Name
Date ______________B
Discussion Section
Row _____ Seat _____
PRINCIPLES OF FINANCIAL AND MANAGERIAL ACCOUNTING II
Chapter 13 -- Partnerships
Spring 2011
“As a student of ORU I hereby pledge my full and hearty support to the Honor Code. I agree not only to be
honest myself but to report all cases of dishonesty that are observed by me.”
Answer “+” for TRUE and “O” for FALSE:
1.
The sale of the assets upon winding up the affairs of a partnership is referred to as
liquidation.
2.
After all noncash assets have been converted to cash and all liabilities paid, X, Y, and Z
have capital balances of $20,000 (credit), $9,000 (debit), and $22,500 (credit). The cash
available for distribution to the partners is $42,500.
3.
The distribution of cash, as the final process in winding up the affairs of a partnership, is
made in the income-sharing ratio.
4.
Gains on the sale of noncash assets upon winding up the affairs of a partnership are divided
between the partners in the income-sharing ratio.
5.
The process of winding up the affairs of a partnership is referred to as realization.
6.
If the partnership agreement states that net income should be divided between the partners
equally, a net loss would be handled in the same way.
7.
If the net income of a partnership is less than the total of the allowances provided by the
partnership agreement, the difference must be divided among the partners as if it were a net
loss.
8.
If a partner’s capital balance is a debit after it has absorbed its share of the loss on
realization, the balance is referred to as a deficiency.
9.
If the articles of a partnership provide for annual salary allowances of $18,000 and $24,000
to A and B respectively and net income is $90,000, A’s share of the net income would be
$42,000.
10.
If the partnership agreement is silent on the matter, net income and net loss should be
divided between the partners in the ratio of time devoted to the partnership.
Name
Discussion Section
Date ______________B
Row _____ Seat _____
PRINCIPLES OF FINANCIAL AND MANAGERIAL ACCOUNTING II
Chapter 13 -- Partnerships
Spring 2011
“As a student of ORU I hereby pledge my full and hearty support to the Honor Code. I agree not only to be
honest myself but to report all cases of dishonesty that are observed by me.”
Answer “+” for TRUE and “O” for FALSE:
O
1.
The sale of the assets upon winding up the affairs of a partnership is referred to as
liquidation. realization
O
2.
After all noncash assets have been converted to cash and all liabilities paid, X, Y, and Z
have capital balances of $20,000 (credit), $9,000 (debit), and $22,500 (credit). The cash
available for distribution to the partners is $42,500. $33,500
O
3.
The distribution of cash, as the final process in winding up the affairs of a partnership, is
made in the income-sharing ratio. according to capital balances
+
4.
Gains on the sale of noncash assets upon winding up the affairs of a partnership are divided
between the partners in the income-sharing ratio.
O
5.
The process of winding up the affairs of a partnership is referred to as realization. liquidation
+
6.
If the partnership agreement states that net income should be divided between the partners
equally, a net loss would be handled in the same way.
+
7.
If the net income of a partnership is less than the total of the allowances provided by the
partnership agreement, the difference must be divided among the partners as if it were a net
loss.
+
8.
If a partner’s capital balance is a debit after it has absorbed its share of the loss on
realization, the balance is referred to as a deficiency.
+
9.
If the articles of a partnership provide for annual salary allowances of $18,000 and $24,000
to A and B respectively and net income is $90,000, A’s share of the net income would be
$42,000.
O
10.
If the partnership agreement is silent on the matter, net income and net loss should be
divided between the partners in the ratio of time devoted to the partnership.
See next page for explanation of question #9.
Question 9 – Division of Income
Step 1 – set up “table” or “schedule” for allocation:
Partner A
Partner B
Total
$90,000
Step 2 – allocate known amounts according to agreement:
Salaries
Partner A
Partner B
Total
$18,000
$24,000
$42,000
$90,000
Step 3 – Determine the remainder to be allocated:
Salaries
Partner A
Partner B
Total
$18,000
$24,000
$42,000
48,000
$90,000
Step 4 – Allocate the remainder and sum the columns: (note: since not stated the remainder would be
allocated equally)
Partner A
Partner B
Total
Salaries
$18,000
$24,000
$42,000
Remainder
24,000
24,000
48,000
Totals
$42,000
$48,000
$90,000
Thus, the answer to the question is “true.”