Multiple Choice Answers

1.Which of the following is NOT a characteristic of a partnership?
a.Each general partner has unlimited liability for the debts of the partnership.
b.If one partner dies or leaves the partnership, the existing partnership is terminated.
c.The partnership income is subject to a federal income tax that is levied on the business but not on the partners
d.The existing partnership agreement is dissolved and a new agreement is formed when a new partner joins the partnership.
2.Ryan Fuller, a sole proprietor, entered into partnership with another individual. Fullers investment in the partnership included equipment that cost $32,00 when it was purchased. The equipment has a book value of $13,000 and a net agreed-on value of $16,000. In the financial records of the partnership, this equipment and its accumulated depreciation should be recorded at:
a. $16,000 and $0, respectively
b. $13,000 and 0$, respectively
c. $32,000 and $19,000 respectively
d.$16,000 and $3,000 respectively
3.The general ledger of a partnership will:
a.Not contain a separate drawing account for each partner.
b.Contain one capital account that reflects the total equity of all partners.
c.Not contain a capital account or accounts.
d.Contain a separate capital account for each partner.
4.The salary and interest allowances in a partnership profit-sharing agreement can best be described as:
a.Expenses of the business that are deducted from revenue in the determination of net income
b.Amounts on which each partner will not have to pay income tax.
c.A means of distributing net income in relation to the services provided and the capital invested by each partner.
d.A legel requirement in order for a partnership to be formed.

5.Partnership net income of $33,000 is to be divided between two partners, Elan Chan and Roy Anderson, according to the following arrangement: There will be salary allowances of $20,000 for Chan and $10,000 for Anderson, with the remainder divided equally. How much of the net income will be distributed to Chan and Anderson, respectively?
a.$22,000 and $11,000
b.$21,5000 and $11,500
c.$16,500 and $16,000
d.$21,000 and $12,000
6.Kara Johnson and Tyler Jones are partners, and each has a capital balance if $100,000. To gain admission to the partnership, Raiden Nash pays $60,000 directly to Johnson for one-half of her equity. After the admission of Nash, the total partners equity in the records of the partnership will be:

a.$200,000
b.$250,000
c.$260,000
d.$300,000
7.A corporation is owned by:
a.The individual who started the company
b.Its board of directors
c.The president of the corporation
d.Its stockholders
8.Which of the following statements is correct?
a. Shareholders have no personal liability for a corporations
b. A corporations profits are first taxed at the corporate tax rate and then taxed again at person income tax rates when the profits are paid to the stockholders in the form of dividends.
c. Limited liability partnership (LLP) partners have liability for their own actions and the actions of those under their control or supervision.
d. All of these statements are correct.
9. If only one class of stock is issued by a corporation, it is referred to as a _______stock.
a. Preferred
b. Company
c. treasury
d. common
10. A corporation has 1,000 shares of 10 percent, $50 par-value preferred stock and 10,000 shares of $5 par-value common stock outstanding. If the board of directors decides to distribute dividends totaling $40,000, the common stockholders will receive a dividend of +______________ a share.
a. $5.00
b. $4.00
c. $3.50
d. $3.75
11. The entry to record the issuance of 1,000 shares of $10par-value common stock for $14 a share consists of a debit to Cash for:
a. $14,000 and a credit to Common Stock for $14,000.
b. $10,000 and a credit to Gain on Sale of Common Stock for $4,000
c. $14,000 and a credit to Paid-in Capital in Excess of Par-Value-Common Stock for $4000 and a credit of $10,000 to common stock.
d. $10,000 and a credit to Treasury Stock for $4,000

12.Which of the following statements is correct?
a.Market value is the figure selected by the organizers of the corporation to be assigned to each share of stock for accounting purposes.
b. If there is only one class of stock, the stock is called preferred stock.
c. In the event of liquidation, preferred stockholders have a claim on assets before that of common stockholders.
d. None of these statements is correct.

 
13. The Preferred Stock account is shown in the_________________section of the balance sheet.
a. assets
b. current liabilities
c.long-term liabilities
d.stockholders equity
14.When the amount of future taxes that will be paid as a result of MACRS depreciation deduction taken in this and prior years, an adjustment for the future taxes is made with a debit to _____and a credit to_____.
a. Tax Expense;Deferred Income Tax Liability
b, Deferred Income Tax Liability; Tax Expense
c.Tax Expense;Deferred Income Tax Asset
d.Deferred Income Tax Asset;Tax Expens