Accounting multiple choice questions | Accounting

1. Callie was admitted to the Adams & Beal Partnership four years ago. The partnership has a deficiency at year end for the current year. How could this deficiency be accounted for?
-Use the profit and loss ratios to absorb the deficiency
-Do not account for the loss in the year incurred, it can be offset against income in future years
-Do not account for the loss in the year incurred, it could be offset against income in future years or carried back to offset income in prior years
-Losses are not passed on to individual partners in a partnership
2. The following is the priority sequence in which liquidation proceeds will be distributed for a partnership
-partnership drawings, partnership liabilities, partnership loans, partnership capital balances
-partnership liabilities, partnership loans, partnership capital balances
-partnership liabilities, partnership loans, partnership drawings, partnership capital balances
-partnership liabilities, partnership capital balances, partnership loans
3. Which of the following statements is correct regarding a partner’s debit capital balances?
-The partner should make contributions to reduce the debit balance to whatever extent possible
-If contributions are not possible, the other partners with credit capital balances will be allocated a portion of the debit balance based on their proportionate profit-and-loss-sharing percentages
-Partners who absorb another’s debit capital balance have a legal claim against the deficient partner
-All of these statements are correct
4. In a lump-sum liquidation of a partnership
-all assets are paid to the partners based on their initial contribution, with the oldest partnering being paid back first
-all assets are paid to the partners based on an equal distribution regardless of when the partner was admitted to the partnership
-all assets must be realized before any distribution can be made
-all assets are paid to the partners, at the same time, based the fair market value at the time they were initial donated to the partnership
5. When a partner withdraws from a partnership and the remaining partners acquire that interest
-this may have an effect on the liquidity of the partnership
-this will increases the cash flow into the partnership
-this will always create goodwill for an amount equal to the withdrawing partner’s original interest in the partnership
-this will cause all assets to be written down to offset the acquisition cost of the withdrawing partner’s interest at the time of the withdraw
6. The parent’s entry to record the interest in the foreign subsidiary’s undistributed income would be
-a debit to the investment of the subsidiary and a credit to subsidiary income
-a debit to the investment of the subsidiary receivable and a credit to subsidiary income payable
-a debit to the investment of the subsidiary receivable and a credit to subsidiary income payable
-a debit to the investment of the subsidiary receivable and a credit to subsidiary income payable
-no entry since the income is undistributed
7. You are the controller of A company that has just recently merged with B company. You are doing some research and based on your old accounting textbooks from 1999 you are thinking about using the pooling method for this transaction. This method
-requires assets only to be recorded at historical costs and liabilities at fair value
-requires all assets to be recorded at historical cost
-requires all assets and liabilities to be recorded at fair value
-is no longer an acceptable method
8. For financial accounting purposes, assets of an individual partner contributed to a partnership are recorded by the partnership at
-historical cost
-book value
-fair market value
-lower of cost or market
9. Which of the following would be least likely to be used as a means of allocating profits among partners who are active in the management of the partnership?
-Salaries
-Bonus as a percentage of net income before the bonus
-Bonus as a percentage of sales in excess of a targeted amount
-Interest on average capital balances
10. Assuming that the functional currency of a foreign subsidiary is not the local currency, which of the following accounts would be re measured at the historical rate?
-Accounts Payable
-Long-term notes payable
-Land
-Sales Revenue

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