Question 1

Applying the profit and loss ratio method,compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000 and the profit and loss ratio is 3:2.Net income was $75,000.

Accepted Answer

A) Taylor,$15,000; Timmy,$60,000 
B) Taylor,$37,500; Timmy,$37,500 
C) Taylor,$45,000; Timmy,$30,000 
D) None of these answers is correct.

Question 2

John and Brad have average capital balances of $25,000 and $10,000,respectively.The partners have agreed to allow $20,000 salary allowances.The partners will share income and losses in a 1:2 ratio.How much will each partner's capital account change if net income is $70,000?

Accepted Answer

The answer of John and Brad have average capital balances...

Question 3

Bernstein is brought into the partnership.His capital is equal to his net that he brings to the partnership.He brings assets of $167,000 and liabilities of $27,000.His capital balance will be:

Accepted Answer

A) $30,000 (cash invested). 
B) $167,000 (total of all assets invested). 
C) $140,000. 
D) $137,000.

Question 4

Applying the ratio based on investment method,compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000.Net income was $75,000.

Accepted Answer

A) Taylor,$15,000; Timmy,$60,000 
B) Taylor,$37,500; Timmy,$37,500 
C) Taylor,$19,500; Timmy,$55,500 
D) None of these answers is correct.

Question 5

If the retiring partner's interest is sold to one of the remaining partners,the retiring partner's equity is merely transferred to the other partner.

Accepted Answer

A) True 
 B)False

Question 6

Partners Roger and Martin each have $3,000 capital balances and share income and losses in a 2:1 ratio,respectively.Cash equals $1,000,noncash assets total $10,000,and liabilities are $5,000.If all the noncash assets are sold for $7,000,Martin's capital account will:

Accepted Answer

A) increase by $4,667. 
B) decrease by $2,000. 
C) decrease by $1,000. 
D) increase by $2,333.

Question 7

Given the following accounts:
[1] 	Cash
[2]	Accounts receivable
[3]	Allowance for doubtful accounts
[4]	Merchandise inventory
[5]	Store supplies
[6]	Store equipment
[7]	Accumulated depreciation
[8]	Notes payable
[9]	Accounts payable
[10]	Able Partner's Capital
[11]	Baker Partner's Capital
[12]	Able Partner's withdrawals
[13]	Baker Partner's withdrawals
[14]	Income summary
[15]	Service revenue
[16]	Gain on realization
[17]	Loss on realization
Indicate the account(s) to be debited and credited to record the following transactions.
-Able partner withdrew cash from the business.
Debit ________ & ________ & ________ Credit ________ & ________ & ________

Accepted Answer

The answer of Given the following accounts:
[1] 	Cash
[2]	Accounts receivable
[3]	Allowance for...

Question 8

All assets held by a partnership are:

Accepted Answer

A) co-owned by all partners. 
B) owned by the partner(s)who purchased the assets. 
C) owned by the partners based on investment percentage. 
D) owned by the partnership.

Question 9

The first entry to liquidate a partnership would probably include:

Accepted Answer

A) debit to Cash; credit to individual assets sold. 
B) debit to Cash; debit or credit to Loss or Gain from Realization; credit to individual assets sold. 
C) debit to individual assets sold; credit to Cash. 
D) None of the above.

Question 10

A new partner was admitted but the assets weren't revalued.A revaluation would have decreased the worth.This error would cause:

Accepted Answer

A) future period's net income to be understated. 
B) future period's net income to be overstated. 
C) this period end assets to be understated. 
D) cash and capital to lower.

Question 11

Track and Smith are partners sharing profits and losses in a 3:2 ratio.Their capital balances are $10,000 and $20,000,respectively.The partners agree to admit Don for $10,000 for a 30% interest in the partnership.Smith's capital balance after admitting Don is:

Accepted Answer

A) $12,000. 
B) $19,200. 
C) $20,000. 
D) $20,800.

Question 12

A statement of partner's equity is the same as a statement of owner's equity except for:

Accepted Answer

A) there is a capital account for all partners. 
B) net income is assigned to one partner. 
C) no additional investment by partners are shown on the statement. 
D) There is no difference in the statements.

Question 13

Partners Brian,Josh,and Chad have capital balances of $7,000,$3,000,and $90,000,respectively.The losses for the year are $12,000.What will Josh's capital balance be if the three partners share profits and losses at a 2:2:6 ratio?

Accepted Answer

A) $600 credit balance 
B) $1,000 debit balance 
C) $2,400 debit balance 
D) $4,000 debit balance

Question 14

Nathan invests $2,000 for 10% interest in a partnership that has total capital of $15,000 after admitting Nathan.Which of the following is true?

Accepted Answer

A) Nathan's capital is $2,000. 
B) The original partners received a bonus of $500. 
C) Nathan received a bonus of $500. 
D) The original partners' capital in the business was $13,500 before admitting Nathan.

Question 15

The Brad and Marcia partnership agree to admit Fred with a one-third interest for $5,000.Brad and Marcia's capital balances are $3,000,and $7,000,respectively,and they share profits and losses equally.The entry to admit Brad would include:

Accepted Answer

A) debit Cash $5,000; credit Fred,Capital $5,000. 
B) debit Cash $5,000; credit Brad,Capital $2000; debit Marcia,Capital $2000; credit Fred,Capital $5,000. 
C) debit Cash $5,000; credit Brad,Capital $2,500; credit Marsha,Capital $2,500. 
D) debit Cash $5,000; debit Brad,Capital $2,500; credit Marcia,Capital $2500; credit Fred,Capital $5,000.

Question 16

A bonus is paid to the old partners when:

Accepted Answer

A) the old partner believes the business is worth less than the amounts recorded in the accounting records. 
B) the equity of a partnership is worth more than what is recorded in the accounting records. 
C) the company's earnings records are less than expected. 
D) None of these answers are correct.

Question 17

A partnership admits a new partner.The new partner invests $50,000 in the business and receives a credit of $60,000 to his capital account.The difference of $10,000 is called a(n):

Accepted Answer

A) admission fee. 
B) partnership expense. 
C) bonus. 
D) illegal activity.

Question 18

Partners are required to report their share of earnings on their personal tax return.

Accepted Answer

A) True 
 B)False

Question 19

Given the following accounts:
[1] 	Cash
[2]	Accounts receivable
[3]	Allowance for doubtful accounts
[4]	Merchandise inventory
[5]	Store supplies
[6]	Store equipment
[7]	Accumulated depreciation
[8]	Notes payable
[9]	Accounts payable
[10]	Able Partner's Capital
[11]	Baker Partner's Capital
[12]	Able Partner's withdrawals
[13]	Baker Partner's withdrawals
[14]	Income summary
[15]	Service revenue
[16]	Gain on realization
[17]	Loss on realization
Indicate the account(s) to be debited and credited to record the following transactions.
-The business bought store equipment on account.
Debit ________ & ________ & ________ Credit ________ & ________ & ________

Accepted Answer

The answer of Given the following accounts:
[1] 	Cash
[2]	Accounts receivable
[3]	Allowance for...

Question 20

When two proprietors decide to combine their businesses and form a partnership,GAAP usually requires that non-cash assets be taken over at their:

Accepted Answer

A) residual value on the date of the partnership. 
B) book value on the date of the partnership. 
C) fair market value on the date of the partnership. 
D) historical cost on the date of the partnership.

Exam 17: Partnership

Applying the profit and loss ratio method,compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000 and the profit and loss ratio is 3:2.Net income was $75,000.

John and Brad have average capital balances of $25,000 and $10,000,respectively.The partners have agreed to allow $20,000 salary allowances.The partners will share income and losses in a 1:2 ratio.How much will each partner's capital account change if net income is $70,000?

Bernstein is brought into the partnership.His capital is equal to his net that he brings to the partnership.He brings assets of $167,000 and liabilities of $27,000.His capital balance will be:

Applying the ratio based on investment method,compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000.Net income was $75,000.

If the retiring partner's interest is sold to one of the remaining partners,the retiring partner's equity is merely transferred to the other partner.

Partners Roger and Martin each have $3,000 capital balances and share income and losses in a 2:1 ratio,respectively.Cash equals $1,000,noncash assets total $10,000,and liabilities are $5,000.If all the noncash assets are sold for $7,000,Martin's capital account will:

All assets held by a partnership are:

The first entry to liquidate a partnership would probably include:

A new partner was admitted but the assets weren't revalued.A revaluation would have decreased the worth.This error would cause:

Track and Smith are partners sharing profits and losses in a 3:2 ratio.Their capital balances are $10,000 and $20,000,respectively.The partners agree to admit Don for $10,000 for a 30% interest in the partnership.Smith's capital balance after admitting Don is:

A statement of partner's equity is the same as a statement of owner's equity except for:

Partners Brian,Josh,and Chad have capital balances of $7,000,$3,000,and $90,000,respectively.The losses for the year are $12,000.What will Josh's capital balance be if the three partners share profits and losses at a 2:2:6 ratio?

Nathan invests $2,000 for 10% interest in a partnership that has total capital of $15,000 after admitting Nathan.Which of the following is true?

The Brad and Marcia partnership agree to admit Fred with a one-third interest for $5,000.Brad and Marcia's capital balances are $3,000,and $7,000,respectively,and they share profits and losses equally.The entry to admit Brad would include:

A bonus is paid to the old partners when:

A partnership admits a new partner.The new partner invests $50,000 in the business and receives a credit of $60,000 to his capital account.The difference of $10,000 is called a(n) :

Partners are required to report their share of earnings on their personal tax return.

When two proprietors decide to combine their businesses and form a partnership,GAAP usually requires that non-cash assets be taken over at their: