Question 1

Accounting procedures for both C corporations and S corporations are the same in all aspects.

Accepted Answer

A) True 
 B)False

Question 2

The following information is available on TGR Enterprises, a partnership, for the most recent fiscal year: $\begin{array}{ll}
\text { Total partnership capital at beginning of the year } & \$ 180,000 \
\text { Partnership net income for the year } & \$ 150,000 \
\text { Withdrawals by partners during the year } & \$ 120,000 \
\text { Additional investments by partners during the year } & \$ 60,000
\end{array}$ There are three partners in TGR Enterprises: Tracey, Gregory and Rodgers. At the end of the year, the partners' capital accounts were in the ratio of 2:1:2, respectively. Compute the ending capital balances of the three partners.

Accepted Answer

A) Tracey = $84,000; Gregory = $102,000; Rodgers = $84,000. 
B) Tracey = $204,000; Gregory = $102,000; Rodgers = $204,000. 
C) Tracey = $60,000; Gregory = $30,000; Rodgers = $60,000. 
D) Tracey = $90,000; Gregory = $90,000; Rodgers = $90,000. 
E) Tracey = $108,000; Gregory = $54,000; Rodgers = $108,000. 
A) Tracey = $84,000; Gregory = $102,000; Rodgers = $84,000. 
B) Tracey = $204,000; Gregory = $102,000; Rodgers = $204,000. 
C) Tracey = $60,000; Gregory = $30,000; Rodgers = $60,000. 
D) Tracey = $90,000; Gregory = $90,000; Rodgers = $90,000. 
E) Tracey = $108,000; Gregory = $54,000; Rodgers = $108,000.

Question 3

In a Limited Partnership, there must be more than one general partner.

Accepted Answer

A) True 
 B)False

Question 4

Hewlett and Martin are partners. Hewlett's capital balance in the partnership is $64,000, and Martin's capital balance $67,000. Hewlett and Martin have agreed to share equally in income or loss. The existing partners agree to accept Black with a 20% interest. Black will invest $35,000 in the partnership. The bonus that is granted to Hewlett and Martin equals:

Accepted Answer

A) 600 to Hewlett; $900 to Martin. 
B) $1,500 each. 
C) $900 each. 
D) $600 each. 
E) $0, because Hewlett and Martin actually grant a bonus to Black. 
A) 600 to Hewlett; $900 to Martin. 
B) $1,500 each. 
C) $900 each. 
D) $600 each. 
E) $0, because Hewlett and Martin actually grant a bonus to Black.

Question 5

Caitlin, Chris, and Molly are partners and share income and losses in a 3:4:3 ratio. The partnership's capital balances are Caitlin, $120,000; Chris, $80,000; and Molly, $100,000. Paul is admitted to the partnership on July 1 with a 20% equity and invests $60,000. The balance in Paul's capital account immediately after his admission is:

Accepted Answer

A) $68,000 
B) $300,000 
C) $92,000 
D) $72,000 
E) $160,000 
A) $68,000 
B) $300,000 
C) $92,000 
D) $72,000 
E) $160,000

Question 6

Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $250,000; the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property. Monroe invests $100,000 in cash and equipment that has a market value of $55,000. For the partnership, the amounts recorded for total assets and for total capital account are:

Accepted Answer

A) Total assets $405,000; total capital $305,000. 
B) Total assets $305,000; total capital $230,000. 
C) Total assets $350,000; total capital $350,000. 
D) Total assets $350,000; total capital $275,000. 
E) Total assets $405,000; total capital $330,000. 
A) Total assets $405,000; total capital $305,000. 
B) Total assets $305,000; total capital $230,000. 
C) Total assets $350,000; total capital $350,000. 
D) Total assets $350,000; total capital $275,000. 
E) Total assets $405,000; total capital $330,000.

Question 7

Which of the following statements is true?

Accepted Answer

A) Salaries to partners are expenses on the partnership income statement. 
B) Interest allowances are expenses. 
C) Salary allowances are expenses. 
D) Partners are employees of the partnership. 
E) Salary allowances usually reflect the relative value of services provided by partners. 
A) Salaries to partners are expenses on the partnership income statement. 
B) Interest allowances are expenses. 
C) Salary allowances are expenses. 
D) Partners are employees of the partnership. 
E) Salary allowances usually reflect the relative value of services provided by partners.

Question 8

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 9

Wright, Bell, and Edison are partners and share income in a 2:5:3 ratio. The partnership's capital balances are as follows: Wright, $33,000, Bell $27,000 and Edison $40,000. Edison decides to withdraw from the partnership, and the partners agree not to revalue the assets upon Edison's retirement. The journal entry to record Edison's June 1 withdrawal from the partnership if Edison is paid $40,000 for his equity is:

Accepted Answer

A) Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Cash $40,000. 
B) Debit Edison, Capital $40,000; credit Wright, Capital $20,000; credit Bell, Capital $20,000. 
C) Debit Edison, Capital $40,000; credit Cash $40,000. 
D) Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Edison, Capital $40,000. 
E) Debit Cash $40,000; credit Edison, Capital $40,000. 
A) Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Cash $40,000. 
B) Debit Edison, Capital $40,000; credit Wright, Capital $20,000; credit Bell, Capital $20,000. 
C) Debit Edison, Capital $40,000; credit Cash $40,000. 
D) Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Edison, Capital $40,000. 
E) Debit Cash $40,000; credit Edison, Capital $40,000.

Question 10

When a partner leaves a partnership, the present partnership ends, but the business can still continue to operate.

Accepted Answer

A) True 
 B)False

Question 11

A partnership recorded the following journal entry: $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 60,000 & \
\hline \text { B. Founder, Capital } & 10,000 & \
\hline \text { R. Aqui, Capital } & 10,000 & \
\hline \text { H. Joiner, Capital } & & 80,000 \
\hline
\end{array}$$ This entry reflects:

Accepted Answer

A) Withdrawal of a partner who pays a $10,000 bonus to each of the other partners. 
B) Withdrawal of $10,000 each by Founder and Aqui upon the admission of a new partner. 
C) Additional investment into the partnership by Founder and Aqui. 
D) Addition of a partner who pays a bonus to each of the other partners. 
E) Acceptance of a new partner who invests $60,000 and receives a $20,000 bonus. 
A) Withdrawal of a partner who pays a $10,000 bonus to each of the other partners. 
B) Withdrawal of $10,000 each by Founder and Aqui upon the admission of a new partner. 
C) Additional investment into the partnership by Founder and Aqui. 
D) Addition of a partner who pays a bonus to each of the other partners. 
E) Acceptance of a new partner who invests $60,000 and receives a $20,000 bonus.

Question 12

Peters, Chong, and Aaron are dissolving their partnership. Their partnership agreement allocates each partner an equal share of all income and losses. The current period's ending capital account balances are Peters, $54,000; Chong, $42,000; and Aaron, $(2,000). After all assets are sold and liabilities are paid, there is $94,000 in cash to be distributed. Aaron is unable to pay the deficiency. The journal entry to record the distribution should be:

Accepted Answer

A) Debit Peters, Capital $54,000; debit Chong, Capital $40,000; credit Cash $94,000. 
B) Debit Peters, Capital $53,000; debit Chong, Capital $41,000; credit Cash $94,000. 
C) Debit Cash $94,000; credit Peters, Capital $47,000; credit Chong, Capital $47,000. 
D) Debit Cash $94,000, debit Aaron, Capital $2,000, credit Peters, Capital $54,000, credit Chong, Capital $42,000. 
E) Debit Peters, Capital $54,000; debit Chong, Capital $42,000; credit Cash $96,000. 
A) Debit Peters, Capital $54,000; debit Chong, Capital $40,000; credit Cash $94,000. 
B) Debit Peters, Capital $53,000; debit Chong, Capital $41,000; credit Cash $94,000. 
C) Debit Cash $94,000; credit Peters, Capital $47,000; credit Chong, Capital $47,000. 
D) Debit Cash $94,000, debit Aaron, Capital $2,000, credit Peters, Capital $54,000, credit Chong, Capital $42,000. 
E) Debit Peters, Capital $54,000; debit Chong, Capital $42,000; credit Cash $96,000.

Question 13

Forman and Berry are forming a partnership. Forman will invest a building that currently is being used by another business owned by Forman. The building has a market value of $80,000. Also, the partnership will assume responsibility for a $20,000 note secured by a mortgage on that building. Berry will invest $50,000 cash. For the partnership, the amounts to be recorded for the building and for Forman's Capital account are:

Accepted Answer

A) Building, $80,000 and Forman, Capital, $60,000. 
B) Building, $60,000 and Forman, Capital, $60,000. 
C) Building, $60,000 and Forman, Capital, $50,000. 
D) Building, $60,000 and Forman, Capital, $80,000. 
E) Building, $80,000 and Forman, Capital, $80,000. 
A) Building, $80,000 and Forman, Capital, $60,000. 
B) Building, $60,000 and Forman, Capital, $60,000. 
C) Building, $60,000 and Forman, Capital, $50,000. 
D) Building, $60,000 and Forman, Capital, $80,000. 
E) Building, $80,000 and Forman, Capital, $80,000.

Question 14

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

Accepted Answer

A new partner may purchase a partnership

Question 15

The withdrawals account of each partner is closed to income summary at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 16

Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $250,000; the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property. Monroe invests $100,000 in cash and equipment that has a market value of $55,000. For the partnership, the amounts recorded for Fontaine's Capital account and for Monroe's Capital account are:

Accepted Answer

A) Fontaine, Capital $175,000; Monroe, Capital $45,000. 
B) Fontaine, Capital $250,000; Monroe, Capital $100,000. 
C) Fontaine, Capital $0; Monroe, Capital $100,000. 
D) Fontaine, Capital $250,000; Monroe, Capital $155,000. 
E) Fontaine, Capital $175,000; Monroe, Capital $155,000. 
A) Fontaine, Capital $175,000; Monroe, Capital $45,000. 
B) Fontaine, Capital $250,000; Monroe, Capital $100,000. 
C) Fontaine, Capital $0; Monroe, Capital $100,000. 
D) Fontaine, Capital $250,000; Monroe, Capital $155,000. 
E) Fontaine, Capital $175,000; Monroe, Capital $155,000.

Question 17

Cox, North, and Lee form a partnership. Cox contributes $180,000, North contributes $150,000, and Lee contributes $270,000. Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested. If the partnership reports income of $150,000 for its first year, what amount of income is credited to Lee's capital account? (Do not round your intermediate calculations.)

Accepted Answer

A) $67,500. 
B) $54,000. 
C) $60,000. 
D) $50,000. 
E) $45,000. 
A) $67,500. 
B) $54,000. 
C) $60,000. 
D) $50,000. 
E) $45,000.

Question 18

Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership. The journal entry to record the transaction for the partnership is:

Accepted Answer

A) Debit Cash $104,000; debit Equipment $27,000; credit Common Stock $131,000. 
B) Debit Reno, Capital $131,000; credit RD Partnership, Capital $131,000. 
C) Debit Cash $104,000; debit Equipment $27,000; credit Reno, Capital $131,000. 
D) Debit Cash $104,000; debit Equipment $27,000; credit RD Partnership, Capital $131,000. 
E) Debit RD Partnership, Capital $131,000; credit Reno, Capital $131,000. 
A) Debit Cash $104,000; debit Equipment $27,000; credit Common Stock $131,000. 
B) Debit Reno, Capital $131,000; credit RD Partnership, Capital $131,000. 
C) Debit Cash $104,000; debit Equipment $27,000; credit Reno, Capital $131,000. 
D) Debit Cash $104,000; debit Equipment $27,000; credit RD Partnership, Capital $131,000. 
E) Debit RD Partnership, Capital $131,000; credit Reno, Capital $131,000.

Question 19

A capital deficiency exists when at least one partner has a debit balance in his or her capital account at the point of final cash distribution during liquidation.

Accepted Answer

A) True 
 B)False

Question 20

When a partner leaves a partnership, the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

Accepted Answer

A) True 
 B)False

Accounting procedures for both C corporations and S corporations are the same in all aspects.

In a Limited Partnership, there must be more than one general partner.

Which of the following statements is true?

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.

When a partner leaves a partnership, the present partnership ends, but the business can still continue to operate.

A partnership recorded the following journal entry: Cash 60,000 B. Founder, Capital 10,000 R. Aqui, Capital 10,000 H. Joiner, Capital 80,000 This entry reflects:

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

The withdrawals account of each partner is closed to income summary at the end of the accounting period.

Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership. The journal entry to record the transaction for the partnership is:

A capital deficiency exists when at least one partner has a debit balance in his or her capital account at the point of final cash distribution during liquidation.

When a partner leaves a partnership, the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 12: Accounting for Partnerships

Accounting procedures for both C corporations and S corporations are the same in all aspects.

In a Limited Partnership, there must be more than one general partner.

Which of the following statements is true?

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.

When a partner leaves a partnership, the present partnership ends, but the business can still continue to operate.

A partnership recorded the following journal entry: Cash 60,000 B. Founder, Capital 10,000 R. Aqui, Capital 10,000 H. Joiner, Capital 80,000 This entry reflects:

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

The withdrawals account of each partner is closed to income summary at the end of the accounting period.

Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership. The journal entry to record the transaction for the partnership is:

A capital deficiency exists when at least one partner has a debit balance in his or her capital account at the point of final cash distribution during liquidation.

When a partner leaves a partnership, the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters