Question 1

When the existing partners pay a bonus to a newly admitted partner, the existing partners' accounts are debited.

Accepted Answer

A) True 
 B)False

Question 2

When a partner withdraws from a partnership, an audit might be performed and the assets reappraised.

Accepted Answer

A) True 
 B)False

Question 3

When a partner invests assets other than cash into a partnership, those assets should be listed on the balance sheet at

Accepted Answer

A)  their original cost 
B)  their carrying (book) value 
C)  their fair market value 
D)  the value the investing partner assigns to them 
A)  their original cost 
B)  their carrying (book) value 
C)  their fair market value 
D)  the value the investing partner assigns to them

Question 4

As long as the action is within the scope of the partnership, any partner can bind the partnership.

Accepted Answer

A) True 
 B)False

Question 5

Sennett invests $40,000 for a 20 percent interest in a partnership that has capital totaling $150,000 after admitting Sennett. Which of the following is true?

Accepted Answer

A)  The original partners received a bonus of $10,000 
B)  Sennett received a bonus of $10,000 
C)  Sennett's capital is $40,000 
D)  The original partners' capital in the business was $120,000 before admitting Sennett 
A)  The original partners received a bonus of $10,000 
B)  Sennett received a bonus of $10,000 
C)  Sennett's capital is $40,000 
D)  The original partners' capital in the business was $120,000 before admitting Sennett

Question 6

Partners' Withdrawals accounts have normal credit balances.

Accepted Answer

A) True 
 B)False

Question 7

The death of a partner dissolves the partnership.

Accepted Answer

A) True 
 B)False

Question 8

In a partnership liquidation,

Accepted Answer

A)  creditors should be paid before partners 
B)  gains and losses on the sale of assets are allocated to the partners on the basis of their current capital balances 
C)  the last entry credits the partners' Capital accounts 
D)  the partners' accounts are settled on the basis of the stated ratios 
A)  creditors should be paid before partners 
B)  gains and losses on the sale of assets are allocated to the partners on the basis of their current capital balances 
C)  the last entry credits the partners' Capital accounts 
D)  the partners' accounts are settled on the basis of the stated ratios

Question 9

It is possible to allocate income or loss to partners based solely on the stated ratio.

Accepted Answer

A) True 
 B)False

Question 10

A partner who withdraws from a partnership is always entitled to the balance in his or her Capital account.

Accepted Answer

A) True 
 B)False

Question 11

When a partner leaves a partnership, it is possible that total assets will be unaffected.

Accepted Answer

A) True 
 B)False

Question 12

It is possible to allocate income or loss to partners based solely on average capital balances.

Accepted Answer

A) True 
 B)False

Question 13

Gains and losses on the sale of assets in a liquidation are divided equally among partners.

Accepted Answer

A) True 
 B)False

Question 14

A partner will not bind the partnership to an outside purchase contract when the

Accepted Answer

A)  the item purchased is considered immaterial in amount 
B)  item purchased is not within the normal scope of the business 
C)  partner was not authorized by the other partners to make the purchase 
D)  partner who made the purchase withdraws from the partnership 
A)  the item purchased is considered immaterial in amount 
B)  item purchased is not within the normal scope of the business 
C)  partner was not authorized by the other partners to make the purchase 
D)  partner who made the purchase withdraws from the partnership

Question 15

Partners Y and Z receive a salary of $15,000 and $30,000, respectively, and share income and losses in a 2:1 ratio, respectively. If the partnership suffers a $15,000 net loss in 2010, the entry to close the income or loss into their capital accounts is:

Accepted Answer

The answer of Partners Y and Z receive a salary...

Question 16

The admission of a partner does not change the composition of partners' equity if the new partner purchases the old partner's interest by paying the old partner directly.

Accepted Answer

A) True 
 B)False

Question 17

Each partner has a separate Capital and Withdrawals account.

Accepted Answer

A) True 
 B)False

Question 18

A partnership has a limited life, because any change in the relationship of the partners dissolves the partnership.

Accepted Answer

A) True 
 B)False

Question 19

When M purchases N's $10,000 capital interest for $10,000, the ensuing entry on the books of the partnership would contain a debit to Cash for $10,000.

Accepted Answer

A) True 
 B)False

Question 20

Warren and Spencer are partners in a drilling operation. Warren purchased a drilling rig to be used in the partnership's operations. Is this purchase binding on Spencer even though he was not involved in it? Explain your answer.

Accepted Answer

Yes. Each partner is an agent of the par

Exam 17: Partnerships

When the existing partners pay a bonus to a newly admitted partner, the existing partners' accounts are debited.

When a partner withdraws from a partnership, an audit might be performed and the assets reappraised.

When a partner invests assets other than cash into a partnership, those assets should be listed on the balance sheet at

As long as the action is within the scope of the partnership, any partner can bind the partnership.

Sennett invests $40,000 for a 20 percent interest in a partnership that has capital totaling $150,000 after admitting Sennett. Which of the following is true?

Partners' Withdrawals accounts have normal credit balances.

The death of a partner dissolves the partnership.

In a partnership liquidation,

It is possible to allocate income or loss to partners based solely on the stated ratio.

A partner who withdraws from a partnership is always entitled to the balance in his or her Capital account.

When a partner leaves a partnership, it is possible that total assets will be unaffected.

It is possible to allocate income or loss to partners based solely on average capital balances.

Gains and losses on the sale of assets in a liquidation are divided equally among partners.

A partner will not bind the partnership to an outside purchase contract when the

Partners Y and Z receive a salary of $15,000 and $30,000, respectively, and share income and losses in a 2:1 ratio, respectively. If the partnership suffers a $15,000 net loss in 2010, the entry to close the income or loss into their capital accounts is:

The admission of a partner does not change the composition of partners' equity if the new partner purchases the old partner's interest by paying the old partner directly.

Each partner has a separate Capital and Withdrawals account.

A partnership has a limited life, because any change in the relationship of the partners dissolves the partnership.

When M purchases N's $10,000 capital interest for $10,000, the ensuing entry on the books of the partnership would contain a debit to Cash for $10,000.

Warren and Spencer are partners in a drilling operation. Warren purchased a drilling rig to be used in the partnership's operations. Is this purchase binding on Spencer even though he was not involved in it? Explain your answer.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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