Question : 41. Mutual agency implies that each partner in a partnership a : 1225250

41. Mutual agency implies that each partner in a partnership is a fully authorized agent of the partnership. Which of the following statements is correct regarding the authority of a partner to bind the partnership in dealings with third parties? 

A. The partner’s authority must be derived from the partnership agreement.

B. The partner’s authority may be effectively limited by a formal resolution of the other partners, even if third parties are not aware of that limitation.

C. Only a partner with a majority interest in a partnership has the authority to represent the partnership to third parties.

D. A partner has authority to deal with third parties on the behalf of the other partners only if he has written permission to do so.

E. A partner may be able to legally bind the partnership to actions even if the other partners are unaware of his actions.

42. David and Jeannie formed This & That as a limited liability company. Unless the member owners elect to be treated otherwise, the Internal Revenue Service will tax the LLC as: 

A. An S corporation.

B. A C corporation.

C. A non-taxable entity.

D. A joint venture.

E. A partnership.

43. A partnership in which all partners have mutual agency and unlimited liability is called: 

A. Limited partnership.

B. Limited liability partnership.

C. General partnership.

D. S corporation.

E. Limited liability company.

44. Renee Jackson is a partner in Sports Promoters. Her beginning partnership capital balance for the current year is $55,000, and her ending partnership capital balance for the current year is $62,000. Her share of this year’s partnership income was $5,250. What is her partner return on equity? 

A. 8.47%

B. 8.97%

C. 9.54%

D. 10.47%

E. 10.60%

45. Web Services is organized as a limited partnership, with David White as one of its partners. David’s capital account began the year with a balance of $45,000. During the year, David’s share of the partnership income was $7,500, and David received $4,000 in distributions from the partnership. What is David’s partner return on equity? 

A. 7.8%

B. 8.9%

C. 15.4%

D. 16.0%

E. 16.7%

46. The following information is available regarding John Smith’s capital account in Technology Consulting Group, a general partnership, for a recent year:   

What is Smith’s partner return on equity during the year in question? 

A. 36.6%

B. 34.7%

C. 10.8%

D. 11.4%

E. 55.7%

47. Partnership accounting: 

A. Uses a capital account for each partner.

B. Uses a withdrawals account for each partner.

C. Allocates net income to each partner according to the partnership agreement.

D. Allocates net loss to each partner according to the partnership agreement.

E. All of these.

48. Partnership accounting: 

A. Is the same as accounting for a sole proprietorship.

B. Is the same as accounting for a corporation.

C. Is the same as accounting for a sole proprietorship, except that separate capital and withdrawal accounts are kept for each partner.

D. Is the same as accounting for an S corporation.

E. Is the same as accounting for a corporation, except that retained earnings is used to keep track of partners’ withdrawals.

49. Partners’ withdrawals of assets are: 

A. Credited to their withdrawals accounts.

B. Debited to their withdrawals accounts.

C. Credited to their retained earnings.

D. Debited to their retained earnings.

E. Debited to their asset accounts.

50. The withdrawals account of each partner is: 

A. Closed to that partner’s capital account with a credit.

B. Closed to that partner’s capital account with a debit.

C. A permanent account that is not closed.

D. Credited with that partner’s share of net income.

E. Debited with that partner’s share of net loss.