partnership

In BigEasy Co. capital balances are Adrienne $60000 and Dino $75000. The partners share income equally. Javier is admitted to the firm with a 40% interest by an investment of cash of $85000. Journalize the admission of Javier.

A ______________ allowance or ______________ on partners' capital accounts are not expenses of the partnership when they are specified as the basis for sharing income and losses.

A detailed listing of all the assets invested by a partner in a partnership appears on the Partners' Capital Statement.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

A allowance or on partners' capital accounts are not expenses of the partnership when they are specified as the basis for sharing income and losses.