Question 1

A general partner in a limited partnership:

Accepted Answer

A) has less personal liability for the debts of the business than the limited partners. 
B) is the major shareholder and does not get involved in the daily business activities. 
C) has unlimited personal liability in the partnership. 
D) is the first owner to receive a share of profits and losses. 
A) has less personal liability for the debts of the business than the limited partners. 
B) is the major shareholder and does not get involved in the daily business activities. 
C) has unlimited personal liability in the partnership. 
D) is the first owner to receive a share of profits and losses.

Question 2

In a partnership, mutual agency means that:

Accepted Answer

A) the addition of a new partner does not dissolve the old partnership and mutually exchange the ownership with the exiting partner. 
B) every partner must bring the same amount of capital. 
C) the agency problem between the principal and agents are mutual and gets neutralized. 
D) any partner can bind the business to a contract within the scope of its regular business operations. 
A) the addition of a new partner does not dissolve the old partnership and mutually exchange the ownership with the exiting partner. 
B) every partner must bring the same amount of capital. 
C) the agency problem between the principal and agents are mutual and gets neutralized. 
D) any partner can bind the business to a contract within the scope of its regular business operations.

Question 3

An S corporation is a corporation with 100 or fewer stockholders that can elect to be taxed as a partnership.

Accepted Answer

A) True 
 B)False

Question 4

The balance sheet of Ryan and Peter firm as on December 31, 2014, is given below.   Ryan and Peter share profits in the ratio 3:2. They have decided to liquidate the partnership with immediate effect. They sold the furniture and equipment for $70,000. Which of the following is the correct journal entry for the sale transaction?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 5

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:   Floyd and Merriam share profits and losses equally. They agreed to dissolve the partnership and start a new one, admitting Ramelow for one-half share in the capital in exchange for land and equipment having a total market value of $70,000. Which of the following is the correct journal entry to record the introduction of Ramelow as a partner?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 6

Farrell and Jimmy enter into a partnership agreement on May 1, 2015. Farrell contributes $50,000 and Jimmy contributes $150,000 as their capital contributions. They decide to share profits and losses in the ratio of their respective capital account balances. The net income for the year ended December 31, 2015 is $60,000. Which of the following amounts should be credited to Jimmy's capital account?

Accepted Answer

A) $40,000 
B) $60,000 
C) $45,000 
D) $15,000 
A) $40,000 
B) $60,000 
C) $45,000 
D) $15,000

Question 7

Sarah and Jane formed a partnership with capital of $210,000 and $126,000, respectively. Peter contributed $84,000 to acquire an ownership interest of 14% in the new partnership. How much is the total bonus for the existing partners?

Accepted Answer

A) $84,000 
B) $25,200 
C) $58,800 
D) $12,600 
A) $84,000 
B) $25,200 
C) $58,800 
D) $12,600

Question 8

Keith and Jim are partners. Keith has a capital balance of $50,000 and Jim has a capital balance of $40,000. Bill invested a building worth $30,000 to the partnership for an ownership interest of 20%. How much is the total bonus for the existing partners?

Accepted Answer

A) $5,000 
B) $15,000 
C) $6,000 
D) $30,000 
A) $5,000 
B) $15,000 
C) $6,000 
D) $30,000

Question 9

A firm has two partners: Jim and Bill. Jim owns 60% of the partnership and Bill owns 40%. In which of the following transactions will the partnership be responsible for the partners' actions?

Accepted Answer

A) Jim signing the contract as a guarantor for Bill's personal loan 
B) Jim buying a laptop on credit for personal use 
C) Bill signing a contract to buy furniture for official use in the partnership 
D) Bill defaulting on payment of his credit card bill 
A) Jim signing the contract as a guarantor for Bill's personal loan 
B) Jim buying a laptop on credit for personal use 
C) Bill signing a contract to buy furniture for official use in the partnership 
D) Bill defaulting on payment of his credit card bill

Question 10

Farrell and Jimmy enter into a partnership agreement on May 1, 2015. Farrell contributes $50,000 and Jimmy contributes $150,000 as their capital contributions. They decide to share profits and losses in the ratio of their respective capital account balances. The net income for the year ended December 31, 2015 is $60,000. Which of the following is the correct journal entry to record the allocation of profit?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 11

Farrell and Jimmy enter into a partnership agreement on May 1, 2015. Farrell contributes $50,000 and Jimmy contributes $150,000 as their capital contributions. They decide to share profits and losses in the ratio of their respective capital account balances. The net loss for the year ended December 31, 2015 is $40,000. The capital account of Farrell should be ________ with the amount of loss.

Accepted Answer

A) debited 
B) credited 
C) increased 
D) halved 
A) debited 
B) credited 
C) increased 
D) halved

Question 12

The balance sheet of Ryan and Peter firm as on December 31, 2014, is given below.   Ryan and Peter share profits in the ratio 3:2. They have decided to liquidate the partnership with immediate effect. The furniture and the equipment were sold at a cumulative loss of $55,000. The accounts receivable were duly received in cash and the other assets were written off as worthless. The cash balance remaining to pay the liabilities is:

Accepted Answer

A) $15,000. 
B) $92,000. 
C) $37,000. 
D) $40,000. 
A) $15,000. 
B) $92,000. 
C) $37,000. 
D) $40,000.

Question 13

When a new partner is admitted to a partnership by purchasing an existing partner's interests, the journal does not record the transfer of cash from the new partner to the existing partner.

Accepted Answer

A) True 
 B)False

Question 14

Andre, Beau, and Caroline share profits and losses of their partnership as 2:2:5. If the net income is $900,000, calculate the profit share of Caroline.

Accepted Answer

A) $200,000 
B) $500,000 
C) $250,000 
D) $100,000 
A) $200,000 
B) $500,000 
C) $250,000 
D) $100,000

Question 15

The net income (loss)allocated to each partner should always equal the total net income (loss)of the partnership.

Accepted Answer

A) True 
 B)False

Question 16

Steve owns 60% and Mark owns 40% of a partnership business. For developing the business, they purchased equipment for $10,000. The current market value of the equipment at the time of purchase was $9,500. At the time of the balance sheet preparation, depreciation of $200 was incurred. Based on the information provided, which of the following is true of the partnership balance sheet?

Accepted Answer

A) The Equipment account will be debited at $9,500 on the date of purchase. 
B) The Equipment account will be debited at $9,300 on the date of purchase. 
C) The Equipment account will be debited at $10,000 on the date of purchase. 
D) The Equipment account will be debited at $9,800 on the date of purchase. 
A) The Equipment account will be debited at $9,500 on the date of purchase. 
B) The Equipment account will be debited at $9,300 on the date of purchase. 
C) The Equipment account will be debited at $10,000 on the date of purchase. 
D) The Equipment account will be debited at $9,800 on the date of purchase.

Question 17

Mathew, Patrick, and Robin and have capital balances of $75,000, $120,000, and $93,000, respectively. As per the partnership agreement, Mathew gets a profit share of 2/9; Patrick gets 4/9; and Robin gets 3/9. Partnership agrees to pay $66,000 as final settlement to Mathew. How much bonus will Robin receive as a result of this transaction?

Accepted Answer

A) $5,142 
B) $3,857 
C) $5,000 
D) $4,000 
A) $5,142 
B) $3,857 
C) $5,000 
D) $4,000

Question 18

Ronald, Ross, and Carol opened a partnership firm. Ronald has a capital of $75,000; Ross has a capital of $120,000; and Carol has a capital of $93,000. Ronald decided to withdraw from the partnership and received $84,000. Which of the following will be included in the journal entry to record this? (Assume an equal profit-loss sharing between the existing partners)

Accepted Answer

A) Cash is credited for $9,000. 
B) Ross, Capital is credited for $4,500. 
C) Carol, Capital is debited for $4,500. 
D) Ross, Capital is debited for $9,000. 
A) Cash is credited for $9,000. 
B) Ross, Capital is credited for $4,500. 
C) Carol, Capital is debited for $4,500. 
D) Ross, Capital is debited for $9,000.

Question 19

Albert, Billy, and Cathy share profits and losses of their partnership as 2:5:3. If the net income is $50,000, calculate the profit share of Billy.

Accepted Answer

A) $20,000 
B) $15,000 
C) $25,000 
D) $10,000 
A) $20,000 
B) $15,000 
C) $25,000 
D) $10,000

Question 20

Rodriguez and Ying start a partnership business on July 1, 2014. Rodriguez brings in cash worth $4,000, furniture with a current market value of $50,000, payables with a current market value of $15,000 and equipment with a current market value of $26,000. Which of the following is the correct journal entry to record the above transaction?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

A general partner in a limited partnership:

In a partnership, mutual agency means that:

An S corporation is a corporation with 100 or fewer stockholders that can elect to be taxed as a partnership.

Sarah and Jane formed a partnership with capital of $210,000 and $126,000, respectively. Peter contributed $84,000 to acquire an ownership interest of 14% in the new partnership. How much is the total bonus for the existing partners?

Keith and Jim are partners. Keith has a capital balance of $50,000 and Jim has a capital balance of $40,000. Bill invested a building worth $30,000 to the partnership for an ownership interest of 20%. How much is the total bonus for the existing partners?

A firm has two partners: Jim and Bill. Jim owns 60% of the partnership and Bill owns 40%. In which of the following transactions will the partnership be responsible for the partners' actions?

When a new partner is admitted to a partnership by purchasing an existing partner's interests, the journal does not record the transfer of cash from the new partner to the existing partner.

Andre, Beau, and Caroline share profits and losses of their partnership as 2:2:5. If the net income is $900,000, calculate the profit share of Caroline.

The net income (loss)allocated to each partner should always equal the total net income (loss)of the partnership.

Albert, Billy, and Cathy share profits and losses of their partnership as 2:5:3. If the net income is $50,000, calculate the profit share of Billy.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 12: Partnerships

A general partner in a limited partnership:

In a partnership, mutual agency means that:

An S corporation is a corporation with 100 or fewer stockholders that can elect to be taxed as a partnership.

Sarah and Jane formed a partnership with capital of $210,000 and $126,000, respectively. Peter contributed $84,000 to acquire an ownership interest of 14% in the new partnership. How much is the total bonus for the existing partners?

Keith and Jim are partners. Keith has a capital balance of $50,000 and Jim has a capital balance of $40,000. Bill invested a building worth $30,000 to the partnership for an ownership interest of 20%. How much is the total bonus for the existing partners?

A firm has two partners: Jim and Bill. Jim owns 60% of the partnership and Bill owns 40%. In which of the following transactions will the partnership be responsible for the partners' actions?

When a new partner is admitted to a partnership by purchasing an existing partner's interests, the journal does not record the transfer of cash from the new partner to the existing partner.

Andre, Beau, and Caroline share profits and losses of their partnership as 2:2:5. If the net income is $900,000, calculate the profit share of Caroline.

The net income (loss)allocated to each partner should always equal the total net income (loss)of the partnership.

Albert, Billy, and Cathy share profits and losses of their partnership as 2:5:3. If the net income is $50,000, calculate the profit share of Billy.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters