Principles of Accounting Chapter 12

1390 Words Nov 11th, 2010 6 Pages
1. A major advantage of the partnership form is that the personal assets of the partners are protected from creditors in case of legal action- False 2. A partnership is considered an “entity” for accounting purposes- True 3. “Mutual agency” means that one partner can legally bind all the other partners to a contract if it appears that he or she is acting appropriately- True 4. Partners are taxed on their drawings regardless of their share of the income. False 5. If a partnership agreement is silent regard to how profits and losses are to be shared, they will be deemed to be shared in the ratio of capital balances- False 6. If the formation of a new partnership, the fair value of any asset brought into the partnership …show more content…
Assume the partnership of Doll, Moll and Soll is being liquidated. Each partner has a capital balance of $56,200 and they share profits and losses 8:5:2, respectively . If assets with a book value of $136,000 are sold for $38,500, what is Moll 's share of the loss? $32,500 15. Which of the following is false regarding the liquidation of a partnership? If a partnership is dissolved, it must be liquidated 16. When forming a partnership, how are assets valued that are contributed by the partners? Fair value 17. Rope and Dope form a partnership. Dope contributes cash of $13,000 and equipment from a former business which has a book value of $18,000 and a fair value of $16,000. Which of the following is true? The equipment is recorded at $16,000
NOT FROM THE TEST ME (Its from Interactive) 1. Rosenberg and Kelly are forming a partnership. Rosenberg is bringing the following into the new firm: Accounts receivable of $23,000 that have a collectible value (fair value) of $22,400. A car that has a cost of $20,000, accumulated depreciation of $12,000 and a fair value of $6,000. He is also contributing cash of $10,000. How much will Rosenberg’s capital account be credited for in forming the partnership? $38,400 2. The partnership of Rosenberg and Kelly divide income or loss as follows: Rosenberg gets a salary allowance of $12,000, Kelly, $4,000. Kelly is also allocated an interest allowance of $2,000. The remaining income, if any,
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