Question 1

A partnership

Accepted Answer

A)  is an association of one or more individuals. 
B)  pays income tax on partnership profit. 
C)  has a limited life. 
D)  is not an accounting entity for financial reporting purposes. 
A)  is an association of one or more individuals. 
B)  pays income tax on partnership profit. 
C)  has a limited life. 
D)  is not an accounting entity for financial reporting purposes.

Question 2

In the liquidation of a partnership, any partner who has a capital deficiency

Accepted Answer

A)  has a personal debt to the partnership for the amount of the deficiency. 
B)  is automatically terminated as a partner. 
C)  will receive a cash distribution only on the basis of his or her profit-sharing ratio. 
D)  is not obligated to make up the capital deficiency. 
A)  has a personal debt to the partnership for the amount of the deficiency. 
B)  is automatically terminated as a partner. 
C)  will receive a cash distribution only on the basis of his or her profit-sharing ratio. 
D)  is not obligated to make up the capital deficiency.

Question 3

A partnership is taxed as a single legal entity.

Accepted Answer

A) True 
 B)False

Question 4

Accounting for the admission of a new partner by purchase of a partner's interest will

Accepted Answer

A)  not affect total assets, liabilities and capital. 
B)  increase total assets and total capital. 
C)  increase total capital. 
D)  decrease total capital. 
A)  not affect total assets, liabilities and capital. 
B)  increase total assets and total capital. 
C)  increase total capital. 
D)  decrease total capital.

Question 5

Julie Ellis, Sara Lake, and Dan Madden have capital balances of $54,000, $82,000, and $36,000, respectively, and their profit ratios are 4:2:4.
Instructions
Record the withdrawal of Madden from the partnership under each of the following assumptions:
a. Madden is paid $36,000 from partnership assets.
b. Madden is paid $48,000 from partnership assets.
c. Madden is paid $27,000 from partnership assets.

Accepted Answer

The answer of Julie Ellis, Sara Lake, and Dan Madden...

Question 6

Two proprietorships CANNOT combine and form a partnership.

Accepted Answer

A) True 
 B)False

Question 7

The liquidation of a partnership ends the business. It involves

Accepted Answer

A)  selling noncash assets. 
B)  paying liabilities. 
C)  distributing any remaining assets to partners. 
D)  all of the above. 
A)  selling noncash assets. 
B)  paying liabilities. 
C)  distributing any remaining assets to partners. 
D)  all of the above.

Question 8

A partnership has unlimited life.

Accepted Answer

A) True 
 B)False

Question 9

Ace, Bell, and Cole have partnership capital account balances of $90,000 each. Profit and losses are shared on a basis of 3:2:1 for Ace, Bell, and Cole respectively. Cole agrees to sell three-fourths of his ownership interest to Ace for $55,000 and one-fourth to Bell for $20,000. Ace and Bell will use personal assets to purchase Cole's interest. The partnership's entry to record Cole's withdrawal from the partnership would be

Accepted Answer

The answer of Ace, Bell, and Cole have partnership capital...

Question 10

A partnership is more difficult to form than a corporation.

Accepted Answer

A) True 
 B)False

Question 11

If division of profits in a partnership is NOT specified, profit (loss) is assumed to be

Accepted Answer

A)  allocated to general partners first. 
B)  allocated based on capital contribution. 
C)  held within the partnership. 
D)  allocated equally. 
A)  allocated to general partners first. 
B)  allocated based on capital contribution. 
C)  held within the partnership. 
D)  allocated equally.

Question 12

The Jackson-Chan partnership is terminated when creditor claims exceed partnership assets by $30,000. Chan is a millionaire and Jackson has no personal assets. Jackson's partnership interest is 75% and Chan's is 25%. Creditors

Accepted Answer

A)  must collect their claims equally from Chan and Jackson. 
B)  may collect the entire $30,000 from Chan. 
C)  must collect their claims 75% from Jackson and 25% from Chan. 
D)  may not require Chan to use his personal assets to satisfy the $30,000 in claims. 
A)  must collect their claims equally from Chan and Jackson. 
B)  may collect the entire $30,000 from Chan. 
C)  must collect their claims 75% from Jackson and 25% from Chan. 
D)  may not require Chan to use his personal assets to satisfy the $30,000 in claims.

Question 13

The individual assets invested by a partner in a partnership

Accepted Answer

A)  revert back to that partner if the partnership liquidates. 
B)  determine that partner's share of profit or loss for the year. 
C)  are jointly owned by all partners. 
D)  determine the scope of authority of that partner. 
A)  revert back to that partner if the partnership liquidates. 
B)  determine that partner's share of profit or loss for the year. 
C)  are jointly owned by all partners. 
D)  determine the scope of authority of that partner.

Question 14

A change in total partners' capital may occur from all of the following EXCEPT

Accepted Answer

A)  additional capital investments in the partnership. 
B)  the sale of a partnership interest by a partner to an outside party. 
C)  the use of partnership cash to pay salaries to the partners. 
D)  the use of partnership cash to purchase new office equipment for a new partner. 
A)  additional capital investments in the partnership. 
B)  the sale of a partnership interest by a partner to an outside party. 
C)  the use of partnership cash to pay salaries to the partners. 
D)  the use of partnership cash to purchase new office equipment for a new partner.

Question 15

At the end of December 2013, Rod Clarke, a partner in Boyde-Clarke Company, had a balance in his drawings account of $18,000. Rod's capital account at the beginning of 2013 was $80,000. $5,000 of partnership profit was allocated to Rod in 2013. The entry to close Rod's drawings account at the end of 2013 would include a

Accepted Answer

A)  debit to Income Summary for $18,000. 
B)  credit to Clarke, Capital for $13,000. 
C)  debit to Clarke, Capital for $18,000. 
D)  credit to Clarke, Capital for $5,000. 
A)  debit to Income Summary for $18,000. 
B)  credit to Clarke, Capital for $13,000. 
C)  debit to Clarke, Capital for $18,000. 
D)  credit to Clarke, Capital for $5,000.

Question 16

The condensed, adjusted trial balance of the Kirby and Simon Partnership as at December 31, 2013, appears below:   The partnership agreement stipulates that a division of partnership profit or loss is to be made as follows:
1. A salary allowance of $310,000 to Kirby and $250,000 to Simon.
2. The remainder is to be divided equally.
Instructions
a. Prepare a schedule which shows the division of profit to each partner.
b. Prepare the closing entries for the division of profit and for the drawings accounts at December 31, 2013.

Accepted Answer

a. Schedul

Question 17

The investment of assets in a partnership by a partner increases both the partnership's

Accepted Answer

A)  total assets and current liabilities. 
B)  net assets and total capital. 
C)  total capital and revenue. 
D)  current assets and non-current liabilities. 
A)  total assets and current liabilities. 
B)  net assets and total capital. 
C)  total capital and revenue. 
D)  current assets and non-current liabilities.

Question 18

Partnerships are sometime publicly accountable enterprises and these entities must follow

Accepted Answer

A)  ASPE. 
B)  IFRS. 
C)  partnership accounting standards. 
D)  public sector accounting standards. 
A)  ASPE. 
B)  IFRS. 
C)  partnership accounting standards. 
D)  public sector accounting standards.

Question 19

At the death of a partner, the partnership is dissolved.

Accepted Answer

A) True 
 B)False

Question 20

If a partner has a capital deficiency and does NOT have the personal resources to eliminate it,

Accepted Answer

A)  the creditors will have to absorb the capital deficiency. 
B)  the other partners will absorb the capital deficiency on the basis of their respective capital balances. 
C)  the other partners will have to absorb the capital deficiency on the basis of their respective profit sharing ratios. 
D)  neither the creditors nor the other partners will have to absorb the capital deficiency. 
A)  the creditors will have to absorb the capital deficiency. 
B)  the other partners will absorb the capital deficiency on the basis of their respective capital balances. 
C)  the other partners will have to absorb the capital deficiency on the basis of their respective profit sharing ratios. 
D)  neither the creditors nor the other partners will have to absorb the capital deficiency.

A partnership

In the liquidation of a partnership, any partner who has a capital deficiency

A partnership is taxed as a single legal entity.

Accounting for the admission of a new partner by purchase of a partner's interest will

Two proprietorships CANNOT combine and form a partnership.

The liquidation of a partnership ends the business. It involves

A partnership has unlimited life.

A partnership is more difficult to form than a corporation.

If division of profits in a partnership is NOT specified, profit (loss) is assumed to be

The Jackson-Chan partnership is terminated when creditor claims exceed partnership assets by $30,000. Chan is a millionaire and Jackson has no personal assets. Jackson's partnership interest is 75% and Chan's is 25%. Creditors

The individual assets invested by a partner in a partnership

A change in total partners' capital may occur from all of the following EXCEPT

The investment of assets in a partnership by a partner increases both the partnership's

Partnerships are sometime publicly accountable enterprises and these entities must follow

At the death of a partner, the partnership is dissolved.

If a partner has a capital deficiency and does NOT have the personal resources to eliminate it,

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

A partnership

In the liquidation of a partnership, any partner who has a capital deficiency

A partnership is taxed as a single legal entity.

Accounting for the admission of a new partner by purchase of a partner's interest will

Two proprietorships CANNOT combine and form a partnership.

The liquidation of a partnership ends the business. It involves

A partnership has unlimited life.

A partnership is more difficult to form than a corporation.

If division of profits in a partnership is NOT specified, profit (loss) is assumed to be

The Jackson-Chan partnership is terminated when creditor claims exceed partnership assets by $30,000. Chan is a millionaire and Jackson has no personal assets. Jackson's partnership interest is 75% and Chan's is 25%. Creditors

The individual assets invested by a partner in a partnership

A change in total partners' capital may occur from all of the following EXCEPT

The investment of assets in a partnership by a partner increases both the partnership's

Partnerships are sometime publicly accountable enterprises and these entities must follow

At the death of a partner, the partnership is dissolved.

If a partner has a capital deficiency and does NOT have the personal resources to eliminate it,

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