Matching Partnership Terms with Their Descriptions
Required
Match the descriptions of terms on the left with the terms on the right. A term may be used once, more than once, or not at all.
| Descriptions of Terms |
| Terms |
1. | Item that occurs when the new partner's investment | A. | General partner |
| exceeds the new partner's capital credit. | B. | Note payable to a partner |
2. | Partner who cannot actively participate in the | C. | Recognition of neither bonus |
| management of the partnership. |
| nor goodwill |
3. | The allocation of partnership profits and losses when | D. | Drawing account |
| nothing is stated in the partnership agreement. | E. | Limited partner |
4. | Item that occurs when the new partner's investment | F. | Bonus to old partners |
| equals the new partner's capital credit and no change | G. | Interest on capital accounts |
| occurs in the old partners' capital balances. | H. | Partnership income or loss |
5. | Cost not deducted to determine the partnership's net |
| shared equally |
| income for the period. | I. | New partner's goodwill |
6. | Partner who actively participates in the partnership |
| recognized |
| management and who is personally liable for the | J. | Old partners' goodwill |
| partnership's debts. |
| recognized |
7. | Item that occurs when the new partner's capital credit | K. | Partnership agreement |
| exceeds the new partner's investment and no change | L. | Bonus to new partner |
| occurs in the old partners' capital balances. | M. | Capital account |
8. | Account that increases when a partner takes assets |
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| out of the partnership in anticipation of partnership |
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| net income. |
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9. | Account that increases for the fair value of noncash |
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| assets invested by a partner. |
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10. | Related-party transaction that must be disclosed in the |
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| notes to the financial statements. |
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11. | Item that occurs when the new partner's investment |
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| equals the new partner's capital credit and an increase |
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| occurs in the old partners' capital balances. |
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12. | Item that occurs when the new partner's capital credit |
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| exceeds the new partner's investment and a decrease |
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| occurs in the old partners' capital balances. |
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13. | Recognition of an intangible asset upon a new partner's |
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| admission to the partnership that results in increases in |
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| the old partners' capital balances. |
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1 4 | Account closed to the capital account at year-end. |
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15. | Deduction of interest expense on this payable to |
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| determine the partnership's net income. |
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