Question 1

When a partnership is liquidated, its business is ended.

Accepted Answer

A) True 
 B)False

Question 2

Partners' withdrawals are credited to their separate withdrawals accounts.

Accepted Answer

A) True 
 B)False

Question 3

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 4

When partners invest in a partnership, their capital accounts are credited for the amount invested.

Accepted Answer

A) True 
 B)False

Question 5

If a partnership contract provides for interest at 10% annually on each partner's investment, the interest:

Accepted Answer

A)  Is ignored when earnings are not sufficient to pay interest. 
B)  Is an allowance that can make up for unequal capital contribution. 
C)  Is an expense of the business. 
D)  Must be paid because the partnership contract has unlimited life. 
E)  Legally becomes a liability of the general partner. 
A)  Is ignored when earnings are not sufficient to pay interest. 
B)  Is an allowance that can make up for unequal capital contribution. 
C)  Is an expense of the business. 
D)  Must be paid because the partnership contract has unlimited life. 
E)  Legally becomes a liability of the general partner.

Question 6

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to _____________________; if the recorded value of the withdrawing partner's equity is understated, then a bonus goes to _______________________.

Accepted Answer

the remain

Question 7

If at the time of partnership liquidation, a partner has a $5,000 capital deficiency and pays the partnership $5,000 out of personal assets to cover the deficiency, then that partner is entitled to share in the final distribution of cash.

Accepted Answer

A) True 
 B)False

Question 8

Groh and Jackson are partners. Groh's capital balance in the partnership is $64,000 and Jackson's capital balance is $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 9

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 10

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $35,000 cash. Lepley has exceptional talents that will enhance the partnership. Conley's and Liu's capital account balances are $55,000 each. The partners have agreed to share income or loss equally. Prepare the general journal entry to record the admission of Lepley to the partnership.

Accepted Answer

The answer of Conley and Liu allow Lepley to purchase...

Question 11

The BlueFin Partnership agreed to dissolve. The remaining cash balance after liquidating partnership assets and liabilities is $60,000. The final capital account balances are: Smith, $30,000; Nagy, $20,000; and Russ, $10,000. Prepare the journal entry to distribute the remaining cash to the partners.

Accepted Answer

The answer of The BlueFin Partnership agreed to dissolve. The...

Question 12

The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.

Accepted Answer

A) True 
 B)False

Question 13

Blaser, Lukins, and Franko formed a partnership with Blaser contributing $160,000, Lukins contributing $520,000, and Franko contributing $240,000. Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments. If the partnership had income of $275,000 for its first year of operation, what amount of income (rounded to the nearest dollar) would be credited to Franko's capital account?

Accepted Answer

A)  $50,000 
B)  $240,000 
C)  $91,667 
D)  $71,739 
E)  $275,000 
A)  $50,000 
B)  $240,000 
C)  $91,667 
D)  $71,739 
E)  $275,000

Question 14

A partnership recorded the following journal entry:   This entry reflects:

Accepted Answer

A)  Acceptance of a new partner who invests $70,000 and receives a $20,000 bonus. 
B)  Withdrawal of a partner who pays a $10,000 bonus to each of the other partners. 
C)  Addition of a partner who pays a bonus to each of the other partners. 
D)  Additional investment into the partnership by Tanner and Jackson. 
E)  Withdrawal of $10,000 each by Tanner and Jackson upon the admission of a new partner. 
A)  Acceptance of a new partner who invests $70,000 and receives a $20,000 bonus. 
B)  Withdrawal of a partner who pays a $10,000 bonus to each of the other partners. 
C)  Addition of a partner who pays a bonus to each of the other partners. 
D)  Additional investment into the partnership by Tanner and Jackson. 
E)  Withdrawal of $10,000 each by Tanner and Jackson upon the admission of a new partner.

Question 15

McCartney, Harris, and Hussin are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period's ending capital account balances are McCartney, $15,000, Harris, $15,000, Hussin, $(2,000). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,000 in cash to be distributed. Hussin pays $2,000 to cover the deficiency in his account. The general journal entry to record the final distribution would be:

Accepted Answer

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

Question 16

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 17

When a partner leaves a partnership, the present partnership ends.

Accepted Answer

A) True 
 B)False

Question 18

Partnership accounting:

Accepted Answer

A)  Is the same as accounting for a sole proprietorship. 
B)  Is the same as accounting for a corporation. 
C)  Is the same as accounting for a sole proprietorship, except that separate capital and withdrawal accounts are kept for each partner. 
D)  Is the same as accounting for an S corporation. 
E)  Is the same as accounting for a corporation, except that retained earnings is used to keep track of partners' withdrawals. 
A)  Is the same as accounting for a sole proprietorship. 
B)  Is the same as accounting for a corporation. 
C)  Is the same as accounting for a sole proprietorship, except that separate capital and withdrawal accounts are kept for each partner. 
D)  Is the same as accounting for an S corporation. 
E)  Is the same as accounting for a corporation, except that retained earnings is used to keep track of partners' withdrawals.

Question 19

Which of the following best lists the disadvantages of a partnership:

Accepted Answer

A)  Unlimited life and mutual agency. 
B)  Mutual agency and limited liability. 
C)  Unlimited liability and unlimited life. 
D)  Limited Life and limited liability. 
E)  Limited life, mutual agency, and unlimited liability are all disadvantages of a partnership 
A)  Unlimited life and mutual agency. 
B)  Mutual agency and limited liability. 
C)  Unlimited liability and unlimited life. 
D)  Limited Life and limited liability. 
E)  Limited life, mutual agency, and unlimited liability are all disadvantages of a partnership

Question 20

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash. Conley and Liu both have capital balances of $55,000 each and have agreed to share income and loss equally. Prepare the journal entry to record the admission of Lepley to the partnership.

Accepted Answer

The answer of Conley and Liu allow Lepley to purchase...

When a partnership is liquidated, its business is ended.

Partners' withdrawals are credited to their separate withdrawals accounts.

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

When partners invest in a partnership, their capital accounts are credited for the amount invested.

If a partnership contract provides for interest at 10% annually on each partner's investment, the interest:

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to _; if the recorded value of the withdrawing partner's equity is understated, then a bonus goes to ___.

If at the time of partnership liquidation, a partner has a $5,000 capital deficiency and pays the partnership $5,000 out of personal assets to cover the deficiency, then that partner is entitled to share in the final distribution of cash.

The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.

A partnership recorded the following journal entry: This entry reflects:

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

When a partner leaves a partnership, the present partnership ends.

Partnership accounting:

Which of the following best lists the disadvantages of a partnership:

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash. Conley and Liu both have capital balances of $55,000 each and have agreed to share income and loss equally. Prepare the journal entry to record the admission of Lepley to the partnership.

Introducing Financial Accounting

Accounting for Transactions

Preparing Financial Statements

Accounting for Merchandising Operations

Accounting for Inventories

Accounting for Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Accounting for Equity

Accounting for Cash Flows

Interpreting Financial Statements

Time Value of Money

Investments and International Operations

Accounting With Special Journals

Filters

Exam 16: Accounting for Partnerships

When a partnership is liquidated, its business is ended.

Partners' withdrawals are credited to their separate withdrawals accounts.

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

When partners invest in a partnership, their capital accounts are credited for the amount invested.

If a partnership contract provides for interest at 10% annually on each partner's investment, the interest:

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to _____________________; if the recorded value of the withdrawing partner's equity is understated, then a bonus goes to _______________________.

If at the time of partnership liquidation, a partner has a $5,000 capital deficiency and pays the partnership $5,000 out of personal assets to cover the deficiency, then that partner is entitled to share in the final distribution of cash.

The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.

A partnership recorded the following journal entry: This entry reflects:

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

When a partner leaves a partnership, the present partnership ends.

Partnership accounting:

Which of the following best lists the disadvantages of a partnership:

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash. Conley and Liu both have capital balances of $55,000 each and have agreed to share income and loss equally. Prepare the journal entry to record the admission of Lepley to the partnership.

Introducing Financial Accounting

Accounting for Transactions

Preparing Financial Statements

Accounting for Merchandising Operations

Accounting for Inventories

Accounting for Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Accounting for Equity

Accounting for Cash Flows

Interpreting Financial Statements

Time Value of Money

Investments and International Operations

Accounting With Special Journals

Filters

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to _; if the recorded value of the withdrawing partner's equity is understated, then a bonus goes to ___.