Question 1

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 2

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)  $\begin{array}{ | l | r| r| }
\hline \text{McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{Harris, Capital} \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{ \quad Cash} \ldots \ldots \ldots\ldots \ldots \ldots& &  30,000\
\hline
\end{array}$ 
B)  $\begin{array}{ | l | r| r| }
\hline \text{McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots  &14,000\
\hline \text{Harris, Capital} \ldots \ldots \ldots\ldots \ldots \ldots&   14,000\
\hline \text{ \quad Cash} \ldots \ldots \ldots\ldots \ldots \ldots& &  28,000\
\hline
\end{array}$ 
C)  $\begin{array}{ | l | r| r| }
\hline \text{McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{Harris, Capital} \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{ \quad Hussin, Capital} \ldots \ldots \ldots\ldots \ldots \ldots& &  2,000\
\hline \text{ \quad Cash} \ldots \ldots \ldots\ldots \ldots \ldots& &  28,000\
\hline
\end{array}$ 
D)  $\begin{array}{ | l | r| r| }
\hline \text{Cash } \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{Hussin, Capital} \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{ \quad McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots& &  2,000\
\hline \text{ \quad Harris, Capital } \ldots \ldots \ldots\ldots \ldots \ldots& &  28,000\
\hline
\end{array}$ 
E)  $\begin{array}{ | l | r| r| }
\hline \text{McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots  & 9,334\
\hline \text{Harris, Capital} \ldots \ldots \ldots\ldots \ldots \ldots  & 9,333\
\hline \text{Hussin, Capital} \ldots \ldots \ldots\ldots \ldots \ldots&   9,333\
\hline \text{ \quad Cash} \ldots \ldots \ldots\ldots \ldots \ldots& &  28,000\
\hline
\end{array}$ 
A)  $\begin{array}{ | l | r| r| }
\hline \text{McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{Harris, Capital} \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{ \quad Cash} \ldots \ldots \ldots\ldots \ldots \ldots& &  30,000\
\hline
\end{array}$ 
B)  $\begin{array}{ | l | r| r| }
\hline \text{McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots  &14,000\
\hline \text{Harris, Capital} \ldots \ldots \ldots\ldots \ldots \ldots&   14,000\
\hline \text{ \quad Cash} \ldots \ldots \ldots\ldots \ldots \ldots& &  28,000\
\hline
\end{array}$ 
C)  $\begin{array}{ | l | r| r| }
\hline \text{McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{Harris, Capital} \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{ \quad Hussin, Capital} \ldots \ldots \ldots\ldots \ldots \ldots& &  2,000\
\hline \text{ \quad Cash} \ldots \ldots \ldots\ldots \ldots \ldots& &  28,000\
\hline
\end{array}$ 
D)  $\begin{array}{ | l | r| r| }
\hline \text{Cash } \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{Hussin, Capital} \ldots \ldots \ldots\ldots \ldots \ldots  & 15,000\
\hline \text{ \quad McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots& &  2,000\
\hline \text{ \quad Harris, Capital } \ldots \ldots \ldots\ldots \ldots \ldots& &  28,000\
\hline
\end{array}$ 
E)  $\begin{array}{ | l | r| r| }
\hline \text{McCartney, Capital } \ldots \ldots \ldots\ldots \ldots \ldots  & 9,334\
\hline \text{Harris, Capital} \ldots \ldots \ldots\ldots \ldots \ldots  & 9,333\
\hline \text{Hussin, Capital} \ldots \ldots \ldots\ldots \ldots \ldots&   9,333\
\hline \text{ \quad Cash} \ldots \ldots \ldots\ldots \ldots \ldots& &  28,000\
\hline
\end{array}$

Question 3

Active Sports LP is organized as a limited partnership consisting of two partners: Basketball Products LP and Hockey Products LP.Each of the partners sell sporting equipment for their respective sports.Compute the partner return on equity for each limited partnership and for the total limited partnership for the year ended September 30,2013,using the following data:
 $$\begin{array} { | l | r | r | r | } 
\hline & \begin{array} { l } 
\text { Basketball } \
\text { Products L.P }
\end{array} & { \begin{array} { l } 
\text { Hockey } \
\text { Products Lp }
\end{array} } & \begin{array} { l } 
\text { Active } \
\text { Sports Lp }
\end{array} \
\hline \text { Capital balance at } 10 / 1 / 12 & \$ 870,000 & \$ 580,000 & \$ 1,450,000 \
\hline \text { Net ircome } & 65,000 & 35,000 & 100,000 \
\hline \text { Cash distribution } & ( 40,000 ) & ( 25,000 ) & ( 65,000 ) \
\hline \text { Capital balance at } 9 / 30 / 13 & \$ 895,000 & \$ 590,000 &  \$ 1,485,000 \
\hline
\end{array}$$

Accepted Answer

Partner return on equity = Partner net i

Question 4

If a partner is unable to cover a deficiency and the other partners absorb the deficiency,then the partner with the deficiency is thus relieved of all liability.

Accepted Answer

A) True 
 B)False

Question 5

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,$32,000; Sate,$28,000; and Melton,$(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 $2,000 to cover the deficiency in her account.The final distribution of cash would be as follows:

Accepted Answer

A)  Rodriquez $30,000 and State $26,000. 
B)  Rodriquez $32,000 and State $26,000. 
C)  Rodriquez $30,000 and State $28,000. 
D)  Rodriquez $30,000 and State $27,000. 
E)  Rodriquez $31,000 and State $27,000. 
A)  Rodriquez $30,000 and State $26,000. 
B)  Rodriquez $32,000 and State $26,000. 
C)  Rodriquez $30,000 and State $28,000. 
D)  Rodriquez $30,000 and State $27,000. 
E)  Rodriquez $31,000 and State $27,000.

Question 6

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

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

If a partner is unable to cover a deficiency and the other partners absorb the deficiency,then the partner with the deficiency is thus relieved of all liability.

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

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Filters

Exam 28: Accounting for Partnerships

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

If a partner is unable to cover a deficiency and the other partners absorb the deficiency,then the partner with the deficiency is thus relieved of all liability.

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

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Filters