Question

17. A deficient partner A s assumed to be always insolvent B who is solvent and has a loan to the st a tes the right of C should inmediately withdraw from the partnership D may invest additional cash The partners did not agree is to how t h e guided then ch should be divided among partners A based on original capital to B arbitrary ratio C equally D. based on ending capital ratio 19. The total partners' equity will not change when a withdrawing partner A receives assets from the firm equal to his capital balance B. Sels his interest to a new or remaining partner C. receives assets from the firm amounting to less than his capital balance D. receives assets from the firm amounting to greater than his capital balance 20. A partner contributes as part of his initial investment accounts receivable with an allowance for doudou accounts. Which of the following reflects a proper treatment A The balance of the accounts receivable account should be recorded in the books of the partnership at its net realizable value of the probable loss on accounts is very minimal B. The allowance account may be set up in the books of the partnership but only for those accounts that have been evaluated to be totally worthless C. The accounts receivable and allowance should not be recorded on the books of the partnership because a partner must invest cash in the business D. Accounts receivable is recorded in the partnership books at gross amount together with the allowance account 21. Which of the following correctly characterizes a partnership? A General partnerships normally have limited and general partners B. In theory, partnerships are more stable than corporations C. Limited partners are liable only to the extent of their capital balances D. Like corporations, partnerships have an unlimited life. 22. Interest based on partners' capital is usually treated as A Distribution of eamings of the partnership B. Expense on a partnership income statement C. Liability on the partnership statement of financial position D. A direct decrease in partner's capital 23. Which of the following is NOT a component of the formula used to distribute income? A. Bonus to all partners B. Bonus to the managing partner C. Interest on partner's average capital D. Salary alowance to partners and the remainder is divided according to the agreed profit and loss 24. When admitting a new partner, allocation of bonus, f any, to old partners is based on A equal distribution among old partners. B. profit and loss ratio after the admission of the new partner. C profit and loss ratio before the admission of the new partner. D. equal distribution among old and new partners. 25. When a retiring partner sells his whole interest to an outsider at more than its carrying value, A total partnership capitalization increases B. The agreed price becomes the new partner's capital balance C. The incoming partner's capital will be credited for an amount equal to 100% of the retiring partner's capital D. The difference between the seling price and the retiring partner's capital is regarded as bonus to the

Answer 1

Q.17- Answer D-may invest additional cash

Deficient partner means a partner who has debit balance in his/her capital account . hence he/her can invest additional cash to remove his/her deficiency

Q.18-Answer C-Equally.

In the absence of partnership agreement specifying profit sharing ratio, then the profit can be shared equally

Q.19-Answer B-sells his interest to a new or remaining partners

All the other 3 options will affect partners equity

Q.20-Answer D-Accounts receivable is recorded in the partnership books at gross amount together with the allowance account

Q.21-Answer C- Limited partners are liable to the extend of their capital balance

A limited partner are only liable for the company's liabilities up to the amount of this contribution.

Q.22-Answer B-Expense on a partnership income statement

Q.23- Answer C-interest on partners average capital

Q.24-Answer C-Profit & loss ratio before admission of the new partner

Q.25-Answer C-The incoming partner's capital will be credited for an amount equal to 100% of the retiring partners capital