Question 1

Partners in a partnership are taxed on the partnership income, not the amounts they withdraw from the partnership.

Accepted Answer

A) True 
 B)False

Question 2

The withdrawals account of each partner is closed to income summary at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 3

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 the income or loss division to be based on the ratio of capital invested. 
-If the partnership reports income of $150,000 for its first year, what amount of income is credited to Lee's capital account? (Do not round your intermediate calculations.)

Accepted Answer

A)  $67,500. 
B)  $54,000. 
C)  $60,000. 
D)  $50,000. 
E)  $45,000. 
A)  $67,500. 
B)  $54,000. 
C)  $60,000. 
D)  $50,000. 
E)  $45,000.

Question 4

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

Accepted Answer

A new partner may purchase a partnership

Question 5

The income or loss of a partnership is allocated to the partners according to the partnership agreement, and it is included in determining the taxable income for each partner's tax return.

Accepted Answer

A) True 
 B)False

Question 6

Peters and Chong are partners and share equally in income or loss. Peters' current capital balance is $140,000 and Chong's is $130,000. Peters and Chong agree to accept Aaron with a 30% interest in the partnership. Aaron invests $98,000 in the partnership.
- The balances in Peters's and Chong's capital accounts after admission of the new partner equal:

Accepted Answer

A)  Peters $140,000; Chong $130,000. 
B)  Peters $133,800; Chong $123,800. 
C)  Peters $146,200; Chong $136,200. 
D)  Peters $145,000; Chong $135,000. 
E)  Peters $166,027; Chong $156,027. 
A)  Peters $140,000; Chong $130,000. 
B)  Peters $133,800; Chong $123,800. 
C)  Peters $146,200; Chong $136,200. 
D)  Peters $145,000; Chong $135,000. 
E)  Peters $166,027; Chong $156,027.

Question 7

Masters, Hardy, and Rowen are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period's ending capital account balances are Masters, $15,000; Hardy, $15,000; Rowen, $(2,000). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,000 in cash to be distributed. Rowen pays $2,000 to cover the deficiency in his account. The general journal entry to record the final distribution would be:

Accepted Answer

A)  Debit Masters, Capital $14,000; debit Hardy, Capital $14,000; credit Cash $28,000. 
B)  Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Rowen, Capital $2,000; credit Cash $28,000. 
C)  Debit Masters, Capital $9,334; debit Hardy, Capital $9,333; debit Rowen, Capital $9,333; credit Cash $28,000. 
D)  Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Cash $30,000. 
E)  Debit Cash $28,000; debit Rowen, Capital $2,000; credit Masters, Capital $15,000; credit Hardy, Capital $15,000. 
A)  Debit Masters, Capital $14,000; debit Hardy, Capital $14,000; credit Cash $28,000. 
B)  Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Rowen, Capital $2,000; credit Cash $28,000. 
C)  Debit Masters, Capital $9,334; debit Hardy, Capital $9,333; debit Rowen, Capital $9,333; credit Cash $28,000. 
D)  Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Cash $30,000. 
E)  Debit Cash $28,000; debit Rowen, Capital $2,000; credit Masters, Capital $15,000; credit Hardy, Capital $15,000.

Question 8

A partnership that has at least two classes of partners, general and limited, allows the limited partners to have no personal liability beyond the amounts they invest in the partnership, and the limited partners have no active role except as specified in the partnership agreement is a  __________partnership.

Accepted Answer

The answer of A partnership that has at least two...

Question 9

R. Stetson contributed $14,000 in cash plus office equipment valued at $7,000 to the SJ Partnership. The journal entry to record the transaction for the partnership is:

Accepted Answer

A)  Debit R. Stetson, Capital $21,000; credit SJ Partnership, Capital $21,000. 
B)  Debit Cash $14,000; debit Office Equipment $7,000; credit SJ Partnership, Capital $21,000. 
C)  Debit Cash $14,000; debit Office Equipment $7,000; credit Common Stock $21,000. 
D)  Debit Cash $14,000; debit Office Equipment $7,000; credit R Stetson, Capital $21,000. 
E)  Debit SJ Partnership $21,000; credit R. Stetson, Capital $21,000. 
A)  Debit R. Stetson, Capital $21,000; credit SJ Partnership, Capital $21,000. 
B)  Debit Cash $14,000; debit Office Equipment $7,000; credit SJ Partnership, Capital $21,000. 
C)  Debit Cash $14,000; debit Office Equipment $7,000; credit Common Stock $21,000. 
D)  Debit Cash $14,000; debit Office Equipment $7,000; credit R Stetson, Capital $21,000. 
E)  Debit SJ Partnership $21,000; credit R. Stetson, Capital $21,000.

Question 10

Partners' withdrawals of assets are:

Accepted Answer

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

Question 11

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.
- What amount of cash will Gage receive upon liquidation?

Accepted Answer

A)  $0. 
B)  Gage will be invoiced for $5,000. 
C)  $25,667. 
D)  $30,667. 
E)  $20,667. 
A)  $0. 
B)  Gage will be invoiced for $5,000. 
C)  $25,667. 
D)  $30,667. 
E)  $20,667.

Question 12

Caitlin, Chris, and Molly are partners and share income and losses in a 3:4:3 ratio. The partnership's capital balances are Caitlin, $120,000; Chris, $80,000; and Molly, $100,000. Paul is admitted to the partnership on July 1 with a 20% equity and invests $60,000. 
-The balance in Caitlin's capital account immediately after Paul's admission is:

Accepted Answer

A)  $60,000 
B)  $123,600 
C)  $72,000 
D)  $120,000 
E)  $116,400 
A)  $60,000 
B)  $123,600 
C)  $72,000 
D)  $120,000 
E)  $116,400

Question 13

What are the ways a partner can withdraw from a partnership? Explain how to account for the withdrawal of a current partner from a partnership.

Accepted Answer

A partner may sell his or her interest i

Question 14

Total partnership income is reported to the IRS on Form 1065.

Accepted Answer

A) True 
 B)False

Question 15

A partnership that has two classes of partners, general and limited, where the limited partners have no personal liability beyond the amounts they invest in the partnership, and no active role in the partnership, except as specified in the partnership agreement is a:

Accepted Answer

A)  Limited liability company. 
B)  Limited partnership. 
C)  Mutual agency partnership. 
D)  Limited liability partnership. 
E)  General partnership. 
A)  Limited liability company. 
B)  Limited partnership. 
C)  Mutual agency partnership. 
D)  Limited liability partnership. 
E)  General partnership.

Question 16

A bonus may be paid in all of the following situations except:

Accepted Answer

A)  By remaining partners to a withdrawing partner if the recorded equity is understated. 
B)  To a new partner with exceptional talents. 
C)  By an existing partner to him or herself when in need of personal cash flow. 
D)  By a new partner when the current value of a partnership is greater than the recorded amounts of equity. 
E)  By a withdrawing partner to remaining partners if the recorded value of the equity is overstated. 
A)  By remaining partners to a withdrawing partner if the recorded equity is understated. 
B)  To a new partner with exceptional talents. 
C)  By an existing partner to him or herself when in need of personal cash flow. 
D)  By a new partner when the current value of a partnership is greater than the recorded amounts of equity. 
E)  By a withdrawing partner to remaining partners if the recorded value of the equity is overstated.

Question 17

The withdrawals account of each partner is:

Accepted Answer

A)  A permanent account that is not closed. 
B)  Credited with that partner's share of net income. 
C)  Closed to that partner's capital account. 
D)  Closed to the Income Summary account. 
E)  Debited with that partner's share of net loss. 
A)  A permanent account that is not closed. 
B)  Credited with that partner's share of net income. 
C)  Closed to that partner's capital account. 
D)  Closed to the Income Summary account. 
E)  Debited with that partner's share of net loss.

Question 18

Hewlett and Martin are partners. Hewlett's capital balance in the partnership is $64,000, and Martin's capital balance $67,000. Hewlett and Martin have agreed to share equally in income or loss. The existing partners agree to accept Black with a 20% interest. Black will invest $35,000 in the partnership. The bonus that is granted to Hewlett and Martin equals:

Accepted Answer

A)  600 to Hewlett; $900 to Martin. 
B)  $1,500 each. 
C)  $900 each. 
D)  $600 each. 
E)  $0, because Hewlett and Martin actually grant a bonus to Black. 
A)  600 to Hewlett; $900 to Martin. 
B)  $1,500 each. 
C)  $900 each. 
D)  $600 each. 
E)  $0, because Hewlett and Martin actually grant a bonus to Black.

Question 19

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from the acts of other partners is a __________ partnership.

Accepted Answer

The answer of A partnership designed to protect innocent partners...

Question 20

Hewlett and Martin are partners. Hewlett's capital balance in the partnership is $64,000, and Martin's capital balance $61,000. Hewlett and Martin have agreed to share equally in income or loss. Hewlett and Martin agree to accept Black with a 25% interest. Black will invest $35,000 in the partnership. The bonus that is granted to Black equals:

Accepted Answer

A)  $5,000. 
B)  $3,333. 
C)  $2,500. 
D)  $6,667. 
E)  $0, because Black must actually grant a bonus to Hewlett and Martin. 
A)  $5,000. 
B)  $3,333. 
C)  $2,500. 
D)  $6,667. 
E)  $0, because Black must actually grant a bonus to Hewlett and Martin.

Partners in a partnership are taxed on the partnership income, not the amounts they withdraw from the partnership.

The withdrawals account of each partner is closed to income summary at the end of the accounting period.

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

The income or loss of a partnership is allocated to the partners according to the partnership agreement, and it is included in determining the taxable income for each partner's tax return.

R. Stetson contributed $14,000 in cash plus office equipment valued at $7,000 to the SJ Partnership. The journal entry to record the transaction for the partnership is:

Partners' withdrawals of assets are:

What are the ways a partner can withdraw from a partnership? Explain how to account for the withdrawal of a current partner from a partnership.

Total partnership income is reported to the IRS on Form 1065.

A partnership that has two classes of partners, general and limited, where the limited partners have no personal liability beyond the amounts they invest in the partnership, and no active role in the partnership, except as specified in the partnership agreement is a:

A bonus may be paid in all of the following situations except:

The withdrawals account of each partner is:

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from the acts of other partners is a __________ partnership.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Corporations

Long-Term Liabilities

Investments

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

Present and Future Values in Accounting

Activity-Based Costing

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Exam 12: Accounting for Partnerships

Partners in a partnership are taxed on the partnership income, not the amounts they withdraw from the partnership.

The withdrawals account of each partner is closed to income summary at the end of the accounting period.

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

The income or loss of a partnership is allocated to the partners according to the partnership agreement, and it is included in determining the taxable income for each partner's tax return.

R. Stetson contributed $14,000 in cash plus office equipment valued at $7,000 to the SJ Partnership. The journal entry to record the transaction for the partnership is:

Partners' withdrawals of assets are:

What are the ways a partner can withdraw from a partnership? Explain how to account for the withdrawal of a current partner from a partnership.

Total partnership income is reported to the IRS on Form 1065.

A partnership that has two classes of partners, general and limited, where the limited partners have no personal liability beyond the amounts they invest in the partnership, and no active role in the partnership, except as specified in the partnership agreement is a:

A bonus may be paid in all of the following situations except:

The withdrawals account of each partner is:

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from the acts of other partners is a __________ partnership.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Corporations

Long-Term Liabilities

Investments

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

Present and Future Values in Accounting

Activity-Based Costing

Filters