Multiple Choice Questions
1) Under the Uniform Partnership Act, loans made by a partner to the partnership are treated as
A) liabilities to the partnership for which interest shall be paid from the date of the advance.
B) advances to the partnership that are carried in the partners' capital accounts.
C) Accounts Payable of the partnership for which interest is paid.
D) advances to the partnership for which interest does not have to be paid.
2) A partner assigned his partnership interest to a third party. Which statement best describes the legal ramifications to the assignee?
A) The assignment of the partnership interest does not entitle the assignee to partnership assets upon a liquidation.
B) The assignment dissolves the partnership.
C) The assignee has the right to share in the management of the partnership.
D) The assignee does not become a partner but has the right to share in future partnership profits and to receive the proper share of partnership assets upon liquidation.
3) In the Uniform Partnership Act, partners have
A) I only
B) II only
C) I and II
D) Neither I nor II
A) are required to prepare annual reports.
B) are required to file income tax returns but do not pay Federal income taxes.
C) are required to file income tax returns and pay Federal income taxes.
D) are not required to file income tax returns or pay Federal income taxes.
5) Austin contributes his computer equipment to the landscaping partnership he starts with Bentley. At what amount should the computer equipment be credited to Austin's partnership capital?
A) The tax basis
B) The fair value at the date of contribution
C) Austin's original cost
D) At the amount that Bentley contributes, with the assumption that they both contribute equally to the partnership
6) By how much will the capital accounts of Lemon, Mango, and Nobb increase, respectively, due to the revaluation of the assets and the recognition of goodwill?
A) The capital accounts will increase by $50,000 each.
B) The capital accounts will increase by $60,000 each.
C) $36,000, $54,000, and $90,000
D) $40,000, $50,000, and $60,000
7) How much cash must Oran invest to acquire a one-fifth interest?
8) What will the profit and loss sharing ratios be after Oran's investment?
9) What is the weighted-average capital for Bertram and Ernest in 2011?
A) $224,000 and $245,000
B) $203,333 and $221,167
C) $221,333 and $239,167
D) $256,000 and $220,000
10) If the average capital for Bertram and Ernest from the above information is $224,000 and $238,000, respectively, what will be the total amount of profit allocated to salary and interest distributions?
A) $ 93,800