Question 1

If partners devote their time and services to their partnership,their salaries are expenses on the income statement.

Accepted Answer

A) True 
 B)False  False

Question 2

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. B

Question 3

The withdrawals account of each partner is:

Accepted Answer

A) Closed to that partner's capital account with a credit. 
B) Closed to that partner's capital account with a debit. 
C) A permanent account that is not closed. 
D) Credited with that partner's share of net income. 
E) Debited with that partner's share of net loss. 
A) Closed to that partner's capital account with a credit. 
B) Closed to that partner's capital account with a debit. 
C) A permanent account that is not closed. 
D) Credited with that partner's share of net income. 
E) Debited with that partner's share of net loss. B

Question 4

Tanner,Schmidt,and Hayes are partners with capital account balances of $100,000,$120,000,and $96,000 respectively.They share profits and losses in a 3:4:3 ratio.Schmidt wishes to leave the partnership and will be paid $125,000.What are the remaining capital account balances after Schmidt withdraws?

Accepted Answer

A) Tanner $95,500; Hayes $95,500. 
B) Tanner $102,500; Hayes $98,500. 
C) Tanner $100,000; Hayes $96,000. 
D) Tanner $97,500; Hayes $93,500. 
E) Tanner $100,000; Hayes $91,000. 
A) Tanner $95,500; Hayes $95,500. 
B) Tanner $102,500; Hayes $98,500. 
C) Tanner $100,000; Hayes $96,000. 
D) Tanner $97,500; Hayes $93,500. 
E) Tanner $100,000; Hayes $91,000.

Question 5

Mutual agency means each partner can commit or bind the partnership to any contract within the scope of the partnership business.

Accepted Answer

A) True 
 B)False

Question 6

A capital deficiency can arise from liquidation losses,excessive withdrawals before liquidation,or recurring losses in prior periods.

Accepted Answer

A) True 
 B)False

Question 7

Renee Jackson is a partner in Sports Promoters.Her beginning partnership capital balance for the current year is $55,000 and her ending partnership capital balance for the current year is $62,000.Her share of this year's partnership income was $5,250.What is her partner return on equity?

Accepted Answer

A) 8.47% 
B) 8.97% 
C) 9.54% 
D) 1047% 
E) 1060% 
A) 8.47% 
B) 8.97% 
C) 9.54% 
D) 1047% 
E) 1060%

Question 8

Armstrong withdraws from the FAP Partnership.The remaining partners agree to buy out her share for her capital balance of $35,000.Prepare the journal entry to record the withdrawal from the partnership.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 9

During the closing process,partner's capital accounts are _______________ for their share of net income and _________________ for their share of net loss.

Accepted Answer

The answer of During the closing process,partner's capital accounts are...

Question 10

Force and Zabala are partners.Force's capital balance in the partnership is $98,000 and Zabala 's capital balance is $53,000.Force and Zabala have agreed to share equally in income or loss.Force and Zabala agree to accept Burns with a 25% interest.Burns will invest $56,000 in the partnership.Which of the following statements is correct?

Accepted Answer

A) Force's capital balance after the admission of Burns is $50,875. 
B) Burns' capital after admission is $51,750. 
C) Force's capital after the admission of Burns is $98,000. 
D) Burns' capital after admission is $56,000. 
E) Zabala's capital balance after the admission of Burns is $53,000. 
A) Force's capital balance after the admission of Burns is $50,875. 
B) Burns' capital after admission is $51,750. 
C) Force's capital after the admission of Burns is $98,000. 
D) Burns' capital after admission is $56,000. 
E) Zabala's capital balance after the admission of Burns is $53,000.

Question 11

Shelby and Mortonson formed a partnership with capital contributions of $300,000 and $400,000,respectively.Their partnership agreement calls for Shelby to receive a $60,000 per year salary.Also,each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments.The remaining income or loss is to be divided equally.If the net income for the current year is $125,000,then Shelby and Mortonson's respective shares are:

Accepted Answer

A) $62,500; $62,500 
B) $90,000; $35,000 
C) $87,500; $37,500 
D) $85,000; $40,000 
E) $92,000; $33,000 
A) $62,500; $62,500 
B) $90,000; $35,000 
C) $87,500; $37,500 
D) $85,000; $40,000 
E) $92,000; $33,000

Question 12

Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.The balance of Collins' Capital account will be:

Accepted Answer

A) $80,000 
B) $24,000 
C) $56,000 
D) $44,000 
E) $60,000 
A) $80,000 
B) $24,000 
C) $56,000 
D) $44,000 
E) $60,000

Question 13

The withdrawals account of each partner is closed to retained earnings at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 14

Rodriguez,Sate,and Melton are dissolving their partnership.Their partnership agreement allocates income and losses equally among the partners.The current period's ending capital account balances are Rodriguez,$30,000; Sate,$30,000; and Melton,$(4,000).After all the assets are sold and liabilities are paid,but before any contributions are considered to cover any deficiencies,there is $56,000 in cash to be distributed.Melton pays $4,000 to cover the deficiency in her 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 15

If the partners agree on a formula to share income and say nothing about losses,then the losses are shared equally.

Accepted Answer

A) True 
 B)False

Question 16

A capital deficiency means that:

Accepted Answer

A) The partnership has a loss. 
B) The partnership has more liabilities than assets. 
C) At least one partner has a debit balance in his/her capital account. 
D) At least one partner has a credit balance in his/her capital account. 
E) The partnership has been sold at a loss. 
A) The partnership has a loss. 
B) The partnership has more liabilities than assets. 
C) At least one partner has a debit balance in his/her capital account. 
D) At least one partner has a credit balance in his/her capital account. 
E) The partnership has been sold at a loss.

Question 17

Discuss the options for the allocation of income and loss among partners,including with and without a partnership agreement.

Accepted Answer

In the absence of a partnership agreemen

Question 18

Holden,Phillips,and Rogers are partners with beginning-year capital balances of $120,000,$60,000,and $60,000,respectively.Partnership net income for the year is $84,000.Make the necessary journal entry to close Income Summary to the capital accounts if:
a.Partners agree to divide income based on their beginning-year capital balances.
b.Partners agree to divide income based on the ratio of 5:3:2 (Holden:Phillips:Rogers),respectively.
c.Partnership agreement is silent as to division of income and loss.

Accepted Answer

a. @#IMG-DLM&_TB6947_00_TB6947_00_TB6947

Question 19

Alberts and Bartel are partners.On October 1,Alberts' capital balance is $75,000 and Bartel's capital balance is $125,000.With the partnership's approval,Bartel sells one-half of his partnership interest to Camero for $70,000.Prepare the journal entry to record this transaction in the partnership records.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 20

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%

If partners devote their time and services to their partnership,their salaries are expenses on the income statement.

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

The withdrawals account of each partner is:

Tanner,Schmidt,and Hayes are partners with capital account balances of $100,000,$120,000,and $96,000 respectively.They share profits and losses in a 3:4:3 ratio.Schmidt wishes to leave the partnership and will be paid $125,000.What are the remaining capital account balances after Schmidt withdraws?

Mutual agency means each partner can commit or bind the partnership to any contract within the scope of the partnership business.

A capital deficiency can arise from liquidation losses,excessive withdrawals before liquidation,or recurring losses in prior periods.

Renee Jackson is a partner in Sports Promoters.Her beginning partnership capital balance for the current year is $55,000 and her ending partnership capital balance for the current year is $62,000.Her share of this year's partnership income was $5,250.What is her partner return on equity?

Armstrong withdraws from the FAP Partnership.The remaining partners agree to buy out her share for her capital balance of $35,000.Prepare the journal entry to record the withdrawal from the partnership.

During the closing process,partner's capital accounts are _ for their share of net income and ___ for their share of net loss.

Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.The balance of Collins' Capital account will be:

The withdrawals account of each partner is closed to retained earnings at the end of the accounting period.

If the partners agree on a formula to share income and say nothing about losses,then the losses are shared equally.

A capital deficiency means that:

Discuss the options for the allocation of income and loss among partners,including with and without a partnership agreement.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting With Special Journals

Filters

Exam 16: Accounting for Partnerships

If partners devote their time and services to their partnership,their salaries are expenses on the income statement.

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

The withdrawals account of each partner is:

Tanner,Schmidt,and Hayes are partners with capital account balances of $100,000,$120,000,and $96,000 respectively.They share profits and losses in a 3:4:3 ratio.Schmidt wishes to leave the partnership and will be paid $125,000.What are the remaining capital account balances after Schmidt withdraws?

Mutual agency means each partner can commit or bind the partnership to any contract within the scope of the partnership business.

A capital deficiency can arise from liquidation losses,excessive withdrawals before liquidation,or recurring losses in prior periods.

Renee Jackson is a partner in Sports Promoters.Her beginning partnership capital balance for the current year is $55,000 and her ending partnership capital balance for the current year is $62,000.Her share of this year's partnership income was $5,250.What is her partner return on equity?

Armstrong withdraws from the FAP Partnership.The remaining partners agree to buy out her share for her capital balance of $35,000.Prepare the journal entry to record the withdrawal from the partnership.

During the closing process,partner's capital accounts are _______________ for their share of net income and _________________ for their share of net loss.

Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.The balance of Collins' Capital account will be:

The withdrawals account of each partner is closed to retained earnings at the end of the accounting period.

If the partners agree on a formula to share income and say nothing about losses,then the losses are shared equally.

A capital deficiency means that:

Discuss the options for the allocation of income and loss among partners,including with and without a partnership agreement.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting With Special Journals

Filters

During the closing process,partner's capital accounts are _ for their share of net income and ___ for their share of net loss.