Question 1

An S corporation is a corporation with 100 or fewer stockholders that can elect to be taxed as a partnership.

Accepted Answer

A) True 
 B)False  True

Question 2

Edwin and Darren have decided to form a partnership.Edwin contributes $80,000 cash and merchandise inventory with a current market value of $17,000.Darren contributes $2,400 cash and office furniture with a current market value of $3,200.When journalizing this transaction ________.

Accepted Answer

A) Office Furniture will be debited for $1,070 
B) Office Furniture will be credited for $3,200 
C) Office Furniture will be debited for $3,200 
D) Office Furniture will be credited for $1,070 
A) Office Furniture will be debited for $1,070 
B) Office Furniture will be credited for $3,200 
C) Office Furniture will be debited for $3,200 
D) Office Furniture will be credited for $1,070 C

Question 3

Capital deficiency occurs when a partner's capital account has a credit balance.

Accepted Answer

A) True 
 B)False  False

Question 4

A general partner in a limited partnership ________.

Accepted Answer

A) has less personal liability for the debts of the business than the limited partners 
B) is the majority shareholder and is not involved in the daily business activities 
C) has unlimited personal liability in the partnership 
D) is the first owner to receive a share of profits and losses 
A) has less personal liability for the debts of the business than the limited partners 
B) is the majority shareholder and is not involved in the daily business activities 
C) has unlimited personal liability in the partnership 
D) is the first owner to receive a share of profits and losses

Question 5

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 $7,000. 
C) Ann,Capital will be credited for $7,000. 
D) Beth,Capital will be debited for $30,000. 
A) Cash will be debited for $30,000. 
B) Mary,Capital will be debited for $7,000. 
C) Ann,Capital will be credited for $7,000. 
D) Beth,Capital will be debited for $30,000.

Question 6

Like a sole proprietorship statement of owner's equity,the statement of partners' equity will show all the partners' capital accounts as one account.

Accepted Answer

A) True 
 B)False

Question 7

Simonsen,Paulson,and Richardson are partners in a firm with the following capital account balances:
 
The profit-and-loss-sharing ratio among Simonsen,Paulson,and Richardson is 1:3:2,in the order given.Paulson is retiring from the partnership on December 31,2017.Paulson's capital account is settled at book value.Which of the following journal entries would the firm record for Paulson's withdrawal?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 8

The balance sheet of Ryan and Peter firm as on December 31,2017,is given below.
 
Ryan and Peter share profits in the ratio 3:2.They have decided to liquidate the partnership with immediate effect.After completing all the liquidation procedures (assuming all assets and liabilities were liquidated at book value),the business is left with $35,000 cash.As a result,Ryan will receive ________.

Accepted Answer

A) $16,250 
B) $21,000 
C) $14,000 
D) $26,000 
A) $16,250 
B) $21,000 
C) $14,000 
D) $26,000

Question 9

Lauren and Elizabeth are partners.Lauren has a capital balance of $125,000 and Elizabeth has a capital balance of $110,000.Harry invested $100,000 to acquire an ownership interest of 30%.The journal entry to record the receipt of Harry's contribution will ________.

Accepted Answer

A) decrease Lauren,Capital 
B) increase Elizabeth,Capital 
C) decrease Cash 
D) decrease Harry,Capital 
A) decrease Lauren,Capital 
B) increase Elizabeth,Capital 
C) decrease Cash 
D) decrease Harry,Capital

Question 10

Steve and Roger allocate 2/3 of their partnership's profits and losses to Steve and 1/3 to Roger.If the net income of the firm is $30,000,calculate the share of Roger's net income.

Accepted Answer

A) $20,000 
B) $10,000 
C) $30,000 
D) $25,000 
A) $20,000 
B) $10,000 
C) $30,000 
D) $25,000

Question 11

Whenever a partner mix in a partnership changes,the old partnership ceases to exist and a new partnership begins.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Kenny and Jeff form a partnership.During the year,Kenny and Jeff withdraw $32,000 and $22,000,respectively.Which of the following will be included in the journal entry to record the withdrawals?

Accepted Answer

A) debit to Kenny,Withdrawals for $32,000 
B) debit to Jeff,Withdrawals for $27,000 
C) credit to Kenny,Withdrawals for $27,000 
D) credit to Jeff,Withdrawals for $22,000 
A) debit to Kenny,Withdrawals for $32,000 
B) debit to Jeff,Withdrawals for $27,000 
C) credit to Kenny,Withdrawals for $27,000 
D) credit to Jeff,Withdrawals for $22,000

Question 14

Raul and Bianca are partners.Raul has a capital balance of $50,000 and Bianca has a capital balance of $37,000.Bianca sells half of her ownership interest to Bill for $20,500.Which of the following is true of the journal entry to record this transaction?

Accepted Answer

A) Bianca,Capital is credited for $20,500 and Raul,Capital is debited for $18,500. 
B) Bill,Capital is credited for $18,500 and Raul,Capital is debited for $20,500. 
C) Bill,Capital is credited for $18,500 and Bianca,Capital is debited for $18,500. 
D) Bianca,Capital is credited for $20,500 and Raul,Capital is debited for $20,500. 
A) Bianca,Capital is credited for $20,500 and Raul,Capital is debited for $18,500. 
B) Bill,Capital is credited for $18,500 and Raul,Capital is debited for $20,500. 
C) Bill,Capital is credited for $18,500 and Bianca,Capital is debited for $18,500. 
D) Bianca,Capital is credited for $20,500 and Raul,Capital is debited for $20,500.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Keith and Jim formed a partnership,with the partners sharing profits and losses equally.The partnership incurs a net loss of $5,000 for the year.The entry to close the net loss will ________.

Accepted Answer

A) debit Income Summary by $5,000 
B) decrease Keith,Capital by $2,500 
C) increase Jim,Capital by $2,500 
D) decrease Jim,Capital by $5,000 
A) debit Income Summary by $5,000 
B) decrease Keith,Capital by $2,500 
C) increase Jim,Capital by $2,500 
D) decrease Jim,Capital by $5,000

Question 17

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 18

A firm has two partners: Jim and Bill.Jim owns 60% of the partnership and Bill owns 40%.In which of the following transactions will the partnership be held responsible for an individual partners' actions?

Accepted Answer

A) Jim signs a contract as a guarantor for Bill's personal loan. 
B) Jim buys a laptop on credit for personal use. 
C) Bill signs a contract to buy furniture for official use in the partnership. 
D) Bill defaults on payment of his personal credit card bill. 
A) Jim signs a contract as a guarantor for Bill's personal loan. 
B) Jim buys a laptop on credit for personal use. 
C) Bill signs a contract to buy furniture for official use in the partnership. 
D) Bill defaults on payment of his personal credit card bill.

Question 19

An S corporation pays no corporate income tax.

Accepted Answer

A) True 
 B)False

Question 20

New partners will always be admitted to a partnership at a contribution equal to or greater than the book value of their interest.

Accepted Answer

A) True 
 B)False

Exam 12: Partnerships

An S corporation is a corporation with 100 or fewer stockholders that can elect to be taxed as a partnership.

Edwin and Darren have decided to form a partnership.Edwin contributes $80,000 cash and merchandise inventory with a current market value of $17,000.Darren contributes $2,400 cash and office furniture with a current market value of $3,200.When journalizing this transaction ________.

Capital deficiency occurs when a partner's capital account has a credit balance.

A general partner in a limited partnership ________.

Like a sole proprietorship statement of owner's equity,the statement of partners' equity will show all the partners' capital accounts as one account.

Lauren and Elizabeth are partners.Lauren has a capital balance of $125,000 and Elizabeth has a capital balance of $110,000.Harry invested $100,000 to acquire an ownership interest of 30%.The journal entry to record the receipt of Harry's contribution will ________.

Steve and Roger allocate 2/3 of their partnership's profits and losses to Steve and 1/3 to Roger.If the net income of the firm is $30,000,calculate the share of Roger's net income.

Whenever a partner mix in a partnership changes,the old partnership ceases to exist and a new partnership begins.

Kenny and Jeff form a partnership.During the year,Kenny and Jeff withdraw $32,000 and $22,000,respectively.Which of the following will be included in the journal entry to record the withdrawals?

Raul and Bianca are partners.Raul has a capital balance of $50,000 and Bianca has a capital balance of $37,000.Bianca sells half of her ownership interest to Bill for $20,500.Which of the following is true of the journal entry to record this transaction?

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

Keith and Jim formed a partnership,with the partners sharing profits and losses equally.The partnership incurs a net loss of $5,000 for the year.The entry to close the net loss will ________.

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.

A firm has two partners: Jim and Bill.Jim owns 60% of the partnership and Bill owns 40%.In which of the following transactions will the partnership be held responsible for an individual partners' actions?

An S corporation pays no corporate income tax.

New partners will always be admitted to a partnership at a contribution equal to or greater than the book value of their interest.

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