Exam 11: Partnerships

Puff and Smoke agreed to share profits and losses in their partnership on a 7:3 basis, respectively, after a salary allowance of $25,000 is allocated to Puff. Earnings for theperiod total $115,000. What will be the total amount credited to Puff's Capital account when the Income Summary account is closed?

The TJR Partnership recorded the following journal entry:

When partners invest in a partnership, their capital accounts are credited for the amount invested.

The statement of changes in equity shows the beginning balance in retained earnings,plus investments, less partners' withdrawals, the income or loss, and the ending balance in retained earnings.

The partnership agreement gives Tsang 60% and Breck 40% of partnership incomes or losses. The partnership had a net loss of $27,000. Tsang's share of the loss was $16,200. Breck's share was $10,800.

In order to buy into an existing partnership, the new partner must contribute cash.

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a:

The legal relationship among the partners whereby each partner is an agent of thepartnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business is called:

If at the time of partnership liquidation, Breck has a $5,000 capital deficiency and paysthe partnership $5,000 to cover the deficiency, then Breck is entitled to share in the final distribution of cash.

Partnership accounting:

When a partnership is liquidated, the business ends.

A bonus may be paid:

The withdrawal accounts of each partner are closed to retained earnings.

If a partnership contract provides for interest at 10% annually on each partner's investment, the interest:

A capital deficiency exists when all partners have a credit balance in their capital accounts.

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

The withdrawals account of each partner is:

When a new partner is added to a partnership:

Partners' withdrawals are credited to their withdrawals accounts.

The fact that partnership assets are owned jointly by all partners is called: