Question 1

Define the partner return on equity ratio and explain how a specific partner would use this ratio.

Accepted Answer

The partner return on equity ratio is ca

Question 2

The partnership agreement for Smith,Wesson & Davis,a general partnership,provided that profits be shared between the partners in the ratio of their financial contributions to the partnership.Smith contributed $100,000,Wesson contributed $60,000 and Davis contributed $20,000.In the partnership's first year of operation,it incurred a loss of $210,000.What amount of the partnership's loss,rounded to the nearest dollar,should be absorbed by Smith?

Accepted Answer

A) $70,000 
B) $116,667 
C) $23,333 
D) $105,000 
E) $52,500 
A) $70,000 
B) $116,667 
C) $23,333 
D) $105,000 
E) $52,500

Question 3

Explain the steps involved in the liquidation of a partnership.

Accepted Answer

Four steps are involved in the liquidati

Question 4

Discuss the options for the allocation of income and loss among partners,including with and without a partnership agreement.

Accepted Answer

In the absence of a partnership agreemen

Question 5

When the current value of a partnership is greater than the recorded amounts of equity,the current partners usually require any new partner to pay a bonus for the privilege of joining.

Accepted Answer

A) True 
 B)False

Question 6

Disadvantages of a partnership include:

Accepted Answer

A) Limited life. 
B) Mutual agency. 
C) Unlimited liability. 
D) Co-ownership of property. 
E) All of the choices are disadvantages. 
A) Limited life. 
B) Mutual agency. 
C) Unlimited liability. 
D) Co-ownership of property. 
E) All of the choices are disadvantages.

Question 7

When a partner leaves a partnership,the present partnership ends,but the business can still continue to operate.

Accepted Answer

A) True 
 B)False

Question 8

Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.The balance of Collins' Capital account will be:

Accepted Answer

A) $80,000. 
B) $24,000. 
C) $56,000. 
D) $44,000. 
E) $60,000. 
A) $80,000. 
B) $24,000. 
C) $56,000. 
D) $44,000. 
E) $60,000.

Question 9

In a partnership agreement,if the partners agreed to an interest allowance of 10% annually on each partner's investment,the interest allowance:

Accepted Answer

A) Is ignored when earnings are not sufficient to pay interest. 
B) Can make up for unequal capital contributions. 
C) Is an expense of the business. 
D) Must be paid because the partnership contract has unlimited life. 
E) Legally becomes a liability of the general partner. 
A) Is ignored when earnings are not sufficient to pay interest. 
B) Can make up for unequal capital contributions. 
C) Is an expense of the business. 
D) Must be paid because the partnership contract has unlimited life. 
E) Legally becomes a liability of the general partner.

Question 10

A capital deficiency means that:

Accepted Answer

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

Question 11

Smith,West,and Krug form a partnership.Smith contributes $180,000,West contributes $150,000,and Krug contributes $270,000.Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested.If the partnership reports income of $175,000 for its first year,what amount of income is credited to Smith's capital account?

Accepted Answer

A) $43,750. 
B) $78,750. 
C) $52,500. 
D) $58,333. 
E) $60,000. 
A) $43,750. 
B) $78,750. 
C) $52,500. 
D) $58,333. 
E) $60,000.

Question 12

Partners' withdrawals of assets are:

Accepted Answer

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

Question 13

Identify and discuss the key characteristics of partnerships.Also,identify other organizations that possess the positive aspects of both partnerships and corporations.

Accepted Answer

Partnerships are unincorporated associat

Question 14

On May 1,Fine and Max formed a partnership.Fine contributed cash of $90,000 and equipment valued at $152,000.Max contributed land valued at $120,000 and a building valued at $250,000.The partnership also assumed responsibility for Max's $110,000 long-term note payable associated with the land and building.The partners agreed to share income as follows:
 Fine is to receive a salary allowance of $38,000,both are to receive an annual interest allowance of 8% of their beginning-year capital investments,and any remaining income or loss is to be shared equally.During the year,Fine withdrew $40,000 and Max withdrew $42,000 cash.After the adjusting and closing entries are made to the revenue and expense accounts at the end of the year,the Income Summary account had a credit balance of $140,000.Prepare the journal entries to record (a)the partners' initial capital investments,(b)their cash withdrawals,and (c)closing of both the Withdrawals and Income Summary accounts.

Accepted Answer

The answer of On May 1,Fine and Max formed a...

Question 15

When a partner is added to a partnership:

Accepted Answer

A) The previous partnership ends. 
B) The underlying business operations end. 
C) The underlying business operations must close and then re-open. 
D) The partnership must continue. 
E) The partnership equity always increases. 
A) The previous partnership ends. 
B) The underlying business operations end. 
C) The underlying business operations must close and then re-open. 
D) The partnership must continue. 
E) The partnership equity always increases.

Question 16

When a partner invests in a partnership,his/her capital account is __________ for the invested amount.

Accepted Answer

The answer of When a partner invests in a partnership,his/her...

Question 17

A partner can be admitted into a partnership by _______________ or by ___________.

Accepted Answer

answers c

Question 18

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

Accepted Answer

A) True 
 B)False

Question 19

Nguyen invested $100,000 and Hansen invested $200,000 in a partnership.They agreed to share incomes and losses by allowing a $60,000 per year salary allowance to Nguyen and a $40,000 per year salary allowance to Hansen,plus an interest allowance on the partners' beginning-year capital investments at 10%,with the balance to be shared equally.Under this agreement,the shares of the partners when the partnership earns $105,000 in income are:

Accepted Answer

A) $52,500 to Nguyen; $52,500 to Hansen. 
B) $35,000 to Nguyen; $70,000 to Hansen. 
C) $57,500 to Nguyen; $47,500 to Hansen. 
D) $42,500 to Nguyen; $62,500 to Hansen. 
E) $70,000 to Nguyen; $60,000 to Hansen. 
A) $52,500 to Nguyen; $52,500 to Hansen. 
B) $35,000 to Nguyen; $70,000 to Hansen. 
C) $57,500 to Nguyen; $47,500 to Hansen. 
D) $42,500 to Nguyen; $62,500 to Hansen. 
E) $70,000 to Nguyen; $60,000 to Hansen.

Question 20

Holden,Phillips,and Rogers are partners with beginning-year capital balances of $120,000,$60,000,and $60,000,respectively.Partnership net income for the year is $84,000.Make the necessary journal entry to close Income Summary to the capital accounts if:
a.Partners agree to divide income based on their beginning-year capital balances.
b.Partners agree to divide income based on the ratio of 5:
3:
2 (Holden:
Phillips:
Rogers),respectively.
c.Partnership agreement is silent as to division of income and less.

Accepted Answer

The answer of Holden,Phillips,and Rogers are partners with beginning-year capital...

Exam 12: Accounting for Partnerships

Define the partner return on equity ratio and explain how a specific partner would use this ratio.

Explain the steps involved in the liquidation of a partnership.

Discuss the options for the allocation of income and loss among partners,including with and without a partnership agreement.

When the current value of a partnership is greater than the recorded amounts of equity,the current partners usually require any new partner to pay a bonus for the privilege of joining.

Disadvantages of a partnership include:

When a partner leaves a partnership,the present partnership ends,but the business can still continue to operate.

Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.The balance of Collins' Capital account will be:

In a partnership agreement,if the partners agreed to an interest allowance of 10% annually on each partner's investment,the interest allowance:

A capital deficiency means that:

Partners' withdrawals of assets are:

Identify and discuss the key characteristics of partnerships.Also,identify other organizations that possess the positive aspects of both partnerships and corporations.

When a partner is added to a partnership:

When a partner invests in a partnership,his/her capital account is __________ for the invested amount.

A partner can be admitted into a partnership by _______________ or by ___________.

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

Filters

A partner can be admitted into a partnership by _____ or by _.