1) For financial accounting purposes, assets of an individual partner contributed to a

partnership are recorded by the partnership at

a) Historical cost

b) Book value

c) Fair market value

d) Lower of cost or market

2) Which of the following is not an advantage of a partnership over a corporation?

a) Ease of formation

b) Unlimited liability

c) Less governmental regulations

d) All of the above

3) Partnership drawings are

a) Always maintained in a separate account from the partner's capital account

b) Equal to partners' salaries

c) Usually maintained in a separate draw account with any excess draws being

debited directly to the capital account

d) Not discussed in the specific contract provisions of the partnership

4) Which of the following would least likely to be used as a means of allocating profits

among partners who are active in the management of the partnership?

a) Salaries

b) Bonus as a percentage of net income before the bonus

c) Bonus as a percentage of sales in excess of a targeted amount

d) Interest on average capital balances

5) If a bonus is traceable to the previous partners rather than an incoming partner, it is

allocated among the partners according to the

a) Profit-sharing percentages of the previous partnership

b) Profit-sharing percentages of the new partnership

c) Capital percentages of the previous partners

d) Capital percentages of the new partnership