Question 1

In a partnership balance sheet,each partner's assets,liabilities,and equity will be shown separately.

Accepted Answer

A) True 
 B)False

Question 2

The statement of partners' equity shows the changes in each partner's capital account for a specific period of time.

Accepted Answer

A) True 
 B)False

Question 3

Sasha and Michelle form a partnership.Sasha contributes $16,000 cash and merchandise inventory with a current market value of $3000.While journalizing this transaction ________.

Accepted Answer

A)  Merchandise Inventory will be credited for $3000 
B)  Merchandise Inventory will be debited for $3000 
C)  Merchandise Inventory will be credited for $13,000 
D)  Merchandise Inventory will be debited for $13,000 
A)  Merchandise Inventory will be credited for $3000 
B)  Merchandise Inventory will be debited for $3000 
C)  Merchandise Inventory will be credited for $13,000 
D)  Merchandise Inventory will be debited for $13,000

Question 4

Tim and Michelle have decided to form a partnership with a 60/40 partnership interest ratio.Tim contributes $7500 cash and merchandise inventory with a market value of $1500.While journalizing this transaction ________.

Accepted Answer

A)  Tim, Capital will be debited for $9000 
B)  Tim, Capital will be credited for $9000 
C)  Tim, Capital will be credited for $6000 and Michelle, Capital will be credited for $4500 
D)  Tim, Capital will be debited for $6000 and Michelle, Capital will be debited for $4500 
A)  Tim, Capital will be debited for $9000 
B)  Tim, Capital will be credited for $9000 
C)  Tim, Capital will be credited for $6000 and Michelle, Capital will be credited for $4500 
D)  Tim, Capital will be debited for $6000 and Michelle, Capital will be debited for $4500

Question 5

Felix and Ian allocate 2/5 of their partnership's profits and losses to Felix and 3/5 to Ian.The net income of the firm is $20,000.The journal entry to close the Income Summary will include ________.

Accepted Answer

A)  credit to Ian, Capital for $12,000 
B)  debit to Felix, Capital for $12,000 
C)  debit to Felix, Capital for $8000 
D)  credit to Income Summary for $20,000 
A)  credit to Ian, Capital for $12,000 
B)  debit to Felix, Capital for $12,000 
C)  debit to Felix, Capital for $8000 
D)  credit to Income Summary for $20,000

Question 6

Ronald,Ross,and Carol opened a partnership firm.Ronald has a capital of $77,000; Ross has a capital of $119,000; and Carol has a capital of $91,000.Ronald decided to withdraw from the partnership and received $86,000.Which of the following will be included in the journal entry to record this? (Assume an equal profit-loss sharing between the existing partners.)

Accepted Answer

A)  Cash is credited for $9000. 
B)  Ross, Capital is credited for $4500. 
C)  Carol, Capital is debited for $4500. 
D)  Ross, Capital is debited for $9000. 
A)  Cash is credited for $9000. 
B)  Ross, Capital is credited for $4500. 
C)  Carol, Capital is debited for $4500. 
D)  Ross, Capital is debited for $9000.

Question 7

When a new partner enters into a partnership by purchasing an existing partner's interest,the total assets and equity of the business increase.

Accepted Answer

A) True 
 B)False

Question 8

Adam,Bill,and Charlie are partners.The profit and loss sharing rule between them is 2:5:3,with Bill getting the largest share and Adam receiving the smallest.The partnership incurs a net loss of $21,000.While closing the Income Summary ________.(Do not round any intermediate calculations.)

Accepted Answer

A)  Income Summary will be credited for $6300 
B)  Adam, Capital will be debited for $6300 
C)  Adam, Capital will be credited for $6300 
D)  Charlie, Capital will be debited for $6300 
A)  Income Summary will be credited for $6300 
B)  Adam, Capital will be debited for $6300 
C)  Adam, Capital will be credited for $6300 
D)  Charlie, Capital will be debited for $6300

Question 9

A partnership is a business with two or more owners that is legally organized as a corporation.

Accepted Answer

A) True 
 B)False

Question 10

An asset received from a partner as a contribution is recorded at its historical cost.

Accepted Answer

A) True 
 B)False

Question 11

Allan and Ralph are partners.Allan has a capital balance of $92,000 and Ralph has a capital balance of $75,000.Carol invested $60,000 to acquire an ownership interest of $50,000.Which of the following is TRUE of the impact of the transaction on the balance sheet?

Accepted Answer

A)  Asset increases and the equity will remain unchanged. 
B)  Both assets and equity will increase. 
C)  Assets will increase and equity will decrease. 
D)  Assets will decrease and the equity will remain unchanged. 
A)  Asset increases and the equity will remain unchanged. 
B)  Both assets and equity will increase. 
C)  Assets will increase and equity will decrease. 
D)  Assets will decrease and the equity will remain unchanged.

Question 12

Which of the following is TRUE of a written partnership agreement?

Accepted Answer

A)  It is an agreement in which the partners hold a direct agreement with the registration body, and the registration body acts as an interlocutor between the partners. 
B)  It is an informal agreement between the partners and is not legally binding. 
C)  It is a legally-binding agreement between the owners which explains the procedures for liquidating the partnership. 
D)  It is a legally-binding agreement between the proprietors and the stock exchange where it is listed regarding the profit sharing between the owners. 
A)  It is an agreement in which the partners hold a direct agreement with the registration body, and the registration body acts as an interlocutor between the partners. 
B)  It is an informal agreement between the partners and is not legally binding. 
C)  It is a legally-binding agreement between the owners which explains the procedures for liquidating the partnership. 
D)  It is a legally-binding agreement between the proprietors and the stock exchange where it is listed regarding the profit sharing between the owners.

Question 13

Bill and Bob share profits of their partnership in the ratio of 6:1 respectively.If the net income of the firm is $29,000,calculate Bill's share of net income.(Do not round any intermediate calculations.)

Accepted Answer

A)  $20,714 
B)  $4143 
C)  $29,000 
D)  $24,857 
A)  $20,714 
B)  $4143 
C)  $29,000 
D)  $24,857

Question 14

Rodriguez and Ying start a partnership on July 1,2019.Rodriguez contributes $4100 cash,furniture with a current market value of $47,000,accounts payable with a current market value of $16,000 and equipment with a current market value of $23,000.Which of the following is the correct journal entry to record Rodriguez's partnership investment?

Accepted Answer

A)  $$\begin{array} { | l | r | l | } 
\hline \text { Cash } & 4100 & \
\hline \text { Furniture } & 47,000 & \
\hline \text { Equipment } & 23,000 & \
\hline \text { Accounts Payable } & 16,000 & \
\hline \text { Rodriguez, Capital } & & 90,100 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | l | } 
\hline \text { Cash } & 4100 & \
\hline \text { Furniture } & 47,000 & \
\hline \text { Equipment } & 23,000 & \
\hline \text { Accounts Payable } & & 16,000 \
\hline \text { Rodriguez, Capital } & & 58,100 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 4100 & \
\hline \text { Furniture } & 47,000 & \
\hline \text { Equipment } & & 23,000 \
\hline \text { Accounts Payable } & & 16,000 \
\hline \text { Rodriguez, Capital } & & 12,100 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 16,000 & \
\hline \text { Rodriguez, Capital } & 58,100 & \
\hline \text { Cash } & & 4100 \
\hline \text { Furniture } & & 47,000 \
\hline \text { Equipment } & & 23,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | l | } 
\hline \text { Cash } & 4100 & \
\hline \text { Furniture } & 47,000 & \
\hline \text { Equipment } & 23,000 & \
\hline \text { Accounts Payable } & 16,000 & \
\hline \text { Rodriguez, Capital } & & 90,100 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | l | } 
\hline \text { Cash } & 4100 & \
\hline \text { Furniture } & 47,000 & \
\hline \text { Equipment } & 23,000 & \
\hline \text { Accounts Payable } & & 16,000 \
\hline \text { Rodriguez, Capital } & & 58,100 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 4100 & \
\hline \text { Furniture } & 47,000 & \
\hline \text { Equipment } & & 23,000 \
\hline \text { Accounts Payable } & & 16,000 \
\hline \text { Rodriguez, Capital } & & 12,100 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 16,000 & \
\hline \text { Rodriguez, Capital } & 58,100 & \
\hline \text { Cash } & & 4100 \
\hline \text { Furniture } & & 47,000 \
\hline \text { Equipment } & & 23,000 \
\hline
\end{array}$$

Question 15

Which of the following is TRUE of the assets of a partnership?

Accepted Answer

A)  The partner who is more actively involved in the daily business affairs is considered to be the sole owner of the partnership's assets. 
B)  Any new assets purchased by the partnership are jointly owned by each partner. 
C)  When a partner contributes a particular asset to the firm, he is considered to be the sole owner of the asset. 
D)  In the case of the liquidation of a partnership, the partners must be paid based on the profit sharing ratio of the partnership. 
A)  The partner who is more actively involved in the daily business affairs is considered to be the sole owner of the partnership's assets. 
B)  Any new assets purchased by the partnership are jointly owned by each partner. 
C)  When a partner contributes a particular asset to the firm, he is considered to be the sole owner of the asset. 
D)  In the case of the liquidation of a partnership, the partners must be paid based on the profit sharing ratio of the partnership.

Question 16

Capital deficiency refers to a partnership's claim against a partner.

Accepted Answer

A) True 
 B)False

Question 17

When a partner withdraws his or her interest in the partnership,both assets and equity will decrease.

Accepted Answer

A) True 
 B)False

Question 18

Aries and Eros start a partnership with capital contributions of $37,000 and $63,000,respectively.Over the course of the year,Aries withdraws $4800 from the business in order to meet his personal expenses.Which of the following is the correct journal entry to close the relevant Withdrawals account at the end of the year?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Aries, Withdrawals } & 4800 & \
\hline \text { Cash } & & 4800 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | l | } 
\hline \text { Aries, Capital } & 4800 & \
\hline \text { Aries, } & & \
\text { Withdrawals } & & 4800 \
\hline
\end{array}$$ 
C)  No entry 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Aries, Withdrawals } & 4800 & \
\hline \text { Eros, Capital } & & 4800 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Aries, Withdrawals } & 4800 & \
\hline \text { Cash } & & 4800 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | l | } 
\hline \text { Aries, Capital } & 4800 & \
\hline \text { Aries, } & & \
\text { Withdrawals } & & 4800 \
\hline
\end{array}$$ 
C)  No entry 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Aries, Withdrawals } & 4800 & \
\hline \text { Eros, Capital } & & 4800 \
\hline
\end{array}$$

Question 19

Dominic and Morgan are partners.Dominic has a capital balance of $360,000 and Morgan has a capital balance of $225,000.Morgan sells $125,000 of his ownership to Lance.Which of the following is TRUE of the items in the balance sheet?

Accepted Answer

A)  The total equity decreases by $125,000. 
B)  The total equity remains unchanged. 
C)  Assets will decrease by $125,000. 
D)  Assets will increase by $125,000. 
A)  The total equity decreases by $125,000. 
B)  The total equity remains unchanged. 
C)  Assets will decrease by $125,000. 
D)  Assets will increase by $125,000.

Question 20

The process of going out of business by selling the entity's assets,paying its liabilities,and distributing any remaining cash to the partners based on their equity balances is known as liquidation.

Accepted Answer

A) True 
 B)False

Exam 12: Partnerships

In a partnership balance sheet,each partner's assets,liabilities,and equity will be shown separately.

The statement of partners' equity shows the changes in each partner's capital account for a specific period of time.

Sasha and Michelle form a partnership.Sasha contributes $16,000 cash and merchandise inventory with a current market value of $3000.While journalizing this transaction ________.

Tim and Michelle have decided to form a partnership with a 60/40 partnership interest ratio.Tim contributes $7500 cash and merchandise inventory with a market value of $1500.While journalizing this transaction ________.

Felix and Ian allocate 2/5 of their partnership's profits and losses to Felix and 3/5 to Ian.The net income of the firm is $20,000.The journal entry to close the Income Summary will include ________.

When a new partner enters into a partnership by purchasing an existing partner's interest,the total assets and equity of the business increase.

Adam,Bill,and Charlie are partners.The profit and loss sharing rule between them is 2:5:3,with Bill getting the largest share and Adam receiving the smallest.The partnership incurs a net loss of $21,000.While closing the Income Summary ________.(Do not round any intermediate calculations.)

A partnership is a business with two or more owners that is legally organized as a corporation.

An asset received from a partner as a contribution is recorded at its historical cost.

Allan and Ralph are partners.Allan has a capital balance of $92,000 and Ralph has a capital balance of $75,000.Carol invested $60,000 to acquire an ownership interest of $50,000.Which of the following is TRUE of the impact of the transaction on the balance sheet?

Which of the following is TRUE of a written partnership agreement?

Bill and Bob share profits of their partnership in the ratio of 6:1 respectively.If the net income of the firm is $29,000,calculate Bill's share of net income.(Do not round any intermediate calculations.)

Which of the following is TRUE of the assets of a partnership?

Capital deficiency refers to a partnership's claim against a partner.

When a partner withdraws his or her interest in the partnership,both assets and equity will decrease.

Dominic and Morgan are partners.Dominic has a capital balance of $360,000 and Morgan has a capital balance of $225,000.Morgan sells $125,000 of his ownership to Lance.Which of the following is TRUE of the items in the balance sheet?

The process of going out of business by selling the entity's assets,paying its liabilities,and distributing any remaining cash to the partners based on their equity balances is known as liquidation.

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

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