1.Which of the following statements about a partnership is correct?

a.The personal assets of a partner are included in the partnership accounting records.

b.A partnership is not required to file an information tax return.

c.Each partner's share of income is taxable to the partnership.

d.A partnership represents an accounting entity for financial reporting purposes.

2.In a partnership, mutual agency means

a.each partner acts on his own behalf when engaging in partnership business.

b.the act of any partner is binding on all other partners, only if partners act within their cope of authority.

c.an act by a partner is judged as binding on other partners depending on whether the act appears to be appropriate for the partnership.

d.that partners must pay taxes on a mutual or combined basis.

3.A partnership

a.is dissolved only by the withdrawal of a partner.

b.is dissolved upon the acceptance of a new partner.

c.dissolution means the business must liquidate.

d.has unlimited life.

Use the following information for questions 4-5.

The net income of the Pine and Miles partnership is $180,000. The partnership agreement specifies that Pine and Miles have a salary allowance of $48,000 and $72,000, respectively. The partnership agreement also specifies an interest allowance of 10% on capital balances at the beginning of the year. Each partner had a beginning capital balance of $120,000. Any remaining net income or net loss is shared equally.

4.What is Pine's share of the $180,000 net income?

a.$48,000

b.$60,000

c.$66,000

d.$78,000

5.What is the balance of Miles' Capital account at the end of the year after net income has been distributed?

a.$204,000

b.$192,000

c.$222,000

d.$210,000

6.Which of the following would not cause an increase in partnership capital?

a.Drawings

b.Net income

c.Additional capital investment by the partners

d.Initial capital investment by the partners

7.Jill Grier's capital statement reveals that her drawings during the year were $50,000. She made an additional capital investment of $25,000 and her share of the net loss for the year was $10,000. Her ending capital balance was $200,000. What was Jill Grier's beginning capital balance?

a.$225,000

b.$185,000

c.$235,000

d.$260,000

8.Bill Wren started the year with a capital balance of $180,000. During the year, his share of partnership net income was $160,000 and he withdrew $30,000 from the partnership for personal use. He made an additional capital contribution of $50,000 during the year. The amount of Bill Wren's capital balance that will be reported on the year-end balance sheet will be

a.$160,000.

b.$390,000.

c.$300,000.

d.$360,000.

9.The partners' drawing accounts are

a.reported on the income statement.

b.reported on the balance sheet.

c.closed to Income Summary.

d.closed to the partners' capital accounts.

10.The liquidation of a partnership may result from each of the following except the

a.bankruptcy of the partnership.

b.death of a partner.

c.retirement of a partner.

d.sale of the business by the partners.