Question 1

When a new partner invests more than the proportionate share he or she receives in the partnership, a bonus is recorded to his or her account.

Accepted Answer

A) True 
 B)False  False

Question 2

A partnership agreement must be in writing.

Accepted Answer

A) True 
 B)False  False

Question 3

In a partnership gain or Loss from Realization is debited for a loss.

Accepted Answer

A) True 
 B)False  True

Question 4

The entities forming joint ventures usually involve companies, but can sometimes involve governments.

Accepted Answer

A) True 
 B)False

Question 5

When a newly admitted partner pays a bonus to the existing partners, the new partner's capital account is debited.

Accepted Answer

A) True 
 B)False

Question 6

When a partner invests assets in a partnership, the assets are recorded at the partner's book value.

Accepted Answer

A) True 
 B)False

Question 7

Percy, Quinn, and Renee each receive a $7,000 salary, as well as 15 percent interest on their respective average investments of $20,000, $10,000, and $40,000. If they share remaining income and losses in a 4:3:2 ratio, respectively, by how much would Renee's account increase or decrease (indicate a decrease by placing parentheses around the amount), assuming (a) net income of $40,500, (b) net income of $27,000, and (c) net loss of $31,500.

Accepted Answer

a. $15,000

Question 8

Joint ventures

Accepted Answer

A)  have become outmoded 
B)  are a form of partnership 
C)  are used only in the United States 
D)  have unlimited life 
A)  have become outmoded 
B)  are a form of partnership 
C)  are used only in the United States 
D)  have unlimited life

Question 9

In a liquidation, one partner may have to make up the deficit in another partner's account.

Accepted Answer

A) True 
 B)False

Question 10

Joan pays Eva $60,000 for her $40,000 interest in a partnership. The entry to record the sale on the partnership books is:

Accepted Answer

The answer of Joan pays Eva $60,000 for her $40,000...

Question 11

Describe how a dissolution of a partnership is different from a liquidation of a partnership.

Accepted Answer

A dissolution occurs any time there is a

Question 12

Harry invests $40,000 for a one-fourth interest in a partnership in which the other partners have capital totaling $80,000 before admitting Harry. After distribution of the bonus, what is Harry's capital balance?

Accepted Answer

A)  $10,000 
B)  $20,000 
C)  $30,000 
D)  $40,000 
A)  $10,000 
B)  $20,000 
C)  $30,000 
D)  $40,000

Question 13

The division of partnership profits on the basis of salaries, interest, and a stated ratio is usually necessary because

Accepted Answer

A)  partners seldom contribute time, effort, and resources equally 
B)  this prevents arguments among the partners 
C)  this reflects the amount of time devoted to the partnership by the partners 
D)  most states require this method of distribution 
A)  partners seldom contribute time, effort, and resources equally 
B)  this prevents arguments among the partners 
C)  this reflects the amount of time devoted to the partnership by the partners 
D)  most states require this method of distribution

Question 14

When a partner withdraws assets greater than his or her capital balance, the excess is treated as a bonus to the remaining partners.

Accepted Answer

A) True 
 B)False

Question 15

In a liquidation, partners are given back the assets that they originally invested.

Accepted Answer

A) True 
 B)False

Question 16

Donovan invests $60,000 for a 30 percent interest in a partnership in which the other partners have capital totaling $100,000 before admitting Donovan. After distribution of the bonus, what is Donovan's capital balance?

Accepted Answer

A)  $30,000 
B)  $48,000 
C)  $60,000 
D)  $72,000 
A)  $30,000 
B)  $48,000 
C)  $60,000 
D)  $72,000

Question 17

Partnership liquidation is the same as partnership dissolution.

Accepted Answer

A) True 
 B)False

Question 18

It is possible to invest no tangible assets into a partnership, yet be given a positive opening capital balance.

Accepted Answer

A) True 
 B)False

Question 19

Fred and Walden are partners who share profits and losses in a ratio of 3:2, respectively, and have the following capital balances on September 30, 2010:
 $\begin{array}{ll}
\text { Fred, Capital } & \text { Walden, Capital } \
\$ 25,000 \mathrm{Cr} . & \$ 50,000 \mathrm{Cr} .
\end{array}$ The partners agree to admit Miller to the partnership. Calculate the capital balances of each partner after the admission of Miller, assuming that bonuses are recorded when appropriate for each of the following assumptions: 
a. Miller pays Fred $25,000 for 50 percent of his interest
b. Miller invests $25,000 for a one-fourth interest in the partnership
c. Miller invests $25,000 for a 30 percent interest in the partnership
d. Miller invests $25,000 for a 20 percent interest in the partnership

Accepted Answer

The answer of Fred and Walden are partners who share...

Question 20

A partner invests into a partnership a building with a $25,000 carrying value and $40,000 fair market value. The related mortgage payable of $12,500 is assumed by the partnership. The entry to record the investment in partnership is:

Accepted Answer

The answer of A partner invests into a partnership a...

Exam 17: Partnerships

When a new partner invests more than the proportionate share he or she receives in the partnership, a bonus is recorded to his or her account.

A partnership agreement must be in writing.

In a partnership gain or Loss from Realization is debited for a loss.

The entities forming joint ventures usually involve companies, but can sometimes involve governments.

When a newly admitted partner pays a bonus to the existing partners, the new partner's capital account is debited.

When a partner invests assets in a partnership, the assets are recorded at the partner's book value.

Joint ventures

In a liquidation, one partner may have to make up the deficit in another partner's account.

Joan pays Eva $60,000 for her $40,000 interest in a partnership. The entry to record the sale on the partnership books is:

Describe how a dissolution of a partnership is different from a liquidation of a partnership.

Harry invests $40,000 for a one-fourth interest in a partnership in which the other partners have capital totaling $80,000 before admitting Harry. After distribution of the bonus, what is Harry's capital balance?

The division of partnership profits on the basis of salaries, interest, and a stated ratio is usually necessary because

When a partner withdraws assets greater than his or her capital balance, the excess is treated as a bonus to the remaining partners.

In a liquidation, partners are given back the assets that they originally invested.

Donovan invests $60,000 for a 30 percent interest in a partnership in which the other partners have capital totaling $100,000 before admitting Donovan. After distribution of the bonus, what is Donovan's capital balance?

Partnership liquidation is the same as partnership dissolution.

It is possible to invest no tangible assets into a partnership, yet be given a positive opening capital balance.

A partner invests into a partnership a building with a $25,000 carrying value and $40,000 fair market value. The related mortgage payable of $12,500 is assumed by the partnership. The entry to record the investment in partnership is:

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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