Question 1

Partner A receives $60,000 and Partner B receives $40,000 in a split of $100,000 profit. Which expression does NOT reflect the profit splitting arrangement?

Accepted Answer

A)  3:2 
B)  3/5 and 2/5 
C)  6:4 
D)  2:1 
A)  3:2 
B)  3/5 and 2/5 
C)  6:4 
D)  2:1

Question 2

Which of the following statements about a partnership is correct?

Accepted Answer

A)  The personal assets of a partner are included in the partnership accounting records. 
B)  A partnership is required to file an income tax return. 
C)  Each partner's share of profit is taxable to the partnership. 
D)  A partnership represents an accounting entity for financial reporting purposes. 
A)  The personal assets of a partner are included in the partnership accounting records. 
B)  A partnership is required to file an income tax return. 
C)  Each partner's share of profit is taxable to the partnership. 
D)  A partnership represents an accounting entity for financial reporting purposes.

Question 3

Ms. Drew, Mr. Fraser and Ms. Percy had a 1:2:3 partnership split on profit in their partnership. In 2014, the partnership had a profit of $150,000. How much would Ms. Drew receive as her share of the profit?

Accepted Answer

A)  $15,000 
B)  $50,000 
C)  $75,000 
D)  $25,000 
A)  $15,000 
B)  $50,000 
C)  $75,000 
D)  $25,000

Question 4

The partnership of Ezekiel and Gibbons reports profit of $30,000. The partners share equally in profit and losses. The entry to record the partners' share of profit will include a

Accepted Answer

A)  credit to Income Summary for $30,000. 
B)  credit to Ezekiel, Capital for $15,000. 
C)  debit to Gibbons, Capital for $15,000. 
D)  credit to Ezekiel, Drawings for $15,000. 
A)  credit to Income Summary for $30,000. 
B)  credit to Ezekiel, Capital for $15,000. 
C)  debit to Gibbons, Capital for $15,000. 
D)  credit to Ezekiel, Drawings for $15,000.

Question 5

On January 1, 2013, Steve Furlong and Mark Pippy agreed to pool their assets and form a partnership called F&P Computing. They agree to share all profits equally and make the following initial investments:   On December 31, 2013, the partnership reported a loss for the year of $19,500. On January 1, 2014, Furlong and Pippy agreed to accept Nicholas Adams into the partnership by purchasing 20% of Pippy's interest in the partnership and 30% of Furlong's interest. The partnership agreement is amended to provide for the following sharing of profit and losses:   For the year ended December 31, 2014, profit was $350,000.
Instructions 
a. Journalize the following transactions:
(1) the initial contributions to the partnership by Furlong and Pippy on January 1, 2013.
(2) the allocation of the loss to the partners at the end of December 2013.
(3) the purchase of the partnership interest by Adams on January 1, 2014.
b. Prepare a schedule to show the division of profit at December 31, 2014.

Accepted Answer

The answer of On January 1, 2013, Steve Furlong and...

Question 6

No capital deficiency means that all partners have credit balances prior to the final distribution of cash.

Accepted Answer

A) True 
 B)False

Question 7

Wooley and Murley each sell 1/3 of their partnership interest to Downer, receiving $20,000 each. At the time of the admission, each partner has a $60,000 capital balance. The entry to record the admission of Downer will show a

Accepted Answer

A)  debit to Cash for $40,000. 
B)  credit to Downer, Capital for $60,000. 
C)  debit to Murley, Capital for $60,000. 
D)  debit to Wooley, Capital for $20,000. 
A)  debit to Cash for $40,000. 
B)  credit to Downer, Capital for $60,000. 
C)  debit to Murley, Capital for $60,000. 
D)  debit to Wooley, Capital for $20,000.

Question 8

In the liquidation process, if a capital account shows a deficiency

Accepted Answer

A)  the partner with a deficiency has an obligation to the partnership for the amount of the deficiency. 
B)  it may be written off to a "Loss" account. 
C)  it is disregarded until after the partnership books are closed. 
D)  it can be written off to a "Gain" account. 
A)  the partner with a deficiency has an obligation to the partnership for the amount of the deficiency. 
B)  it may be written off to a "Loss" account. 
C)  it is disregarded until after the partnership books are closed. 
D)  it can be written off to a "Gain" account.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A limited liability partnership is designed to

Accepted Answer

A)  protect innocent partners from the negligent acts of employees working on behalf of the partners. 
B)  ensure all partners get an equal share of partnership earnings. 
C)  allow partners to enter into several different partnerships simultaneously. 
D)  protect partners from the negligence claims resulting from the acts of other partners. 
A)  protect innocent partners from the negligent acts of employees working on behalf of the partners. 
B)  ensure all partners get an equal share of partnership earnings. 
C)  allow partners to enter into several different partnerships simultaneously. 
D)  protect partners from the negligence claims resulting from the acts of other partners.

Question 11

The partners' profit and loss sharing ratio is 2:3:5, respectively.  
-If the D, E, and F Partnership is liquidated by selling the equipment for $45,000 and creditors are paid in full, what is the amount of cash that can be safely distributed to each partner?

Accepted Answer

A)  D, $24,000; E, $16,000; F, $0 
B)  D, $14,000; E, $21,000; F, $5,000 
C)  D, $20,000; E, $25,000; F, $5,000 
D)  D, $30,000; E, $25,000; F, $15,000 
A)  D, $24,000; E, $16,000; F, $0 
B)  D, $14,000; E, $21,000; F, $5,000 
C)  D, $20,000; E, $25,000; F, $5,000 
D)  D, $30,000; E, $25,000; F, $15,000

Question 12

Marty Cummerford and Jane Wheeler have formed the MCJW partnership, and have capital balances of $65,000 and $50,000 respectively on January 1, 2013. On June 1, 2013, Wheeler invested an additional $35,000. Also during the year, Cummerford withdrew $30,000 and Wheeler withdrew $34,000. Sales for the year amounted to $300,000 and expenses were $220,000. After taking salary allowances of $30,000 and $20,000 respectively, Cummerford and Wheeler share any remaining profit and losses on a 3:1 basis.
Instructions
a. Prepare a schedule that shows the division of profit to each partner.
b. Prepare the closing entries at December 31, 2013, for the MCJW partnership.
c. Prepare a statement of partners' equity for 2013.

Accepted Answer

The answer of Marty Cummerford and Jane Wheeler have formed...

Question 13

A general partner in a limited 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 14

A partner may only withdraw from a partnership on a voluntary basis.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following would NOT be considered a disadvantage of the partnership form of organization?

Accepted Answer

A)  limited life 
B)  unlimited liability 
C)  mutual agency 
D)  ease of formation 
A)  limited life 
B)  unlimited liability 
C)  mutual agency 
D)  ease of formation

Question 16

The partners' drawings accounts are

Accepted Answer

A)  reported on the income statement. 
B)  reported on the balance sheet. 
C)  closed to Income Summary. 
D)  closed to the partners' capital accounts. 
A)  reported on the income statement. 
B)  reported on the balance sheet. 
C)  closed to Income Summary. 
D)  closed to the partners' capital accounts.

Question 17

In the final step of the liquidation process, remaining cash is distributed to partners

Accepted Answer

A)  on an equal basis. 
B)  on the basis of the profit ratios. 
C)  on the basis of the remaining capital balances. 
D)  regardless of capital deficiencies. 
A)  on an equal basis. 
B)  on the basis of the profit ratios. 
C)  on the basis of the remaining capital balances. 
D)  regardless of capital deficiencies.

Question 18

Julie Harris, William Gosse, and Regina Ryan started a partnership to provide mobile tax services. The partners' capital account at the beginning of 2014 was Harris, $120,000; Gosse, $180,000; and Ryan, $90,000. The partnership agreement states that the partners will share profit equally.
On December 31, 2014, the partnership reported a loss of $21,000 for the year. During the year, Harris withdrew $80,000 and Gosse withdrew $140,000. Ryan did not make any withdrawals.
On January 1, 2015, the partners had a major disagreement as to the direction of the partnership and decided to liquidate the business. The December 31, 2014 balance sheet showed the following balances:   On January 1, 2015, the machinery was sold for proceeds of $133,000.
Instructions
Prepare the journal entry to record the following: 
a. The allocation of the loss to the partners on December 31, 2014.
b. The closing of the drawings accounts on December 31, 2014.
c. The liquidation of the partnership on January 1, 2015.

Accepted Answer

The answer of Julie Harris, William Gosse, and Regina Ryan...

Question 19

All of the following are correct EXCEPT

Accepted Answer

A)  a partnership is a legal entity. 
B)  the partnership can sue or be sued. 
C)  the personal assets, liability and transactions of the partners are recorded in the partnership. 
D)  the partnership must file an information tax return. 
A)  a partnership is a legal entity. 
B)  the partnership can sue or be sued. 
C)  the personal assets, liability and transactions of the partners are recorded in the partnership. 
D)  the partnership must file an information tax return.

Question 20

When admitting a new partner by investment, a bonus to old partners

Accepted Answer

A)  is usually unjustified because carrying amounts clearly reflect partnership net worth. 
B)  is sometimes justified because goodwill may exist and it is not reflected in the accounts. 
C)  results if the debit to cash is less than the new partner's capital credit. 
D)  results if the debit to cash is equal to the new partner's capital credit. 
A)  is usually unjustified because carrying amounts clearly reflect partnership net worth. 
B)  is sometimes justified because goodwill may exist and it is not reflected in the accounts. 
C)  results if the debit to cash is less than the new partner's capital credit. 
D)  results if the debit to cash is equal to the new partner's capital credit.

Partner A receives $60,000 and Partner B receives $40,000 in a split of $100,000 profit. Which expression does NOT reflect the profit splitting arrangement?

Which of the following statements about a partnership is correct?

Ms. Drew, Mr. Fraser and Ms. Percy had a 1:2:3 partnership split on profit in their partnership. In 2014, the partnership had a profit of $150,000. How much would Ms. Drew receive as her share of the profit?

The partnership of Ezekiel and Gibbons reports profit of $30,000. The partners share equally in profit and losses. The entry to record the partners' share of profit will include a

No capital deficiency means that all partners have credit balances prior to the final distribution of cash.

Wooley and Murley each sell 1/3 of their partnership interest to Downer, receiving $20,000 each. At the time of the admission, each partner has a $60,000 capital balance. The entry to record the admission of Downer will show a

In the liquidation process, if a capital account shows a deficiency

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

A limited liability partnership is designed to

The partners' profit and loss sharing ratio is 2:3:5, respectively. -If the D, E, and F Partnership is liquidated by selling the equipment for $45,000 and creditors are paid in full, what is the amount of cash that can be safely distributed to each partner?

A general partner in a limited partnership

A partner may only withdraw from a partnership on a voluntary basis.

Which one of the following would NOT be considered a disadvantage of the partnership form of organization?

The partners' drawings accounts are

In the final step of the liquidation process, remaining cash is distributed to partners

All of the following are correct EXCEPT

When admitting a new partner by investment, a bonus to old partners

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 12: Accounting for Partnerships

Partner A receives $60,000 and Partner B receives $40,000 in a split of $100,000 profit. Which expression does NOT reflect the profit splitting arrangement?

Which of the following statements about a partnership is correct?

Ms. Drew, Mr. Fraser and Ms. Percy had a 1:2:3 partnership split on profit in their partnership. In 2014, the partnership had a profit of $150,000. How much would Ms. Drew receive as her share of the profit?

The partnership of Ezekiel and Gibbons reports profit of $30,000. The partners share equally in profit and losses. The entry to record the partners' share of profit will include a

No capital deficiency means that all partners have credit balances prior to the final distribution of cash.

Wooley and Murley each sell 1/3 of their partnership interest to Downer, receiving $20,000 each. At the time of the admission, each partner has a $60,000 capital balance. The entry to record the admission of Downer will show a

In the liquidation process, if a capital account shows a deficiency

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

A limited liability partnership is designed to

The partners' profit and loss sharing ratio is 2:3:5, respectively. -If the D, E, and F Partnership is liquidated by selling the equipment for $45,000 and creditors are paid in full, what is the amount of cash that can be safely distributed to each partner?

A general partner in a limited partnership

A partner may only withdraw from a partnership on a voluntary basis.

Which one of the following would NOT be considered a disadvantage of the partnership form of organization?

The partners' drawings accounts are

In the final step of the liquidation process, remaining cash is distributed to partners

All of the following are correct EXCEPT

When admitting a new partner by investment, a bonus to old partners

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters