Question 1

Advantages of a partnership include:

Accepted Answer

A)  Tax-free designation of all income earned 
B)  Limited life. 
C)  Unlimited liability. 
D)  Voluntary association. 
E)  Mutual agency. 
A)  Tax-free designation of all income earned 
B)  Limited life. 
C)  Unlimited liability. 
D)  Voluntary association. 
E)  Mutual agency.

Question 2

Farmer and Taylor formed a partnership with capital contributions of $200,000 and $250,000, respectively. Their partnership agreement calls for Farmer to receive a $70,000 per year salary. The remaining income or loss is to be divided equally. 
-Assuming net loss for the current year is $15,000, the journal entry to allocate the net loss is:

Accepted Answer

A)  Debit Income Summary, $15,000; Credit Taylor, Capital, $7,500; Credit Farmer, Capital, $7,500. 
B)  Debit Taylor, Capital, $42,500; Credit Income Summary, $15,000; Credit Farmer, Capital, $27,500. 
C)  Debit Income Summary, $15,000; Debit Taylor, Capital, $27,500; Credit Taylor, Capital, $32,500. 
D)  Debit Income Summary, $15,000; Debit Farmer, Capital, $27,500; Credit Taylor, Capital, $42,500. 
E)  Debit Income Summary, $15,000; Credit Farmer, Capital, $7,500; Credit Taylor, Capital, $7,500. 
A)  Debit Income Summary, $15,000; Credit Taylor, Capital, $7,500; Credit Farmer, Capital, $7,500. 
B)  Debit Taylor, Capital, $42,500; Credit Income Summary, $15,000; Credit Farmer, Capital, $27,500. 
C)  Debit Income Summary, $15,000; Debit Taylor, Capital, $27,500; Credit Taylor, Capital, $32,500. 
D)  Debit Income Summary, $15,000; Debit Farmer, Capital, $27,500; Credit Taylor, Capital, $42,500. 
E)  Debit Income Summary, $15,000; Credit Farmer, Capital, $7,500; Credit Taylor, Capital, $7,500.

Question 3

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 4

Partners can invest assets but not liabilities into a partnership.

Accepted Answer

A) True 
 B)False

Question 5

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 $174,000 for its first year, what amount of income is credited to Lee's capital account?

Accepted Answer

A)  $55,500. 
B)  $61,500. 
C)  $57,000. 
D)  $48,000. 
E)  $58,000. 
A)  $55,500. 
B)  $61,500. 
C)  $57,000. 
D)  $48,000. 
E)  $58,000.

Question 6

A capital deficiency means that:

Accepted Answer

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

When a partner is added to a partnership:

Accepted Answer

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

Question 9

If a company wants to protect its three investors against personal liability risk, which of the following business forms would not be a suitable option?

Accepted Answer

A)  Limited liability partnership 
B)  S Corporation 
C)  Partnership 
D)  C Corporation 
E)  Limited liability company 
A)  Limited liability partnership 
B)  S Corporation 
C)  Partnership 
D)  C Corporation 
E)  Limited liability company

Question 10

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

Accepted Answer

A partnership agreement should specify h

Question 11

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to ; if the recorded value of the withdrawing partner's equity is understated, then a bonus goes to ________.

Accepted Answer

the remain

Question 12

Fellows and Marshall are partners in an accounting firm and share net income and loss equally. Fellows' beginning partnership capital balance for the current year is $185,000, and Marshall's beginning partnership capital balance for the current year is $260,000. The partnership had net income of $350,000 for the year. Fellows withdrew $80,000 during the year and Marshall withdrew $70,000. What is Marshall's return on equity?

Accepted Answer

A)  54.3% 
B)  56.0% 
C)  60.3% 
D)  78.7% 
E)  67.3% 
A)  54.3% 
B)  56.0% 
C)  60.3% 
D)  78.7% 
E)  67.3%

Advantages of a partnership include:

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

Partners can invest assets but not liabilities into a partnership.

A capital deficiency means that:

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

When a partner is added to a partnership:

If a company wants to protect its three investors against personal liability risk, which of the following business forms would not be a suitable option?

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

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to ; if the recorded value of the withdrawing partner's equity is understated, then a bonus goes to ________.

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

Advantages of a partnership include:

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

Partners can invest assets but not liabilities into a partnership.

A capital deficiency means that:

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

When a partner is added to a partnership:

If a company wants to protect its three investors against personal liability risk, which of the following business forms would not be a suitable option?

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

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to ; if the recorded value of the withdrawing partner's equity is understated, then a bonus goes to ________.

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