Question 1

Which of the following is true of a general partnership?

Accepted Answer

A) Each partner has all the privileges and risks of ownership. 
B) The income of a general partnership is double-taxed. 
C) Each partner's liability is limited to the capital contributed by him. 
D) When a general partner contributes a particular asset to the firm, he is considered the sole owner of the asset. 
A) Each partner has all the privileges and risks of ownership. 
B) The income of a general partnership is double-taxed. 
C) Each partner's liability is limited to the capital contributed by him. 
D) When a general partner contributes a particular asset to the firm, he is considered the sole owner of the asset.

Question 2

Felix and Ian allocate 2/5 of the profits and losses to Felix and 3/5 to Ian. The net income of the firm is $30,000. The journal entry to close the Income Summary will include:

Accepted Answer

A) credit to Ian, Capital for $18,000. 
B) debit to Felix, Capital for $18,000. 
C) debit to Felix, Capital for $12,000. 
D) credit to Income Summary for $30,000. 
A) credit to Ian, Capital for $18,000. 
B) debit to Felix, Capital for $18,000. 
C) debit to Felix, Capital for $12,000. 
D) credit to Income Summary for $30,000.

Question 3

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, and computer equipment. The computer equipment cost $45,000 in 2011 and has an accumulated depreciation of $25,000. The current market value of the computer equipment is $18,000. At what value should the computer equipment be recorded in the books of the partnership firm?

Accepted Answer

A) $45,000 
B) $18,000 
C) $20,000 
D) $25,000 
A) $45,000 
B) $18,000 
C) $20,000 
D) $25,000

Question 4

Liquidation in a partnership refers to:

Accepted Answer

A) increasing the investment in highly liquid assets. 
B) shutting down the business by selling its assets and paying its liabilities. 
C) the admission or withdrawal of a partner that dissolves the partnership. 
D) purchase of another partnership firm which is operating in the same business. 
A) increasing the investment in highly liquid assets. 
B) shutting down the business by selling its assets and paying its liabilities. 
C) the admission or withdrawal of a partner that dissolves the partnership. 
D) purchase of another partnership firm which is operating in the same business.

Question 5

A partnership records the partners' contributions at the ________.

Accepted Answer

A) current market value 
B) historical value 
C) net realizable value 
D) average value 
A) current market value 
B) historical value 
C) net realizable value 
D) average value

Question 6

In a partnership firm, if one partner cannot pay his or her part of the debt, the other partner or partners must pay the total.

Accepted Answer

A) True 
 B)False

Question 7

Gary, Peter, and Chris own a firm as partners. Gary has a capital balance of $25,000; Peter a capital balance of $40,000; and Chris has a capital balance of $31,000. As per the partnership agreement, Gary gets a profit share of 2/9; Peter has 4/9; and Chris has 3/9. Which of the following is true, if Gary withdraws from the partnership by receiving $25,000?

Accepted Answer

A) Peter, Capital and Chris, Capital will be credited for $12,500 each. 
B) Gary, Capital will be debited for $25,000. 
C) Cash is debited for $25,000. 
D) Peter, Capital will be credited for $25,000. 
A) Peter, Capital and Chris, Capital will be credited for $12,500 each. 
B) Gary, Capital will be debited for $25,000. 
C) Cash is debited for $25,000. 
D) Peter, Capital will be credited for $25,000.

Question 8

Which of the following is true of a liquidation of a partnership?

Accepted Answer

A) It allocates the gain or loss on sale of assets to the partners' capital accounts based on the profit-and-loss-sharing ratio. 
B) The remaining cash after paying all liabilities are paid to the partners based on their profit-and-loss-sharing agreement. 
C) Before a business is liquidated, its books should not be adjusted or closed. 
D) It involves the selling of short-term liquid assets and does not involve the sale of fixed assets. 
A) It allocates the gain or loss on sale of assets to the partners' capital accounts based on the profit-and-loss-sharing ratio. 
B) The remaining cash after paying all liabilities are paid to the partners based on their profit-and-loss-sharing agreement. 
C) Before a business is liquidated, its books should not be adjusted or closed. 
D) It involves the selling of short-term liquid assets and does not involve the sale of fixed assets.

Question 9

Capital deficiency refers to a partnership's claim against a partner.

Accepted Answer

A) True 
 B)False

Question 10

In partnership, a person can become a partner by purchasing an existing partner's interest.

Accepted Answer

A) True 
 B)False

Question 11

An asset received from a partner as a contribution is recorded at its historical cost.

Accepted Answer

A) True 
 B)False

Question 12

Alex, Brad, and Carl are partners. The profit and rule sharing rule between them is 4:3:3 in the alphabetical order. The partnership incurs a net loss of $100,000. Before preparing the closing journal entry the:

Accepted Answer

A) Income Summary account will have a debit balance of $100,000. 
B) Alex, Capital account will have a debit balance of $40,000. 
C) Alex, Capital account will have a credit balance of $40,000. 
D) Carl, Capital account will have a debit balance of $30,000. 
A) Income Summary account will have a debit balance of $100,000. 
B) Alex, Capital account will have a debit balance of $40,000. 
C) Alex, Capital account will have a credit balance of $40,000. 
D) Carl, Capital account will have a debit balance of $30,000.

Question 13

Which of the following is an additional feature of a limited liability partnership compared to a limited partnership?

Accepted Answer

A) It has a general partner who does not participate in the day-to-day operations of the partnership. 
B) It limits the personal liability of limited partners to their contribution in the business. 
C) It restricts the general partner from taking high-risk projects. 
D) It protects each partner from any malpractice or negligence of another partner's actions. 
A) It has a general partner who does not participate in the day-to-day operations of the partnership. 
B) It limits the personal liability of limited partners to their contribution in the business. 
C) It restricts the general partner from taking high-risk projects. 
D) It protects each partner from any malpractice or negligence of another partner's actions.

Question 14

When an existing partner sells his interest to another party in a personal transaction:

Accepted Answer

A) it is considered a transaction between the partnership and the new party. 
B) the old partnership will continue functioning, since the partner is replaced by another party without diluting the old partnership. 
C) the journal entry simply debits the withdrawing partner's capital account and credits the new partner's capital. 
D) the equity and assets in the balance sheet increase by the same amount. 
A) it is considered a transaction between the partnership and the new party. 
B) the old partnership will continue functioning, since the partner is replaced by another party without diluting the old partnership. 
C) the journal entry simply debits the withdrawing partner's capital account and credits the new partner's capital. 
D) the equity and assets in the balance sheet increase by the same amount.

Question 15

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. After completing all the liquidation procedures, the business is left with $34,000 cash. As a result, Ryan will receive:

Accepted Answer

A) $17,000. 
B) $20,400. 
C) $13,600. 
D) $30,000. 
A) $17,000. 
B) $20,400. 
C) $13,600. 
D) $30,000.

Question 16

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:   They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership. He had to bring in a cash contribution of $30,000 for the same. Assuming that Floyd and Merriam shared profits and losses in the ratio 3:1 before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission?

Accepted Answer

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

Question 17

Which of the following is a characteristic of a partnership?

Accepted Answer

A) pays corporate taxes 
B) listed in a stock exchange 
C) organized as a corporation 
D) a written agreement 
A) pays corporate taxes 
B) listed in a stock exchange 
C) organized as a corporation 
D) a written agreement

Question 18

Sasha and Michelle form a partnership. Sasha contributes $16,000 cash and merchandise inventory with a current market value of $4,000. While journalizing this transaction:

Accepted Answer

A) Merchandise Inventory will be credited for $4,000. 
B) Merchandise Inventory will be debited for $4,000. 
C) Merchandise Inventory will be credited for $2,400. 
D) Merchandise Inventory will be debited for $2,400. 
A) Merchandise Inventory will be credited for $4,000. 
B) Merchandise Inventory will be debited for $4,000. 
C) Merchandise Inventory will be credited for $2,400. 
D) Merchandise Inventory will be debited for $2,400.

Question 19

Adam, Bill, and Charlie are partners. The profit and rule sharing rule between them is 2:5:3, with Bill getting the most and Adam getting the least. The partnership incurs a net loss of $72,000. While closing the Income Summary:

Accepted Answer

A) Income Summary will be debited for $72,000. 
B) Adam, Capital will be debited for $14,400. 
C) Adam, Capital will be credited for $36,000. 
D) Charlie, Capital will be credited for $36,000. 
A) Income Summary will be debited for $72,000. 
B) Adam, Capital will be debited for $14,400. 
C) Adam, Capital will be credited for $36,000. 
D) Charlie, Capital will be credited for $36,000.

Question 20

Anna and Naomi are partners. Anna has a capital balance of $50,000 and Naomi has a capital balance of $40,000. Gary invested $30,000 to acquire an ownership interest of $20,000. Which of the following is true of the partnership journal entry to record the receipt of Gary's contribution? (Assume the existing partners equally divide the bonus)

Accepted Answer

A) Cash is debited for $30,000 and Gary, Capital is credited for $20,000. 
B) Cash is debited for $20,000 and Gary, Capital is credited for $20,000. 
C) Cash is credited for $30,000 and Gary, Capital is debited for $20,000. 
D) Cash is credited for $20,000 and Gary, Capital is debited for $20,000. 
A) Cash is debited for $30,000 and Gary, Capital is credited for $20,000. 
B) Cash is debited for $20,000 and Gary, Capital is credited for $20,000. 
C) Cash is credited for $30,000 and Gary, Capital is debited for $20,000. 
D) Cash is credited for $20,000 and Gary, Capital is debited for $20,000.

Exam 12: Partnerships

Which of the following is true of a general partnership?

Felix and Ian allocate 2/5 of the profits and losses to Felix and 3/5 to Ian. The net income of the firm is $30,000. The journal entry to close the Income Summary will include:

Liquidation in a partnership refers to:

A partnership records the partners' contributions at the ________.

In a partnership firm, if one partner cannot pay his or her part of the debt, the other partner or partners must pay the total.

Which of the following is true of a liquidation of a partnership?

Capital deficiency refers to a partnership's claim against a partner.

In partnership, a person can become a partner by purchasing an existing partner's interest.

An asset received from a partner as a contribution is recorded at its historical cost.

Alex, Brad, and Carl are partners. The profit and rule sharing rule between them is 4:3:3 in the alphabetical order. The partnership incurs a net loss of $100,000. Before preparing the closing journal entry the:

Which of the following is an additional feature of a limited liability partnership compared to a limited partnership?

When an existing partner sells his interest to another party in a personal transaction:

Which of the following is a characteristic of a partnership?

Sasha and Michelle form a partnership. Sasha contributes $16,000 cash and merchandise inventory with a current market value of $4,000. While journalizing this transaction:

Adam, Bill, and Charlie are partners. The profit and rule sharing rule between them is 2:5:3, with Bill getting the most and Adam getting the least. The partnership incurs a net loss of $72,000. While closing the Income Summary:

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