1- The ability of one partner to enter into a contract binding all other partners is termed: A- Mutual Agency B- Unlimited Liability C- Partnership agreement D- Pass-through entity 2- As a part of the initial investment, a partner contributes office equipment that had a cost of $20,000 and accumulated depreciation of $12,500. If the partner agree on the a valuation of $9,000 for the equipment, what amount should be debited to the office equipment account? A- $7,500 B- $9,000 C- $12,500 D- $20,000 3- Lee and Stills are partner who share income in the ratio of 2:1 and who have capital balances of $65,000 and $$35,000 respectively. If MOR, with the consent of Stills, acquired of Lees interest for $40,000 for what amount would MORs capital account be credited? A- $32,000 B- $40,000 C- $50,000 D- 72,500 4- Chip and Dale agree to form a partnership. Chip is to contribute $$50,000 in assets and devote time to the partnership. Dale is to contribute $20,000 and to devote full time to the partnership. How will Chip and Dale split the net income/Loss? A- 5:2 B- 1:2 C- 1:1 D- 2.5:1 5- Henry and Thomas share gains and losses in the ratio of 2:1. After selling all assets for cash and paying all liabilities, the cash account has $12,000 c in it. The capital accounts were as follows: Henry $10,000, Thomas $2,000. How much of the $12,000 cash would Henry receive? A- $2,000 B- $8,000 C- $10,000 D- $12,000 6- Which of the following is not true about a partnership? A- It is easy to form a partnership B- A partnership has personal limited liability C- There no double taxation in a partnership D- A partnership has limited life 7- On which financial statement is each partners capital account? A- Balance Sheet B- Income Statement C- Statement of Retained earning D- Cash Flow Statement 8- The partners capital account is what type of account and what is the Capital accounts normal balance? A- Asset account, normal debit balance B- Equity account, normal debit balance C- Asset account, normal credit balance D- Equity account, normal credit balance 9- Which of the following is not true for a corporation? A- A corporation is a separate entity from its owners B- Ownership can be transferred when stock is exchanged C- Owners have limited liability D- Corporations are not taxed 10- In a sole proprietorship the drawing account is similar to what account in a corporation? A- Capital account B- Retained Earning C- Dividends D- Common Stock