ACCT 202 Principle of Accounting II
Semester: 082
Section 4
Time: 25 minutes
Quiz #1
Points: 20
Student-ID#: _____________________
Name: __________________________
1. Which of the following is not an advantage of the partnership form of business?
A) Ease of decision making
B) Mutual agency
C) Freedom from governmental regulations and restrictions
D) Ease of formation
2. A general partner in a partnership
A) is always the general manager of the firm.
B) is liable for partnership liabilities only to the extent of that partner's capital
equity.
C) has unlimited liability for all partnership debts.
D) is the partner who lacks a specialization.
3. Which of the following statements is incorrect regarding partnership agreements?
A) It should specify the different relationships that are to exist among the partners.
B) It should state procedures for submitting disputes to arbitration.
C) Oral agreements are preferable to written articles.
D) It may be referred to as the “articles of co-partnership.”
4. The partnership form of business is
A) restricted to firms having fewer than 10 partners.
B) most often used in relatively large companies.
C) restricted to law and medical practices.
D) not restricted to any particular type of business.
5. Which of the following statements about a partnership is correct?
A) A partnership represents an accounting entity for financial reporting purposes.
B) Each partner's share of income is taxable to the partnership.
C) The personal assets of a partner are included in the partnership accounting
records.
D) A partnership is not required to file an information tax return.
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6. Norton invests personally owned equipment, which originally cost $110,000 and has
accumulated depreciation of $30,000 in the Norton and Kennett partnership. Both
partners agree that the fair market value of the equipment was $60,000. The entry
made by the partnership to record Norton's investment should be
A)
B)
C)
D)
d
a
b
c
7. Which one of the following would not be considered a disadvantage of the
partnership form of organization?
A) Mutual agency
B) Limited life
C) Ease of formation
D) Unlimited liability
8. The Maris-Crane partnership is terminated when creditor claims exceed partnership
assets by $40,000. Crane is a millionaire and Maris has no personal assets. Maris'
partnership interest is 75% and Crane's is 25%. Creditors
A) may not require Crane to use his personal assets to satisfy the $40,000 in claims.
B) must collect their claims equally from Maris and Crane.
C) may collect the entire $40,000 from Crane.
D) must collect their claims 75% from Maris and 25% from Crane.
9. A partner's share of net income is recognized in the accounts through
A) accrual entries.
B) adjusting entries.
C) closing entries.
D) correcting entries.
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10. The Jill & Frill Co. reports net income of $28,000. Interest allowances are Jill $3,000
and Frill $5,000; partner salary allowances are Jill $18,000 and Frill $10,000 and the
remainder is shared equally.
Instructions
Indicate the division of net income to each partner, and prepare the entry to
distribute the net income.
11. After liquidating noncash assets and paying creditors, account balances in the Main
Co. are Cash $29,000, A Capital (Cr.) $11,000, B Capital (Cr,) $8,000 and C Capital
(Cr.) $10,000. The partners share income equally.
Instructions
Journalize the final distribution of cash to the partners.
12. Partner B is investing in a partnership with Partner A. B contributes as part of his
initial investment, Accounts Receivable of $80,000; an Allowance for Doubtful
Accounts of $12,000; and $8,000 cash. The entry that the partnership makes to
record B's initial contribution includes a
A) debit to Accounts Receivable for $68,000.
B) credit to B, Capital for $76,000.
C) debit to Allowance for Doubtful Accounts for $12,000.
D) credit to B, Capital for $88,000.
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Answer Key
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
B
C
C
D
A
A
C
C
C
(6 min.)
The entry to record the division of net income is:
Income Summary
Jill, Capital
Frill, Capital
11. (4 min.)
A, Capital
B, Capital
C, Capital
Cash
12. B
28,000
17,000
11,000
11,000
8,000
10,000
29,000
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