Question 1

The ______________ ratio specifies the basis for sharing income and losses.

Accepted Answer

The answer of The ______________ ratio specifies the basis for...

Question 2

When a partnership terminates business, the sale of noncash assets is called

Accepted Answer

A)  liquidation. 
B)  realization. 
C)  recognition. 
D)  disposition. 
A)  liquidation. 
B)  realization. 
C)  recognition. 
D)  disposition.

Question 3

On November 30, capital balances are Howe $90,000, Doss $75,000 and Newlin $75,000. The income ratios are 20%, 20% and 60%, respectively. Howe decides to retire from the partnership. The partnership pays Howe $105,000 cash for her partnership interest. After Howe's retirement, what is the balance of Doss's capital account?

Accepted Answer

A)  $71,250 
B)  $72,000 
C)  $75,000 
D)  $97,500 
A)  $71,250 
B)  $72,000 
C)  $75,000 
D)  $97,500

Question 4

The partnership agreement should include each of the following except the

Accepted Answer

A)  date of the partnership inception. 
B)  principal location of the firm. 
C)  surviving family members in the event of a partner's death. 
D)  Each of these should be included. 
A)  date of the partnership inception. 
B)  principal location of the firm. 
C)  surviving family members in the event of a partner's death. 
D)  Each of these should be included.

Question 5

Eberle and Lankton are partners who share income and losses in the ratio of 3:2, respectively. On August 31, their capital balances were: Eberle, $175,000 and Lankton, $150,000. On that date, they agree to admit Newman as a partner with a one-third capital interest. If Newman invests $125,000 in the partnership, what is Eberle's capital balance after Newman's admittance?

Accepted Answer

A)  $150,000 
B)  $158,333 
C)  $160,000 
D)  $175,000 
A)  $150,000 
B)  $158,333 
C)  $160,000 
D)  $175,000

Question 6

Joe Mann and Sam Trane operate separate auto repair shops. On January 1, 2010, they decide to combine their separate businesses which were operated as proprietorships to form M & S Auto Repair, a partnership. Information from their separate balance sheets is presented below:   
It is agreed that the expected realizable value of Mann's accounts receivable is $8,000 and Trane's receivables is $7,000. The fair market value of Mann's equipment is $13,000 and the value of Trane's equipment is $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Trane's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of the partnership.

Accepted Answer

The answer of Joe Mann and Sam Trane operate separate...

Question 7

An entry is not required in the liquidation of a partnership to record the

Accepted Answer

A)  payment of cash to creditors. 
B)  distribution of cash to the partners. 
C)  sale of noncash assets. 
D)  allocation of a capital deficiency to partners with credit balances when the deficient partner is expected to pay the deficiency. 
A)  payment of cash to creditors. 
B)  distribution of cash to the partners. 
C)  sale of noncash assets. 
D)  allocation of a capital deficiency to partners with credit balances when the deficient partner is expected to pay the deficiency.

Question 8

The ______________ Act provides the basic rules for the formation and operation of partnerships in more than 90% of the states.

Accepted Answer

The answer of The ______________ Act provides the basic rules...

Question 9

In liquidating a partnership, it is necessary to convert ______________ into cash and to allocate any ______________ or ______________ to the partners based on their income ratios.

Accepted Answer

noncash as

Question 10

The net income of the Linder and Hill partnership is $250,000. The partnership agreement specifies that profits and losses will be shared equally after salary allowances of $200,000 (Linder) and $150,000 (Hill) have been allocated. At the beginning of the year, Linder 's Capital account had a balance of $500,000 and Hill's Capital account had a balance of $650,000. What is the balance of Hill's Capital account at the end of the year after profits and losses have been distributed?

Accepted Answer

A)  $650,000 
B)  $100,000 
C)  $750,000 
D)  $775,000 
A)  $650,000 
B)  $100,000 
C)  $750,000 
D)  $775,000

Question 11

Nick, Alan, and Tim are partners who share profits 40%, 20%, and 40%. Their capital balances were $630,000, $420,000, and $210,000, respectively, before Tim's retirement. Tim was paid $270,000 from partnership assets to buy his interest.
Instructions
Compute the capital balances of Nick and Alan after Tim has withdrawn.

Accepted Answer

Nick's capital balance: $630,0

Question 12

When a partner invests noncash assets in a partnership, the assets should be recorded at their

Accepted Answer

A)  book value. 
B)  carrying value. 
C)  fair market value. 
D)  original cost. 
A)  book value. 
B)  carrying value. 
C)  fair market value. 
D)  original cost.

Question 13

Prior to the distribution of cash to the partners, the accounts of ABC Company are: Cash $30,000, Ace, Capital (Dr.) $10,000, Ball, Capital (Cr.) $25,000, and Catt, Capital (Cr.) $15,000. They share income on a 5:3:2 basis.
Instructions
Prepare entries to record (a) the absorption of Ace's capital deficiency by the other partners and (b) the distribution of cash to the partners with credit balances.

Accepted Answer

The answer of Prior to the distribution of cash to...

Question 14

Danny and Vicky are forming a partnership. Danny will invest a truck with a book value of $10,000 and a fair market value of $14,000. Vicky will invest a building with a book value of $30,000 and a fair market value of $42,000 with a mortgage of $15,000. What amount should be recorded in Vicky's capital account?

Accepted Answer

A)  $30,000 
B)  $27,000 
C)  $42,000 
D)  $14,000 
A)  $30,000 
B)  $27,000 
C)  $42,000 
D)  $14,000

Question 15

Use the following account balance information for Grinotfin Partnership with income ratios of 2:4:4 for Grigsby, Nott, and Fine, respectively.   Assume that, as part of liquidation proceedings, Grinotfin sells its noncash assets for $170,000. The amount of cash that would ultimately be distributed to Fine would be:

Accepted Answer

A)  $104,000. 
B)  $96,000. 
C)  $68,000. 
D)  $172,000. 
A)  $104,000. 
B)  $96,000. 
C)  $68,000. 
D)  $172,000.

Question 16

The withdrawal of a partner legally dissolves the partnership.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

The distribution of cash to partners in a partnership liquidation is always made based on the partners' income sharing ratio.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Each partner's initial investment in a partnership should be recorded at book value.

Accepted Answer

A) True 
 B)False

The ______________ ratio specifies the basis for sharing income and losses.

When a partnership terminates business, the sale of noncash assets is called

The partnership agreement should include each of the following except the

An entry is not required in the liquidation of a partnership to record the

The ______________ Act provides the basic rules for the formation and operation of partnerships in more than 90% of the states.

In liquidating a partnership, it is necessary to convert into cash and to allocate any or __ to the partners based on their income ratios.

When a partner invests noncash assets in a partnership, the assets should be recorded at their

The withdrawal of a partner legally dissolves the partnership.

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

The distribution of cash to partners in a partnership liquidation is always made based on the partners' income sharing ratio.

The admission of a new partner to an existing partnership

Each partner's initial investment in a partnership should be recorded at book value.

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

Exam 12: Accounting for Partnerships

The ______________ ratio specifies the basis for sharing income and losses.

When a partnership terminates business, the sale of noncash assets is called

The partnership agreement should include each of the following except the

An entry is not required in the liquidation of a partnership to record the

The ______________ Act provides the basic rules for the formation and operation of partnerships in more than 90% of the states.

In liquidating a partnership, it is necessary to convert ______________ into cash and to allocate any ______________ or ______________ to the partners based on their income ratios.

When a partner invests noncash assets in a partnership, the assets should be recorded at their

The withdrawal of a partner legally dissolves the partnership.

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

The distribution of cash to partners in a partnership liquidation is always made based on the partners' income sharing ratio.

The admission of a new partner to an existing partnership

Each partner's initial investment in a partnership should be recorded at book value.

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

In liquidating a partnership, it is necessary to convert into cash and to allocate any or __ to the partners based on their income ratios.