Question 1

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 B

Question 2

Business organizations that mimic the characteristics of partnerships include

Accepted Answer

A)  Special-purpose entities.
B)  Limited liability companies.
C)  S corporations.
D)  All of these choices. D

Question 3

Only not-for-profit organizations form joint ventures.

Accepted Answer

A) True 
 B)False  False

Question 4

Elliot and Jessica are about to liquidate their partnership.They each have $40,000 capital balances,and they share income and losses in a 3:1 ratio,respectively.In addition,the partnership has $50,000 in cash,$90,000 in noncash assets,and $60,000 in accounts payable.Assuming that the noncash assets are sold for $34,000 and that both partners are personally solvent,prepare all the liquidation entries in the journal provided.

Accepted Answer

The answer of Elliot and Jessica are about to liquidate...

Question 5

A partner who withdraws from a partnership may not be entitled to the balance in his or her Capital account.

Accepted Answer

A) True 
 B)False

Question 6

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.

Question 7

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 8

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 9

In a partnership liquidation,the Gain or Loss from Realization

Accepted Answer

A)  is closed to Retained Earnings.
B)  is distributed according to the partners' stated ratios.
C)  the last entry made to the partners' Capital accounts.
D)  All of these choices.

Question 10

It is possible to allocate income or loss to partners based solely on interest.

Accepted Answer

A) True 
 B)False

Question 11

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

Question 12

A partner has a capital balance of $40,000 for five months,$50,000 for six months,and $60,000 for one month.The average capital balance is

Accepted Answer

A)  $49,168
B)  $50,000
C)  $48,500
D)  $46,667

Question 13

Rachel and Dillon divide partnership income and losses solely on the basis of their average capital balances.Rachel had $55,000 invested during all of 20x5; Dillon had $40,000 invested from January 1 to August 31,and he invested another $15,000 on September 1.If income was $160,000 during 20x5,how much should each partner receive?

Accepted Answer

The answer of Rachel and Dillon divide partnership income and...

Question 14

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 15

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

The answer of Chelsea,Jack,and Connor have a partnership.Chelsea wishes to...

Question 16

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 17

The death of a partner dissolves the partnership.

Accepted Answer

A) True 
 B)False

Question 18

In a liquidation,partners are given back the assets that they originally invested.

Accepted Answer

A) True 
 B)False

Question 19

When individuals invest property in a partnership,the property becomes an asset of the partnership and is owned jointly by the partners.

Accepted Answer

A) True 
 B)False

Question 20

There is no income tax imposed on a partnership.

Accepted Answer

A) True 
 B)False

Exam 12: Accounting for Partnerships

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?

Business organizations that mimic the characteristics of partnerships include

Only not-for-profit organizations form joint ventures.

A partner who withdraws from a partnership may not be entitled to the balance in his or her Capital account.

Which of the following is correct?

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

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

In a partnership liquidation,the Gain or Loss from Realization

It is possible to allocate income or loss to partners based solely on interest.

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

A partner has a capital balance of $40,000 for five months,$50,000 for six months,and $60,000 for one month.The average capital balance 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.

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.

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

The death of a partner dissolves the partnership.

In a liquidation,partners are given back the assets that they originally invested.

When individuals invest property in a partnership,the property becomes an asset of the partnership and is owned jointly by the partners.

There is no income tax imposed on a partnership.