Question 1

The ability of a sole proprietorship to pay its debts may be determined by the financial strength of the owner.

Accepted Answer

A) True 
 B)False

Question 2

Sally Smythe enters into a partnership by contributing the following: Cash $15,000; Accounts Receivable $4,500; Machinery which cost $3,000 and has a fair market value of $2,125; and accounts payable of $1,200.What amount will be recorded in her capital account?

Accepted Answer

A) $21,625. 
B) $20,425. 
C) $22,500. 
D) $21,300. 
A) $21,625. 
B) $20,425. 
C) $22,500. 
D) $21,300.

Question 3

Regardless of whether partners in a partnership work in the company,each partner is allocated an equal share of profits.

Accepted Answer

A) True 
 B)False

Question 4

Assets contributed to a partnership by a partner would be recorded at:

Accepted Answer

A) Historical cost. 
B) Fair market value. 
C) Cost less depreciation. 
D) Potential value. 
A) Historical cost. 
B) Fair market value. 
C) Cost less depreciation. 
D) Potential value.

Question 5

Sue and Al form a partnership.Sue invests $20,000 and Al invests $25,000.In the first year the partnership earns $60,000.Sue withdraws $7,500 and Al withdraws $12,000.Each receives a salary of $15,000 and the remainder is divided 60% to Al and 40% to Sue.Prepare a schedule showing the capital accounts for Sue and Al.

Accepted Answer

The answer of Sue and Al form a partnership.Sue invests...

Question 6

When a corporation declares a dividend:

Accepted Answer

A) Assets decrease,liabilities increase. 
B) Retained earnings increase,liabilities increase. 
C) Liabilities increase,retained earnings decrease. 
D) Retained earnings decrease,assets increase. 
A) Assets decrease,liabilities increase. 
B) Retained earnings increase,liabilities increase. 
C) Liabilities increase,retained earnings decrease. 
D) Retained earnings decrease,assets increase.

Question 7

Every stockholder in a corporation will have a drawing account that will be closed to retained earnings during the closing process.

Accepted Answer

A) True 
 B)False

Question 8

Stockholders of an S corporation pay taxes on their share of the corporate net income whether they receive it or not.

Accepted Answer

A) True 
 B)False

Question 9

Closely held corporations have the same ability to qualify for credit sources as publicly traded corporations.

Accepted Answer

A) True 
 B)False

Question 10

John's Metalworks Incorporated recently issued 10,000 shares of stock in exchange for $100,000.Metalworks' journal entry to record this transaction included:

Accepted Answer

A) A debit to Capital Stock for $10,000. 
B) A debit to Cash for $100,000. 
C) A credit to Capital Stock for $10,000. 
D) A credit to Cash for $100,000. 
A) A debit to Capital Stock for $10,000. 
B) A debit to Cash for $100,000. 
C) A credit to Capital Stock for $10,000. 
D) A credit to Cash for $100,000.

Question 11

Net income in a partnership may not be distributed to the partners:

Accepted Answer

A) As a salary allowance. 
B) As interest on beginning capital. 
C) In a fixed ratio. 
D) In the form of dividends. 
A) As a salary allowance. 
B) As interest on beginning capital. 
C) In a fixed ratio. 
D) In the form of dividends.

Question 12

When evaluating the liquidity of a partnership,creditors will likely base their decision on:

Accepted Answer

A) the business ability to generate a profit. 
B) previous debts of the business. 
C) the total assets owned by the business. 
D) the financial strength of the owners. 
A) the business ability to generate a profit. 
B) previous debts of the business. 
C) the total assets owned by the business. 
D) the financial strength of the owners.

The ability of a sole proprietorship to pay its debts may be determined by the financial strength of the owner.

Sally Smythe enters into a partnership by contributing the following: Cash $15,000; Accounts Receivable $4,500; Machinery which cost $3,000 and has a fair market value of $2,125; and accounts payable of $1,200.What amount will be recorded in her capital account?

Regardless of whether partners in a partnership work in the company,each partner is allocated an equal share of profits.

Assets contributed to a partnership by a partner would be recorded at:

When a corporation declares a dividend:

Every stockholder in a corporation will have a drawing account that will be closed to retained earnings during the closing process.

Stockholders of an S corporation pay taxes on their share of the corporate net income whether they receive it or not.

Closely held corporations have the same ability to qualify for credit sources as publicly traded corporations.

John's Metalworks Incorporated recently issued 10,000 shares of stock in exchange for $100,000.Metalworks' journal entry to record this transaction included:

Net income in a partnership may not be distributed to the partners:

When evaluating the liquidity of a partnership,creditors will likely base their decision on:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

The Time Value of Money: Future Amounts and Present Values

Filters

Exam 27: Forms of Business Organization

The ability of a sole proprietorship to pay its debts may be determined by the financial strength of the owner.

Sally Smythe enters into a partnership by contributing the following: Cash $15,000; Accounts Receivable $4,500; Machinery which cost $3,000 and has a fair market value of $2,125; and accounts payable of $1,200.What amount will be recorded in her capital account?

Regardless of whether partners in a partnership work in the company,each partner is allocated an equal share of profits.

Assets contributed to a partnership by a partner would be recorded at:

When a corporation declares a dividend:

Every stockholder in a corporation will have a drawing account that will be closed to retained earnings during the closing process.

Stockholders of an S corporation pay taxes on their share of the corporate net income whether they receive it or not.

Closely held corporations have the same ability to qualify for credit sources as publicly traded corporations.

John's Metalworks Incorporated recently issued 10,000 shares of stock in exchange for $100,000.Metalworks' journal entry to record this transaction included:

Net income in a partnership may not be distributed to the partners:

When evaluating the liquidity of a partnership,creditors will likely base their decision on:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

The Time Value of Money: Future Amounts and Present Values

Filters