Question 1

If a partner's capital account is credited with the amount that he or she contributed in cash,which of the following financial statements will be affected?

Accepted Answer

A) the withdrawal statement 
B) the bank reconciliation statement 
C) the statement of partners' equity 
D) the interest payment schedule 
A) the withdrawal statement 
B) the bank reconciliation statement 
C) the statement of partners' equity 
D) the interest payment schedule

Question 2

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 increase 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 increase and the equity will remain unchanged.

Question 3

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 4

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.They sold the furniture and equipment for $72,000.Which of the following is the correct journal entry for the sale transaction?

Accepted Answer

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

Question 5

The articles of partnership is a written contract between partners that specifies the name,location,and nature of the business;the identifying characteristics of each partner;and the method of sharing profits and losses among the partners.

Accepted Answer

A) True 
 B)False

Question 6

Keith and Jim are partners.Keith has a capital balance of $51,000 and Jim has a capital balance of $39,000.Bill invested a building worth $27,000 to the partnership for an ownership interest of 20%.How much is the total bonus for the existing partners?

Accepted Answer

A) $12,000 
B) $13,500 
C) $3,600 
D) $27,000 
A) $12,000 
B) $13,500 
C) $3,600 
D) $27,000

Question 7

Which of the following is true of a partnership balance sheet?

Accepted Answer

A) Unlike a corporation's balance sheet,it includes all income statement account information. 
B) It excludes any current liabilities. 
C) It reports a separate capital account for each partner. 
D) It details the interest expenses of the business. 
A) Unlike a corporation's balance sheet,it includes all income statement account information. 
B) It excludes any current liabilities. 
C) It reports a separate capital account for each partner. 
D) It details the interest expenses of the business.

Question 8

The financial statements of a partnership are similar to the statements of a sole proprietorship in all aspects.

Accepted Answer

A) True 
 B)False

Question 9

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 $50,000.The accounts receivable were duly received in cash and the other assets were written off as worthless.The cash balance remaining to pay the liabilities is ________.

Accepted Answer

A) $17,000 
B) $94,000 
C) $44,000 
D) $40,000 
A) $17,000 
B) $94,000 
C) $44,000 
D) $40,000

Question 10

The net income (loss)allocated to each partner should always equal the total net income (loss)of the partnership.

Accepted Answer

A) True 
 B)False

Question 11

A written partnership agreement is also known as the articles of partnership.

Accepted Answer

A) True 
 B)False

Question 12

Andy and Ian formed a partnership on April 1,2017.Andy contributes equipment to the business that originally cost $82,000 and on which accumulated depreciation of $16,000 has been recorded.The current market value of the equipment is $74,000.The value of the equipment recorded in the partnership journal is ________.

Accepted Answer

A) $66,000 
B) $74,000 
C) $58,000 
D) $82,000 
A) $66,000 
B) $74,000 
C) $58,000 
D) $82,000

Question 13

Sarah and Jane formed a partnership with capital contributions of $210,000 and $123,000,respectively.Peter contributed $86,000 to acquire an ownership interest of 12% in the new partnership.How much is the total bonus for the existing partners?

Accepted Answer

A) $86,000 
B) $35,720 
C) $50,280 
D) $17,860 
A) $86,000 
B) $35,720 
C) $50,280 
D) $17,860

Question 14

Nancy and Betty enter into a partnership agreement where they decide to share profits according to the following rules:
(a)Nancy and Betty will receive salaries of $1,700 and $14,500 respectively as the first allocation.
(b)The next allocation is based on 20% of each partner's capital balances.
(c)Any remaining profit or loss is to be allocated completely to Betty.
The partnership's net income for the first year is $50,000.Nancy's capital balance is $83,000 and Betty's capital balance is $11,000 as at the end of the year.Calculate the share of profit/loss to be allocated to Betty.

Accepted Answer

A) $18,300 
B) $31,700 
C) $3,760 
D) $16,100 
A) $18,300 
B) $31,700 
C) $3,760 
D) $16,100

Question 15

Harry,Tony,and Liza run a partnership firm.In the process of liquidation,the partnership sells non-cash assets,having a book value of $78,000,for $86,000.Which of the following is true of the journal entries?

Accepted Answer

A) Cash will be credited by $8,000. 
B) Non-cash assets will be credited for $86,000. 
C) Cash will be credited for $78,000. 
D) Non-cash assets will be credited for $78,000. 
A) Cash will be credited by $8,000. 
B) Non-cash assets will be credited for $86,000. 
C) Cash will be credited for $78,000. 
D) Non-cash assets will be credited for $78,000.

Question 16

A partnership records the partners' contributions at their ________.

Accepted Answer

A) current market value 
B) historical value 
C) net realizable value 
D) average value 
A) current market value 
B) historical value 
C) net realizable value 
D) average value

Question 17

When a partner dies,the partnership ceases to exist,and the deceased partner's estate will have ownership of the partner's equity in the partnership.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an advantage of a limited liability company compared to a partnership?

Accepted Answer

A) Unlike a partnership,the members of a limited liability company cannot participate actively in management of the business. 
B) Unlike a partnership,the members of a limited liability company are not personally liable for the business's debts. 
C) Unlike a partnership,the members of a limited liability company are taxed at the business level and are double-taxed. 
D) Unlike a partnership,the members of a limited liability company do not need to file articles of organization with the state. 
A) Unlike a partnership,the members of a limited liability company cannot participate actively in management of the business. 
B) Unlike a partnership,the members of a limited liability company are not personally liable for the business's debts. 
C) Unlike a partnership,the members of a limited liability company are taxed at the business level and are double-taxed. 
D) Unlike a partnership,the members of a limited liability company do not need to file articles of organization with the state.

Question 19

Admission of a new partner,by contributing directly to the partnership,increases both assets and liabilities by the same amount.

Accepted Answer

A) True 
 B)False

Question 20

A withdrawing partner acquires a bonus if the assets they receive in the dissolution are worth more than the book value of their equity.

Accepted Answer

A) True 
 B)False

Exam 12: Partnerships

If a partner's capital account is credited with the amount that he or she contributed in cash,which of the following financial statements will be affected?

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?

The articles of partnership is a written contract between partners that specifies the name,location,and nature of the business;the identifying characteristics of each partner;and the method of sharing profits and losses among the partners.

Keith and Jim are partners.Keith has a capital balance of $51,000 and Jim has a capital balance of $39,000.Bill invested a building worth $27,000 to the partnership for an ownership interest of 20%.How much is the total bonus for the existing partners?

Which of the following is true of a partnership balance sheet?

The financial statements of a partnership are similar to the statements of a sole proprietorship in all aspects.

The net income (loss)allocated to each partner should always equal the total net income (loss)of the partnership.

A written partnership agreement is also known as the articles of partnership.

Sarah and Jane formed a partnership with capital contributions of $210,000 and $123,000,respectively.Peter contributed $86,000 to acquire an ownership interest of 12% in the new partnership.How much is the total bonus for the existing partners?

Harry,Tony,and Liza run a partnership firm.In the process of liquidation,the partnership sells non-cash assets,having a book value of $78,000,for $86,000.Which of the following is true of the journal entries?

A partnership records the partners' contributions at their ________.

When a partner dies,the partnership ceases to exist,and the deceased partner's estate will have ownership of the partner's equity in the partnership.

Which of the following is an advantage of a limited liability company compared to a partnership?

Admission of a new partner,by contributing directly to the partnership,increases both assets and liabilities by the same amount.

A withdrawing partner acquires a bonus if the assets they receive in the dissolution are worth more than the book value of their equity.

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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