Multiple Choice Questions

Lia Chen and Martin Monroe formed a partnership, dividing income as follows:Annual salary allowance to Chen of $35,000.Interest of 4% on each partner's capital balance on January 1.Any remaining net income divided to Chen and Monroe, 2:1.Chen and Monroe had $90,000 and $140,000, respectively, in their January 1 capital balances. Net income for the year was $70,000.
  • $37,500 and $112,500
  • chen: 55800monroe: 14200
  • prado: 5250nicks: 24750
  • Luke, $38,000; John, $55,000
Tomas and Saturn are partners who share income in the ratio of 3:Their capital balances are $80,000 and $120,000, respectively. The partnership generated net income of $30,What is Tomas's capital balance after closing the revenue and expense accounts to the capital accounts?
  • 65000
  • 102500
  • 146000
  • 127500
Which of the following is an advantage of a general partnership when compared to a corporation?
  • The partnership has limited life.
  • Dissolution occurs only when all partners agree.
  • . The partners have co-ownership of partnership property.
  • The partnership is relatively inexpensive to organize.
If the partnership purchases the withdrawing partner's interest, the assets and the owners' equity of the partnership are reduced by
  • all of these
  • The partnership has limited life.
  • The partnership is relatively inexpensive to organize.
  • the purchase price
Which of the following is a disadvantage of a partnership when compared to a corporation?
  • . The partners have co-ownership of partnership property.
  • The partnership has limited life.
  • the purchase price
  • The partnership is relatively inexpensive to organize.
Unless otherwise stated in the partnership agreement, income (and loss) is allocated to each partner _____.
  • The partnership has limited life.
  • equally
  • the purchase price
  • mutual agency
Tomas and Saturn are partners who share income in the ratio of 3:Their capital balances are $88,800 and $95,400, respectively. The partnership generated net income of $42,What is Tomas's capital balance after closing the revenue and expense accounts to the capital accounts?
  • 127500
  • 120450
  • 146000
  • 65000
Partnership income and losses are usually divided on the basis of interest, salaries, and stated ratios because
  • The partnership is relatively inexpensive to organize.
  • a statement of partnership equity
  • The partnership has limited life.
  • partners seldom contribute time and resources equally
The first step of the liquidation process is to
  • a statement of partnership equity
  • sell the partnership assets
  • a credit to partner c, capital
  • all partners have limited liability
As part of the initial investment, Jackson contributes accounts receivable that had a balance of $22,500 in the accounts of a sole proprietorship. Of this amount, $3,000 is deemed completely worthless. For the remaining accounts, the partnership will establish a provision for possible future uncollectible accounts of $1,The amount debited to Accounts Receivable for the new partnership is
  • 14000
  • 127500
  • 119000
  • 19500
On January 1, Johnson invested $105,000 and Tyler invested $210,000 in a newly formed partnership. They agreed to salary allowances of $60,000 per year to Johnson and $40,000 per year to Tyler, plus an interest allowance of 10% based on the partners' capital balances on JanuaryAny remaining income (loss) is to be shared equally. When net income is $105,000 for the year, the allocation of income to the partners is _____.
  • $57,250 to Johnson; $47,750 to Tyler
  • a credit to partner c, capital
  • chen: 55800monroe: 14200
  • $37,500 and $112,500
Sandra and Kelsey are forming a partnership. Sandra will invest a piece of equipment with a book value of $7,500 and a fair market value of $18,Kelsey will invest a building with a book value of $40,000 and a fair market value of $44,000.What amount will be recorded to Sandra's capital account?
  • 14000
  • 44000
  • 63000
  • 18000
The changes in partner capital accounts for a period of time are reported in
  • The partnership has limited life.
  • pay the claims of creditors
  • statement of members equity
  • a statement of partnership equity
Bobbi and Stuart are partners. The partnership capital of Bobbi is $40,000 and that of Stuart is $70,Bobbi sells his interest in the partnership to John for $50,The journal entry to record the admission of John as a new partner would include a credit to
  • current market values
  • a statement of partnership equity
  • John's capital account for $40,000
  • chen: 55800monroe: 14200
Revenue per employee is computed as
  • a credit to partner c, capital
  • a statement of partnership equity
  • revenue dived by the number of employees
  • pay the claims of creditors
Which of the following is a characteristic of a general partnership?
  • . The partners have co-ownership of partnership property.
  • The partnership has limited life.
  • Dissolution occurs only when all partners agree.
  • limited liability company
An advantage of the partnership form of business organization is
  • proprietorship
  • ease of formation
  • statement of members equity
  • all of these
Tomas and Saturn are partners who share income in the ratio of 3:Their capital balances are $80,000 and $120,000, respectively. The partnership generated net income of $30,What is Saturn's capital balance after closing the revenue and expense accounts to the capital accounts?
  • 146000
  • 18000
  • 127500
  • 102500
Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income in the ratio of capital balances
  • prado: 5250nicks: 24750
  • chen: 55800monroe: 14200
  • $37,500 and $112,500
  • $60,000; $45,000; $45,000
The characteristic of a partnership that gives the authority to any partner to legally bind the partnership and all other partners to business contracts is called
  • all of these
  • equally
  • mutual agency
  • the purchase price
Before a new partner is admitted, the balances of a partnership's asset accounts should be stated at
  • limited liability company
  • a credit to partner c, capital
  • statement of members equity
  • current market values
Henry Jones contributed equipment, inventory, and $44,000 cash to a partnership. The equipment had a book value of $35,000 and market value of $28,The inventory had a book value of $25,000 but only had a market value of $12,000 due to obsolescence. The partnership also assumed a $15,000 note payable owed by Henry that was originally used to purchase the equipment.What amount should be recorded to Henry's capital account?
  • 14000
  • 69000
  • 63000
  • 71200
Hannah Johnson contributed equipment, inventory, and $45,300 cash to a partnership. The equipment had a book value of $28,500 and a market value of $32,The inventory had a book value of $56,800 but only had a market value of $10,500 due to obsolescence. The partnership also assumed a $16,900 note payable owed by Hannah that was originally used to purchase the equipment.What amount should be recorded to Hannah's capital account?
  • 63000
  • 19500
  • 71200
  • 14000
Singer and McMann are partners in a business. Singer's original capital was $40,000 and McMann's was $60,They agree to salaries of $12,000 and $18,000 for Singer and McMann, respectively, and 10% interest on original capital. If they agree to share the remaining profits and losses on a 3:2 ratio, what will McMann's share of the income be if the income for the year is $15,000?
  • 14000
  • 19500
  • 63000
  • 69000
Patty and Paul are partners who share income in the ratio of 3:Their capital balances are $90,000 and $130,000, respectively, on JanuaryThe partnership generated net income of $40,000 for the year. What is Paul's capital balance after closing the revenue and expense accounts to the capital accounts?
  • 146000
  • 119000
  • 127500
  • 120450
Which one of the following business forms has unlimited liability?
  • all of these
  • The partnership has limited life.
  • The partnership is relatively inexpensive to organize.
  • proprietorship
When a limited liability company is formed,
  • sell the partnership assets
  • The partnership is relatively inexpensive to organize.
  • . The partners have co-ownership of partnership property.
  • all partners have limited liability
The journal entry required to transfer capital of Partners A and B to Partner C would include
  • a statement of partnership equity
  • a credit to partner c, capital
  • statement of members equity
  • sell the partnership assets
Rex and Kelsey are partners who share income in the ratio of 3:Their capital balances are $95,000 and $140,000, respectively, on JanuaryThe partnership generated net income of $40,000 for the year. What is Rex's capital balance after closing the revenue and expense accounts to the capital accounts?
  • 14000
  • 119000
  • 146000
  • 44000
Tomas and Saturn are partners who share income in the ratio of 3:Their capital balances are $40,000 and $60,000, respectively. The partnership generated net income of $20,What is Saturn's capital balance after closing the revenue and expense accounts to the capital accounts?
  • 120450
  • 65000
  • 102500
  • 127500
Jenkins, CPAs earned $5,000,000 during the year using 20 employees. Jenkins' total assets were $9,000,The revenue per employee for the year was
  • 69000
  • 14000
  • 63000
  • 250000
When the partnership goes out of business and the normal operations are discontinued, the accounts should be adjusted and closed except
  • proprietorship
  • the purchase price
  • mutual agency
  • all of these
John Prado and Ayana Nicks formed a partnership, dividing income as follows:Annual salary allowance to Prado, $10,000 and Nicks, $28,000.Interest of 5% on each partner's capital balance on January 1.Any remaining net income divided equally.
  • statement of members equity
  • prado: 5250nicks: 24750
  • $37,500 and $112,500
  • Luke, $38,000; John, $55,000
0 h : 0 m : 1 s

Multiple Choice Questions
Answered Not Answered Not Visited Correct : 0 Incorrect : 0