Question 1

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) Allowance 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) Allowance 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 2

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 3

Arthur,Barnett and Cummings form a partnership.Arthur contributes $250,000 cash and Barnett contributes $230,000 in cash.Cummings contributes equipment worth $255,000.Prepare the single journal entry to record the formation of this partnership.

Accepted Answer

$\begin{array}{|l|c|c|}
\hline \text { Cash }(\$ 250,000+\$ 230,000) & 480,000 & \
\hline
\text { Equipment } & 255,000 \
\text { Arthur, Capital. }
&& 250,000 \
\hline \text { Barnett, Capital } & 230,000 \
\text { Cummings, Capital } && 255,000\
\hline
\end{array}$

Question 4

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 less.

Accepted Answer

(a)
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\begin{array} {

Question 7

When a partner leaves a partnership,the present partnership ends.

Accepted Answer

A) True 
 B)False

Question 8

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 9

A partnership cannot use salary allowances or interest allowances if it uses the stated ratio method to allocate income and losses to the partners.

Accepted Answer

A) True 
 B)False

Question 10

The equity section of the balance sheet of a partnership can report the separate capital account balances of each partner.

Accepted Answer

A) True 
 B)False

Question 11

Nguyen invested $100,000 and Hansen invested $200,000 in a partnership.They agreed to share incomes and losses by allowing a $60,000 per year salary allowance to Nguyen and a $40,000 per year salary allowance to Hansen,plus an interest allowance on the partners' beginning-year capital investments at 10%,with the balance to be shared equally.Under this agreement,the shares of the partners when the partnership earns a $105,000 in income are:

Accepted Answer

A) $52,500 to Nguyen; $52,500 to Hansen 
B) $35,000 to Nguyen; $70,000 to Hansen 
C) $57,500 to Nguyen; $47,500 to Hansen 
D) $42,500 to Nguyen; $62,500 to Hansen 
E) $70,000 to Nguyen; $60,000 to Hansen 
A) $52,500 to Nguyen; $52,500 to Hansen 
B) $35,000 to Nguyen; $70,000 to Hansen 
C) $57,500 to Nguyen; $47,500 to Hansen 
D) $42,500 to Nguyen; $62,500 to Hansen 
E) $70,000 to Nguyen; $60,000 to Hansen

Question 12

Assume that the S & B partnership agreement gave Steely 60% and Breck 40% of partnership income and losses.The partnership recorded a loss of $27,000 in the current period.Steely's share of the loss equals $16,200 and Breck's share equals $10,800.

Accepted Answer

A) True 
 B)False

Question 13

A _____________________ is an unincorporated association of two or more people to pursue a business for profit as co-owners.

Accepted Answer

The answer of A _____________________ is an unincorporated association of...

Question 14

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

The answer of Juanita invested $100,000 and Jacque invested $95,000...

Question 15

Groh and Jackson are partners.Groh's capital balance in the partnership is $64,000 and Jackson's capital balance is $61,000.Groh and Jackson have agreed to share equally in income or loss.Groh and Jackson agree to accept Block with a 25% interest.Block will invest $35,000 in the partnership.The bonus that is granted to Block equals:

Accepted Answer

A) $5,000 
B) $2,500 
C) $6,667 
D) $3,333 
E) $0,because Block must actually grant a bonus to Groh and Jackson 
A) $5,000 
B) $2,500 
C) $6,667 
D) $3,333 
E) $0,because Block must actually grant a bonus to Groh and Jackson

Question 16

Marquis and Bose agree to accept Sherman into their partnership.Sherman will contribute $25,000 in cash.Prepare the journal entry to record this transaction.

Accepted Answer

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Question 17

Match between columns
                        Premises:  An unincorporated association of two or more persons to pursue a business for profit as co-owners
 The agreement between partners that sets terms under which the affairs of the partnership are conducted
 A financial statement that shows total capital balances at the beginning of the period, any additional investment by partners, the income or loss of the period, the partners' withdrawals and the ending capital balances
 The legal relationship among general partners that makes each of them responsible for paying the debts of the partnership if the other partners are unable to pay their shares
 A corporation that meets special tax qualifications so as to be treated like a partnership for income tax purposes
 A partner who assumes unlimited liability for the debts of the partnership
 A corporation that does not qualify for and elect to be treated like a partnership for income tax purposes and therefore is subject to income taxes
 A partnership that has two classes of partners, limited partners and general partners. Limited partners have no personal liability beyond the amount they invest in the partnership and have no active role except as specified in the partnership agreement
 A partnership that protects innocent partners from malpractice or negligence claims resulting from the acts of another partner
 The legal relationship among partners whereby each partner can commit or bind the partnership to any contract within the scope of the partnership's business

Accepted Answer

The Answer of Statement of changes in partner’s equity and is...

Question 18

When a partnership is liquidated,its business is ended.

Accepted Answer

A) True 
 B)False

Question 19

Paco and Kate invested $99,000 and $126,000,respectively,in a partnership they began one year ago.Assuming the partnership earned $120,000 during the current year,compute the share of the net income each partner should receive under each of these independent assumptions.

Accepted Answer

None

Question 20

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated,then a bonus goes to _____________________; if the recorded value of the withdrawing partner's equity is understated,then a bonus goes to _______________________.

Accepted Answer

The remain

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

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

Arthur,Barnett and Cummings form a partnership.Arthur contributes $250,000 cash and Barnett contributes $230,000 in cash.Cummings contributes equipment worth $255,000.Prepare the single journal entry to record the formation of this partnership.

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

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

When a partner leaves a partnership,the present partnership ends.

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.

A partnership cannot use salary allowances or interest allowances if it uses the stated ratio method to allocate income and losses to the partners.

The equity section of the balance sheet of a partnership can report the separate capital account balances of each partner.

Assume that the S & B partnership agreement gave Steely 60% and Breck 40% of partnership income and losses.The partnership recorded a loss of $27,000 in the current period.Steely's share of the loss equals $16,200 and Breck's share equals $10,800.

A _____________________ is an unincorporated association of two or more people to pursue a business for profit as co-owners.

Marquis and Bose agree to accept Sherman into their partnership.Sherman will contribute $25,000 in cash.Prepare the journal entry to record this transaction.

When a partnership is liquidated,its business is ended.

Paco and Kate invested $99,000 and $126,000,respectively,in a partnership they began one year ago.Assuming the partnership earned $120,000 during the current year,compute the share of the net income each partner should receive under each of these independent assumptions.

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated,then a bonus goes to _; if the recorded value of the withdrawing partner's equity is understated,then a bonus goes to ___.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing 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

Investments and International Operations

Reporting and Preparing Special Journals

Filters

Exam 15: Reporting and Analyzing Partnerships

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

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

Arthur,Barnett and Cummings form a partnership.Arthur contributes $250,000 cash and Barnett contributes $230,000 in cash.Cummings contributes equipment worth $255,000.Prepare the single journal entry to record the formation of this partnership.

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

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

When a partner leaves a partnership,the present partnership ends.

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.

A partnership cannot use salary allowances or interest allowances if it uses the stated ratio method to allocate income and losses to the partners.

The equity section of the balance sheet of a partnership can report the separate capital account balances of each partner.

Assume that the S & B partnership agreement gave Steely 60% and Breck 40% of partnership income and losses.The partnership recorded a loss of $27,000 in the current period.Steely's share of the loss equals $16,200 and Breck's share equals $10,800.

A _____________________ is an unincorporated association of two or more people to pursue a business for profit as co-owners.

Marquis and Bose agree to accept Sherman into their partnership.Sherman will contribute $25,000 in cash.Prepare the journal entry to record this transaction.

When a partnership is liquidated,its business is ended.

Paco and Kate invested $99,000 and $126,000,respectively,in a partnership they began one year ago.Assuming the partnership earned $120,000 during the current year,compute the share of the net income each partner should receive under each of these independent assumptions.

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated,then a bonus goes to _____________________; if the recorded value of the withdrawing partner's equity is understated,then a bonus goes to _______________________.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing 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

Investments and International Operations

Reporting and Preparing Special Journals

Filters

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated,then a bonus goes to _; if the recorded value of the withdrawing partner's equity is understated,then a bonus goes to ___.