Question 1

The purchase of an existing partner's interest is a transaction between the partnership and the new partner,and not a personal transaction between the two individuals involved.

Accepted Answer

A) True 
 B)False

Question 2

Hillary,Bruce,and Cindy own a partnership firm.Hillary has an ownership interest of $24,000; Bruce has an ownership interest of $41,000; and Cindy has an ownership interest of $30,000.In the process of liquidation,the partnership sells non-cash assets and registers a gain of $30,000.The profit-loss sharing agreement is 1/6 to Hillary; 2/6 to Bruce; and 3/6 to Cindy.Which of the following is TRUE when a journal entry for the allocation of gain is recorded?

Accepted Answer

A)  Hillary, Capital is credited for $10,000. 
B)  Cindy, Capital is credited for $15,000. 
C)  Hillary, Capital is debited for $10,000. 
D)  Cindy, Capital is credited for $10,000. 
A)  Hillary, Capital is credited for $10,000. 
B)  Cindy, Capital is credited for $15,000. 
C)  Hillary, Capital is debited for $10,000. 
D)  Cindy, Capital is credited for $10,000.

Question 3

Nancy and Betty enter into a partnership agreement where they decide to share profits according to the following rules: (a)Nancy and Betty will receive salaries of $1700 and $14,500 respectively as the first allocation.
(b)The next allocation is based on 20% of each partner's capital balances.
(c)Any remaining profit or loss is to be allocated completely to Betty.
The partnership's net income for the first year is $50,000.Nancy's capital balance is $83,000 and Betty's capital balance is $11,000 at the end of the year.Calculate the share of profit/loss to be allocated to Betty.

Accepted Answer

A)  $18,300 
B)  $31,700 
C)  $3760 
D)  $16,100 
A)  $18,300 
B)  $31,700 
C)  $3760 
D)  $16,100

Question 4

Farrell and Jimmy enter into a partnership agreement on May 1,2018.Farrell contributes $50,000 and Jimmy contributes $150,000 as their capital contributions.They decide to share profits and losses in the ratio of their respective capital account balances.The net loss for the year ended December 31,2018 is $40,000.The capital account of Farrell should be ________ with his share of the loss.

Accepted Answer

A)  debited 
B)  credited 
C)  increased 
D)  halved 
A)  debited 
B)  credited 
C)  increased 
D)  halved

Question 5

Keith and Jim are partners.Keith has a capital balance of $47,000 and Jim has a capital balance of $32,000.Jim sells $15,000 of his ownership to Bill.Which of the following is TRUE of the journal entry to admit Bill?

Accepted Answer

A)  Bill, Capital will be debited for $17,000. 
B)  Jim, Capital will be debited for $17,000. 
C)  Jim, Capital will be credited for $15,000. 
D)  Bill, Capital will be credited for $15,000. 
A)  Bill, Capital will be debited for $17,000. 
B)  Jim, Capital will be debited for $17,000. 
C)  Jim, Capital will be credited for $15,000. 
D)  Bill, Capital will be credited for $15,000.

Question 6

Upon liquidation,if there is a sale of assets at a loss,the loss must be allocated to the partners' capital accounts based on their profit-and-loss-sharing ratio.

Accepted Answer

A) True 
 B)False

Question 7

In a ________,each partner is not personally liable for the malpractice committed by another partner.

Accepted Answer

A)  general partnership 
B)  limited liability partnership 
C)  limited partnership 
D)  sole proprietorship 
A)  general partnership 
B)  limited liability partnership 
C)  limited partnership 
D)  sole proprietorship

Question 8

Which of the following is specified in the articles of partnership?

Accepted Answer

A)  procedures for withdrawal of assets by the partners 
B)  procedures for distribution of dividends 
C)  methods for valuation of the assets 
D)  selection of an appropriate depreciation method 
A)  procedures for withdrawal of assets by the partners 
B)  procedures for distribution of dividends 
C)  methods for valuation of the assets 
D)  selection of an appropriate depreciation method

Question 9

When a partner dies,the partnership ceases to exist,and the deceased partner's estate will have ownership of the partner's equity in the partnership.

Accepted Answer

A) True 
 B)False

Question 10

The balance sheet of Ryan,James and Peter's partnership as of December 31,2018,is given below. $$\begin{array} { | l | r | l | r | } 
\hline { \text { Assets } } & &{ \text { Liabilities } } & \
\hline \text { Cash } & \$ 18,000 & \text { Accounts Payable } & \$ 15,000 \
\hline \text { Accounts Receivable } & 10,000 & \text { Other liabilities } & 24,000 \
\hline \text { Furniture } & 10,000 & \text { Partners' Equity } &  \
\hline \text { Equipment } & 15,000 & \text { Ryan, Capital } &9000\ 
\hline \text { Other assets } & 7000 & \text { Peter, Capital } &  10,000 \
\hline& & \text { James, Capital } & 2000 \
\hline \text { Total assets } &\$ 60,000&\text { Total liabilities and partners' equity }&\$ 60,000\
\hline
\end{array}$$ Ryan,Peter,and James share profits 3:2:1.They liquidate the partnership.The furniture and equipment
Are sold at a $8000 loss.The accounts receivable were collected in full and the other assets were
Written off as worthless.The liabilities were paid off at book value.James argued that he should
Receive a portion of the remaining cash,but Ryan and Peter disagree.How much cash should James
Receive or pay?

Accepted Answer

A)  He should receive $1500. 
B)  He should not receive or pay any money. 
C)  He should pay $55,500. 
D)  He should pay $500. 
A)  He should receive $1500. 
B)  He should not receive or pay any money. 
C)  He should pay $55,500. 
D)  He should pay $500.

Question 11

The balance sheet of Incrad Clothes,LLC,as of December 31,2017 is presented below. $$\begin{array} { | l | r | l | r | } 
\hline \text { Assets } & & \text { Liabilities } & \
\hline \text { Cash } & \$ 15,000 & \text { Accounts payable } & \$ 12,000 \
\hline \text { Merchandise inventory } & 56,000 & \text { Bank Loan } & 25,000 \
\hline \text { Furniture } & 12,000 & \text { Partner's Equity } & \
\hline \text { Computer } & 15,000 & \text { Chad, Capital } & 45,000 \
\hline \text { Other assets } & \underline { 22,000 } & \text { Brad, Capital } & \underline { 38,000 } \
\hline& & \text { Total Liabilities and } & \
 { \text { Total Assets } }  & \$ 120,000& \text { Partner's Equity } & \$ 120,000 \
\hline 
\end{array}$$ Which of the following statements is TRUE regarding Incrad's balance sheet?

Accepted Answer

A)  The computer was purchased at a cost less than $15,000. 
B)  The bank loan of $25,000 should be considered part of the Partner's Equity. 
C)  Brad and Chad have limited liabilities for the partnership's debts because it is a limited liability company. 
D)  The current market value of the furniture is $12,000. 
A)  The computer was purchased at a cost less than $15,000. 
B)  The bank loan of $25,000 should be considered part of the Partner's Equity. 
C)  Brad and Chad have limited liabilities for the partnership's debts because it is a limited liability company. 
D)  The current market value of the furniture is $12,000.

Question 12

Mary,Ann,and Beth are partners.Their capital balances are,$23,000; $41,000; and $30,000,respectively.As per the partnership agreement,Mary receives a profit share of 2/9; Ann has 4/9; and Beth has 3/9.Beth withdraws from the partnership by receiving $23,000.What will be the impact of this transaction on the journal entries?

Accepted Answer

A)  Cash will be debited for $30,000. 
B)  Mary, Capital will be debited for $7000. 
C)  Ann, Capital will be credited for $7000. 
D)  Beth, Capital will be debited for $30,000. 
A)  Cash will be debited for $30,000. 
B)  Mary, Capital will be debited for $7000. 
C)  Ann, Capital will be credited for $7000. 
D)  Beth, Capital will be debited for $30,000.

Question 13

A ________ is a form of business organization that combines the advantages of both a partnership and a corporation.

Accepted Answer

A)  limited liability company 
B)  limited liability partnership 
C)  C Corporation 
D)  general partnership 
A)  limited liability company 
B)  limited liability partnership 
C)  C Corporation 
D)  general partnership

Question 14

Kenny and Jeff form a partnership.During the year,Kenny and Jeff withdraw $30,000 and $23,000,respectively.Which of the following will be included in the journal entry to record the withdrawals?

Accepted Answer

A)  debit to Kenny, Withdrawals for $30,000 
B)  debit to Jeff, Withdrawals for $7000 
C)  credit to Kenny, Withdrawals for $30,000 
D)  credit to Jeff, Withdrawals for $23,000 
A)  debit to Kenny, Withdrawals for $30,000 
B)  debit to Jeff, Withdrawals for $7000 
C)  credit to Kenny, Withdrawals for $30,000 
D)  credit to Jeff, Withdrawals for $23,000

Question 15

Upon liquidation of a partnership,gains and losses on the sale of assets are divided according to the partner's capital balances.

Accepted Answer

A) True 
 B)False

Question 16

Before the start of the liquidation process,the books are adjusted and closed.

Accepted Answer

A) True 
 B)False

Question 17

Andre,Beau,and Caroline share profits and losses of their partnership in a 3:3:7 ratio respectively.If the net income is $900,000,calculate Caroline's share of the profits.(Do not round any intermediate calculations.)

Accepted Answer

A)  $207,692 
B)  $484,615 
C)  $161,538 
D)  $69,231 
A)  $207,692 
B)  $484,615 
C)  $161,538 
D)  $69,231

Question 18

In a general partnership,each partner has limited personal liability for the debts of the business.

Accepted Answer

A) True 
 B)False

Question 19

Dana and Emile allocate 2/3 of their partnership's profits and losses to Dana and 1/3 to Emile.The net income of the firm is $40,000.The journal entry to close the Income Summary will include a ________.(Do not round any intermediate calculations.)

Accepted Answer

A)  credit to Income Summary for $26,667 
B)  debit to Dana, Capital for $13,333 
C)  credit to Emile, Capital for $26,667 
D)  debit to Income Summary for $40,000 
A)  credit to Income Summary for $26,667 
B)  debit to Dana, Capital for $13,333 
C)  credit to Emile, Capital for $26,667 
D)  debit to Income Summary for $40,000

Question 20

How is the accounting equation affected when a partner withdraws cash?

Accepted Answer

A)  Both equity and assets decrease; liabilities are not affected. 
B)  Assets increase and equity decreases; liabilities are not affected. 
C)  Both assets and liabilities decrease; equity is not affected. 
D)  Liabilities decrease and assets increase; equity is not affected. 
A)  Both equity and assets decrease; liabilities are not affected. 
B)  Assets increase and equity decreases; liabilities are not affected. 
C)  Both assets and liabilities decrease; equity is not affected. 
D)  Liabilities decrease and assets increase; equity is not affected.

The purchase of an existing partner's interest is a transaction between the partnership and the new partner,and not a personal transaction between the two individuals involved.

Keith and Jim are partners.Keith has a capital balance of $47,000 and Jim has a capital balance of $32,000.Jim sells $15,000 of his ownership to Bill.Which of the following is TRUE of the journal entry to admit Bill?

Upon liquidation,if there is a sale of assets at a loss,the loss must be allocated to the partners' capital accounts based on their profit-and-loss-sharing ratio.

In a ________,each partner is not personally liable for the malpractice committed by another partner.

Which of the following is specified in the articles of partnership?

When a partner dies,the partnership ceases to exist,and the deceased partner's estate will have ownership of the partner's equity in the partnership.

A ________ is a form of business organization that combines the advantages of both a partnership and a corporation.

Kenny and Jeff form a partnership.During the year,Kenny and Jeff withdraw $30,000 and $23,000,respectively.Which of the following will be included in the journal entry to record the withdrawals?

Upon liquidation of a partnership,gains and losses on the sale of assets are divided according to the partner's capital balances.

Before the start of the liquidation process,the books are adjusted and closed.

Andre,Beau,and Caroline share profits and losses of their partnership in a 3:3:7 ratio respectively.If the net income is $900,000,calculate Caroline's share of the profits.(Do not round any intermediate calculations.)

In a general partnership,each partner has limited personal liability for the debts of the business.

Dana and Emile allocate 2/3 of their partnership's profits and losses to Dana and 1/3 to Emile.The net income of the firm is $40,000.The journal entry to close the Income Summary will include a ________.(Do not round any intermediate calculations.)

How is the accounting equation affected when a partner withdraws cash?

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

Exam 12: Partnerships

The purchase of an existing partner's interest is a transaction between the partnership and the new partner,and not a personal transaction between the two individuals involved.

Keith and Jim are partners.Keith has a capital balance of $47,000 and Jim has a capital balance of $32,000.Jim sells $15,000 of his ownership to Bill.Which of the following is TRUE of the journal entry to admit Bill?

Upon liquidation,if there is a sale of assets at a loss,the loss must be allocated to the partners' capital accounts based on their profit-and-loss-sharing ratio.

In a ________,each partner is not personally liable for the malpractice committed by another partner.

Which of the following is specified in the articles of partnership?

When a partner dies,the partnership ceases to exist,and the deceased partner's estate will have ownership of the partner's equity in the partnership.

A ________ is a form of business organization that combines the advantages of both a partnership and a corporation.

Kenny and Jeff form a partnership.During the year,Kenny and Jeff withdraw $30,000 and $23,000,respectively.Which of the following will be included in the journal entry to record the withdrawals?

Upon liquidation of a partnership,gains and losses on the sale of assets are divided according to the partner's capital balances.

Before the start of the liquidation process,the books are adjusted and closed.

Andre,Beau,and Caroline share profits and losses of their partnership in a 3:3:7 ratio respectively.If the net income is $900,000,calculate Caroline's share of the profits.(Do not round any intermediate calculations.)

In a general partnership,each partner has limited personal liability for the debts of the business.

Dana and Emile allocate 2/3 of their partnership's profits and losses to Dana and 1/3 to Emile.The net income of the firm is $40,000.The journal entry to close the Income Summary will include a ________.(Do not round any intermediate calculations.)

How is the accounting equation affected when a partner withdraws cash?

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