Question 1

In the absence of a partnership agreement, the law says that income of a partnership will be shared equally by the partners.

Accepted Answer

A) True 
 B)False

Question 2

How are partners' investments in a partnership recorded?

Accepted Answer

When partners invest in a partnership, t

Question 3

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

Accepted Answer

A) True 
 B)False

Question 4

To buy into an existing partnership, the new partner must contribute cash to the partnership.

Accepted Answer

A) True 
 B)False

Question 5

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

Accepted Answer

A) True 
 B)False

Question 6

Partners in a partnership are taxed on the amounts they withdraw from the partnership, not the partnership income.

Accepted Answer

A) True 
 B)False

Question 7

In the absence of a partnership agreement, the law says that income (and loss) should be allocated based on:

Accepted Answer

A)  A fractional basis. 
B)  The ratio of capital investments. 
C)  Salary allowances. 
D)  Equal shares. 
E)  Interest allowances. 
A)  A fractional basis. 
B)  The ratio of capital investments. 
C)  Salary allowances. 
D)  Equal shares. 
E)  Interest allowances.

Question 8

Disadvantages of a partnership include:

Accepted Answer

A)  Limited life. 
B)  Mutual agency. 
C)  Unlimited liability. 
D)  Co-ownership of property. 
E)  All of these. 
A)  Limited life. 
B)  Mutual agency. 
C)  Unlimited liability. 
D)  Co-ownership of property. 
E)  All of these.

Question 9

Groh and Jackson are partners. Groh's capital balance in the partnership is $64,000, and Jackson's capital balance $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 25% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Block equals:

Accepted Answer

A)  $5,000. 
B)  $2,500. 
C)  $6,667. 
D)  $3,333. 
E)  $0, because Block must actually grant a bonus to Groh and Jackson. 
A)  $5,000. 
B)  $2,500. 
C)  $6,667. 
D)  $3,333. 
E)  $0, because Block must actually grant a bonus to Groh and Jackson.

Question 10

If partners devote their time and services to their partnership, their salaries are expenses on the income statement.

Accepted Answer

A) True 
 B)False

Question 11

Define the partner return on equity ratio and explain how a specific partner would use this ratio.

Accepted Answer

The partner return on equity ratio is ca

Question 12

Shelby and Mortonson formed a partnership with capital contributions of $300,000 and $400,000, respectively. Their partnership agreement calls for Shelby to receive a $60,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $135,000, then Shelby and Mortonson's respective shares are:

Accepted Answer

A)  $67,500; $67,500. 
B)  $92,500; $42,500. 
C)  $57,857; $77,143. 
D)  $90,000; $40,000. 
E)  $35,000; $100,000. 
A)  $67,500; $67,500. 
B)  $92,500; $42,500. 
C)  $57,857; $77,143. 
D)  $90,000; $40,000. 
E)  $35,000; $100,000.

Question 13

Web Services is organized as a limited partnership, with David White as one of its partners. David's capital account began the year with a balance of $45,000. During the year, David's share of the partnership income was $7,500, and David received $4,000 in distributions from the partnership. What is David's partner return on equity?

Accepted Answer

A)  7.8% 
B)  8.9% 
C)  15.4% 
D)  16.0% 
E)  16.7% 
A)  7.8% 
B)  8.9% 
C)  15.4% 
D)  16.0% 
E)  16.7%

Question 14

Trump and Hawthorne have decided to form a partnership. Trump is going to contribute a depreciable asset to the partnership as his equity contribution to the partnership. The following information regarding the asset to be contributed by Trump is available: *will be assumed by the partnership
Based on this information, Trump's beginning equity balance in the partnership will be:

Accepted Answer

A)  $76,000 
B)  $36,000 
C)  $18,000 
D)  $27,000 
E)  $45,000 
A)  $76,000 
B)  $36,000 
C)  $18,000 
D)  $27,000 
E)  $45,000

Question 15

Mutual agency means each partner can commit or bind the partnership to any contract within the scope of the partnership business.

Accepted Answer

A) True 
 B)False

Question 16

During the closing process, partner's capital accounts are _______________ for their share of net income and _________________ for their share of net loss.

Accepted Answer

The answer of During the closing process, partner's capital accounts...

Question 17

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

Accepted Answer

A) True 
 B)False

Question 18

The withdrawals account of each partner is:

Accepted Answer

A)  Closed to that partner's capital account with a credit. 
B)  Closed to that partner's capital account with a debit. 
C)  A permanent account that is not closed. 
D)  Credited with that partner's share of net income. 
E)  Debited with that partner's share of net loss. 
A)  Closed to that partner's capital account with a credit. 
B)  Closed to that partner's capital account with a debit. 
C)  A permanent account that is not closed. 
D)  Credited with that partner's share of net income. 
E)  Debited with that partner's share of net loss.

Question 19

Regina Harrison is a partner in Pressed for Time. An analysis of Regina Harrison's capital account indicates that during the most recent year, she withdrew $20,000 from the partnership. Her share of the partnership's net loss was $16,000 and she made an additional equity contribution of $10,000. Her capital account ended the year at $150,000. What was her capital balance at the beginning of the year?

Accepted Answer

A)  $124,000 
B)  $144,000 
C)  $192,000 
D)  $176,000 
E)  $134,000 
A)  $124,000 
B)  $144,000 
C)  $192,000 
D)  $176,000 
E)  $134,000

Question 20

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

Accepted Answer

A new partner may purchase a partnership

In the absence of a partnership agreement, the law says that income of a partnership will be shared equally by the partners.

How are partners' investments in a partnership recorded?

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

To buy into an existing partnership, the new partner must contribute cash to the partnership.

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

Partners in a partnership are taxed on the amounts they withdraw from the partnership, not the partnership income.

In the absence of a partnership agreement, the law says that income (and loss) should be allocated based on:

Disadvantages of a partnership include:

If partners devote their time and services to their partnership, their salaries are expenses on the income statement.

Define the partner return on equity ratio and explain how a specific partner would use this ratio.

Mutual agency means each partner can commit or bind the partnership to any contract within the scope of the partnership business.

During the closing process, partner's capital accounts are _ for their share of net income and ___ for their share of net loss.

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

The withdrawals account of each partner is:

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters

Exam 12: Accounting for Partnerships

In the absence of a partnership agreement, the law says that income of a partnership will be shared equally by the partners.

How are partners' investments in a partnership recorded?

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

To buy into an existing partnership, the new partner must contribute cash to the partnership.

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

Partners in a partnership are taxed on the amounts they withdraw from the partnership, not the partnership income.

In the absence of a partnership agreement, the law says that income (and loss) should be allocated based on:

Disadvantages of a partnership include:

If partners devote their time and services to their partnership, their salaries are expenses on the income statement.

Define the partner return on equity ratio and explain how a specific partner would use this ratio.

Mutual agency means each partner can commit or bind the partnership to any contract within the scope of the partnership business.

During the closing process, partner's capital accounts are _______________ for their share of net income and _________________ for their share of net loss.

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

The withdrawals account of each partner is:

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters

During the closing process, partner's capital accounts are _ for their share of net income and ___ for their share of net loss.