Question 1

Salary allowances are reported as salaries expense on a partnership income statement.

Accepted Answer

A) True 
 B)False

Question 2

A _________________________ means that at least one partner has a debit balance in his/her capital account at the point of the final distribution of cash.

Accepted Answer

The answer of A _________________________ means that at least one...

Question 3

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a:

Accepted Answer

A) Partnership 
B) Limited partnership 
C) Limited liability partnership 
D) General partnership 
E) Limited liability corporation 
A) Partnership 
B) Limited partnership 
C) Limited liability partnership 
D) General partnership 
E) Limited liability corporation

Question 4

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 5

Admitting a partner into a partnership by accepting assets is a personal transaction between one or more current partners and the new partner.

Accepted Answer

A) True 
 B)False

Question 6

A capital deficiency exists when all partners have a credit balance in their capital accounts.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Baldwin and Tanner formed a partnership.Baldwin's initial capital account balance was $125,000 and Tanner's was $105,000.They agreed to share income and loss as follows: Baldwin 40%,Tanner 60%.Income was $102,000 in year 1 and $150,000 in year 2.Assume they each withdrew $10,000 per year.Calculate the capital balances for Baldwin and Tanner at the end of year 2.

Accepted Answer

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Question 9

Partners in a partnership are taxed on the amounts they withdraw from the partnership,not the partnership income.

Accepted Answer

A) True 
 B)False

Question 10

Chen and Wright are forming a partnership.Chen will invest a building that currently is being used by another business owned by Chen.The building has a market value of $90,000.Also,the partnership will assume responsibility for a $30,000 note secured by a mortgage on that building.Wright will invest $50,000 cash.For the partnership,the amounts to be recorded for the building and for Chen's Capital account are:

Accepted Answer

A) Building,$90,000 and Chen,Capital,$90,000. 
B) Building,$60,000 and Chen,Capital,$60,000. 
C) Building,$60,000 and Chen,Capital,$50,000. 
D) Building,$90,000 and Chen,Capital,$60,000. 
E) Building,$60,000 and Chen,Capital,$90,000. 
A) Building,$90,000 and Chen,Capital,$90,000. 
B) Building,$60,000 and Chen,Capital,$60,000. 
C) Building,$60,000 and Chen,Capital,$50,000. 
D) Building,$90,000 and Chen,Capital,$60,000. 
E) Building,$60,000 and Chen,Capital,$90,000.

Question 11

Rice,Hepburn and DiMarco formed a partnership with Rice contributing $60,000,Hepburn contributing $50,000,and DiMarco contributing $40,000.Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments.If the partnership had income of $75,000 for its first year of operation,what amount of income (rounded to the nearest dollar) would be credited to DiMarco's capital account?

Accepted Answer

A) $20,000 
B) $25,000 
C) $30,000 
D) $40,000 
E) $75,000 
A) $20,000 
B) $25,000 
C) $30,000 
D) $40,000 
E) $75,000

Question 12

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 13

Sierra and Jenson formed a partnership.Sierra contributed $25,000 cash and accounts receivable worth $11,000.Jenson's investment included cash,$5,000; inventory,$18,000; and supplies,$1,000.Prepare the journal entries to record each partner's investment in the new partnership.

Accepted Answer

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Question 14

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

Accepted Answer

A) True 
 B)False

Question 15

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.The total bonus that is granted to the existing partners equals:

Accepted Answer

A) $6,500. 
B) $9,125. 
C) $2,125. 
D) $4,250. 
E) $0,because Force and Zabala actually grant a bonus to Burns. 
A) $6,500. 
B) $9,125. 
C) $2,125. 
D) $4,250. 
E) $0,because Force and Zabala actually grant a bonus to Burns.

Question 16

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 $135,000,then Shelby and Mortonson's respective shares are:

Accepted Answer

A) $67,500; $67,500 
B) $92,500; $42,500 
C) $57,857; $77,143 
D) $90,000; $40,000 
E) $35,000; $100,000 
A) $67,500; $67,500 
B) $92,500; $42,500 
C) $57,857; $77,143 
D) $90,000; $40,000 
E) $35,000; $100,000

Question 17

An unincorporated association of two or more persons to carry on a business for profit as co-owners is a(n):

Accepted Answer

A) Partnership 
B) Proprietorship 
C) Contractual company 
D) Mutual agency 
E) Voluntary organization 
A) Partnership 
B) Proprietorship 
C) Contractual company 
D) Mutual agency 
E) Voluntary organization

Question 18

The partnership shows the following capital balances at the date of Bohme's withdrawal: Lennon,$252,000,Bohme,$114,000,and Starr,$114,000.The partners (Lennon,Bohme,and Harrington) share income and loss equally.Bohme withdraws and is paid $122,000 of cash.How would the partnership record the withdrawal of Bohme?

Accepted Answer

A) Debit Cash for $122,000 and credit Bohme,Capital for $122,000. 
B) Debit Bohme,Capital for $122,000 and credit Cash for $122,000. 
C) Debit Lennon,Capital for $4,000,debit Starr,Capital for $4,000,debit Bohme,Capital for $114,000 and credit Cash for $122,000. 
D) Debit Lennon,Capital for $57,000,debit Starr,Capital for $57,000,and credit Bohme,Capital for $114,000. 
E) Debit Bohme,Capital for $114,000,credit Lennon,Capital for $57,000,and credit Starr,Capital for $57,000. 
A) Debit Cash for $122,000 and credit Bohme,Capital for $122,000. 
B) Debit Bohme,Capital for $122,000 and credit Cash for $122,000. 
C) Debit Lennon,Capital for $4,000,debit Starr,Capital for $4,000,debit Bohme,Capital for $114,000 and credit Cash for $122,000. 
D) Debit Lennon,Capital for $57,000,debit Starr,Capital for $57,000,and credit Bohme,Capital for $114,000. 
E) Debit Bohme,Capital for $114,000,credit Lennon,Capital for $57,000,and credit Starr,Capital for $57,000.

Question 19

Juanita invested $100,000 and Jacque invested $95,000 in a new partnership.They agreed to a $50,000 annual salary allowance to Juanita and a $40,000 annual salary allowance to Jacque.They also agreed to an annual interest allowance of 10% on the partners' beginning-year capital balance,with the balance to be divided equally.Under this agreement,what are the income or loss shares of the partners if the annual partnership income is $102,000?

Accepted Answer

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Question 20

___________________________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.

Accepted Answer

The answer of ___________________________ means that partners can commit or...

Salary allowances are reported as salaries expense on a partnership income statement.

A _________________________ means that at least one partner has a debit balance in his/her capital account at the point of the final distribution of cash.

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a:

Partnership accounting:

Admitting a partner into a partnership by accepting assets is a personal transaction between one or more current partners and the new partner.

A capital deficiency exists when all partners have a credit balance in their capital accounts.

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.

Partners in a partnership are taxed on the amounts they withdraw from the partnership,not the partnership income.

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.

Sierra and Jenson formed a partnership.Sierra contributed $25,000 cash and accounts receivable worth $11,000.Jenson's investment included cash,$5,000; inventory,$18,000; and supplies,$1,000.Prepare the journal entries to record each partner's investment in the new partnership.

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

An unincorporated association of two or more persons to carry on a business for profit as co-owners is a(n):

___________________________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.

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

Salary allowances are reported as salaries expense on a partnership income statement.

A _________________________ means that at least one partner has a debit balance in his/her capital account at the point of the final distribution of cash.

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a:

Partnership accounting:

Admitting a partner into a partnership by accepting assets is a personal transaction between one or more current partners and the new partner.

A capital deficiency exists when all partners have a credit balance in their capital accounts.

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.

Partners in a partnership are taxed on the amounts they withdraw from the partnership,not the partnership income.

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.

Sierra and Jenson formed a partnership.Sierra contributed $25,000 cash and accounts receivable worth $11,000.Jenson's investment included cash,$5,000; inventory,$18,000; and supplies,$1,000.Prepare the journal entries to record each partner's investment in the new partnership.

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

An unincorporated association of two or more persons to carry on a business for profit as co-owners is a(n):

___________________________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.

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