Matching Partnership Terms with Their Descriptions}

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Match the descriptions of terms on the left with the terms on the right. A term may be used once, more than once, or not at all.

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Descriptions of Terms 1. Occurs when the new partner's investment exceeds the new partner's capital credit. 2. A partner who cannot actively participate in the management of the partnership. 3. How partnership profits and losses are allocated when there is nothing stated in the partnership agreement. 4. Occurs when the new partner's investment equals the new partner's capital credit and there is no change in the old partners' capital balances. 5. This cost is not deducted to determine the partnership's net income for the period. 6. A partner who actively participates in the management of the partnership and who is personally liable for the debts of the partnership. 7. Occurs when the new partner's capital credit exceeds the new partner's investment and there is no change in the old partners' capital balances. 8. This account is increased when a partner takes assets out of the partnership in anticipation of partnership net income. 9. This account is increased for the fair value of noncash assets invested by a partner. 10 This represents a related-party transaction that must be disclosed in the notes to the financial statements. 11. Occurs when the new partner's investment equals the new partner's capital credit and there is an increase in the old partners' capital balances. 12. Occurs when the new partner's capital credit exceeds the new partner's investment and there is a decrease in the old partners' capital balances. 13. When a new partner is admitted to the partnership, an intangible asset is recognized that results in increases in the old partners' capital balances. 14. This account is closed to the capital account at year-end. 15. Interest expense on this payable is deducted to determine the net income of the partnership. A. General partner Terms B. Note payable to a partner C. Neither bonus nor goodwill recognized D. Drawing account E. Limited partner F. Bonus to old partners G. Interest on capital accounts H. Partnership income or loss shared equally I. New partner's goodwill recognized J. Old partners' goodwill recognized K. Articles of Copartnership L. Bonus to new partner M. Capital account