Question 1

Partnership accounting

Accepted Answer

A)  Is the same as accounting for a sole proprietorship
B)  Is the same as accounting for a corporation
C)  Is the same as accounting for a sole proprietorship,except that separate capital and withdrawal accounts are kept for each partner
D)  Is the same as accounting for a not-for profit organization
E)  None of theseF) A) and B)
G) A) and E)

Question 2

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

Accepted Answer

A) True 
 B)False

Question 3

A partner can withdraw from a partnership by

Accepted Answer

A)  Selling his/her interest to another person who pays for it in cash
B)  Selling his/her interest to another person who pays for it with non-cash assets
C)  Receiving cash or other assets of the partnership equal to the amount of his/her capital account
D)  Receiving cash or other assets of the partnership greater than the amount of his/her capital account
E)  All of theseF) A) and B)
G) C) and E)

Question 4

Explain the type of information needed to prepare journal entries to record the formation of a partnership.

Accepted Answer

When partners invest in a partnership,the current fair value of their individual contributions is credited to each partner's capital account.Partners normally contribute assets which are debited to the appropriate asset account.Partners may contribute assets that have related liabilities.The liabilities assumed by the partnership are credited to the appropriate liability account.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Lauren and Jenna formed a partnership with capital contributions with a fair value of $145,000 and $125,000,respectively.Their partnership agreement calls for Lauren to receive a $10,000 annual salary allowance.Also,each partner is to receive a share of earnings equal to a 5% return on capital investments.The remaining income or loss is to be divided equally.If the profit for the year is $148,000,then Lauren and Jenna's respective shares are

Accepted Answer

A)  $79,500; $68,500
B)  $74,000; $74,000
C)  $78,000; $70,000
D)  $145,000; $3,000
E)  $80,000; $68,000F) D) and E)
G) B) and D)

Question 7

In the absence of a partnership agreement,the law says that income of a partnership will be shared equally by the partners.

Accepted Answer

A) True 
 B)False

Question 8

When a partner is unable to pay a capital deficiency

Accepted Answer

A)  The partner must take out a loan to cover the deficiency.
B)  The deficiency is absorbed by the remaining partners.
C)  The partnership ends.
D)  The deficient partner has a personal liability to the other partners.
E)  The deficiency is absorbed by the remaining partners and the deficient partner has a personal liability to the other partners.F) B) and D)
G) B) and C) E

Question 9

If at the time of partnership liquidation,Claire has a $7,000 capital deficiency and pays the partnership $7,000 to cover the deficiency,then Claire is entitled to share in the final distribution of cash.

Accepted Answer

A) True 
 B)False

Question 10

The TJR Partnership recorded the following journal entry:   Cash 20,000 B. Tara, Capital 2,000 R. Jillian, Capital 2,000 S. Rose, Capital 24,000\begin{array}{|l|r|r|}\hline 	ext { Cash } & 20,000 \\hline 	ext { B. Tara, Capital } & 2,000 \\hline 	ext { R. Jillian, Capital } & 2,000 \\hline	ext { S. Rose, Capital }&&24,000\\hline\end{array} Cash  B. Tara, Capital  R. Jillian, Capital  S. Rose, Capital ​20,0002,0002,000​24,000​​  The transaction reflects

Accepted Answer

A)  Withdrawal of $2,000 each by Tanner and Jackson
B)  Withdrawal of a partner who pays a $2,000 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 Tara and Jillian
E)  Acceptance of a new partner who invests $20,000 and receives a $4,000 bonus F) All of the above
G) A) and B)

Question 11

When a partner leaves a partnership,the partnership ends.

Accepted Answer

A) True 
 B)False

Question 12

With the consent of the other partners,Frank decides to sell one half of his $50,000 interest in the DDB Partnership to Bob privately for $22,500.Prepare the journal entry to record the transaction.

Accepted Answer

The answer of With the consent of the other partners,Frank...

Question 13

Salary and interest allowances are reported as expenses on a partnership income statement.

Accepted Answer

A) True 
 B)False

Question 14

In a limited partnership the general partner has unlimited liability.

Accepted Answer

A) True 
 B)False

Question 15

Discuss the options for the allocation of income and loss among partners.

Accepted Answer

In the absence of a partnership agreement,income and losses are shared equally by the partners.A partnership agreement should specify how to allocate partnership income or loss among partners.Allocation can be made based on a fractional share of ownership,salary allowances,and/or interest allowances.

Question 16

Cook and Parker formed a partnership with capital contributions of $50,000 and $60,000 respectively.Their partnership agreement called for Cook to receive a $9,000 annual salary allowance,and each partner to receive a share of profit equal to a 5% return on capital investments.The remaining income or loss is to be divided 50% to Cook and 50% to Parker.If the profit for the year is $105,000,what are Cook and Parson's respective shares? Prepare the required closing entry.

Accepted Answer

The answer of Cook and Parker formed a partnership with...

Question 17

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a

Accepted Answer

A)  Partnership
B)  Proprietorship
C)  Partnership contract
D)  Mutual agency
E)  Divided authorityF) C) and D)
G) C) and E)

Question 18

Unlimited liability of partners is

Accepted Answer

A)  The agreement between partners that sets forth the terms under which the affairs of the partnership will be conducted
B)  In the absence of a contrary agreement,the legal responsibility of partners in a partnership to share all losses equally
C)  The legal relationship between partners in which all the partners must share liability for the partnership debts,but only up to the amount of their capital accounts
D)  The legal relationship among the partners whereby each partner is an agent of the partnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business
E)  The legal relationship among general partners that makes each of them responsible for paying all the debts of the partnership if the other partners are unable to pay their sharesF) A) and B)
G) A) and C)

Question 19

Rachel,Jenna and Lauren are partners with capital balances of $80,000,$10,000,and $10,000,respectively.Profit for the year is $150,000.Prepare the necessary journal entries to close Income Summary to the capital accounts if:(a)The partners agree to divide income based on their beginning-of-year capital balances.(b)The partners agree to divide income based on the ratio of 5:3:2,respectively.(c)The partnership agreement is silent as to division of income.

Accepted Answer

The answer of Rachel,Jenna and Lauren are partners with capital...

Question 20

Assets invested by a partner into a partnership remain the property of the individual partner.

Accepted Answer

A) True 
 B)False

Exam 3: Partnerships

Partnership accounting

Correct Answer
verified

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

Correct Answer
verified

A partner can withdraw from a partnership by

Correct Answer
verified

Explain the type of information needed to prepare journal entries to record the formation of a partnership.

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

Correct Answer
verified

Correct Answer
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In the absence of a partnership agreement,the law says that income of a partnership will be shared equally by the partners.

Correct Answer
verified

When a partner is unable to pay a capital deficiency

Correct Answer
verified
E

If at the time of partnership liquidation,Claire has a $7,000 capital deficiency and pays the partnership $7,000 to cover the deficiency,then Claire is entitled to share in the final distribution of cash.

Correct Answer
verified

The TJR Partnership recorded the following journal entry: $\begin{array}{|l|r|r|}\hline \text { Cash } & 20,000 \\\hline \text { B. Tara, Capital } & 2,000 \\\hline \text { R. Jillian, Capital } & 2,000 \\\hline\text { S. Rose, Capital }&&24,000\\\hline\end{array}$ The transaction reflects

Correct Answer
verified

When a partner leaves a partnership,the partnership ends.

Correct Answer
verified

With the consent of the other partners,Frank decides to sell one half of his $50,000 interest in the DDB Partnership to Bob privately for $22,500.Prepare the journal entry to record the transaction.

Correct Answer
verified

Salary and interest allowances are reported as expenses on a partnership income statement.

Correct Answer
verified

In a limited partnership the general partner has unlimited liability.

Correct Answer
verified

Discuss the options for the allocation of income and loss among partners.

Correct Answer
verified

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a

Correct Answer
verified

Unlimited liability of partners is

Correct Answer
verified

Correct Answer
verified

Assets invested by a partner into a partnership remain the property of the individual partner.

Correct Answer
verified

Exam 3: Partnerships

Partnership accounting

Correct AnswerverifiedShow Answer

The equity section of the balance sheet of a partnership usually shows the individual capital account balance of each partner.

Correct AnswerverifiedShow Answer

A partner can withdraw from a partnership by

Correct AnswerverifiedShow Answer

Explain the type of information needed to prepare journal entries to record the formation of a partnership.

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the absence of a partnership agreement,the law says that income of a partnership will be shared equally by the partners.

Correct AnswerverifiedShow Answer

When a partner is unable to pay a capital deficiency

Correct AnswerverifiedE

If at the time of partnership liquidation,Claire has a $7,000 capital deficiency and pays the partnership $7,000 to cover the deficiency,then Claire is entitled to share in the final distribution of cash.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a partner leaves a partnership,the partnership ends.

Correct AnswerverifiedShow Answer

With the consent of the other partners,Frank decides to sell one half of his $50,000 interest in the DDB Partnership to Bob privately for $22,500.Prepare the journal entry to record the transaction.

Correct AnswerverifiedShow Answer

Salary and interest allowances are reported as expenses on a partnership income statement.

Correct AnswerverifiedShow Answer

In a limited partnership the general partner has unlimited liability.

Correct AnswerverifiedShow Answer

Discuss the options for the allocation of income and loss among partners.

Correct AnswerverifiedShow Answer

An unincorporated association of two or more persons to carry on a business for profit as co-owners is called a

Correct AnswerverifiedShow Answer

Unlimited liability of partners is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assets invested by a partner into a partnership remain the property of the individual partner.

Correct AnswerverifiedShow Answer

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E

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