Question 1

In comparison to a corporation,the owners of a general partnership ________.

Accepted Answer

A)  have limited claim on the profits generated by the business 
B)  are restricted from dissolving the business without prior notice to the SEC 
C)  have an unlimited personal liability for the debts of the business 
D)  are taxed at two levels 
A)  have limited claim on the profits generated by the business 
B)  are restricted from dissolving the business without prior notice to the SEC 
C)  have an unlimited personal liability for the debts of the business 
D)  are taxed at two levels

Question 2

When a partner withdraws his or her partnership interest for cash,the liabilities in the balance sheet remain unchanged.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following occurs if a withdrawing partner receives assets worth more than the book value of his or her equity?

Accepted Answer

A)  an increase in the remaining partners' capital accounts 
B)  no change to the remaining partners' capital accounts 
C)  a premium to existing partners 
D)  a bonus to the withdrawing partner 
A)  an increase in the remaining partners' capital accounts 
B)  no change to the remaining partners' capital accounts 
C)  a premium to existing partners 
D)  a bonus to the withdrawing partner

Question 4

In a partnership,when a partner contributes a particular asset to the firm,he or she is considered to be the sole owner of the asset.

Accepted Answer

A) True 
 B)False

Question 5

In a limited liability partnership,each partner is not personally liable for the malpractice or negligence committed by another partner.

Accepted Answer

A) True 
 B)False

Question 6

Bob and Bill allocate 2/3 of their partnership's profits and losses to Bob and 1/3 to Bill.The net income of the firm is $20,000.The journal entry to close the Income Summary will include ________.(Do not round any intermediate calculations.)

Accepted Answer

A)  credit to Income Summary for $13,333 
B)  debit to Bob, Capital for $6667 
C)  credit to Bob, Capital for $13,333 
D)  credit to Income Summary for $20,000 
A)  credit to Income Summary for $13,333 
B)  debit to Bob, Capital for $6667 
C)  credit to Bob, Capital for $13,333 
D)  credit to Income Summary for $20,000

Question 7

Which of the following is a disadvantage of partnership firms?

Accepted Answer

A)  They cannot be dissolved without the permission of the SEC. 
B)  They are taxed at multiple levels: corporate level and individual level. 
C)  They have more difficulty in raising capital as compared to a sole proprietorship. 
D)  They have mutual agency which creates personal obligations for each partner. 
A)  They cannot be dissolved without the permission of the SEC. 
B)  They are taxed at multiple levels: corporate level and individual level. 
C)  They have more difficulty in raising capital as compared to a sole proprietorship. 
D)  They have mutual agency which creates personal obligations for each partner.

Question 8

Mathew,Patrick,and Robin and have capital balances of $75,000,$125,000 and $93,000,respectively.As per the partnership agreement,Mathew gets a profit share of 2/9; Patrick gets 4/9; and Robin gets 3/9.Partnership agrees to pay $65,000 as final settlement to Mathew.How much bonus will Robin receive as a result of this transaction? (Do not round intermediate calculations and round the final answer to the nearest dollar.)

Accepted Answer

A)  $5714 
B)  $4286 
C)  $5556 
D)  $4444 
A)  $5714 
B)  $4286 
C)  $5556 
D)  $4444

Question 9

A partnership began on January 1,2020,with two partners Greg Lucey and Scott Lucas.Greg contributed $50,000 cash and Scott contributed equipment with a fair market value of $40,000.The partners share profits and losses 50:50.Partners' withdrawals were $12,000 by Greg and $6000 by Scott.Net income for 2020 was $56,000.What is the balance in Greg's capital account at December 31,2020?

Accepted Answer

A)  $66,000 
B)  $78,000 
C)  $16,000 
D)  $50,000 
A)  $66,000 
B)  $78,000 
C)  $16,000 
D)  $50,000

Question 10

Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: $$\begin{array} { | l | r | } 
\hline \text { Floyd } & \$ 50,000 \
\hline \text { Merriam } & 23,000 \
\hline
\end{array}$$ They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership.Ramelow contributes $27,000 cash in exchange for the partnership interest.Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow.Which of the following is the correct journal entry to record the above admission?

Accepted Answer

A)  $$\begin{array} { | c | c | c | } 
\hline \text { Cash } & 27,000 & \
\hline \text { Ramelow, Capital } & & 27,000 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|r|}
\hline\text { Cash } & 27,000 & \
\hline \text { Merriam, Capital } & & 7000 \
\hline \text { Floyd, Capital } & & 20,000 \
\hline
\end{array}$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Merriam, Capital } & 20,000 & \
\hline \text { Floyd, Capital } & 7000 & \
\hline \text { Ramelow, Capital } & & 27,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 27,000 & \
\hline \text { Floyd, Capital } & & 5250 \
\hline \text { Merriam, Capital } & & 1750 \
\hline \text { Ramelow, Capital } & & 20,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | c | c | } 
\hline \text { Cash } & 27,000 & \
\hline \text { Ramelow, Capital } & & 27,000 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|r|}
\hline\text { Cash } & 27,000 & \
\hline \text { Merriam, Capital } & & 7000 \
\hline \text { Floyd, Capital } & & 20,000 \
\hline
\end{array}$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Merriam, Capital } & 20,000 & \
\hline \text { Floyd, Capital } & 7000 & \
\hline \text { Ramelow, Capital } & & 27,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 27,000 & \
\hline \text { Floyd, Capital } & & 5250 \
\hline \text { Merriam, Capital } & & 1750 \
\hline \text { Ramelow, Capital } & & 20,000 \
\hline
\end{array}$$

Question 11

Ruby and Anita are partners.Ruby has a capital balance of $270,000 and Anita has a capital balance of $180,000.Denis contributes a building with a current market value of $170,000 to acquire an interest in the new partnership.Which of the following is TRUE of the journal entry to record this transaction? (Assume no bonus to any partner.)

Accepted Answer

A)  Building will be debited for $170,000, Ruby, Capital and Anita, Capital will be credited for $85,000 each. 
B)  Building will be debited for $170,000 and Denis, Capital will be credited for $170,000. 
C)  Ruby, Capital and Anita, Capital will be debited for $85,000 each and Denis, Capital will be credited for $170,000. 
D)  Ruby, Capital and Anita, Capital will be credited for $85,000 each and Denis, Capital will be debited for $170,000. 
A)  Building will be debited for $170,000, Ruby, Capital and Anita, Capital will be credited for $85,000 each. 
B)  Building will be debited for $170,000 and Denis, Capital will be credited for $170,000. 
C)  Ruby, Capital and Anita, Capital will be debited for $85,000 each and Denis, Capital will be credited for $170,000. 
D)  Ruby, Capital and Anita, Capital will be credited for $85,000 each and Denis, Capital will be debited for $170,000.

In comparison to a corporation,the owners of a general partnership ________.

When a partner withdraws his or her partnership interest for cash,the liabilities in the balance sheet remain unchanged.

Which of the following occurs if a withdrawing partner receives assets worth more than the book value of his or her equity?

In a partnership,when a partner contributes a particular asset to the firm,he or she is considered to be the sole owner of the asset.

In a limited liability partnership,each partner is not personally liable for the malpractice or negligence committed by another partner.

Bob and Bill allocate 2/3 of their partnership's profits and losses to Bob and 1/3 to Bill.The net income of the firm is $20,000.The journal entry to close the Income Summary will include ________.(Do not round any intermediate calculations.)

Which of the following is a disadvantage of partnership firms?

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

In comparison to a corporation,the owners of a general partnership ________.

When a partner withdraws his or her partnership interest for cash,the liabilities in the balance sheet remain unchanged.

Which of the following occurs if a withdrawing partner receives assets worth more than the book value of his or her equity?

In a partnership,when a partner contributes a particular asset to the firm,he or she is considered to be the sole owner of the asset.

In a limited liability partnership,each partner is not personally liable for the malpractice or negligence committed by another partner.

Bob and Bill allocate 2/3 of their partnership's profits and losses to Bob and 1/3 to Bill.The net income of the firm is $20,000.The journal entry to close the Income Summary will include ________.(Do not round any intermediate calculations.)

Which of the following is a disadvantage of partnership firms?

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