WorksheetsPartnership Review of Concepts
Total questions: 20
Worksheet time: 10mins
When property other than cash is invested in a partnership, at what amount should the noncash property be credited to the contributing partner’s capital account?
Fair value at the date of recognition
Contributing partner’s original cost
Assessed valuation for property tax purposes
Contributing partner’s tax basis
Four individuals who were previously sole proprietors form a partnership. Each partner contributes inventory and equipment for use by the partnership. What basis should the partnership use to record the contributed assets?
Inventory at the lower of FIFO cost or market
Inventory at the lower of weighted-average cost or market
Equipment at each proprietor’s carrying amount
Equipment at fair value
On April 30, 2023, Algee, Belger, and Ceda formed a partnership by combining their separate business proprietorships. Algee contributed cash of $50,000, Belger contributed property with a $36,000 carrying amount, a $40,000 original cost, and $80,000 fair value. The partnership accepted responsibility for the $35,000 mortgage attached to the property. Ceda contributed equipment with a $30,000 carrying amount, a $75,000 original cost, and $55,000 fair value. The partnership agreement specifies that profits and losses are to be shared equally but is silent regarding capital contributions. Which partner has the largest April 30, 2023, capital account balance?
Algee
Belger
Ceda
All capital balances are equal
Assume that C has a P50,000 equity in the partnership of “A, B, and C.” Partner C arranges to sell his entire interest to D for P80,000 Cash. Partners A and B agree to the admission of D. At what amount will the equity of the incoming partner, D, be shown in the balance sheet?
at P50,000
at P50,000 and the P30,000 will be divided equally among the original partners
at P80,000
at P80,000 and the P30,000 will represent Goodwill which will be apportioned between the existing equities of A and B
In the Adel-Brick partnership, Adel and Brick had a capital ratio of 3:1 and a profit and loss ratio of 2:1, respectively. The bonus method was used to record Colter’s admittance as a new partner. What ratio would be used to allocate, to Adel and Brick, the excess of Colter’s contribution over the amount credited to Colter’s capital account?
Adel and Brick’s new relative capital ratio
Adel and Brick’s new relative profit and loss ratio
Adel and Brick’s old capital ratio
Adel and Brick’s old profit and loss ratio
The Oxide and Ferris partnership agreement provides for Oxide to receive a 20% bonus on profits before the bonus. Remaining profits and losses are divided between Oxide and Ferris in the ratio of 2 to 3, respectively. Which partner has a greater advantage when the partnership has a loss?
Oxide
Ferris
Before the withdrawal of Alice from their partnership, the partners agreed to adjust assets to their fair values. Accordingly, the appraisal increase was credited to
Income Summary
Deferred Credit
Appraisal Capital
Partners' Capital Accounts
When Mill retired from the partnership of Mill, Yale, and Lear, the final settlement of Mill’s interest exceeded Mill’s capital balance. Under the bonus method, the excess
was recorded as goodwill
was recorded as an expense
reduced the capital balances of Yale and Lear
Had no effect on the capital balances of Yale and Lear
When NANA retired from the partnership of NANA, NINA, and NONA, the final settlement of NANA’s interest exceeded her capital balance. Under the bonus method, the excess is
recorded as goodwill
recorded as an expense
of no effect to the capital accounts of Nina and Nona
deducted from the capital account balances of Nina and Nona
In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the
Partners’ profit and loss sharing ratio
Balances of the partners’ capital accounts
Ratio of capital contributions made by the partners
Ratio of capital contributions less withdrawals made by the partners
Which of the following does not give rise to a partnership dissolution?
Admission of a new partner by purchase of interest
Transfer of full interest from one existing partner to another existing partner
Incapacity of a partner
None of the above
Which of the following dissolution events will not change the net assets of the partnership?
Purchase of ownership interest directly from existing partner
Purchase of ownership interest directly from partnership
Both statements can change the net assets
Both statements could not change the net assets
In the event of liquidation, who spearheads the winding up of operations and affairs of the partnership?
Managing Partner
Ostensible Partner
General Partner
Liquidating Partner
Distribution of final cash to partners is based on
Profit and loss ratio
Ownership interest
Available cash balance
Final capital balances
In what manner should continuing partners share in the bonus paid to withdrawing partner?
Proportionate to their residual profit and loss ratio
Equally
Proportionate to capital account balances
The partner with the least capital balance is given the bonus
Which of the following occur/s every time a new partner is admitted to a partnership?
Dissolution only
Dissolution and liquidation only
Dissolution and termination only
Dissolution, liquidation, and termination
This compensates for the routine time and effort partners expends to the business
Interest on capital balance
Bonus
Loans
Salary allowances
The following transactions affect partners' equity account, EXCEPT
additional investment
payment of personal expenses from partnership funds
withdrawal of cash from the partnership
none of the above
A partner who does not participate in the management of operations and affairs of the partnership
Silent Partner
Dormant Partner
Managing Partner
Liquidating Partner
A partnership whose main activity is rendering services
Trading partnership
Non-trading partnership
General partnership
Limited partnership
