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ACC 206 Week 4 Quiz Chapter 12

ACC 206 Week 4 Quiz Chapter 12

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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

  • adjusting entries.
  • closing entries.
  • 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:

                                                                                    Cantor            Dickens

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
  • $4,000 income

 

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?

  • $420,000
  • $408,750
  • $450,000
  • $375,000

 

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

 

  • $131,250.
  • $200,000.
  • $175,000.
  • $168,750.

 

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

                        $624,000                                                                    $624,000

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

  • $312,000.
  • $288,000.
  • $516,000.
  • $204,000.

 

 

 

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?

  • $45,000
  • $30,000
  • $27,000
  • $42,000

 

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