Question 1

The life of a partnership is ________ in duration.

Accepted Answer

limited

Question 2

When a new partner is admitted,all parties usually must agree to the admission.

Accepted Answer

A) True 
 B)False  True

Question 3

A partnership in which all partners have mutual agency and unlimited liability is called:

Accepted Answer

A)  Limited partnership. 
B)  Limited liability partnership. 
C)  General partnership. 
D)  S corporation. 
E)  Limited liability company. 
A)  Limited partnership. 
B)  Limited liability partnership. 
C)  General partnership. 
D)  S corporation. 
E)  Limited liability company. C

Question 4

Partners can invest assets but not liabilities into a partnership.

Accepted Answer

A) True 
 B)False

Question 5

Glade,Marker,and Walters are partners with beginning-year capital balances of $250,000,$150,000,and $100,000,respectively.Partnership net income for the year is $192,000.Make the necessary journal entry to close Income Summary to the capital accounts if partners agree to divide income based on their beginning-year capital balances.

Accepted Answer

\[\begin{array} { l l l } 
\text { (a) I

Question 6

Lin and Coral invested $99,000 and $126,000,respectively,in a partnership they began one year ago.Assuming the partnership earned $120,000 during the current year; compute the share of the net income each partner should receive under each of these independent assumptions.
1.The partnership contract specifies salary allowances of $45,000 to Lin and $60,000 to Coral,and any balance shared equally.
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { Lin } & \text { Coral } & \text { Allocated } \
\hline \text { Net Income } & & & \
\hline \text { Salary allowance } & & & \
\hline \text { Remainder } & & & \
\hline \text { Allocation of remainder } & & & \
\hline \text { Total } & & & \
\hline
\end{array}$$ 
2.The partnership contract specifies salary allowances of $45,000 to Lin and $60,000 to Coral,interest allowance of 10% on the partners' beginning capital balance for the year.
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { Lin } & \text { Coral } & \text { Allocated } \
\hline \text { Net Income } & & & \
\hline \text { Salary allowance } & & & \
\hline \text { Interest allowance } & & & \
\hline \text { Remainder } & & & \
\hline \text { Allocation of remainder } & & & \
\hline \text { Total } & & & \
\hline
\end{array}$$

Accepted Answer

Part 1
 \[\begin{array} { | l | r | r |

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Wright,Bell,and Edison are partners and share income in a 2:5:3 ratio.The partnership's capital balances are as follows: Wright,$33,000,Bell $27,000 and Edison $40,000.Edison decides to withdraw from the partnership,and the partners agree not to revalue the assets upon Edison's retirement.
-The journal entry to record Edison's June 1 withdrawal from the partnership if Edison is paid $40,000 for his equity is:

Accepted Answer

A)  Debit Edison, Capital $40,000; credit Cash $40,000. 
B)  Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Cash $40,000. 
C)  Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Edison, Capital $40,000. 
D)  Debit Edison, Capital $40,000; credit Wright, Capital $20,000; credit Bell, Capital $20,000. 
E)  Debit Cash $40,000; credit Edison, Capital $40,000. 
A)  Debit Edison, Capital $40,000; credit Cash $40,000. 
B)  Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Cash $40,000. 
C)  Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Edison, Capital $40,000. 
D)  Debit Edison, Capital $40,000; credit Wright, Capital $20,000; credit Bell, Capital $20,000. 
E)  Debit Cash $40,000; credit Edison, Capital $40,000.

Question 9

A capital deficiency exists when at least one partner has a debit balance in his or her capital account at the point of final cash distribution during liquidation.

Accepted Answer

A) True 
 B)False

Question 10

Conklin plans to leave the CAP Partnership.The recorded balance in her capital account is $48,000.The remaining partners,Arthurs and Preston,agree to pay Conklin $58,000 cash and Conklin accepts.The partners share income and loss equally.Prepare the journal entry to record the transaction.

Accepted Answer

Conklin,Capital………………………………………

Question 11

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 12

Cox,North,and Lee form a partnership.Cox contributes $180,000,North contributes $150,000,and Lee contributes $270,000.Their partnership agreement calls for a 5% interest allowance on the partner's capital balances with the remaining income or loss to be allocated equally.If the partnership reports income of $150,000 for its first year,what amount of income is credited to North's capital account?

Accepted Answer

A)  $50,000. 
B)  $63,500. 
C)  $61,500. 
D)  $47,500. 
E)  $45,000. 
A)  $50,000. 
B)  $63,500. 
C)  $61,500. 
D)  $47,500. 
E)  $45,000.

Question 13

Henry,Luther,and Gage are dissolving their partnership.Their partnership agreement allocates each partner 1/3 of all income and losses.The current period's ending capital account balances are Henry,$45,000; Luther,$37,000; and Gage,$(5,000).After all assets are sold and liabilities are paid,there is $77,000 in cash to be distributed.Gage is unable to pay the deficiency.
-The journal entry to record the distribution should be:

Accepted Answer

A)  Debit Henry, Capital $25,667; debit Luther, Capital $25,667; debit Gage, Capital $25,666; credit Cash $77,000. 
B)  Debit Henry, Capital $42,500; debit Luther, Capital $34,500; credit Cash $77,000. 
C)  Debit Henry, Capital $45,000; debit Luther, Capital $37,000; credit Gage, Capital $5,000; credit Cash $77,000. 
D)  Debit Cash $77,000, debit Gage, Capital $5,000, credit Henry, Capital $45,000, credit Luther, Capital $37,000. 
E)  Debit Cash $77,000; credit Henry, Capital $25,667; credit Luther, Capital $25,667; credit Gage, Capital $25,666. 
A)  Debit Henry, Capital $25,667; debit Luther, Capital $25,667; debit Gage, Capital $25,666; credit Cash $77,000. 
B)  Debit Henry, Capital $42,500; debit Luther, Capital $34,500; credit Cash $77,000. 
C)  Debit Henry, Capital $45,000; debit Luther, Capital $37,000; credit Gage, Capital $5,000; credit Cash $77,000. 
D)  Debit Cash $77,000, debit Gage, Capital $5,000, credit Henry, Capital $45,000, credit Luther, Capital $37,000. 
E)  Debit Cash $77,000; credit Henry, Capital $25,667; credit Luther, Capital $25,667; credit Gage, Capital $25,666.

Question 14

Wheadon,Davis,and Singer formed a partnership with Wheadon contributing $60,000,Davis contributing $50,000 and Singer contributing $40,000.Their partnership agreement called for the income (loss)division to be based on the ratio of capital investments.If the partnership had income of $75,000 for its first year of operation,what amount of income (rounded to the nearest thousand)would be credited to Singer's capital account?

Accepted Answer

A)  $20,000. 
B)  $25,000. 
C)  $30,000. 
D)  $40,000. 
E)  $75,000. 
A)  $20,000. 
B)  $25,000. 
C)  $30,000. 
D)  $40,000. 
E)  $75,000.

Question 15

Glade,Marker,and Walters are partners with beginning-year capital balances of $100,000,$50,000,and $50,000,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 (Glade:Marker:Walters),respectively.
c.Partnership agreement is silent as to division of income and less.

Accepted Answer

\[\begin{array} { l l } 
\text { (a) Inc

Question 16

Christie and Jergens formed a partnership with capital contributions of $300,000 and $400,000,respectively.Their partnership agreement calls for Christie to receive a $60,000 per year salary.Also,each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments.The remaining income or loss is to be divided equally.If the net income for the current year is $135,000,then Christie and Jergens's respective shares are:

Accepted Answer

A)  $67,500; $67,500. 
B)  $92,500; $42,500. 
C)  $57,857; $77,143. 
D)  $90,000; $40,000. 
E)  $35,000; $100,000. 
A)  $67,500; $67,500. 
B)  $92,500; $42,500. 
C)  $57,857; $77,143. 
D)  $90,000; $40,000. 
E)  $35,000; $100,000.

Question 17

Match each of the following terms with the appropriate definitions.
-A corporation with 100 or fewer stockholders that can elect to be treated as a partnership for income tax purposes but retain the same limited liability as other corporations.

Accepted Answer

A) General partner 
B) Limited liability partnership 
C) Unlimited liability of partners 
D) C corporation 
E) Statement of partners' equity
F)Mutual agency
G)Limited partnership
H)S corporation
I)Partnership
J)Partnership contract 
A) General partner 
B) Limited liability partnership 
C) Unlimited liability of partners 
D) C corporation 
E) Statement of partners' equity
F)Mutual agency
G)Limited partnership
H)S corporation
I)Partnership
J)Partnership contract

Question 18

A relatively new form of business organization that protects partners with limited liability,allows limited partners to assume an active management role,and is taxed as a partnership is a ________.

Accepted Answer

limited li

Question 19

Barber and Atkins are partners in an accounting firm and share net income and loss equally.Barber's beginning partnership capital balance for the current year is $285,000,and Atkins' beginning partnership capital balance for the current year is $370,000.The partnership had net income of $250,000 for the year.Barber withdrew $90,000 during the year and Atkins withdrew $100,000.
-What is Atkins's return on equity?

Accepted Answer

A)  41.3% 
B)  43.9% 
C)  32.7% 
D)  33.8% 
E)  36.5% 
A)  41.3% 
B)  43.9% 
C)  32.7% 
D)  33.8% 
E)  36.5%

Question 20

Explain the steps involved in the liquidation of a partnership.

Accepted Answer

Four steps are involved in the liquidati

The life of a partnership is ________ in duration.

When a new partner is admitted,all parties usually must agree to the admission.

A partnership in which all partners have mutual agency and unlimited liability is called:

Partners can invest assets but not liabilities into a partnership.

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

A capital deficiency exists when at least one partner has a debit balance in his or her capital account at the point of final cash distribution during liquidation.

Conklin plans to leave the CAP Partnership.The recorded balance in her capital account is $48,000.The remaining partners,Arthurs and Preston,agree to pay Conklin $58,000 cash and Conklin accepts.The partners share income and loss equally.Prepare the journal entry to record the transaction.

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

Match each of the following terms with the appropriate definitions. -A corporation with 100 or fewer stockholders that can elect to be treated as a partnership for income tax purposes but retain the same limited liability as other corporations.

A relatively new form of business organization that protects partners with limited liability,allows limited partners to assume an active management role,and is taxed as a partnership is a ________.

Explain the steps involved in the liquidation of a partnership.

Accounting in Business

Analyzing for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Filters

Exam 16: Partnership Accounting

The life of a partnership is ________ in duration.

When a new partner is admitted,all parties usually must agree to the admission.

A partnership in which all partners have mutual agency and unlimited liability is called:

Partners can invest assets but not liabilities into a partnership.

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

A capital deficiency exists when at least one partner has a debit balance in his or her capital account at the point of final cash distribution during liquidation.

Conklin plans to leave the CAP Partnership.The recorded balance in her capital account is $48,000.The remaining partners,Arthurs and Preston,agree to pay Conklin $58,000 cash and Conklin accepts.The partners share income and loss equally.Prepare the journal entry to record the transaction.

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

Match each of the following terms with the appropriate definitions. -A corporation with 100 or fewer stockholders that can elect to be treated as a partnership for income tax purposes but retain the same limited liability as other corporations.

A relatively new form of business organization that protects partners with limited liability,allows limited partners to assume an active management role,and is taxed as a partnership is a ________.

Explain the steps involved in the liquidation of a partnership.

Accounting in Business

Analyzing for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Filters