ACC 206 Week 4 Quiz Chapter 12 -
Multiple Choice Question 83
If the partnership agreement specifies salaries to partners, interest on partners' capital, and the remainder on a fixed ratio, and partnership net income is not sufficient to cover both salaries and interest,
- only salaries are allocated to the partners.
- both salaries and interest are allocated to the partners.
- only interest is allocated to the partners.
- the entire net income is shared on a fixed ratio.
Multiple Choice Question 57
Which of the following statements is incorrect regarding partnership agreements?
- Oral agreements are preferable to written articles.
- It should specify the different relationships that are to exist among the partners.
- It should state procedures for submitting disputes to arbitration.
- It may be referred to as the “articles of co-partnership.”
Multiple Choice Question 130
When a partnership interest is purchased
- every partner's capital account is affected.
- all partners will receive some part of the purchase price.
- the transaction is a personal transaction between the purchaser and the selling partner(s).
- the buyer receives equity equal to the amount of cash paid.
Multiple Choice Question 111
In the liquidation process, if a capital account shows a deficiency
- it can be written off to a "Gain" account.
- it may be written off to a "Loss" account.
- it is disregarded until after the partnership books are closed.
- the partner with a deficiency has an obligation to the partnership for the amount of the deficiency.
Multiple Choice Question 79
A partner's share of net income is recognized in the accounts through
- correcting entries.
- accrual entries.
Multiple Choice Question 75
Partners Cantor and Dickens have capital balances in a partnership of $160,000 and $240,000, respectively. They agree to share profits and losses as follows:
As salaries $40,000 $48,000
As interest on capital at the beginning of the year 10% 10%
Remaining profits or losses 50% 50%
If net loss for the year was $8,000, what will be the distribution to Dickens?
- $48,000 income
- $4,000 loss
- $8,000 loss
Multiple Choice Question 115
In liquidation, balances prior to the distribution of cash to the partners are: Cash $900,000; Peterson, Capital $420,000; Laney, Capital $390,000, and Howell, Capital $90,000. The income ratio is 6:2:2, respectively. How much cash should be distributed to Peterson?
Multiple Choice Question 113
Mandy, Annie, and Tammy formed a partnership with income-sharing ratios of 50%, 30%, and 20%, respectively. Cash of $300,000 was available after the partnership’s assets were liquidated. Prior to the final distribution of cash, Mandy’s capital balance was $200,000, Annie’s capital balance was $150,000, and Tammy had a capital deficiency of $50,000. Assuming Tammy contributes cash to match her capital deficiency, Mandy should receive
Multiple Choice Question 119
Use the following account balance information for Granobfin Partnership with income ratios of 2:4:4 for Granger, Noble, and Finn, respectively.
Assets Liabilities and Owner’s Equity
Cash $54,000 Accounts payable $126,000
Accounts Granger, Capital $138,000
receivable 132,000 Noble, Capital 48,000
Inventory 438,000 Finn, Capital 312,000
Assume that, as part of liquidation proceedings, Granobfin sells its noncash assets for $510,000. The amount of cash that would ultimately be distributed to Finn would be
Multiple Choice Question 65
Brian and Sandy are forming a partnership. Brian will invest a truck with a book value of $10,000 and a fair value of $14,000. Sandy will invest a building with a book value of $30,000 and a fair value of $42,000 with a mortgage of $15,000. At what amount should the building be recorded?