1. A partner withdraws from a partnership by selling their interest in the partnership to a person who is not currently associated with the partnership. As a result of this transaction, what will happen to the capital account balances of the other partners in the partnership?

1. They will increase
2. They will decrease
3. They will remain the same
4. They may increase, decrease, or remain the same

2. What happens when an additional partner is admitted to a partnership by a contribution of assets to the partnership?

1. The total assets of the partnership do not change
2. No liabilities can be contributed at the same time
3. The amount of the asset contribution is the same as the amount of the debit to the new partners capital account
4. The total of the partners equity accounts increases

3. Benson and Orton are partners who share profit/loss in the ratio of 2:3. Benson has a capital balance of $50,000 and Orton has a capital balance of $30,000. Ramsey is admitted to the partnership and is given a 40% ownership interest by investing $20,000 in cash. What is Bensons capital balance after admitting Ramsey?

1. $18,000
2. $20,000
3. $25,000
4. $42,000

4. Benson and Orton are partners who share profit/loss in the ratio of 2:3. Benson has a capital balance of $30,000 and Orton has a capital balance of $50,000. Ramsey is admitted to the partnership and is given a 10% ownership interest by investing $20,000 in cash. What is Ortons capital balance after admitting Ramsey?

1. $56,000
2. $44,000
3. $34,000
4. $20,000

5. Harriet, Mickey, and Zack decide to liquidate their partnership. All assets are sold for cash and all the liabilities are paid. After this, their capital balances are: Harriet - $27,000; Mickey - ($12,000); Zack - $43,000. Their profit/loss percentages are: Harriet - 30%; Mickey - 40%; Zack - 30%. Mickey is unable to contribute any assets to reduce his deficit. How much cash will Harriet receive as a result of the partnership liquidation?

1. $15,000
2. $21,000
3. $23,400
4. $27,000

6. How is the remaining cash of a partnership ( after all creditors have been paid ) divided among partners upon liquidation?

1. According to their capital balances
2. According to their contribution of assets
3. According to their withdrawal account balances
4. According to their profit/loss ratio

7. Bobbi and Stuart are partners. Bobbis capital balance is $40,000 and Stuarts capital balance is $70,000. Bobbi sells her interest in the partnership to John for $50,000. The journal entry to record the admission of John as a new partner would include:

1. A credit to Johns capital account for $40,000
2. A credit to Johns capital account for $50,000
3. A credit to Johns capital account for $40,000 and a credit to Stuarts capital account for $10,000
4. A credit to Stuarts capital for $10,000

8. Partners Ken and Macki each have a capital balance of $40,000 and share profit/loss in a 3:2 ratio. Cash equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. They decide to liquidate the partnership and the noncash assets are sold for $60,000. Both partners agree to make up any capital deficits with personal cash contributions. How much cash will Macki receive as a result of the liquidation?

1. $0
2. $4,000
3. $16,000
4. $24,000

9. ABC Company, a private company, decides to lease new manufacturing equipment. The lease qualifies as a capital lease under ASPE. The lease transaction will be recorded at:

1. The fair market value of the leased equipment
2. The present value of the lease payments
3. The higher of the fair market value of the leased equipment and the present value of the lease payments
4. The lower of the fair market value of the leased equipment and the present value of the lease payments

10. The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

1. Retained Earnings
2. Authorized Shares
3. Organization Costs
4. Common Shares