Acc. chapter 12
which of the following statements about a partnership is correct?
a partnership represents an accounting entity for financial reporting purposes
which of the following would not be recorded in the entry for the formation of a partnership
accumulated depreciation
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 are allocated to the partners
the basis for dividing partnership net income or net loss is referred to as any of the following except the
capital ratio
The admission of a new partner to an existing partnership
causes a legal dissolution of the legal existing partnership
When a partner invests noncash assets in a partnership, the assets are recorded at their
fair value
the partner in a limited partnership that has unlimited liability is referred to as the
general partner
When a partnership interest is purchased
the transaction is a personal transaction between the purchaser and the selling partner(s)
How many closing entries are required for a partnership?
4
partnership income ratios can be expressed as a
all answer choices proportion percentage, and fraction
in a partnership, mutual agency means
an act by a partner is judged as binding on other partners depending on whether the act appears to be appropriate for the partnership.
the individual assets invested by a partner in a partnership
are jointly owned by all partners
a partner's share of net income is recognized in the accounts through
closing entries
the largest companies in the U.S are primarily as
corporations
Which of the following would not cause an increase in partnership capital?
drawings
In the liquidation of a partnership, any partner who has a capital deficiency
has a personal debt to the partnership for the amount of the deficiency
a general partner in a partnership
has unlimited liability for all partnership debts
a partnership
is dissolved upon the acceptance of a new partner
limited partnerships
must have at at least one general
which of the following is not an advantage of the partnership form of business
mutual agency
Which of the following statements is correct?
neither salaries to partners nor interest on partners' capital are expenses of the partnership
In the final step of the liquidation process, remaining cash is distributed to partners
on the basis of the remaining capital balances
which of the following statements is incorrect regarding partnership agreements?
oral agreement are preferable to written articles
the owner's equity statement for a partnership is called the
partner's capital statement
which of the following would not be considered an expense of a partnership in determining income
salary allowance to partners
The first step in the liquidation of a partnership is to
sell noncash assets and recognize a gain or loss on realization
the partnership agreement should include each of the following except
surviving family members in the events of a partner's death
The liquidation of a partnership
terminates the business
a partners' capital statement explains
the changes in each partner's capital account and in total partnership capital during a period
Which of the following statements is true regarding the form of a legally binding partnership contract?
the partnership contract may be based on a handshake