Question 1

Which of the following is not a characteristic of a general partnership?

Accepted Answer

A)  The partnership is created by a contract. 
B)  Mutual agency exists. 
C)  Partners share equally in net income or net losses unless an agreement states differently. 
D)  Dissolution occurs only when all partners agree. 
A)  The partnership is created by a contract. 
B)  Mutual agency exists. 
C)  Partners share equally in net income or net losses unless an agreement states differently. 
D)  Dissolution occurs only when all partners agree.

Question 2

Seth and Rachel have original investments of $50,000 and $100,000, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%; salary allowances of $27,000 and $18,000, respectively; and the remainder divided equally. How much of the net loss of $16,000 is allocated to Seth?

Accepted Answer

A)  $8,000 
B)  $6,000 
C)  $4,000 
D)  $16,000 
A)  $8,000 
B)  $6,000 
C)  $4,000 
D)  $16,000

Question 3

The distribution of cash, as the final process in winding up the affairs of a partnership, is based on the income-sharing ratio.

Accepted Answer

A) True 
 B)False

Question 4

As part of the initial investment, Ray Blake contributes equipment that had originally cost $125,000 and on which accumulated depreciation of $100,000 has been recorded. If similar equipment would cost $150,000 to replace and the partners agree on a valuation of $29,000 for the contributed equipment, what amount should be debited to the equipment account?

Accepted Answer

A)  $29,000 
B)  $150,000 
C)  $125,000 
D)  $100,000 
A)  $29,000 
B)  $150,000 
C)  $125,000 
D)  $100,000

Question 5

Rex and Kelsey are partners who share income in the ratio of 3:2. Their capital balances are $95,000 and $140,000, respectively, on January 1. The partnership generated net income of $40,000 for the year. What is Rex's capital balance after closing the revenue and expense accounts to the capital accounts?

Accepted Answer

A)  $71,000 
B)  $119,000 
C)  $146,000 
D)  $111,000 
A)  $71,000 
B)  $119,000 
C)  $146,000 
D)  $111,000

Question 6

A partnership is subject to federal income taxes.

Accepted Answer

A) True 
 B)False

Question 7

Based on this information, the statement of partners' equity would show what amount in the capital account for Harrison on December 31?

Accepted Answer

A)  $216,000 
B)  $164,000 
C)  $380,000 
D)  $52,000 
A)  $216,000 
B)  $164,000 
C)  $380,000 
D)  $52,000

Question 8

Lambert invests $20,000 for a 1/3 interest in a partnership in which the other partners have capital totaling $34,000 before admitting Lambert. After distribution of the bonus, what is Lambert's capital?

Accepted Answer

A)  $18,000 
B)  $20,000 
C)  $6,667 
D)  $11,333 
A)  $18,000 
B)  $20,000 
C)  $6,667 
D)  $11,333

Question 9

Carrie and Callie form a partnership in which Carrie contributes $85,000 in assets and agrees to devote half time to the partnership. Callie contributed $50,000 in assets and agrees to devote full time to the partnership. If no additional information is available, how will Carrie and Callie share in the division of income?

Accepted Answer

A)  5:8.5 
B)  1:2 
C)  1:1 
D)  2:1 
A)  5:8.5 
B)  1:2 
C)  1:1 
D)  2:1

Question 10

In admitting a new partner who purchases an interest, the capital interest of the new partner is obtained from the current partners and both the total assets and total capital are increased.

Accepted Answer

A) True 
 B)False

Question 11

When compared to a corporation, one of the major advantages of a partnership is its relative ease of formation.

Accepted Answer

A) True 
 B)False

Question 12

The capital accounts of Hope and Indiana have balances of $115,000 and $95,000, respectively. Clint and Casey are to be admitted to the partnership. Clint buys one-fifth of Hope's interest for $30,000 and one-fourth of Indiana's interest for $20,000. Casey contributes $45,000 cash to the partnership, for which he is to receive an ownership equity of $45,000.​Required
(1) Journalize the entries to record the admission of 
(a) Clint and 
(b) Casey.
(2) What are the capital balances of each partner after the admission of the new partners?​

Accepted Answer

The answer of The capital accounts of Hope and Indiana...

Question 13

The salary allocation to partners used in dividing net income would also appear as salary expense on the partnership income statement.

Accepted Answer

A) True 
 B)False

Question 14

Soledad and Winston are partners who share income in the ratio of 1:3 and have capital balances of $100,000 and $140,000 at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $130,000. What amount of loss on realization should be allocated to Winston?

Accepted Answer

A)  $110,000 
B)  $97,500 
C)  $42,500 
D)  $82,500 
A)  $110,000 
B)  $97,500 
C)  $42,500 
D)  $82,500

Question 15

After all noncash assets have been converted to cash and all liabilities paid, A, B, and C have capital balances of $10,000 
(debit), $5,000 
(debit), and $25,000 
(credit). The cash available for distribution to the partners is $10,000.

Accepted Answer

A) True 
 B)False

Question 16

Sarno has a capital balance of $42,000 after adjusting the assets to fair market value. Minton contributes $22,000 to receive a 30% interest in the new partnership. The bonus paid by Minton is $2,800.

Accepted Answer

A) True 
 B)False

Question 17

Benton and Orton are partners who share income in the ratio of 1:3 and have capital balances of $70,000 and $30,000, respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benton's capital balance after admitting Ramsey?

Accepted Answer

A)  $20,000 
B)  $7,000 
C)  $70,000 
D)  $63,000 
A)  $20,000 
B)  $7,000 
C)  $70,000 
D)  $63,000

Question 18

Wonder purchased one-half of Darwin's interest in the Todd and Darwin Partnership for $50,000. Prior to the investment, land was revalued to a market value of $175,000 from a book value of $100,000. Todd and Darwin share net income equally. Darwin had a capital balance of $40,000 prior to these transactions.​Required
(a) Provide the journal entry for the revaluation of land.
(b) Provide the journal entry to admit Wonder.

Accepted Answer

The answer of Wonder purchased one-half of Darwin's interest in...

Question 19

Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income in the ratio of time devoted to business.​

Accepted Answer

A)  $75,000 and $75,000 
B)  $37,500 and $112,500 
C)  $100,000 and $50,000 
D)  $112,500 and $37,500 
A)  $75,000 and $75,000 
B)  $37,500 and $112,500 
C)  $100,000 and $50,000 
D)  $112,500 and $37,500

Question 20

Alpha and Beta are partners who share income in the ratio of 1:2 and have capital balances of $40,000 and $70,000, respectively, at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $50,000. What amount of loss on realization should be allocated to Alpha?

Accepted Answer

A)  $60,000 
B)  $20,000 
C)  $30,000 
D)  $50,000 
A)  $60,000 
B)  $20,000 
C)  $30,000 
D)  $50,000

Which of the following is not a characteristic of a general partnership?

The distribution of cash, as the final process in winding up the affairs of a partnership, is based on the income-sharing ratio.

A partnership is subject to federal income taxes.

Based on this information, the statement of partners' equity would show what amount in the capital account for Harrison on December 31?

Lambert invests $20,000 for a 1/3 interest in a partnership in which the other partners have capital totaling $34,000 before admitting Lambert. After distribution of the bonus, what is Lambert's capital?

In admitting a new partner who purchases an interest, the capital interest of the new partner is obtained from the current partners and both the total assets and total capital are increased.

When compared to a corporation, one of the major advantages of a partnership is its relative ease of formation.

The salary allocation to partners used in dividing net income would also appear as salary expense on the partnership income statement.

After all noncash assets have been converted to cash and all liabilities paid, A, B, and C have capital balances of $10,000 (debit), $5,000 (debit), and $25,000 (credit). The cash available for distribution to the partners is $10,000.

Sarno has a capital balance of $42,000 after adjusting the assets to fair market value. Minton contributes $22,000 to receive a 30% interest in the new partnership. The bonus paid by Minton is $2,800.

Benton and Orton are partners who share income in the ratio of 1:3 and have capital balances of $70,000 and $30,000, respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benton's capital balance after admitting Ramsey?

Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income in the ratio of time devoted to business.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Filters

Exam 12: Accounting for Partnerships and Limited Liability Companies

Which of the following is not a characteristic of a general partnership?

The distribution of cash, as the final process in winding up the affairs of a partnership, is based on the income-sharing ratio.

A partnership is subject to federal income taxes.

Based on this information, the statement of partners' equity would show what amount in the capital account for Harrison on December 31?

Lambert invests $20,000 for a 1/3 interest in a partnership in which the other partners have capital totaling $34,000 before admitting Lambert. After distribution of the bonus, what is Lambert's capital?

In admitting a new partner who purchases an interest, the capital interest of the new partner is obtained from the current partners and both the total assets and total capital are increased.

When compared to a corporation, one of the major advantages of a partnership is its relative ease of formation.

The salary allocation to partners used in dividing net income would also appear as salary expense on the partnership income statement.

After all noncash assets have been converted to cash and all liabilities paid, A, B, and C have capital balances of $10,000 (debit), $5,000 (debit), and $25,000 (credit). The cash available for distribution to the partners is $10,000.

Sarno has a capital balance of $42,000 after adjusting the assets to fair market value. Minton contributes $22,000 to receive a 30% interest in the new partnership. The bonus paid by Minton is $2,800.

Benton and Orton are partners who share income in the ratio of 1:3 and have capital balances of $70,000 and $30,000, respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benton's capital balance after admitting Ramsey?

Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income in the ratio of time devoted to business.​

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Filters

Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income in the ratio of time devoted to business.