Question 1

Irrespective of the original profit-and-loss-sharing ratio,the bonus received by existing partners-by admitting a new partner-will be allocated equally.

Accepted Answer

A) True 
 B)False

Question 2

Profits and losses in a partnership must be shared based on each partner's capital balances.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 $8,000 
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 $8,000 
D) credit to Income Summary for $20,000

Question 5

If the partnership agreement specifies a method for sharing profits but not losses,then losses are shared the same way as profits.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows:
 
They agreed to admit Ramelow into the business for a one-third interest in the new partnership.Ramelow contributes $16,000 cash in exchange for the partnership interest.Assume that Floyd and Merriam shared profits and losses equally before the admission of Ramelow.Which of the following is the correct journal entry to record the above admission?

Accepted Answer

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

Question 8

Mutual agency means that any partner can legally bind the other partners and the partnership to business contracts within the scope of the businesses regular operations.

Accepted Answer

A) True 
 B)False

Question 9

In which of the following types of business organizations do the owners have unlimited personal liabilities for the business's debts?

Accepted Answer

A) general partnerships 
B) S Corporations 
C) C Corporations 
D) limited liability companies 
A) general partnerships 
B) S Corporations 
C) C Corporations 
D) limited liability companies

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

In the process of liquidation,a partnership firm sells its non-cash assets of a book value of $55,000,for $73,000.Which of the following will be included in the entry to record the sale of assets at liquidation?

Accepted Answer

A) Gain on Disposal will be credited by $73,000. 
B) Gain on Disposal will be debited by $73,000. 
C) Gain on Disposal will be credited by $18,000. 
D) Gain on Disposal will be debited by $18,000. 
A) Gain on Disposal will be credited by $73,000. 
B) Gain on Disposal will be debited by $73,000. 
C) Gain on Disposal will be credited by $18,000. 
D) Gain on Disposal will be debited by $18,000.

Question 12

Aries and Eros start a partnership with capital contributions of $37,000 and $63,000,respectively.Over the course of the year,Aries withdraws $4,800 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) 
  
B) 
  
C) No entry 
D) 
  
A) 
  
B) 
  
C) No entry 
D)

Question 13

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 14

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 ________.

Accepted Answer

A) credit to Income Summary for $13,333 
B) debit to Bob,Capital for $6,667 
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 $6,667 
C) credit to Bob,Capital for $13,333 
D) credit to Income Summary for $20,000

Question 15

Which of the following is true when a partner withdraws his interest from the partnership?

Accepted Answer

A) He is obliged to pay a bonus to the existing partners. 
B) The existing partners are obliged to pay a bonus to the withdrawing partner. 
C) The partner's capital account will be closed. 
D) He must get the book-value of his interest. 
A) He is obliged to pay a bonus to the existing partners. 
B) The existing partners are obliged to pay a bonus to the withdrawing partner. 
C) The partner's capital account will be closed. 
D) He must get the book-value of his interest.

Question 16

The death of a partner dissolves the partnership.

Accepted Answer

A) True 
 B)False

Question 17

When a partner sells his interest to another party,the journal entry simply credits the withdrawing partner's capital account and debits the new partner's capital.

Accepted Answer

A) True 
 B)False

Question 18

In which of the following ways does a limited partnership differ from a general partnership?

Accepted Answer

A) In a limited partnership,the general partner has an unlimited personal liability in the partnership;whereas in a general partnership,all partners have same level of personal liability. 
B) In a limited partnership,all the partners make an equal contribution to the daily operations;whereas in a general partnership,the general partner assumes a greater responsibility of the operation. 
C) In a limited partnership,there will be only one class of partners named limited partners;whereas in a general partnership,there will be only one class of partners named general partners. 
D) In a limited partnership,each partner is not personally liable for the malpractice committed by another partner;whereas in a general partnership,only the general partner is personally liable for the malpractice committed by another partner. 
A) In a limited partnership,the general partner has an unlimited personal liability in the partnership;whereas in a general partnership,all partners have same level of personal liability. 
B) In a limited partnership,all the partners make an equal contribution to the daily operations;whereas in a general partnership,the general partner assumes a greater responsibility of the operation. 
C) In a limited partnership,there will be only one class of partners named limited partners;whereas in a general partnership,there will be only one class of partners named general partners. 
D) In a limited partnership,each partner is not personally liable for the malpractice committed by another partner;whereas in a general partnership,only the general partner is personally liable for the malpractice committed by another partner.

Question 19

Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows:
 
Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash.Which of the following is the correct journal entry in the books of the firm for the above transfer of interest?

Accepted Answer

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

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 12: Partnerships

Irrespective of the original profit-and-loss-sharing ratio,the bonus received by existing partners-by admitting a new partner-will be allocated equally.

Profits and losses in a partnership must be shared based on each partner's capital balances.

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

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 ________.

If the partnership agreement specifies a method for sharing profits but not losses,then losses are shared the same way as profits.

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

Mutual agency means that any partner can legally bind the other partners and the partnership to business contracts within the scope of the businesses regular operations.

In which of the following types of business organizations do the owners have unlimited personal liabilities for the business's debts?

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

In the process of liquidation,a partnership firm sells its non-cash assets of a book value of $55,000,for $73,000.Which of the following will be included in the entry to record the sale of assets at liquidation?

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 ________.

Which of the following is true when a partner withdraws his interest from the partnership?

The death of a partner dissolves the partnership.

When a partner sells his interest to another party,the journal entry simply credits the withdrawing partner's capital account and debits the new partner's capital.

In which of the following ways does a limited partnership differ from a general partnership?

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

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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