Question 1

Accounting for a partnership comes closer to accounting for a corporation than to accounting for a sole proprietorship.

Accepted Answer

A) True 
 B)False  False

Question 2

The entities forming joint ventures usually involve companies,but can sometimes involve governments.

Accepted Answer

A) True 
 B)False  True

Question 3

On December 31,20x5,the R & J Partnership had the following assets,liabilities,and partners' equity:
When the partners agreed to liquidate the business,the assets were sold for $180,000 and the liabilities were paid.R and J share profits and losses in a ratio of 2:1,respectively.What is the final cash distribution to each partner after liquidation?

Accepted Answer

R,$80,000;J,$70,000

Question 4

Partners B and I receive a salary allowance of $6,000 and $14,000,respectively,and share the remainder equally.If the company earned $8,000 during the period,the entry to close the income or loss into their capital accounts is:

Accepted Answer

A)  
B)  
C)  
D)

Question 5

A partnership is an accounting entity separate and apart from its owners.

Accepted Answer

A) True 
 B)False

Question 6

Under the partnership form of business,it may be difficult to raise large amounts of capital.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following methods of distributing income and losses cannot be accomplished (cannot stand alone)?

Accepted Answer

A)  Capital balance ratio alone
B)  Interest and stated ratio alone
C)  Stated ratio alone
D)  Salary alone

Question 8

The use of salaries in the allocation of income or loss allows for the differences in the services that partners provide the business.

Accepted Answer

A) True 
 B)False

Question 9

April and Cammy are partners who have agreed to admit Elena,who will invest $30,000 for a 20 percent interest.The previous capital balances were $30,000 and $60,000 for April and Cammy,respectively.April and Cammy had shared profits and losses equally.What amount will be recorded in Elena's Capital account?

Accepted Answer

A)  $12,000 credit
B)  $24,000 credit
C)  $30,000 credit
D)  $18,000 credit

Question 10

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 11

A partnership agreement should include the method of distributing income and loss.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following describes a special-purpose entity?

Accepted Answer

A)  Entities with limited lives that a company creates to achieve a specific objective.
B)  An association of two or more entities for the purpose of achieving a specific goal.
C)  Corporations that U.S.tax laws treat as partnerships,and they do not pay income taxes.
D)  A special type of partnership that confines the limited partner's potential loss to the amount of his or her investment.

Question 13

There is an impact on the income statement (gain or loss)of a partnership when a partner withdraws from the business.

Accepted Answer

A) True 
 B)False

Question 14

If the partnership agreement does not describe the method of income and loss distribution,the partners must share income and losses equally.

Accepted Answer

A) True 
 B)False

Question 15

The salary,interest,and stated ratio method of allocation can still be applied when a net loss has occurred.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following will not result in dissolution of a partnership?

Accepted Answer

A)  Death of a partner
B)  Withdrawal of a partner
C)  Admission of a new partner
D)  Sale of partnership assets

Question 17

A liquidation differs from a dissolution in that in a liquidation

Accepted Answer

A)  the business will not continue
B)  assets may be revalued
C)  gains and losses are distributed according to the partnership agreement
D)  there may be an adjustment of partners' Capital accounts

Question 18

A partner's inability to meet his or her obligations at the time of liquidation does not relieve that individual of his or her liabilities to the other partners.

Accepted Answer

A) True 
 B)False

Question 19

Describe how a dissolution of a partnership is different from a liquidation of a partnership.

Accepted Answer

The answer of Describe how a dissolution of a partnership...

Question 20

Each partner is personally liable only for his/her share of the debts of the partnership.

Accepted Answer

A) True 
 B)False

Exam 12: Accounting for Partnerships

Accounting for a partnership comes closer to accounting for a corporation than to accounting for a sole proprietorship.

The entities forming joint ventures usually involve companies,but can sometimes involve governments.

Partners B and I receive a salary allowance of $6,000 and $14,000,respectively,and share the remainder equally.If the company earned $8,000 during the period,the entry to close the income or loss into their capital accounts is:

A partnership is an accounting entity separate and apart from its owners.

Under the partnership form of business,it may be difficult to raise large amounts of capital.

Which of the following methods of distributing income and losses cannot be accomplished (cannot stand alone) ?

The use of salaries in the allocation of income or loss allows for the differences in the services that partners provide the business.

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

A partnership agreement should include the method of distributing income and loss.

Which of the following describes a special-purpose entity?

There is an impact on the income statement (gain or loss)of a partnership when a partner withdraws from the business.

If the partnership agreement does not describe the method of income and loss distribution,the partners must share income and losses equally.

The salary,interest,and stated ratio method of allocation can still be applied when a net loss has occurred.

Which of the following will not result in dissolution of a partnership?

A liquidation differs from a dissolution in that in a liquidation

A partner's inability to meet his or her obligations at the time of liquidation does not relieve that individual of his or her liabilities to the other partners.

Describe how a dissolution of a partnership is different from a liquidation of a partnership.

Each partner is personally liable only for his/her share of the debts of the partnership.