Question 1

Which of the following is a characteristic of partnerships?

Accepted Answer

A) Unlimited life 
B) Limited liability 
C) Involuntary association 
D) Mutual agency 
A) Unlimited life 
B) Limited liability 
C) Involuntary association 
D) Mutual agency D

Question 2

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that are greater than her current capital balance.Discuss who,if anyone,receives a bonus.

Accepted Answer

When a withdrawing partner takes out assets that are greater than his or her capital balance,the excess is treated as a bonus to the withdrawing partner.

Question 3

When a partner leaves a partnership,it is possible that total assets will be unaffected.

Accepted Answer

A) True 
 B)False  True

Question 4

Warren and Spencer are partners in a drilling operation.Warren purchased a drilling rig to be used in the partnership's operations.Is this purchase binding on Spencer even though he was not involved in it? Explain your answer.

Accepted Answer

Yes.Each partner is an agent of the part

Question 5

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that represent less than her current capital balance.Discuss who,if anyone,receives a bonus.

Accepted Answer

When a withdrawing partner rem

Question 6

Cortney invests $80,000 for a 10 percent interest in a partnership that has total capital of $600,000 after admitting Cortney.Which of the following is true?

Accepted Answer

A) Cortney's capital is $52,000 
B) The original partners' capital in the business was $540,000 before admitting Cortney 
C) Cortney received a bonus of $20,000 
D) The original partners received a bonus of $20,000 
A) Cortney's capital is $52,000 
B) The original partners' capital in the business was $540,000 before admitting Cortney 
C) Cortney received a bonus of $20,000 
D) The original partners received a bonus of $20,000

Question 7

Partnership income can be divided solely on the basis of salaries or interest.

Accepted Answer

A) True 
 B)False

Question 8

The use of salaries in the allocation of income allows for the differences in the services that partners provide the business.

Accepted Answer

A) True 
 B)False

Question 9

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 10

An informational tax return must be filed for a partnership.

Accepted Answer

A) True 
 B)False

Question 11

The salary allocation to partners also appears as Salaries Expense on the partnership income statement.

Accepted Answer

A) True 
 B)False

Question 12

If the partnership agreement does not describe the method of income and loss distribution,the partners must share income and losses equally.

Accepted Answer

A) True 
 B)False

Question 13

A new partner must have the consent of all the partners before being admitted into the partnership.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is correct regarding partnerships?

Accepted Answer

A) Accounting for a partnership is similar to accounting for a sole proprietorship. 
B) If the partnership assumes a liability related to an asset invested in the partnership,the asset is debited,the partner's capital account is credited and a liability account is credited. 
C) It is necessary to maintain separate Capital and Withdrawals accounts for each partner. 
D) All of these choices. 
A) Accounting for a partnership is similar to accounting for a sole proprietorship. 
B) If the partnership assumes a liability related to an asset invested in the partnership,the asset is debited,the partner's capital account is credited and a liability account is credited. 
C) It is necessary to maintain separate Capital and Withdrawals accounts for each partner. 
D) All of these choices.

Question 15

Noncash assets invested into a partnership are recorded at

Accepted Answer

A) their fair market value. 
B) their carrying value. 
C) zero. 
D) their original cost. 
A) their fair market value. 
B) their carrying value. 
C) zero. 
D) their original cost.

Question 16

Leah,Cameron,and Ryan each receive a $20,000 salary,as well as 10 percent interest on their respective average investments of $120,000,$200,000,and $40,000.If they share remaining income in a 2:1:3 ratio,respectively,by how much would Cameron's account increase assuming net income of $144,000.

Accepted Answer

The answer of Leah,Cameron,and Ryan each receive a $20,000 salary,as...

Question 17

A partner invests into a partnership a building with a $50,000 carrying value and $80,000 fair market value.The related mortgage payable of $25,000 is assumed by the partnership.The entry to record the investment in partnership is:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 18

A partner in a landscaping business can bind the partnership to a contract for purchasing furniture and clothing.

Accepted Answer

A) True 
 B)False

Question 19

Zach has bought Biannca's interest in the A&B Partnership for a $120,000 direct payment to Biannca.Zach and Biannca's capital balances before the sale were $48,000 and $72,000,respectively.The entry to record the purchase of interest in partnership is:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 20

The death of a partner dissolves the partnership.

Accepted Answer

A) True 
 B)False

Exam 27: Accounting for Unincorporated Businesses

Which of the following is a characteristic of partnerships?

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that are greater than her current capital balance.Discuss who,if anyone,receives a bonus.

When a partner leaves a partnership,it is possible that total assets will be unaffected.

Warren and Spencer are partners in a drilling operation.Warren purchased a drilling rig to be used in the partnership's operations.Is this purchase binding on Spencer even though he was not involved in it? Explain your answer.

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that represent less than her current capital balance.Discuss who,if anyone,receives a bonus.

Cortney invests $80,000 for a 10 percent interest in a partnership that has total capital of $600,000 after admitting Cortney.Which of the following is true?

Partnership income can be divided solely on the basis of salaries or interest.

The use of salaries in the allocation of income allows for the differences in the services that partners provide the business.

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

An informational tax return must be filed for a partnership.

The salary allocation to partners also appears as Salaries Expense on the partnership income statement.

If the partnership agreement does not describe the method of income and loss distribution,the partners must share income and losses equally.

A new partner must have the consent of all the partners before being admitted into the partnership.

Which of the following statements is correct regarding partnerships?

Noncash assets invested into a partnership are recorded at

Leah,Cameron,and Ryan each receive a $20,000 salary,as well as 10 percent interest on their respective average investments of $120,000,$200,000,and $40,000.If they share remaining income in a 2:1:3 ratio,respectively,by how much would Cameron's account increase assuming net income of $144,000.

A partner invests into a partnership a building with a $50,000 carrying value and $80,000 fair market value.The related mortgage payable of $25,000 is assumed by the partnership.The entry to record the investment in partnership is:

A partner in a landscaping business can bind the partnership to a contract for purchasing furniture and clothing.

Zach has bought Biannca's interest in the A&B Partnership for a $120,000 direct payment to Biannca.Zach and Biannca's capital balances before the sale were $48,000 and $72,000,respectively.The entry to record the purchase of interest in partnership is:

The death of a partner dissolves the partnership.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Investments

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