Question 1

Identify and discuss the key characteristics of partnerships. Also, identify other organizations that possess partnership characteristics.

Accepted Answer

Partnerships are unincorporated associat

Question 2

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 3

Fellows and Marshall are partners in an accounting firm and share net income and loss equally. Fellows' beginning partnership capital balance for the current year is $185,000, and Marshall's beginning partnership capital balance for the current year is $260,000. The partnership had net income of $350,000 for the year. Fellows withdrew $80,000 during the year and Marshall withdrew $70,000. What is Marshall's return on equity?

Accepted Answer

A) 67.3% 
B) 60.3% 
C) 78.7% 
D) 54.3% 
E) 56.0% 
A) 67.3% 
B) 60.3% 
C) 78.7% 
D) 54.3% 
E) 56.0%

Question 4

Henry, Luther, and Gage are dissolving their partnership. Their partnership agreement allocates each partner 1/3 of all income and losses. The current period's ending capital account balances are Henry, $45,000; Luther, $37,000; and Gage, $(5,000). After all assets are sold and liabilities are paid, there is $77,000 in cash to be distributed. Gage is unable to pay the deficiency. The journal entry to record the distribution should be:

Accepted Answer

A) Debit Henry, Capital $25,667; debit Luther, Capital $25,667; debit Gage, Capital $25,666; credit Cash $77,000. 
B) Debit Henry, Capital $42,500; debit Luther, Capital $34,500; credit Cash $77,000. 
C) Debit Henry, Capital $45,000; debit Luther, Capital $37,000; credit Gage, Capital $5,000; credit Cash $77,000. 
D) Debit Cash $77,000, debit Gage, Capital $5,000, credit Henry, Capital $45,000, credit Luther, Capital $37,000. 
E) Debit Cash $77,000; credit Henry, Capital $25,667; credit Luther, Capital $25,667; credit Gage, Capital $25,666. 
A) Debit Henry, Capital $25,667; debit Luther, Capital $25,667; debit Gage, Capital $25,666; credit Cash $77,000. 
B) Debit Henry, Capital $42,500; debit Luther, Capital $34,500; credit Cash $77,000. 
C) Debit Henry, Capital $45,000; debit Luther, Capital $37,000; credit Gage, Capital $5,000; credit Cash $77,000. 
D) Debit Cash $77,000, debit Gage, Capital $5,000, credit Henry, Capital $45,000, credit Luther, Capital $37,000. 
E) Debit Cash $77,000; credit Henry, Capital $25,667; credit Luther, Capital $25,667; credit Gage, Capital $25,666.

Question 5

The following information is available on TGR Enterprises, a partnership, for the most recent fiscal year:   There are three partners in TGR Enterprises: Tracey, Gregory and Rodgers. At the end of the year, the partners' capital accounts were in the ratio of 2:1:2, respectively, based on their proportionate investments and withdrawals. Compute the ending capital balances of the three partners.

Accepted Answer

A) Tracey = $108,000; Gregory = $54,000; Rodgers = $108,000. 
B) Tracey = $90,000; Gregory = $90,000; Rodgers = $90,000. 
C) Tracey = $204,000; Gregory = $102,000; Rodgers = $204,000. 
D) Tracey = $84,000; Gregory = $102,000; Rodgers = $84,000. 
E) Tracey = $60,000; Gregory = $30,000; Rodgers = $60,000. 
A) Tracey = $108,000; Gregory = $54,000; Rodgers = $108,000. 
B) Tracey = $90,000; Gregory = $90,000; Rodgers = $90,000. 
C) Tracey = $204,000; Gregory = $102,000; Rodgers = $204,000. 
D) Tracey = $84,000; Gregory = $102,000; Rodgers = $84,000. 
E) Tracey = $60,000; Gregory = $30,000; Rodgers = $60,000.

Question 6

Maxwell and Smart are forming a partnership. Maxwell is investing a building that has a market value of $180,000. However, the building carries a $56,000 mortgage that will be assumed by the partnership. Smart is investing $120,000 cash. The balance of Maxwell's Capital account will be:

Accepted Answer

A) $180,000. 
B) $124,000. 
C) $56,000. 
D) $64,000. 
E) $60,000. 
A) $180,000. 
B) $124,000. 
C) $56,000. 
D) $64,000. 
E) $60,000.

Question 7

Darien and Hayden agree to accept Kevin into their partnership. Kevin will contribute $22,000 in cash. Prepare the journal entry to record this transaction.

Accepted Answer

The answer of Darien and Hayden agree to accept Kevin...

Question 8

A partnership recorded the following journal entry:   This entry reflects:

Accepted Answer

A) Acceptance of a new partner who invests $60,000 and receives a $20,000 bonus. 
B) Withdrawal of a partner who pays a $10,000 bonus to each of the other partners. 
C) Addition of a partner who pays a bonus to each of the other partners. 
D) Additional investment into the partnership by Founder and Aqui. 
E) Withdrawal of $10,000 each by Founder and Aqui upon the admission of a new partner. 
A) Acceptance of a new partner who invests $60,000 and receives a $20,000 bonus. 
B) Withdrawal of a partner who pays a $10,000 bonus to each of the other partners. 
C) Addition of a partner who pays a bonus to each of the other partners. 
D) Additional investment into the partnership by Founder and Aqui. 
E) Withdrawal of $10,000 each by Founder and Aqui upon the admission of a new partner.

Question 9

Partnership accounting does not:

Accepted Answer

A) Use a capital account for each partner. 
B) Use a withdrawals account for each partner. 
C) Allocate net income to each partner according to the partnership agreement. 
D) Allocate net loss to each partner according to the partnership agreement. 
E) Tax the business entity. 
A) Use a capital account for each partner. 
B) Use a withdrawals account for each partner. 
C) Allocate net income to each partner according to the partnership agreement. 
D) Allocate net loss to each partner according to the partnership agreement. 
E) Tax the business entity.

Question 10

An unincorporated association of two or more persons to pursue a business for profit as co-owners is a:

Accepted Answer

A) Partnership. 
B) Proprietorship. 
C) Contractual company. 
D) Mutual agency. 
E) Voluntary organization. 
A) Partnership. 
B) Proprietorship. 
C) Contractual company. 
D) Mutual agency. 
E) Voluntary organization.

Question 11

Wallace, Simpson, and Prince are partners and share income and losses in a 3:4:3 ratio. The partnership's capital balances are Wallace, $68,000; Simpson, $90,000; and Prince, $42,000. Royal is admitted to the partnership on July 1 with a 20% equity and invests $50,000. The partnership would record the admission of Royal into the partnership as:

Accepted Answer

A) Debit Wallace, Capital $15,000; debit Simpson, Capital, $20,000; debit Prince, Capital $15,000; credit Royal, Capital $50,000. 
B) Debit Cash $20,000; credit Prince, Capital $20,000. 
C) Debit Cash $40,000; debit Wallace, Capital $3,000; debit Simpson, Capital, $4,000; debit Prince, Capital $3,000; credit Royal, Capital $50,000. 
D) Debit Cash $50,000; credit Royal, Capital $50,000. 
E) Debit Cash $50,000; credit Simpson, Capital $10,000, credit Royal, Capital $40,000. 
A) Debit Wallace, Capital $15,000; debit Simpson, Capital, $20,000; debit Prince, Capital $15,000; credit Royal, Capital $50,000. 
B) Debit Cash $20,000; credit Prince, Capital $20,000. 
C) Debit Cash $40,000; debit Wallace, Capital $3,000; debit Simpson, Capital, $4,000; debit Prince, Capital $3,000; credit Royal, Capital $50,000. 
D) Debit Cash $50,000; credit Royal, Capital $50,000. 
E) Debit Cash $50,000; credit Simpson, Capital $10,000, credit Royal, Capital $40,000.

Question 12

Advantages of a partnership include:

Accepted Answer

A) Limited life. 
B) Mutual agency. 
C) Unlimited liability. 
D) Co-ownership of property. 
E) Voluntary association. 
A) Limited life. 
B) Mutual agency. 
C) Unlimited liability. 
D) Co-ownership of property. 
E) Voluntary association.

Question 13

Which of the following statements is true?

Accepted Answer

A) Partners are employees of the partnership. 
B) Salaries to partners are expenses on the partnership income statement. 
C) Salary allowances usually reflect the relative value of services provided by partners. 
D) Salary allowances are expenses. 
E) Interest allowances are expenses. 
A) Partners are employees of the partnership. 
B) Salaries to partners are expenses on the partnership income statement. 
C) Salary allowances usually reflect the relative value of services provided by partners. 
D) Salary allowances are expenses. 
E) Interest allowances are expenses.

Question 14

Cox, North, and Lee form a partnership. Cox contributes $180,000, North contributes $150,000, and Lee contributes $270,000. Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested. If the partnership reports income of $150,000 for its first year, what amount of income is credited to Cox's capital account?

Accepted Answer

A) $50,000. 
B) $64,286. 
C) $45,000. 
D) $36,000. 
E) $60,000. 
A) $50,000. 
B) $64,286. 
C) $45,000. 
D) $36,000. 
E) $60,000.

Question 15

__________________ implies that each partner in a partnership can be called on to personally pay a partnership's debts.

Accepted Answer

The answer of __________________ implies that each partner in a...

Question 16

Jakobs, Penn, and Lundt are partners with beginning-of-year capital balances of $400,000, $320,000, and $160,000, respectively. The partners agreed to share income and loss as follows: Salary of $30,000 to Jakobs, $50,000 to Penn, and $36,000 to Lundt. An interest allowance of 8% on beginning-of-year capital balances. Any remaining balance is to be divided equally. If partnership net income for the year is $190,000, determine each partner's share and make the appropriate journal entry to close the Income Summary to the capital accounts.

Accepted Answer

The answer of Jakobs, Penn, and Lundt are partners with...

Question 17

Peters and Chong are partners and share equally in income or loss. Peters' current capital balance is $140,000 and Chong's is $130,000. Peters and Chong agree to accept Aaron with a 30% interest in the partnership. Aaron invests $98,000 in the partnership. The balances in Peters's and Chong's capital accounts after admission of the new partner equal:

Accepted Answer

A) Peters $140,000; Chong $130,000. 
B) Peters $146,200; Chong $136,200. 
C) Peters $145,000; Chong $135,000. 
D) Peters $133,800; Chong $123,800. 
E) Peters $166,027; Chong $156,027. 
A) Peters $140,000; Chong $130,000. 
B) Peters $146,200; Chong $136,200. 
C) Peters $145,000; Chong $135,000. 
D) Peters $133,800; Chong $123,800. 
E) Peters $166,027; Chong $156,027.

Question 18

When partners invest in a partnership, their capital accounts are debited for the amount invested.

Accepted Answer

A) True 
 B)False

Question 19

Salary allowances are reported as salaries expense on a partnership income statement.

Accepted Answer

A) True 
 B)False

Question 20

Feldt is a partner in Feldt & Dodson Company. Feldt's share of the partnership income is $18,600 and her average partnership equity is $155,000. Her partner return on equity equals 8.33.
Partner Return on Equity = Partnership Income/Average Partnership Equity
Partner Return on Equity = $18,600/$155,000 = 0.12 = 12%

Accepted Answer

A) True 
 B)False

Identify and discuss the key characteristics of partnerships. Also, identify other organizations that possess partnership characteristics.

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

Maxwell and Smart are forming a partnership. Maxwell is investing a building that has a market value of $180,000. However, the building carries a $56,000 mortgage that will be assumed by the partnership. Smart is investing $120,000 cash. The balance of Maxwell's Capital account will be:

Darien and Hayden agree to accept Kevin into their partnership. Kevin will contribute $22,000 in cash. Prepare the journal entry to record this transaction.

A partnership recorded the following journal entry: This entry reflects:

Partnership accounting does not:

An unincorporated association of two or more persons to pursue a business for profit as co-owners is a:

Advantages of a partnership include:

Which of the following statements is true?

__________________ implies that each partner in a partnership can be called on to personally pay a partnership's debts.

When partners invest in a partnership, their capital accounts are debited for the amount invested.

Salary allowances are reported as salaries expense on a partnership income statement.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for 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

Applying Present and Future Values

Investments and International Operations

Filters

Exam 16: Reporting and Analyzing Partnerships

Identify and discuss the key characteristics of partnerships. Also, identify other organizations that possess partnership characteristics.

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

Maxwell and Smart are forming a partnership. Maxwell is investing a building that has a market value of $180,000. However, the building carries a $56,000 mortgage that will be assumed by the partnership. Smart is investing $120,000 cash. The balance of Maxwell's Capital account will be:

Darien and Hayden agree to accept Kevin into their partnership. Kevin will contribute $22,000 in cash. Prepare the journal entry to record this transaction.

A partnership recorded the following journal entry: This entry reflects:

Partnership accounting does not:

An unincorporated association of two or more persons to pursue a business for profit as co-owners is a:

Advantages of a partnership include:

Which of the following statements is true?

__________________ implies that each partner in a partnership can be called on to personally pay a partnership's debts.

When partners invest in a partnership, their capital accounts are debited for the amount invested.

Salary allowances are reported as salaries expense on a partnership income statement.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for 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

Applying Present and Future Values

Investments and International Operations

Filters