Question 1

The division of income is one area in which a partnership differs from a corporation.

Accepted Answer

A) True 
 B)False

Question 2

It is possible to invest no tangible assets into a partnership,yet be given a positive opening capital balance.

Accepted Answer

A) True 
 B)False

Question 3

An informational tax return must be filed for a partnership.

Accepted Answer

A) True 
 B)False

Question 4

A partner in a landscaping business can bind the partnership to a contract for purchasing furniture and clothing.

Accepted Answer

A) True 
 B)False

Question 5

A new partner must have the consent of all the partners before being admitted into the partnership.

Accepted Answer

A) True 
 B)False

Question 6

Connie and Marcos are partners who share profits and losses in a ratio of 3:2,respectively,and have the following capital balances on September 30,20x5:
  The partners agree to admit Trevor to the partnership.Calculate the capital balances of each partner after the admission of Trevor,assuming that bonuses are recorded when appropriate for each of the following assumptions:
a.Trevor pays Connie $50,000 for 50 percent of her interest
b.Trevor invests $50,000 for a one-fourth interest in the partnership
c.Trevor invests $50,000 for a 30 percent interest in the partnership
d.Trevor invests $50,000 for a 20 percent interest in the partnership

Accepted Answer

a.Connie,$25,000 Marcos,$100,0

Question 7

Which of the following is correct?

Accepted Answer

A) Total assets + Partner's equity = Total liabilities. 
B) Total assets + Partner's equity - Total liabilities = Total equity. 
C) Total assets - Partner's equity = Total liabilities. 
D) Total assets + Total liabilities = Partner's equity. 
A) Total assets + Partner's equity = Total liabilities. 
B) Total assets + Partner's equity - Total liabilities = Total equity. 
C) Total assets - Partner's equity = Total liabilities. 
D) Total assets + Total liabilities = Partner's equity.

Question 8

Each partner has a separate Capital,Withdrawals,and Income or Loss account.

Accepted Answer

A) True 
 B)False

Question 9

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that represent less than her current capital balance.Discuss how this transaction is accounted for on the partnership books.

Accepted Answer

When a withdrawing partner removes asset

Question 10

Sara invests $120,000 for a 30 percent interest in a partnership in which the other partners have capital totaling $200,000 before admitting Sara.After distribution of the bonus,what is Sara's capital balance?

Accepted Answer

A) $60,000 
B) $96,000 
C) $120,000 
D) $144,000 
A) $60,000 
B) $96,000 
C) $120,000 
D) $144,000

Question 11

Total partners' equity will not change when a withdrawing partner

Accepted Answer

A) withdraws assets equal to his or her capital balance 
B) withdraws assets amounting to less than his or her capital balance 
C) sells his or her interest to a new or remaining partner 
D) withdraws assets amounting to greater than his or her capital balance 
A) withdraws assets equal to his or her capital balance 
B) withdraws assets amounting to less than his or her capital balance 
C) sells his or her interest to a new or remaining partner 
D) withdraws assets amounting to greater than his or her capital balance

Question 12

The potential loss of all partners in an ordinary partnership is limited only by personal bankruptcy laws.

Accepted Answer

A) True 
 B)False

Question 13

By meeting certain conditions,a company that sets up an Special-purpose entity (SPE)can legitimately avoid including the debt of the SPE on its balance sheet

Accepted Answer

A) True 
 B)False

Question 14

When a partner withdraws from a partnership taking assets that represent less than his or her capital balance,

Accepted Answer

A) the remaining partners receive a bonus 
B) no bonus results 
C) the remaining partners owe the withdrawing partner the difference 
D) the withdrawing partner receives a bonus 
A) the remaining partners receive a bonus 
B) no bonus results 
C) the remaining partners owe the withdrawing partner the difference 
D) the withdrawing partner receives a bonus

Question 15

If liquidation of a partnership results in a negative balance in a partner's account,the partner must pay into the partnership the amount of the negative balance.

Accepted Answer

A) True 
 B)False

Question 16

Liabilities related to assets invested in a partnership by a new partner can be transferred to the partnership.

Accepted Answer

A) True 
 B)False

Question 17

Partners April,Melissa,and Valerie share profits and losses in a 3:1:2 ratio,respectively.Melissa wishes to leave the partnership,so the assets are revalued and are found to be overvalued by $60,000.If each partner had a capital balance of $100,000 prior to Melissa's notification of withdrawal,the entry to record the Melissa's withdrawal is:

Accepted Answer

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

Question 18

When a loss is closed into the partners' Capital accounts,Income Summary is debited.

Accepted Answer

A) True 
 B)False

Question 19

Chad invests $20,000 for a one-third interest in a partnership in which the other partners have capital totaling $52,000 before admitting Chad.After distribution of the bonus,what is Chad's capital?

Accepted Answer

A) $10,666 
B) $17,334 
C) $20,000 
D) $24,000 
A) $10,666 
B) $17,334 
C) $20,000 
D) $24,000

Question 20

A partnership agreement most likely will stipulate that assets be reappraised when

Accepted Answer

A) a new partner is admitted to the partnership 
B) a partner leaves the partnership 
C) profits and losses are being distributed 
D) the partnership is liquidated 
A) a new partner is admitted to the partnership 
B) a partner leaves the partnership 
C) profits and losses are being distributed 
D) the partnership is liquidated

Exam 12: Accounting for Partnerships

The division of income is one area in which a partnership differs from a corporation.

It is possible to invest no tangible assets into a partnership,yet be given a positive opening capital balance.

An informational tax return must be filed for a partnership.

A partner in a landscaping business can bind the partnership to a contract for purchasing furniture and clothing.

A new partner must have the consent of all the partners before being admitted into the partnership.

Which of the following is correct?

Each partner has a separate Capital,Withdrawals,and Income or Loss account.

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that represent less than her current capital balance.Discuss how this transaction is accounted for on the partnership books.

Sara invests $120,000 for a 30 percent interest in a partnership in which the other partners have capital totaling $200,000 before admitting Sara.After distribution of the bonus,what is Sara's capital balance?

Total partners' equity will not change when a withdrawing partner

The potential loss of all partners in an ordinary partnership is limited only by personal bankruptcy laws.

By meeting certain conditions,a company that sets up an Special-purpose entity (SPE)can legitimately avoid including the debt of the SPE on its balance sheet

When a partner withdraws from a partnership taking assets that represent less than his or her capital balance,

If liquidation of a partnership results in a negative balance in a partner's account,the partner must pay into the partnership the amount of the negative balance.

Liabilities related to assets invested in a partnership by a new partner can be transferred to the partnership.

When a loss is closed into the partners' Capital accounts,Income Summary is debited.

Chad invests $20,000 for a one-third interest in a partnership in which the other partners have capital totaling $52,000 before admitting Chad.After distribution of the bonus,what is Chad's capital?

A partnership agreement most likely will stipulate that assets be reappraised when

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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