Question : 11) Partner A invested furniture that was recorded at a : 1171102

 

11) Partner A invested furniture that was recorded at a value above the fair market value. This error would cause:

A) the period’s net income to be overstated.

B) the period end capital to be understated.

C) the period end assets to be overstated.

D) the period end assets to be understated.

12) In comparison with the proprietorship form of business organization, forming a partnership offers which of the following advantages?

A) Limited life

B) Legal liability of each partner for all of the debts

C) Combination of ability and experience of the partners

D) Simple transfer of interest in the partnership to outsiders

13) When two proprietors decide to combine their businesses and form a partnership, GAAP usually requires that noncash assets be taken over at their:

A) residual value on the date of the partnership.

B) book value on the date of the partnership.

C) fair market value on the date of the partnership.

D) historical cost on the date of the partnership.

14) Which of the following is NOT generally written into the articles of partnership agreement?

A) How new partners are admitted

B) How accounting records will be maintained

C) The marital status of each partner

D) All are written into the agreement.

15) Since all partners are bound together in the agreement and each acts on the behalf of the partnership, ________ has been established.

A) limited life

B) limited risk

C) mutual agency

D) unlimited liability

16) Partner C invested equipment in the partnership and the equipment was recorded at its book value. This error would cause:

A) future period’s net income to be understated.

B) future period’s net income to be overstated.

C) this period end assets to be overstated.

D) None of these is correct.

17) All assets held by a partnership are:

A) co-owned by all partners.

B) owned by the partner(s) who purchased the assets.

C) owned by the partners based on investment percentage.

D) owned by the partnership.

18) Laura’s investment in a new partnership includes $2,000 cash and equipment at a fair value of $7,000. The new partnership is assuming $1,500 of Laura’s accounts payable. The partnership entry should be to:

A) debit Laura, Capital $7,500; debit Accounts Payable $1,500; credit Cash $2,000; credit Equipment $7,000.

B) debit Cash $2,000; debit Equipment $7,000; credit Laura Capital, $9,000.

C) debit Cash $2,000; debit Equipment $7,000; credit Accounts Payable $1,500; credit Laura, Capital, $7,500.

D) debit Laura, Investment $9,000; credit Capital $9,000.

19) Nathan Long is entering into a partnership with Terri. Nathan is investing $4,000 cash and equipment currently on Nathan’s books at $10,000 and accumulated depreciation of $2,000. The equipment has a fair market value of $6,000. The entry to record Nathan’s investment should be to:

A) debit Cash $4,000; debit Equipment 10,000; credit Accumulated Depreciation $2,000; credit Long, Capital $12,000.

B) debit Cash $4,000; debit Equipment $6,000; credit Accumulated Depreciation $2,000; credit Long, Capital $8,000.

C) debit Long, Capital $12,000; debit Accumulated Depreciation $2,000; credit Cash $4,000; credit Equipment $8,000.

D) debit Cash $4,000; debit Equipment $6,000; credit Long, Capital $10,000.

20) A partnership can be formed with an oral agreement.

 

 

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