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In a partnership,the income is taxed at the partnership level as well as at the personal level of the owners.

A) True
B) False

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The articles of partnership is a written contract between partners that specifies the name,location,and nature of the business;the duties of each partner;and the method of sharing profits and losses among the partners.

A) True
B) False

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Harry,Tony,and Liza run a partnership firm.In the process of liquidation,the partnership sells non-cash assets,having a book value of $78,000,for $86,000.Which of the following is TRUE of the journal entries?


A) Cash will be credited by $8000.
B) Non-cash assets will be credited for $86,000.
C) Cash will be credited for $78,000.
D) Non-cash assets will be credited for $78,000.

E) C) and D)
F) A) and C)

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Allan and Ralph are partners.Allan has a capital balance of $92,000 and Ralph has a capital balance of $75,000.Carol invested $60,000 to acquire an ownership interest of $50,000.Which of the following is TRUE of the impact of the transaction on the balance sheet?


A) Asset increases and the equity will remain unchanged.
B) Both assets and equity will increase.
C) Assets will increase and equity will decrease.
D) Assets will decrease and the equity will remain unchanged.

E) A) and B)
F) B) and C)

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Andy and Ian formed a partnership on April 1,2019.Andy contributes equipment to the business that originally cost $82,000 and on which accumulated depreciation of $16,000 has been recorded.The current market value of the equipment is $74,000.The value of the equipment recorded in the partnership journal is ________.


A) $66,000
B) $74,000
C) $58,000
D) $82,000

E) B) and D)
F) B) and C)

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The addition of a new partner to a firm does not dissolve the old partnership.

A) True
B) False

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A written partnership agreement is also known as the articles of partnership.

A) True
B) False

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Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash.Which of the following is the correct journal entry in the books of the firm for the above transfer of interest? A) B) C) D) Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash.Which of the following is the correct journal entry in the books of the firm for the above transfer of interest?


A)
Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash.Which of the following is the correct journal entry in the books of the firm for the above transfer of interest? A) B) C) D)
B)
Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash.Which of the following is the correct journal entry in the books of the firm for the above transfer of interest? A) B) C) D)
C)
Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash.Which of the following is the correct journal entry in the books of the firm for the above transfer of interest? A) B) C) D)
D)
Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash.Which of the following is the correct journal entry in the books of the firm for the above transfer of interest? A) B) C) D)

E) None of the above
F) B) and D)

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Capital deficiency occurs when a partner's capital account has a credit balance.

A) True
B) False

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Which of the following is TRUE of ownership changes in a partnership?


A) Admitting a new partner does not change the core structure of the old partnership.
B) The purchase of an existing partner's interest is a transaction between the new partner and the partnership firm.
C) Any time the partner mix changes,the old partnership ceases to exist and a new partnership begins.
D) A person can become a partner by purchasing an existing partner's interest,even without the approval of the other partners.

E) A) and C)
F) B) and C)

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In which of the following ways does a limited partnership differ from a general partnership?


A) In a limited partnership,the general partner has an unlimited personal liability in the partnership;whereas in a general partnership,all partners have unlimited personal liability.
B) In a limited partnership,all the partners make an equal contribution to the daily operations;whereas in a general partnership,the general partner assumes a greater responsibility of the operation.
C) In a limited partnership,there will be only one class of partners named limited partners;whereas in a general partnership,there will be only one class of partners named general partners.
D) In a limited partnership,each partner is not personally liable for the malpractice committed by another partner;whereas in a general partnership,only the general partner is personally liable for the malpractice committed by another partner.

E) C) and D)
F) B) and D)

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Which of the following is TRUE of a partnership balance sheet?


A) Each partner's assets will be shown separately.
B) Each partner's liabilities will be shown separately.
C) Each partner's equity will be shown separately.
D) Each partner's assets,liabilities,and equity will be shown separately.

E) None of the above
F) B) and D)

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Irrespective of the original profit-and-loss-sharing ratio,the bonus received by existing partners-by admitting a new partner-will be allocated equally.

A) True
B) False

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Mathew,Patrick,and Robin and have capital balances of $75,000,$125,000 and $93,000,respectively.As per the partnership agreement,Mathew gets a profit share of 2/9;Patrick gets 4/9;and Robin gets 3/9.Partnership agrees to pay $65,000 as final settlement to Mathew.How much bonus will Robin receive as a result of this transaction? (Do not round intermediate calculations and round the final answer to the nearest dollar. )


A) $5714
B) $4286
C) $5556
D) $4444

E) A) and C)
F) B) and C)

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Sarah and Jane formed a partnership with capital contributions of $210,000 and $123,000,respectively.Peter contributed $86,000 to acquire an ownership interest of 12% in the new partnership.How much is the total bonus for the existing partners?


A) $86,000
B) $35,720
C) $50,280
D) $17,860

E) A) and B)
F) B) and C)

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Like a sole proprietorship's statement of owner's equity,the statement of partners' equity will show all the partners' capital accounts as one account.

A) True
B) False

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Which of the following is a characteristic of a partnership?


A) Partnerships pay corporate income taxes.
B) Partnerships are listed on a stock exchange.
C) Partnerships are organized as corporations.
D) Partners have co-ownership of the partnership's assets.

E) A) and D)
F) A) and C)

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Lori and Mike enter into a partnership and decide to share profits and losses as follows: 1.The first allocation is a salary allowance with Lori receiving $12,000 and Mike receiving $25,000. 2) The second allocation is 20% of the partners' capital balances at year end.On December 31,2019,the capital balances for Lori and Mike are $86,000 and $344,000,respectively. 3) Any remaining profit or loss is allocated equally. For the year ending December 31,2019,the partnership reported a net loss of $122,000.The journal entry to record the loss allocation will ________.


A) debit Lori,Capital for $93,300
B) debit Lori,Capital for $28,700
C) debit Mike,Capital for $93,800
D) credit Mike,Capital for $93,800

E) A) and B)
F) A) and D)

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Rex and Sandy are partners.Rex has a capital balance of $370,000 and Sandy has a capital balance of $280,000.Marcus contributes a building with a fair market value of $220,000 in order to acquire an interest in the partnership.What is Marcus's partnership share after he makes the investment?(Assume no bonus to any partner.Round the percentage to one decimal place. )


A) 25.3%
B) 32.2%
C) 42.5%
D) 17.2%

E) None of the above
F) All of the above

Correct Answer

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Steve owns 64% and Mark owns 36% of a partnership business.They purchase equipment with a suggested value of $9600.The current market value of the equipment at the time of purchase was $9100.At the time of the balance sheet preparation,depreciation of $160 was recorded.Based on the information provided,which of the following is TRUE of the partnership?


A) The Equipment account will be debited at $9100 on the date of purchase.
B) The Equipment account will be debited at $8940 on the date of purchase.
C) The Equipment account will be debited at $9600 on the date of purchase.
D) The Equipment account will be debited at $9440 on the date of purchase.

E) A) and B)
F) None of the above

Correct Answer

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