Question : 32.Net income in a partnership may not be distributed to : 1259399

 

 

32.Net income in a partnership may not be distributed to the partners:   

A. As a salary allowance.

 

B. As interest on beginning capital.

 

C. In a fixed ratio.

 

D. In the form of dividends.

 

 

 

 

33.In order to form a corporation, the corporation must obtain a charter from:   

A. The federal government.

 

B. A state government.

 

C. The Securities and Exchange Commission.

 

D. The stockholders of the corporation.

 

 

 

 

34.The Board of Directors of a corporation:   

A. Are not responsible for hiring other professional managers.

 

B. Do not decide whether profits will be distributed to stockholders.

 

C. Make major policy decisions.

 

D. Are members of a government agency.

 

 

 

 

35.Paid-in Capital refers to:   

A. The lifetime earnings of the corporation.

 

B. The amount invested by stockholders.

 

C. Net income less dividends.

 

D. The amount in excess of the par value of the stock.

 

 

 

 

36.Income taxes to a partnership:   

A. Are an obligation of the partnership.

 

B. Are an obligation to each partner only when cash is received.

 

C. Are an obligation to each partner based on their share of profits.

 

D. Are not an obligation to each partner since a partnership does not pay tax.

 

 

 

 

37.When deciding the form of organization of a new business the factors to consider would be all of the following except:   

A. The need to raise large amounts of capital.

 

B. The need for continuity in business operations.

 

C. The potential profits of the organization.

 

D. The personal liabilities of the owners.

 

 

 

 

38.When a corporation declares a dividend:   

A. Assets decrease, liabilities increase.

 

B. Retained earnings increase, liabilities increase.

 

C. Liabilities increase, retained earnings decrease.

 

D. Retained earnings decrease, assets increase.

 

 

 

 

39.Sally Smythe enters into a partnership by contributing the following: Cash $15,000; Accounts Receivable $4,500; Machinery which cost $3,000 and has a fair market value of $2,125; and accounts payable of $1,200. What amount will be recorded in her capital account?   

A. $21,625.

 

B. $20,425.

 

C. $22,500.

 

D. $21,300.

 

 

 

40.Partner A earns $68,000 from a partnership. Partner B earns $57,000 but withdraws only $49,000. How much must Partner B report in his income tax return as income?   

A. $49,000.

 

B. $57,000.

 

C. $125,000.

 

D. $117,000.

 

 

 

 

41.When evaluating the liquidity of a proprietorship, creditors will likely base their decision on:   

A. The business ability to generate a profit.

 

B. Previous debts of the business.

 

C. The financial strength of the owner.

 

D. The total assets owned by the business.

 

 

42.When evaluating the liquidity of a partnership, creditors will likely base their decision on:   

A. the business ability to generate a profit.

 

B. previous debts of the business.

 

C. the total assets owned by the business.

 

D. the financial strength of the owners.

 

 

 

 

43.John’s Metalworks Incorporated recently issued 10,000 shares of stock in exchange for $100,000. Metalworks’ journal entry to record this transaction included:   

A. A debit to Capital Stock for $10,000.

 

B. A debit to Cash for $100,000.

 

C. A credit to Capital Stock for $10,000.

 

D. A credit to Cash for $100,000.

 

 

 

 

44.An S corporation must have a maximum of ____ stockholders.   

A. 25

 

B. 65

 

C. 70

 

D. 75