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1
When a net loss is closed into the partners' Capital accounts, Income Summary is debited.
A)True
B)False
2
A partnership agreement is not legal unless it is in writing.
A)True
B)False
3
If partners A and B share net income on a 2 : 1 ratio, partner A gets 2/3 and partner B gets 1/3.
A)True
B)False
4
A partner's death ends a partnership.
A)True
B)False
5
A partnership agreement should include a procedure for ending the business.
A)True
B)False
6
In a liquidation, partners are not given back the assets they originally invested.
A)True
B)False
7
When partners share net income on a fractional basis, this basis is often expressed as a ratio.
A)True
B)False
8
The death of a partner does not automatically end the partnership.
A)True
B)False
9
If partner A's capital is $30,000 and partner B's capital is $20,000, A's share of earnings based on their investment is .6, or 60 percent.
A)True
B)False
10
When partners A and B share profits in a 3 : 2 ratio, but no stipulation has been made for sharing losses, losses should be shared in the same ratio.
A)True
B)False
11
A liquidation involves the sale of assets, payment of liabilities, and distribution of remaining cash.
A)True
B)False
12
Capital deficiency means that at least one partner has a debit (abnormal) balance in his or her capital account at the point of final cash distribution.
A)True
B)False
13
One measure of partnership success compared with other opportunities is the partner return on equity ratio. The ratio is calculated by taking the Partner's Net Income divided by the Average Total Assets of the Partnership.
A)True
B)False
14
To record the withdrawal by a partner, the partner's withdrawal account is credited.
A)True
B)False
15
When a new partner buys a partnership interest directly from one or more existing partners, the amount of cash paid from one partner to another does not affect the partnership total recorded equity.
A)True
B)False
16
Craig and Chris are partners. Craig's capital balance is $140,000. Chris's capital balance is $80,000. Their partnership agreement includes an interest allowance at 10 percent of their Capital account balances, as well as salary allowances of $25,000 for Craig and $21,000 for Chris with the remainder divided equally. How much of the $74,000 net income would be allocated to Craig?
A)$39,000
B)$42,000
C)$41,000
D)$45,000
E)none of these
17
Stu and Marv are partners. Stu's capital balance is $150,000. Marv's capital balance is $78,000. Their partnership agreement states that each partner is allowed 10 percent interest based on their Capital account balance, as well as salary allowances of $27,000 for Stu and $22,000 for Marv, with the remainder divided equally. If net income is $54,000, how much of the net income would be allocated to Stu?
A)$20,900
B)$29,800
C)$33,100
D)$42,000
E)none of these
18
The partnership agreement of Greg and Fred provides for salary allowances of $20,000 for each partner with the remainder divided equally. During this year, Greg withdrew $12,000 and the firm's net income was $45,000. Fred's Capital account increased by
A)$1,000.
B)$10,000.
C)$10,500.
D)$2,500.
E)none of these.
19
Eng, Holt, and Kent are partners who share income equally. They decide to dissolve their partnership. Capital balances are: Eng, $65,000; Holt, $67,000; Kent, $64,000. The noncash assets valued at $110,000 were sold for $92,000. How much of the loss on realization should be allocated to Eng?
A)$6,000
B)$18,000
C)$6,153
D)$9,000
E)none of these
20
Boyd and Gore decide to dissolve their partnership. The remaining cash amounts to $140,000. Boyd's capital balance is $68,000, and Gore's capital balance is $72,000. Their partnership agreement states that they will share profits and losses on a 2 : 1 ratio. The amount of cash to be distributed to Boyd is
A)$70,000.00.
B)$72,000.00.
C)$68,000.00.
D)$93,333.33.
E)none of these.
21
The sharing of profits and losses can be based on
A)a salary allowance and a stated ratio.
B)a stated ratio.
C)a salary allowance and a fractional share.
D)all of these.
E)none of these.
22
The partnership agreement for Ada and Backus provides for a salary allowance of $22,000 for Ada and $9,000 for Backus. The remainder is allocated equally. Net income for the year is $40,000. The amount of the net income allocated to Ada is
A)$11,000.
B)$22,000.
C)$4,500.
D)$27,500.
E)none of these.
23
Partners Lind and Moore have beginning capital balances of $53,000 and $47,000, respectively. Net income for the year is $76,000. Profits and losses are shared on the basis of the ratio of capital investments. The amount of the net income allocated to Lind is
A)$41,000.
B)$40,280.
C)$39,520.
D)$35,720.
E)none of these.
24
At the end of a given year, B. L. Best has a capital balance of $44,000. She decides to sell her interest to C. T. Andre for $50,000. The necessary entry for the transfer of ownership is
A)debit B. L. Best, Capital, $50,000; credit C. T. Andre, Capital, $50,000.
B)debit Cash, $6,000; debit B. L. Best, Capital, $44,000; credit C. T. Andre, Capital, $50,000.
C)debit B. L. Best, Capital, $44,000; credit C. T. Andre, Capital, $44,000.
D)debit Cash, $50,000; debit C. T. Andre, Capital, $6,000; credit B. L. Best, Capital, $50,000.
E)none of these.
25
Which of the following is (are) a disadvantage(s) of a partnership?
A)The actions of one partner are binding on the other partners.
B)A partnership has limited life.
C)The raising of investment capital depends entirely on the partners themselves.
D)All of these are disadvantages.
E)None of these is a disadvantage.
26
Prior to liquidating the partnership for Tice and Blix, and after paying all liabilities, Tice's Capital account is $49,000 (credit balance) and Blix's Capital account is $63,000 (credit balance). The book value of the firm's noncash assets is $97,000, and they are sold for $85,000. Tice and Blix share profits and losses equally. The amount of Blix's final withdrawal is
A)$61,000.
B)$63,000.
C)$57,000.
D)$67,000.
E)none of these.
27
In a liquidation, the liabilities of the partnership are paid before
A)sales of assets.
B)distribution of cash to partners.
C)distribution of losses and gains on realization.
D)a revaluation of the assets.
E)none of these.
28
Which of the following is not a characteristic of a partnership?
A)unlimited liability
B)co-ownership
C)mutual agency
D)unlimited life
E)none of these
29
The death of a partner means
A)liquidation of the existing partnership.
B)division of the deceased partner's assets.
C)payment of all liabilities after assets are divided.
D)the partnership comes to an end.
E)none of these.
30
Since ownership rights in a partnership are divided among partners, partnership accounting uses all of the following EXCEPT:
A)Uses a capital account for each partner.
B)Uses a separate Income Summary account for each partner.
C)Allocates net income or loss to partners according to the partnership agreement
D)Uses a withdrawals account for each partner
E)none of these





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