Question 1

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a:

Accepted Answer

A)   General partnership.
B)   Partnership.
C)   Limited liability partnership.
D)   Limited liability company.
E)   Limited partnership.F) B) and E)
G) A) and B)

Question 2

The statement of changes in equity shows the beginning balance in retained earnings,plus investments, less partners' withdrawals, the income or loss, and the ending balance in retained earnings.

Accepted Answer

A) True 
 B)False

Question 3

If a partnership contract provides for interest at 10% annually on each partner's investment, the interest:

Accepted Answer

A)   Is an expense of the business.
B)   Is ignored when earnings are not sufficient to pay interest.
C)   Legally becomes a liability of the partnership.
D)   Must be paid in cash.
E)   Provides for the sharing of a portion of the partnership earnings in the capital ratio.F) None of the above
G) A) and D)

Question 4

If at the time of partnership liquidation, Breck has a $5,000 capital deficiency and paysthe partnership $5,000 to cover the deficiency, then Breck is entitled to share in the final distribution of cash.

Accepted Answer

A) True 
 B)False

Question 5

The partnership agreement gives Tsang 60% and Breck 40% of partnership incomes or losses. The partnership had a net loss of $27,000. Tsang's share of the loss was $16,200. Breck's share was $10,800.

Accepted Answer

A) True 
 B)False

Question 6

When a partnership is liquidated, the business ends.

Accepted Answer

A) True 
 B)False

Question 7

The withdrawals account of each partner is:

Accepted Answer

A)   Credited when closed to his/her capital account.
B)   A permanent account and not closed.
C)   Credited with his/her share of profit.
D)   Debited when closed to his/her capital account.
E)   Debited with his/her share of losses.F) C) and D)
G) B) and C)

Question 8

In order to buy into an existing partnership, the new partner must contribute cash.

Accepted Answer

A) True 
 B)False

Question 9

Puff and Smoke agreed to share profits and losses in their partnership on a 7:3 basis, respectively, after a salary allowance of $25,000 is allocated to Puff. Earnings for theperiod total $115,000. What will be the total amount credited to Puff's Capital account when the Income Summary account is closed?

Accepted Answer

A)   $63,000
B)   $52,000
C)   $90,000
D)   $88,000
E)   $25,000F) B) and E)
G) A) and B) D

Question 10

A capital deficiency exists when all partners have a credit balance in their capital accounts.

Accepted Answer

A) True 
 B)False

Question 11

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

Accepted Answer

A) True 
 B)False

Question 12

A bonus may be paid:

Accepted Answer

A)   To a partner who provides services in excess of the salary allowance.
B)   To an existing partner with exceptional talents.
C)   By a new partner when the current fair value of a partnership is less than the recorded amounts of equity.
D)   By a new partner when the current fair value of a partnership is greater than the recorded amounts of equity.
E)   All of these answers are correct.F) B) and C)
G) A) and D)

Question 13

The withdrawal accounts of each partner are closed to retained earnings.

Accepted Answer

A) True 
 B)False

Question 14

Partners' withdrawals are credited to their withdrawals accounts.

Accepted Answer

A) True 
 B)False

Question 15

The TJR Partnership recorded the following journal entry:

Accepted Answer

A)   Acceptance of a new partner who invests $20,000 and receives a $4,000 bonus.
B)   Additional investment into the partnership by Tanner and Jackson.
C)   Withdrawal of $2,000 each by Tanner and Jackson.
D)   Withdrawal of a partner who pays a $2,000 bonus to each of the other partners.
E)   Addition of a partner who pays a bonus to each of the other partners.F) A) and C)
G) A) and E) A

Question 16

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

Accepted Answer

A) True 
 B)False  True

Question 17

The legal relationship among the partners whereby each partner is an agent of thepartnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business is called:

Accepted Answer

A)   A partnership contract.
B)   Unlimited liability.
C)   Voluntary association.
D)   Mutual agency.
E)   Preemptive right.F) None of the above
G) A) and E)

Question 18

The fact that partnership assets are owned jointly by all partners is called:

Accepted Answer

A)   Unlimited liability.
B)   Limited partnership.
C)   Sole proprietorship.
D)   Co-ownership of property.
E)   Mutual agency.F) All of the above
G) A) and B)

Question 19

When a new partner is added to a partnership:

Accepted Answer

A)   The partnership ends.
B)   The underlying business ends.
C)   The partnership continues.
D)   The partnership ends, but the underlying business continues.
E)   The underlying business continues.F) B) and E)
G) A) and D)

Question 20

Partnership accounting:

Accepted Answer

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

Exam 11: Partnerships

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a:

Correct Answer
verified

The statement of changes in equity shows the beginning balance in retained earnings,plus investments, less partners' withdrawals, the income or loss, and the ending balance in retained earnings.

Correct Answer
verified

If a partnership contract provides for interest at 10% annually on each partner's investment, the interest:

Correct Answer
verified

If at the time of partnership liquidation, Breck has a $5,000 capital deficiency and paysthe partnership $5,000 to cover the deficiency, then Breck is entitled to share in the final distribution of cash.

Correct Answer
verified

The partnership agreement gives Tsang 60% and Breck 40% of partnership incomes or losses. The partnership had a net loss of $27,000. Tsang's share of the loss was $16,200. Breck's share was $10,800.

Correct Answer
verified

When a partnership is liquidated, the business ends.

Correct Answer
verified

The withdrawals account of each partner is:

Correct Answer
verified

In order to buy into an existing partnership, the new partner must contribute cash.

Correct Answer
verified

Correct Answer
verified
D

A capital deficiency exists when all partners have a credit balance in their capital accounts.

Correct Answer
verified

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

Correct Answer
verified

A bonus may be paid:

Correct Answer
verified

The withdrawal accounts of each partner are closed to retained earnings.

Correct Answer
verified

Partners' withdrawals are credited to their withdrawals accounts.

Correct Answer
verified

The TJR Partnership recorded the following journal entry:

Correct Answer
verified
A

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

Correct Answer
verified
True

The legal relationship among the partners whereby each partner is an agent of thepartnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business is called:

Correct Answer
verified

The fact that partnership assets are owned jointly by all partners is called:

Correct Answer
verified

When a new partner is added to a partnership:

Correct Answer
verified

Partnership accounting:

Correct Answer
verified

Exam 11: Partnerships

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a:

Correct AnswerverifiedShow Answer

The statement of changes in equity shows the beginning balance in retained earnings,plus investments, less partners' withdrawals, the income or loss, and the ending balance in retained earnings.

Correct AnswerverifiedShow Answer

If a partnership contract provides for interest at 10% annually on each partner's investment, the interest:

Correct AnswerverifiedShow Answer

If at the time of partnership liquidation, Breck has a $5,000 capital deficiency and paysthe partnership $5,000 to cover the deficiency, then Breck is entitled to share in the final distribution of cash.

Correct AnswerverifiedShow Answer

The partnership agreement gives Tsang 60% and Breck 40% of partnership incomes or losses. The partnership had a net loss of $27,000. Tsang's share of the loss was $16,200. Breck's share was $10,800.

Correct AnswerverifiedShow Answer

When a partnership is liquidated, the business ends.

Correct AnswerverifiedShow Answer

The withdrawals account of each partner is:

Correct AnswerverifiedShow Answer

In order to buy into an existing partnership, the new partner must contribute cash.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

A capital deficiency exists when all partners have a credit balance in their capital accounts.

Correct AnswerverifiedShow Answer

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

Correct AnswerverifiedShow Answer

A bonus may be paid:

Correct AnswerverifiedShow Answer

The withdrawal accounts of each partner are closed to retained earnings.

Correct AnswerverifiedShow Answer

Partners' withdrawals are credited to their withdrawals accounts.

Correct AnswerverifiedShow Answer

The TJR Partnership recorded the following journal entry:

Correct AnswerverifiedA

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

Correct AnswerverifiedTrue

The legal relationship among the partners whereby each partner is an agent of thepartnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business is called:

Correct AnswerverifiedShow Answer

The fact that partnership assets are owned jointly by all partners is called:

Correct AnswerverifiedShow Answer

When a new partner is added to a partnership:

Correct AnswerverifiedShow Answer

Partnership accounting:

Correct AnswerverifiedShow Answer

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D

Correct Answer
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A

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True

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