Question 1

In comparison with the proprietorship form of business organization, forming a partnership offers which of the following advantages?

Accepted Answer

A) Limited life 
B) Legal liability of each partner for all of the debts 
C) Combination of ability and experience of the partners 
D) Simple transfer of interest in the partnership to outsiders 
A) Limited life 
B) Legal liability of each partner for all of the debts 
C) Combination of ability and experience of the partners 
D) Simple transfer of interest in the partnership to outsiders

Question 2

Applying the ratio based on investment method, compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000. Net income was $75,000.

Accepted Answer

A) Taylor, $15,000; Timmy, $60,000 
B) Taylor, $37,500; Timmy, $37,500 
C) Taylor, $19,500; Timmy, $55,500 
D) None of these answers is correct. 
A) Taylor, $15,000; Timmy, $60,000 
B) Taylor, $37,500; Timmy, $37,500 
C) Taylor, $19,500; Timmy, $55,500 
D) None of these answers is correct.

Question 3

The accounting procedures are the same for sole proprietorships as for partnerships with the exception of:

Accepted Answer

A) the asset section includes more than one cash account. 
B) the liability section. 
C) the revenue section. 
D) the capital section is now divided per the number of partners. 
A) the asset section includes more than one cash account. 
B) the liability section. 
C) the revenue section. 
D) the capital section is now divided per the number of partners.

Question 4

Laura's investment in a new partnership includes $1,000 cash and $5,000 equipment. The new partnership is assuming $500 of Laura's accounts payable. The partnership entry should be to:

Accepted Answer

A) debit Laura, Capital $5,500; debit Accounts Payable $500; credit Cash $1,000; credit Equipment $5,000. 
B) debit Cash $1,000; debit Equipment $5,000; credit Laura Capital, $6,000. 
C) debit Cash $1,000; debit Equipment $5,000; credit Accounts Payable $500; credit Laura, Capital, $5,500. 
D) debit Laura, Investment $5,500; credit Capital $5,500. 
A) debit Laura, Capital $5,500; debit Accounts Payable $500; credit Cash $1,000; credit Equipment $5,000. 
B) debit Cash $1,000; debit Equipment $5,000; credit Laura Capital, $6,000. 
C) debit Cash $1,000; debit Equipment $5,000; credit Accounts Payable $500; credit Laura, Capital, $5,500. 
D) debit Laura, Investment $5,500; credit Capital $5,500.

Question 5

"Limited life" in a partnership agreement means:

Accepted Answer

A) a partnership is limited in the amount of debt it is liable for in the course of the business. 
B) a partnership is limited to the amount of revenue it can earn. 
C) a partnership may be dissolved if the location of the business has changed. 
D) a partnership may be dissolved as the result of any change in the ownership. 
A) a partnership is limited in the amount of debt it is liable for in the course of the business. 
B) a partnership is limited to the amount of revenue it can earn. 
C) a partnership may be dissolved if the location of the business has changed. 
D) a partnership may be dissolved as the result of any change in the ownership.

Question 6

A bonus paid by an incoming partner to the old partners is shared:

Accepted Answer

A) equally. 
B) by the salary method. 
C) on the basis of profit and loss ratio. 
D) by the interest method. 
A) equally. 
B) by the salary method. 
C) on the basis of profit and loss ratio. 
D) by the interest method.

Question 7

A cash withdrawal of a partner was recorded the same as paying payroll. This error would cause:

Accepted Answer

A) the period's net income to be understated. 
B) the period's net income to be overstated. 
C) the period end assets to be overstated. 
D) the period end assets to be understated. 
A) the period's net income to be understated. 
B) the period's net income to be overstated. 
C) the period end assets to be overstated. 
D) the period end assets to be understated.

Question 8

Partnerships are subject to federal income tax.

Accepted Answer

A) True 
 B)False

Question 9

An interest allowance is based on a partner's individual initial investment of capital.

Accepted Answer

A) True 
 B)False

Question 10

Given the following accounts:
   Indicate the account(s)to be debited and credited to record the following transactions.
-During liquidation realized more than book value for the merchandise inventory.
Debit ________ & ________ & ________ Credit ________ & ________ & ________

Accepted Answer

Debit 1, C

Question 11

When two proprietors decide to combine their businesses and form a partnership, GAAP usually requires that non-cash assets be taken over at their:

Accepted Answer

A) residual value on the date of the partnership. 
B) book value on the date of the partnership. 
C) fair market value on the date of the partnership. 
D) historical cost on the date of the partnership. 
A) residual value on the date of the partnership. 
B) book value on the date of the partnership. 
C) fair market value on the date of the partnership. 
D) historical cost on the date of the partnership.

Question 12

Given the following accounts:
   Indicate the account(s)to be debited and credited to record the following transactions.
-Able accepted Baker into the partnership with an investment of cash, inventory, and store equipment, including accumulated depreciation.
Debit ________ & ________ & ________ Credit ________ & ________ & ________

Accepted Answer

Debit 1 &

Question 13

Which method of allocation of profits and losses is based on a percent of initial investment of the partners?

Accepted Answer

A) Salary allowance 
B) Salary expense 
C) Profit and loss ratio 
D) Interest allowance 
A) Salary allowance 
B) Salary expense 
C) Profit and loss ratio 
D) Interest allowance

Question 14

Prepare the journal entry to record the partners' investment in the company.
Todd and Dillon combine their two businesses and enter into a partnership. Todd invests $5,000 cash and equipment on his books at $6,500 with accumulated depreciation of $1,500. The fair market value of the equipment is $5,000. Dillon is investing $8,000 cash and $700 accounts payable.

Accepted Answer

The answer of Prepare the journal entry to record the...

Question 15

A partner may withdraw assets valued at more than book equity if:

Accepted Answer

A) the remaining partners are anxiously awaiting the partner's retirement. 
B) partnership assets are overvalued. 
C) partnership assets are undervalued. 
D) Both A and C 
A) the remaining partners are anxiously awaiting the partner's retirement. 
B) partnership assets are overvalued. 
C) partnership assets are undervalued. 
D) Both A and C

Question 16

Applying the profit and loss ratio method, compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000 and the profit and loss ratio is 3:2. Net income was $75,000.

Accepted Answer

A) Taylor, $15,000; Timmy, $60,000 
B) Taylor, $37,500; Timmy, $37,500 
C) Taylor, $45,000; Timmy, $30,000 
D) None of these answers is correct. 
A) Taylor, $15,000; Timmy, $60,000 
B) Taylor, $37,500; Timmy, $37,500 
C) Taylor, $45,000; Timmy, $30,000 
D) None of these answers is correct.

Question 17

The statement of partners' equity reflects the equity of each partner and summarizes the allocation of net income for the year.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an incorrect step in the process of partnership liquidation?

Accepted Answer

A) Pay any liabilities 
B) Close all accounts payable 
C) Allocate gains and losses to partners 
D) Sell the assets 
A) Pay any liabilities 
B) Close all accounts payable 
C) Allocate gains and losses to partners 
D) Sell the assets

Question 19

When the entity of a partnership is worth more than amounts recorded in the accounting records, an incoming partner may have to pay a bonus.

Accepted Answer

A) True 
 B)False

Question 20

Given the following accounts:
   Indicate the account(s)to be debited and credited to record the following transactions.
-The business bought store equipment on account.
Debit ________ & ________ & ________ Credit ________ & ________ & ________

Accepted Answer

The answer of Given the following accounts:
   Indicate...

Exam 17: Partnership

In comparison with the proprietorship form of business organization, forming a partnership offers which of the following advantages?

Applying the ratio based on investment method, compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000. Net income was $75,000.

The accounting procedures are the same for sole proprietorships as for partnerships with the exception of:

Laura's investment in a new partnership includes $1,000 cash and $5,000 equipment. The new partnership is assuming $500 of Laura's accounts payable. The partnership entry should be to:

"Limited life" in a partnership agreement means:

A bonus paid by an incoming partner to the old partners is shared:

A cash withdrawal of a partner was recorded the same as paying payroll. This error would cause:

Partnerships are subject to federal income tax.

An interest allowance is based on a partner's individual initial investment of capital.

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -During liquidation realized more than book value for the merchandise inventory. Debit ________ & ________ & ________ Credit ________ & ________ & ________

When two proprietors decide to combine their businesses and form a partnership, GAAP usually requires that non-cash assets be taken over at their:

Which method of allocation of profits and losses is based on a percent of initial investment of the partners?

A partner may withdraw assets valued at more than book equity if:

Applying the profit and loss ratio method, compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000 and the profit and loss ratio is 3:2. Net income was $75,000.

The statement of partners' equity reflects the equity of each partner and summarizes the allocation of net income for the year.

Which of the following is an incorrect step in the process of partnership liquidation?

When the entity of a partnership is worth more than amounts recorded in the accounting records, an incoming partner may have to pay a bonus.

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -The business bought store equipment on account. Debit ________ & ________ & ________ Credit ________ & ________ & ________

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes: the Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -During liquidation realized more than book value for the merchandise inventory. Debit & & Credit & &

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -The business bought store equipment on account. Debit & & Credit & &