Question 1

1 / 1 pts
Which of the following equation pairs indicates that the old partners will receive bonus?

AC = CC ACN > AIP bonus to new partner

AC =CC ACN = AIP no bonus no asset reval

Correct!

AC = CC ACN < AIP bonus to new partner

AC = CC ACN ≠ AIP ?

Question 2
1 / 1 pts prior to the admission
If assets are to be revalued, the revaluation should be done after the admission of
the new partner into the partnership. When assets are revalued an identifiable
accounts are adjusted, the amount of the adjustments will be amortized or depreciated
over the remaining life of the asset

The first statement is true, the second statement is false.

Correct!

The first statement is false, the second statement is true.

Both statements are false.

Both statements are true.

Question 3
1 / 1 pts
When AC(Agreed Capital) is given, any of the following cases may not arise:

No Bonus, no Asset Revaluation

Bonus, no Asset Revaluation

Correct!

Bonus and Asset Revaluation

No bonus, Asset Revaluation

Question 4
1 / 1 pts
Which of the following conditions constitutes a legal dissolution of a partnership?

Admission of a new partner.

Correct!

All of these.

Death of a partner.

Retirement of a partner.
Question 5
1 / 1 pts
A new partner or partners, with the consent of all the partners, may be admitted in an
existing partnership. Upon admission of a new partner, the firm is automatically
dissolved and a new partnership is formed.

The first statement is true, the second statement is false.

Both statements are false.

Correct!

Both statements are true.

The first statement is false, the second statement is true.

Question 6
prior to the admission
1 / 1 pts
If assets are to be revalued, the revaluation should be done after the admission of
the new partner into the partnership. When assets are revalued an identifiable
accounts are adjusted, the amount of the adjustments will be amortized or depreciated
over the remaining life of the asset.

Correct!

The first statement is false, the second statement is true.

Both statements are true.

Both statements are false.

The first statement is true, the second statement is false.

Question 7
1 / 1 pts
Which of the following equations indicates that there is negative asset revaluation?

AC ≠ CC

AC = CC

Correct!

AC < CC

AC > CC

Question 8
1 / 1 pts
A partnership is formed by two individuals who were previously sole proprietors.
Property, other than cash, which is part of the initial investment in the partnership would
be recorded for financial accounting purposes at the

proprietor’s book value or the fair value of the property at the date of the investment,
whichever is higher.

proprietor’s book value of the property at the date of the investment.

proprietor’s book value or the fair value of the property at the date of the investment,
whichever is lower.

Correct!

proprietor’s fair value of the property at the date of the investment.

Question 9
0 / 1 pts
Salaries to partners of a partnership typically should be accounted for as:

Reductions of the partners’ capital account balances.

Drawings by the partners from the partnership.

Correct Answer

A device for sharing net income.

You Answered

An operating expense of the partnership.

Question 10
1 / 1 pts
When admitting a new partner into an existing partnership, allocation of any increase or
decrease in the value of assets to the old partners is based on -

The relative capital balances of the partners.

The fair values of the assets each partner has contributed to the partnership.

An equal distribution among the partners.

Correct!

The profit and loss ratio.

Question 11
0 / 1 pts
When agreed capital is equal to contributed capital and the capital credit of the
new partner exceeds his/her actual investment, who will receive the bonus?

The old partners in their new profit and loss ratio.

Correct Answer

The new partner.

The old and new partners in their new profit and loss ratio.

You Answered

The old partners in their old profit and loss ratio.

Question 12
1 / 1 pts
Dissolution is the change in the relation of the partners caused by any partner ceasing
to be associated in the carrying of the business. It refers to the termination of the life
of the existing partnership.

Correct!
Both statements are true.

Both statements are false.

The first statement is false, the second statement is true.

The first statement is true, the second statement is false.

Question 13
1 / 1 pts
When admitting a new partner into an existing partnership, allocation of any
increase or decrease in the value of assets to the old partners is based on –

The fair values of the assets each partner has contributed to the partnership.

The relative capital balances of the partners.

Correct!

The profit and loss ratio.

An equal distribution among the partners.

Question 14
1 / 1 pts
The following are causes of partnership liquidation except –
Correct!

Marriage of the partners.

The accomplishment of the purpose for which the partnership was organized.

The end or termination of the period covered by the partnership contract.

The mutual agreement among the partners to close the business.

Question 15
0 / 1 pts
Liquidation expenses may be incurred to facilitate the immediate realization of non-cash
assets. Payment of liquidation expenses reduce cash and are carried to capital as
deductions based on the partners’ capital balance.
BASED ON THE PROFIT AND LOSS RATIO

Both statements are false.

Correct Answer

The first statement is true, the second statement is false.

You Answered

Both statements are true.

The first statement is false, the second statement is true.

Question 16
1 / 1 pts
In a partnership liquidation, final distribution of cash is made -

Correct!

According to the final capital account balances.

Equally

According to the profit and loss ratio.

According to the initial investment made by each partner.

Question 17
1 / 1 pts
The process of winding up a business which normally consists of conversion of non-
cash assets into cash, payment of liabilities and distribution of the remaining cash
among the partners.

realization

finalization

dissolution

Correct!

liquidation
Question 18
1 / 1 pts
What is the rule of offset?
Correct!

Loans from partners should be offset against their debit capital balances before they
receive any cash distributions.

Loans to partners should be offset against their debit capital balances before they
receive any cash distributions.

Loans from partners should be offset against their credit capital balances before they
receive any cash distributions.

Receivables from partners should be offset against their debit capital balances before
they receive any cash distributions.

Question 19
1 / 1 pts
Which of the following is the first priority in the distribution of cash upon liquidation?

Correct!

those owing to creditors

those owing to partners in respect to capital

those owing to partners in respect of profit

those owing to partners in respect of loans

Question 20
1 / 1 pts
In a partnership liquidation, the realization losses result in a debit balance in one
partner’s
capital account. If this partner fails to contribute personal assets to cover his deficiency,
how should the debit balance be handled by the partners?

Correct!

It should be allocated to the remaining partners in their remaining profit and loss ratio.

It should be allocated to all the partners in their profit and loss ratio.

It should be set up as a receivable and turned over to a collection agency.

It should be written off against partnership profits like any other bad debt.

Question 21
1 / 1 pts
Which of the situations below causes the business operations of a partnership being
terminated?

withdrawal of a partner

Correct!

liquidation
admission of a new partner

death of a partner

Question 22
1 / 1 pts
Which of the following statements is true concerning the accounting that is made for a
partnership going through liquidation?

Within a liquidation, all gains and losses are divided equally among the partners.

A separate income statement is created just to measure the profit and loss generated
during liquidation.

Since gains and losses rarely occuredduring liquidation, no special accounting

treatment is warranted.

Correct!

Gains and losses are reported directly as increases and decreases in the appropriate
capital account.

Question 23
1 / 1 pts
The process of converting non-cash assets into cash.
REALIZATION

right of offset
gain on realization

Dissolution

Correct!

realization

Question 24
1 / 1 pts
The procedure in preparing closing entries in the books of a partnership is the same
with that of a sole proprietorship. All revenues and other nominal accounts with credit
balances will be debited and income summary account will be credited.
Correct!

Both statements are true.

The first statement is false, the second statement is true.

The first statement is true, the second statement is false.

Both statements are false.

Question 25
1 / 1 pts
A credit may signify
Decrease in a liability account.

Increase in an asset account.

decrease in a capital account.

Correct!

Increase in a capital account.

Question 26
1 / 1 pts
In general, profits and losses are divided in accordance with the agreement of the
partners. In the absence of an agreement, profits and losses are divided equally among
partners after satisfying the share of an industrial partner.

Both statements are false.

Both statements are true.

Correct!

The first statement is true, the second statement is false.

The first statement is false, the second statement is true.

Question 27
0 / 1 pts
After posting the income summary account to the ledger the balance will be closed to
capital account of each partner. The debit balance of income summary account
represents a net income while the credit balance represents a net loss.
You Answered

Both statements are false.

Both statements are true.

The first statement is false, the second statement is true

Correct Answer

The first statement is true, the second statement is false.

Question 28
1 / 1 pts
In general, profits and losses are divided in accordance with the agreement of the
partners. In the absence of an agreement, profits and losses are divided in accordance
with capital contribution of the partners after satisfying the share of an industrial partner.

Both statements are false.

The first statement is true, the second statement is false.

The first statement is false, the second statement is true

Correct!

Both statements are true.

Question 29
0 / 1 pts
The allocation of an error should be based on the profit and loss ratio in effect when –
You Answered

the error was discovered.

the allocation should always be made equally.

Correct Answer

the error was made.

the error was corrected.

Question 30
1 / 1 pts
If the partners’ capital will be used as the basis in dividing the profits and losses, it must
be specified. Which of the following is capital contribution ratio?

average capital for the year

Correct!

all of these

ending capital for the year

beginning capital for the year

Question 31 MANAGERIAL PARTNER

0 / 1 pts
Bonus is an incentive given to the industrial partner. It is given only if there is a profit.

1ST-FALSE 2ND TRUE

The first statement is true, the second statement is false.

You Answered

Both statements are true.

Both statements are false.

Correct Answer

The first statement is false, the second statement is true.

Question 32
0 / 1 pts
Which is false concerning the rules of debit and credit?

You Answered

The word “debit” means to increase and the word “credit” means to decrease.

Correct Answer

Increases in assets and expenses are debit entries, and increase the liabilities, owner’s
equity and revenue are credit entries.

The left side of an account is always the debit side and the right side is always the credit
side.

The normal balance of any account appears on the side for recording increases.

Question 33
1 / 1 pts
The following are factors affecting distribution of profits and losses except –

Time spent by the partners in the partnership operations.

Entrepreneurial/managerial abilities, skills and talents of partners.

Capital contributions.

Correct!

Loans extended to the partnership.

Question 34
1 / 1 pts
A retiring partner with the consent of the remaining partnermay sell his interest to an
outsider, such sale is recorded in the same manner as in the admission of a new
partner by purchase. The partnership recognizes only the transfer of capital interest
from the retiring partner to the new partner.

The first statement is true, the second statement is false.

The first statement is false, the second statement is true.

Correct!

Both statements are true.

Both statements are false.

Question 35
1 / 1 pts
As the business may continue after withdrawal, the interest of the withdrawing partner
may be sold to the following, except

continuing (remaining) partner/s.

Correct!

corporation.

new partner (outsider).

partnership itself.

Question 36
1 / 1 pts
When a partner retires and receives cash which is less than his capital balance or
interest, how should the difference be treated?

THE CASH PAID TO THE WITHDRAWING PARTNER IS LESS THAN HIS/

HER CAPITAL THEN THE DIFFERENCE WILL BE CREDITED TO THE
REMAINING PARTNERS, AND WILL SERVE AS A BONUS
The difference should be debited to all the partners in their profit and loss ratio.

The difference should be debited to the remaining partners in their remaining profit and
loss ratio.

Correct!

The difference should be credited to the remaining partners in their remaining profit and
loss ratio.
The difference should be credited to all the partners in their profit and loss ratio.

Question 37
0 / 1 pts
Bonus is made possible under the following cases, except.

You Answered

When a retiring partner sold his capital interest to the partnership

Correct Answer

Admission of new partner by purchase. NO BONUS WHEN BY PURCHASE

Admission of new partner by investment.

When a managing partner is given incentive for a profit.

Question 38
1 / 1 pts
A partner may also retire from the partnership after having served the partnership for a
certain period of time or upon reaching a certain age. This will be treated the same way
as admission of a new partners by investment.
WITHDRAWAL IS THE SAME WITH
ADMISSION BY PURCHASE

The first statement is false, the second statement is true.

Both statements are true.

Both statements are false.

Correct!

The first statement is true, the second statement is false.

Question 39
1 / 1 pts
If deficient partner is insolvent, his deficiency shall be absorbed by the other partners
as
additional loss according to their profit and loss ratio.
Correct!

True

False

Question 40
1 / 1 pts
A partnership may be dissolved at any time by the will of the partners or by operation of
law.
Correct!

True

False

Question 41
1 / 1 pts
The sale of interest of the withdrawing partner to a new partner will require the
recognition
of a gain or loss on the partnership books. THE GAIN FROM SALE OF INTEREST IS A
PERSONAL TRANSACTION, THUS WILL NOT
BE RECORDED IN THE PARTNERSHIP BOOK
True

Correct!

False

Question 42
0 / 1 pts
In admission by investment bonus may always arise when AC = CC.
You Answered
FALSE- AC=CC ,MAY ALSO INDICATE NO BONUS OR NO
ASSET REVALUATION
True

Correct Answer

False

Question 43
1 / 1 pts
In admitting a new partner by investment, there will be no bonus if the amount of the
total
agreed capital is not equal to the total contributed capital.
Correct!
IF AC IS NOT EQUAL TO CC, THEN NO BONUS
True

False

Question 44
1 / 1 pts
In admission by investment revaluation will certainly happen if the AC ≠ CC.
Correct! TRUE
True

False

Question 45
1 / 1 pts
In the process of liquidation, Partnership Law provides that capital contributions of the
partners should be paid first before any payment can be made to creditors.

True
PAYMENT TO CREDITORS IS THE FIRST PRIORITY IN
Correct! THE LIQUIDATION PROCESS

False

Question 46
1 / 1 pts
Winding up is synonymous to realization.

True
WINDING UP IS SYNONYMOUS TO LIQUIDATION

Correct!
REALIZATION IS THE CONVERTION OF NON-CASH
ASSET INTO CASH AS PAYMENT
False

Question 47
1 / 1 pts
Admission of a new partner dissolves an existing partnership but a new partnership may
be
formed.
Correct!
True

False

Question 48
1 / 1 pts
Generally, asset revaluation upon partnership formation are connected to the partners
of the
old partnership only.
Correct!

True

False

Question 49
1 / 1 pts
Liquidation is always preceded by dissolution.
Correct!

True

False

Question 50
1 / 1 pts
In admission by investment revaluation and bonus will occur simultaneously.

True REVALUATION AND BONUS WILL NOT OCCUR SIMULTANEOUSLY

Correct!

False

Question 51
0 / 1 pts
A new partner, with the consent of the majority the partners, may be admitted in an
existing
partnership.
You Answered

True

Correct Answer

False

Question 52
1 / 1 pts
Admitting a new partner by purchase increases the total partnership capital.

True
ADMISSION BY PRUCHASE DOES NOT CHANGE
Correct! THE TOTAL PARTNERSHIP ACCOUNT, THUS IT
REMAINS THE SAME

False

Question 53
0 / 1 pts
Bonus is an incentive given to the industrial partner. It is given only if there is a profit.
You Answered
BONUS IS ONLY GIVEN TO THE MANAGERIAL PARTNER
True
Correct Answer

False

Question 54
1 / 1 pts
In the application of the right of offset, the amount that can be offset is the loan or the
deficiency whichever is higher. WHICHEVER IS LOWER

True

Correct!

False

Question 55
1 / 1 pts
Gain on realization of asset shall distributed among partners as deduction against their
capital balances.

True

Correct!
GAIN INCREASES CAPITAL BALANCES
False

Question 56
1 / 1 pts
When personal liabilities exceed personal assets , the partner is insolvent.
Correct!

True
False

Question 57
1 / 1 pts
The investment of a new partner in an existing partnership is a transaction between the
partnership and the new partner.
Correct!

True

False

Question 58
1 / 1 pts
Under admission by purchase the money paid by the new partner becomes part of the
specific partnership assets. UNDER THE ADMISSION BY INVETMENT THE MONEY
PAID BY THE PARTNER BECOMES PART OF THE
SPECIFICPARTNERSHIP ASSETS.
True

Correct!

False

Question 59
1 / 1 pts
In the absence of any agreement, profits and losses are divided among the partners
based
on their capital contribution.
Correct!
True

False

Question 60
1 / 1 pts
Withdrawal by a partner at less than book value of his capital interest results in a
reduction/loss to the remaining partners allocated according to their profit and loss ratio.

True

Correct!

False