Question 1

Mutual agency means each partner can bind or commit the partnership to any contract within the scope of the partnership's business.

Accepted Answer

A) True 
 B)False

Question 2

A general partner in a limited partnership

Accepted Answer

A)  is responsible for management duties in the business. 
B)  is liable for partnership liabilities only to the extent of the partner's capital investment. 
C)  is protected from any malpractice or negligence claims resulting from the acts of another partner. 
D)  has limited liability for partnership debts. 
A)  is responsible for management duties in the business. 
B)  is liable for partnership liabilities only to the extent of the partner's capital investment. 
C)  is protected from any malpractice or negligence claims resulting from the acts of another partner. 
D)  has limited liability for partnership debts.

Question 3

Disadvantages of a partnership include:

Accepted Answer

A)  Unlimited liability. 
B)  Limited life. 
C)  Mutual agency. 
D)  Co-ownership of property. 
E)  All of these answers are correct. 
A)  Unlimited liability. 
B)  Limited life. 
C)  Mutual agency. 
D)  Co-ownership of property. 
E)  All of these answers are correct.

Question 4

In the absence of a partnership agreement, the law says income/loss sharing should be based on:

Accepted Answer

A)  A fractional basis. 
B)  Interest allowances. 
C)  Equal shares. 
D)  Salary allowances. 
E)  The ratio of capital investments. 
A)  A fractional basis. 
B)  Interest allowances. 
C)  Equal shares. 
D)  Salary allowances. 
E)  The ratio of capital investments.

Question 5

Unlimited liability of partners is:

Accepted Answer

A)  The legal relationship among the partners whereby each partner is an agent of the partnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business. 
B)  The legal relationship between partners in which all the partners must share liability for the partnership debts, but only up to the amount of their capital accounts. 
C)  The agreement between partners that sets forth the terms under which the affairs of the partnership will be conducted. 
D)  In the absence of a contrary agreement, the legal responsibility of partners in a partnership to share all losses equally. 
E)  The legal relationship among general partners that makes each of them responsible for paying all the debts of the partnership if the other partners are unable to pay their shares. 
A)  The legal relationship among the partners whereby each partner is an agent of the partnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business. 
B)  The legal relationship between partners in which all the partners must share liability for the partnership debts, but only up to the amount of their capital accounts. 
C)  The agreement between partners that sets forth the terms under which the affairs of the partnership will be conducted. 
D)  In the absence of a contrary agreement, the legal responsibility of partners in a partnership to share all losses equally. 
E)  The legal relationship among general partners that makes each of them responsible for paying all the debts of the partnership if the other partners are unable to pay their shares.

Question 6

Rice, Hepburn, and DiMarco formed a partnership with Rice contributing $50,000, Hepburn contributing $30,000, and DiMarco contributing $20,000. Their partnership agreement called for the earnings division to be based on the ratio of capitalinvestments. If the partnership had a profit of $75,000 for its first year of operation, how much would be credited to DiMarco's capital account?

Accepted Answer

A)  $10,000. 
B)  $30,000. 
C)  $75,000. 
D)  $15,000. 
E)  $20,000. 
A)  $10,000. 
B)  $30,000. 
C)  $75,000. 
D)  $15,000. 
E)  $20,000.

Question 7

If the partners agree on a formula to share income and say nothing about losses, then the losses are shared equally.

Accepted Answer

A) True 
 B)False

Question 8

In a limited partnership the general partner has unlimited liability.

Accepted Answer

A) True 
 B)False

Question 9

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

Accepted Answer

A) True 
 B)False

Question 10

If there is no partnership agreement, the law requires that profits or losses are divided among partners in the ratio of their capital investments.

Accepted Answer

A) True 
 B)False

Question 11

If partners devote their time and services to their partnership, their salaries are expenses on the income statement.

Accepted Answer

A) True 
 B)False

Question 12

When a partner leaves a partnership, the partnership ends.

Accepted Answer

A) True 
 B)False

Question 13

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a:

Accepted Answer

A)  Partnership contract. 
B)  Mutual agency. 
C)  Divided authority. 
D)  Proprietorship. 
E)  Partnership. 
A)  Partnership contract. 
B)  Mutual agency. 
C)  Divided authority. 
D)  Proprietorship. 
E)  Partnership.

Question 14

A partnership has unlimited life.

Accepted Answer

A) True 
 B)False

Question 15

Partners' withdrawals of assets are:

Accepted Answer

A)  Debited to retained earnings. 
B)  Credited to their withdrawals accounts. 
C)  Debited to their withdrawals accounts. 
D)  Debited to their capital accounts. 
E)  Credited to their capital accounts. 
A)  Debited to retained earnings. 
B)  Credited to their withdrawals accounts. 
C)  Debited to their withdrawals accounts. 
D)  Debited to their capital accounts. 
E)  Credited to their capital accounts.

Question 16

When a partner leaves a partnership, the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

Accepted Answer

A) True 
 B)False

Question 17

A capital deficiency means that:

Accepted Answer

A)  The partnership has a loss. 
B)  At least one partner has a credit balance in his/her capital account. 
C)  The partnership has been sold at a loss. 
D)  At least one partner has a debit balance in his/her capital account. 
E)  The partnership has more liabilities than assets. 
A)  The partnership has a loss. 
B)  At least one partner has a credit balance in his/her capital account. 
C)  The partnership has been sold at a loss. 
D)  At least one partner has a debit balance in his/her capital account. 
E)  The partnership has more liabilities than assets.

Question 18

Alban and Thompson formed a partnership with capital contributions with a fair value of $25,000 and $45,000, respectively. Their partnership agreement calls for Alban toreceive a $12,000 annual salary allowance. Also, each partner is to receive a share of earnings equal to a 10% return on capital investments. The remaining income or loss is to be divided equally. If the profit for the year is $48,000, then Alban and Thompson's respective shares are:

Accepted Answer

A)  $14,000; $14,000. 
B)  $12,000; $16,000. 
C)  $20,000; $8,000. 
D)  $29,000; $19,000. 
E)  $16,500; $11,500. 
A)  $14,000; $14,000. 
B)  $12,000; $16,000. 
C)  $20,000; $8,000. 
D)  $29,000; $19,000. 
E)  $16,500; $11,500.

Question 19

When a partner is unable to pay a capital deficiency:

Accepted Answer

A)  The deficient partner has a personal liability to the other partners. 
B)  The deficiency is absorbed by the remaining partners and the deficient partner has a personal liability to the other partners. 
C)  The deficiency is absorbed by the remaining partners. 
D)  The partnership ends. 
E)  The partner must take out a loan to cover the deficiency. 
A)  The deficient partner has a personal liability to the other partners. 
B)  The deficiency is absorbed by the remaining partners and the deficient partner has a personal liability to the other partners. 
C)  The deficiency is absorbed by the remaining partners. 
D)  The partnership ends. 
E)  The partner must take out a loan to cover the deficiency.

Question 20

Salary and interest allowances are reported as expenses on a partnership income statement.

Accepted Answer

A) True 
 B)False

Mutual agency means each partner can bind or commit the partnership to any contract within the scope of the partnership's business.

A general partner in a limited partnership

Disadvantages of a partnership include:

In the absence of a partnership agreement, the law says income/loss sharing should be based on:

Unlimited liability of partners is:

If the partners agree on a formula to share income and say nothing about losses, then the losses are shared equally.

In a limited partnership the general partner has unlimited liability.

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

If there is no partnership agreement, the law requires that profits or losses are divided among partners in the ratio of their capital investments.

If partners devote their time and services to their partnership, their salaries are expenses on the income statement.

When a partner leaves a partnership, the partnership ends.

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a:

A partnership has unlimited life.

Partners' withdrawals of assets are:

When a partner leaves a partnership, the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

A capital deficiency means that:

When a partner is unable to pay a capital deficiency:

Salary and interest allowances are reported as expenses on a partnership income statement.

Property, Plant and Equipment and Intangibles

Current Liabilities

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

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Exam 11: Partnerships

Mutual agency means each partner can bind or commit the partnership to any contract within the scope of the partnership's business.

A general partner in a limited partnership

Disadvantages of a partnership include:

In the absence of a partnership agreement, the law says income/loss sharing should be based on:

Unlimited liability of partners is:

If the partners agree on a formula to share income and say nothing about losses, then the losses are shared equally.

In a limited partnership the general partner has unlimited liability.

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

If there is no partnership agreement, the law requires that profits or losses are divided among partners in the ratio of their capital investments.

If partners devote their time and services to their partnership, their salaries are expenses on the income statement.

When a partner leaves a partnership, the partnership ends.

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a:

A partnership has unlimited life.

Partners' withdrawals of assets are:

When a partner leaves a partnership, the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

A capital deficiency means that:

When a partner is unable to pay a capital deficiency:

Salary and interest allowances are reported as expenses on a partnership income statement.

Property, Plant and Equipment and Intangibles

Current Liabilities

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters