Question 1

Which of the following statements is true of partnerships?

Accepted Answer

A) If the partners have no partnership agreement specifying how to divide profits and losses,then they share profits and losses equally. 
B) It is legally required to share the profit and losses equally,irrespective of the partnership agreement. 
C) The stated ratio of profit sharing needs to be approved by the SEC. 
D) The profit sharing is always based on each partner's capital balances and any losses will be shared equally. 
A) If the partners have no partnership agreement specifying how to divide profits and losses,then they share profits and losses equally. 
B) It is legally required to share the profit and losses equally,irrespective of the partnership agreement. 
C) The stated ratio of profit sharing needs to be approved by the SEC. 
D) The profit sharing is always based on each partner's capital balances and any losses will be shared equally.

Question 2

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 3

Rodriguez and Ying start a partnership on July 1,2017.Rodriguez contributes $4,100 cash,furniture with a current market value of $55,000,and computer equipment.The computer equipment originally cost $48,000 in 2015,with recorded accumulated depreciation of $28,000.The current market value of the computer equipment is $17,000.At what value should the computer equipment be recorded in the accounting records of the partnership?

Accepted Answer

A) $48,000 
B) $17,000 
C) $20,000 
D) $28,000 
A) $48,000 
B) $17,000 
C) $20,000 
D) $28,000

Question 4

The withdrawal accounts of a partnership are closed at the end of the period,as they are for a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 5

In their business partnership,George has an ownership interest of 59% and Ben has an ownership interest of 41%.In the current year,they purchase equipment for $10,100.In order to finance the equipment purchase,George makes a contribution of $7,400 and Ben makes a contribution of $2,700 to the partnership.Based on the information provided,which of the following is true regarding the partnership balance sheet?

Accepted Answer

A) Both George,Capital and Ben,Capital will increase by $10,100. 
B) George,Capital will increase by $7,400 and Ben,Capital will increase by $2,700. 
C) George,Capital will increase by $10,100 and Ben,Capital will remain unchanged. 
D) George,Capital will increase by $5,959 and Ben,Capital will increase by $4,141. 
A) Both George,Capital and Ben,Capital will increase by $10,100. 
B) George,Capital will increase by $7,400 and Ben,Capital will increase by $2,700. 
C) George,Capital will increase by $10,100 and Ben,Capital will remain unchanged. 
D) George,Capital will increase by $5,959 and Ben,Capital will increase by $4,141.

Question 6

Sasha and Michelle form a partnership.Sasha contributes $13,000 cash and merchandise inventory with a current market value of $3,000.While journalizing this transaction ________.

Accepted Answer

A) Merchandise Inventory will be credited for $3,000 
B) Merchandise Inventory will be debited for $3,000 
C) Merchandise Inventory will be credited for $2,200 
D) Merchandise Inventory will be debited for $2,200 
A) Merchandise Inventory will be credited for $3,000 
B) Merchandise Inventory will be debited for $3,000 
C) Merchandise Inventory will be credited for $2,200 
D) Merchandise Inventory will be debited for $2,200

Question 7

Upon liquidation of a partnership,the cash received from the sale of assets is first returned to the capital balances of the partners.The remaining cash is then used to pay off the liabilities of the business.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Farrell and Jimmy enter into a partnership agreement on May 1,2017.Farrell contributes $50,000 and Jimmy contributes $140,000 as their capital contributions.They decide to share profits and losses in the ratio of their respective capital account balances.The net income for the year ended December 31,2017 is $60,000.Which of the following is the correct journal entry to record the allocation of profit?

Accepted Answer

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

Question 10

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.The accounts payable were settled at $10,000 due to the poor financial condition of the partnership firm.As a result,Ryan's capital account will be credited by ________.

Accepted Answer

A) $6,000 
B) $9,000 
C) $1,800 
D) $3,000 
A) $6,000 
B) $9,000 
C) $1,800 
D) $3,000

Question 11

In a partnership,the income is taxed at the partnership level as well as at the personal level of the owners.

Accepted Answer

A) True 
 B)False

Question 12

Rex and Sandy are partners.Rex has a capital balance of $370,000 and Sandy has a capital balance of $280,000.Marcus invests a building worth $220,000 in order to acquire an interest in the partnership.What is Marcus's partnership share after he makes the investment? (Assume no bonus to any partner. )

Accepted Answer

A) 25.3% 
B) 32.2% 
C) 42.5% 
D) 17.2% 
A) 25.3% 
B) 32.2% 
C) 42.5% 
D) 17.2%

Question 13

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.The furniture and the equipment were sold at a cumulative loss of $4,000.The accounts receivable were received in cash and the other assets were written off as worthless.The accounts payable and other liabilities were paid off at book value.The firm's accountant distributed the remaining cash between Ryan and Peter equally.However,Peter initiated a lawsuit claiming that his share was greater than Ryan's.How much should Peter have received?

Accepted Answer

A) $20,500 
B) $19,200 
C) $21,800 
D) $23,200 
A) $20,500 
B) $19,200 
C) $21,800 
D) $23,200

Question 14

When a partner withdraws his or her equity for cash,the corresponding capital account will be closed.

Accepted Answer

A) True 
 B)False

Question 15

Rodriguez and Ying start a partnership on July 1,2017.Rodriguez contributes $4,100 cash,furniture with a current market value of $47,000,accounts payables 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 Rodriquez's partnership investment?

Accepted Answer

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

Question 16

A(n)________ does not require any permission from the state to be set up.

Accepted Answer

A) LLC 
B) partnership 
C) S Corporation 
D) C Corporation 
A) LLC 
B) partnership 
C) S Corporation 
D) C Corporation

Question 17

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 the share of Bill's net income.

Accepted Answer

A) $20,714 
B) $4,143 
C) $29,000 
D) $24,857 
A) $20,714 
B) $4,143 
C) $29,000 
D) $24,857

Question 18

Farrell and Jimmy enter into a partnership agreement on May 1,2017.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 31,2017 is $40,000.The capital account of Farrell should be ________ with the amount of loss.

Accepted Answer

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

Question 19

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 20

A partnership is a ________.

Accepted Answer

A) firm listed on a stock exchange,in which no owner owns a controlling majority of equity 
B) business with two or more owners that is not organized as a corporation 
C) corporation in which the owners have limited liability for the organization's liabilities 
D) private firm in which all owners have equal ownership and limited liability in the event of a bankruptcy 
A) firm listed on a stock exchange,in which no owner owns a controlling majority of equity 
B) business with two or more owners that is not organized as a corporation 
C) corporation in which the owners have limited liability for the organization's liabilities 
D) private firm in which all owners have equal ownership and limited liability in the event of a bankruptcy

Which of the following statements is true of partnerships?

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.

The withdrawal accounts of a partnership are closed at the end of the period,as they are for a sole proprietorship.

Sasha and Michelle form a partnership.Sasha contributes $13,000 cash and merchandise inventory with a current market value of $3,000.While journalizing this transaction ________.

Upon liquidation of a partnership,the cash received from the sale of assets is first returned to the capital balances of the partners.The remaining cash is then used to pay off the liabilities of the business.

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 partnership,the income is taxed at the partnership level as well as at the personal level of the owners.

When a partner withdraws his or her equity for cash,the corresponding capital account will be closed.

A(n)________ does not require any permission from the state to be set up.

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 the share of Bill's net income.

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

A partnership is a ________.

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

Which of the following statements is true of partnerships?

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.

The withdrawal accounts of a partnership are closed at the end of the period,as they are for a sole proprietorship.

Sasha and Michelle form a partnership.Sasha contributes $13,000 cash and merchandise inventory with a current market value of $3,000.While journalizing this transaction ________.

Upon liquidation of a partnership,the cash received from the sale of assets is first returned to the capital balances of the partners.The remaining cash is then used to pay off the liabilities of the business.

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 partnership,the income is taxed at the partnership level as well as at the personal level of the owners.

When a partner withdraws his or her equity for cash,the corresponding capital account will be closed.

A(n)________ does not require any permission from the state to be set up.

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 the share of Bill's net income.

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

A partnership is a ________.

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