Session:15 Partnership Accounting
Multiple Choice
Principles of Accounting, Volume 1: Financial Accounting | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-financial-accounting
2. LO 15.1Any assets invested by a particular partner in a partnership ________.
- do not become a partnership asset but instead remain with the partner
- can be used only by the investing partner
- become the property of all the partners
- are the basis for all profit sharing
4. LO 15.1Mutual agency is defined as:
- a mutual agreement
- the right of all partners to represent the company’s normal business operations
- a synonym for partnership
- a partnership between two partnerships
6. LO 15.2Juan contributes marketable securities to a partnership. The book value of the securities is $7,000 and they have a current market value of $10,000. What amount should the partnership record in Juan’s Capital account due to this contribution?
- $10,000
- $7,000
- $3,000
- none of the above
8. LO 15.3A well written partnership agreement should include each of the following except ________.
- how to settle disputes
- the name of the partnership
- division of responsibilities
- Partner’s individual tax rate
10. LO 15.3How does a newly formed partnership handle the contribution of previously depreciated assets?
- continues the depreciation life as if the owner had not changed
- starts over, using the contributed value as the new cost basis
- shortens the useful life of the asset per the partnership agreement
- does not depreciate the contributed asset
12. LO 15.4Thandie and Marco are partners with capital balances of $60,000. They share profits and losses at 50%. Chris contributes $30,000 to the partnership for a 1/3 share. What amount should Thandie’s capital balance in the partnership be?
- $60,000
- $50,000
- $45,000
- $30,000
14. LO 15.4Thandie and Marco are partners with capital balances of $60,000. They share profits and losses at 50%. Chris contributes $60,000 to the partnership for a 1/3 share. What amount should the partnership record as an individual bonus to each of the old partners?
- $10,000
- $7,000
- $0
- $5,000
16. LO 15.5When a partnership dissolves, the last step in the dissolution process is to ________.
- allocate the gain or loss on sale based on income sharing ratio
- pay off liabilities
- sell noncash assets
- divide the remaining cash among the partners