Site MapHelpFeedbackMultiple Choice Quiz
Multiple Choice Quiz
(See related pages)

Choose the best answer for each of the following questions.

1
A limited liability partnership is considered an accounting entity separate from the individual partners for purposes of:
A)Both financial accounting and federal income taxes
B)Federal income taxes but not financial accounting
C)Financial accounting but not federal income taxes
D)Neither financial accounting nor federal income taxes
2
Alex and Bame, partners of Alex & Bame LLP, share net income or losses in a 2:1 ratio, respectively. Each partner receives an annual salary allowance of $6,000. If the salaries are recognized as an expense rather than as a means for division of net income, the total amount allocated to each partner for salaries and net income will be:
A)Less for both Alex and Bame
B)Unchanged for both Alex and Bame
C)More for Alex and less for Bame
D)More for Bame and less for Alex
3
Mason & Nelson LLP was formed on February 28. On that date, the following assets were invested (at current fair values):

   MasonNelson
  Cash $25,000 $  35,000
  Inventories   55,000
  Building   100,000
  Equipment 15,000  


The building was subject to a mortgage note payable of $30,000 that was to be assumed by the partnership. The partnership contract provided that Mason and Nelson were to share net income or losses 25% and 75% respectively. Nelson's capital account balance on February 28 is:
A)$190,000
B)$160,000
C)$172,500
D)$150,000
E)Some other amount
4
Based on the same facts as in question 3, if the partnership contract provides that the partners initially should have an equal interest in partnership capital with no investment of intangible assets. Mason's capital account balance on February 28 is:
A)$100,000
B)$115,000
C)$200,000
D)$230,000
E)Some other amount
5
Evans, Farmer, and Grove invested $40,000, $30,000, and $25,000, respectively, in Evans, Farmer & Grove LLP on June 30, 2002. They agreed to divide income or losses as follows:
(1) Salaries of $10,000, $8,000, and $6,000, respectively, to Evans, Farmer, and Grove
(2) Interest of 10% on beginning capital account balances
(3) Remaining net income or loss divided equally
(4) A minimum of $15,000 of income guaranteed to Grove
If the income of the partnership for the fiscal year ended June 30, 2003, before salaries and interest allowances to partners, was $44,000, the amount of income credited to Evans is:
A)$17,500
B)$16,000
C)$14,667
D)$14,000
E)Some other amount
6
The admission of a new partner for a 20% interest in a partnership for an investment of $18,000 cash, with total capital to be $75,000, results in the recognition of:
A)Goodwill to the existing partners
B)Goodwill to the new partner
C)A bonus to the existing partners
D)A bonus to the new partner
7
If E is the total capital of a limited liability partnership before the admission of a new partner, F is the total capital of the partnership after the admission of the new partner, G is the amount of the new partner's investment, and H is the amount of capital credited to the new partner, there is:
A)Goodwill to the new partner if F > (is larger than) (E + G) and H < (is less than) G
B)Goodwill to the exiting partners if F = E + G and H > G
C)A bonus to the new partner if F = E + G and H > G
D)Neither a bonus nor goodwill if F >(E + G) and H > G
8
The total of partners' capital account balances of a limited liability partnership was $105,000, excluding goodwill. A partner whose share of net income or losses was 20% decided to withdraw from the partnership. The withdrawing partner was paid $37,000 by the partnership in final settlement. The withdrawal was improperly recorded by the goodwill method. The continuing partners' capital account balances, excluding their share of the goodwill, totaled $80,000 after withdrawal. The improperly imputed goodwill of the partnership was:
A)$125,000
B)$80,000
C)$70,000
D)$60,000
E)Some other amount
9
On July 1, 2002, Ann Moore and Grace Pulis formed Moore & Pulis LLP, agreeing to share net income and losses in a 2:3 ratio, respectively. Moore invested land with a current fair value of $50,000 that cost her $25,000. Pulis invested $50,000 cash. The land was disposed of for $52,100 on July 5, 2002. The amount to be recorded in Moore's capital account on formation of the partnership is:
A)$10,000
B)$20,000
C)$25,000
D)$50,000
E)$52,100
10
Cicero and Dino, partners of Cicero & Dino LLP, shared net income and losses in the ratio 7:3, respectively. On May 5, 2002, their capital account balances were as follows:

Cicero $35,000
Dino 30,000


On May 5, 2002, the partners agreed to admit Estes as a partner with a one-third interest in the partnership capital and net income or losses for an investment of $25,000. The new limited liability partnership was to begin with total capital of $90,000. Immediately after Estes's admission, the capital account balances of Cicero, Dino, and Estes, respectively, were:
A)$30,000; $30,000; $30,000
B)$31,500; $28,500; $30,000
C)$31,667; $28,333; $30,000
D)$35,000; $30,000; $25,000
11
Budd and Lou's partnership agreement is silent about the income and loss sharing ratio. The income for 2006 was $125,000. Lou's capital account was $65,000 and Budd's was $60,000. How much income is Budd entitled too:
A)$60,000
B)$62,500
C)$65,000
D)Another amount
12
A partnership contract usually would include:
A)Date of Formation
B)Planned Duration
C)Income/Loss Sharing ratio
D)All of the above
13
A new partner is admitted to the ABC partnership by contributing land that to the partnership. The land had cost the partner $50,000 approximately 10 years earlier and had a mortgage of $35,000. The fair market value of the land was $95,000. The land should be recorded in the ABC partnership at the following dollar amount:
A)$15,000
B)$ 60,000
C)$ 95,000
D)$ 40,000
14
A limited partnership consist of the following features except:
A)Must be at least one general partner
B)Limited partners may invest cash or other assets
C)Limited partners are responsible for unpaid liabilities
D)Surname of a limited partner may not appear in name of partnership
15
A partnership has an unlimited life.
A)True
B)False
16
A LLP is separate Legal Entity.
A)True
B)False
17
LLP contract usually includes date of formation and planned duration of the partnership, names of the partners, and name and business activities of the partnership.
A)True
B)False
18
Income-sharing Plans for LLP are shared according to capital account balances if no explicit plan for sharing earnings.
A)True
B)False
19
In the formation of Limited partnership membership is offered to prospective limited partners in units.
A)True
B)False





To learn more about the book this website supports, please visit its Information Center.
(c)2006 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Notice.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.


Modern Advanced AccountingOnline Learning Center

Home > Chapter 2 > Multiple Choice Quiz