Accounting 231

Chapter 15

1. 15.1 A partnership ________.

A. has one owner

B. can issue stock

C. pays taxes on partnership income

D. can have more than one general partner

2. 15.1 Any assets invested by a particular partner in a partnership ________.

A. do not become a partnership asset but instead remain with the partner

B. can be used only by the investing partner

C. become the property of all the partners

D. are the basis for all profit sharing

3. 15.1 Which of the following is a disadvantage of the partnership form of organization?

A. limited life

B. no taxation at the partnership level

C. flexibility in business operations

D. combining of financial resources

4. 15.1 Mutual agency is defined as:

A. a mutual agreement

B. the right of all partners to represent the company's normal business operations C. a synonym for partnership

D. a partnership between two partnerships

5. 15.2 Chani contributes equipment to a partnership that she purchased 2 years ago for $10,000. The current book value is $7,500 and the market value is $9,000. At what value should the partnership record the equipment?

A. $10,000

B. $9,000

C. $7,500

D. none of the above

6. 15.2 Juan contributes marketable securities to a partnership. The book value of the securities is $7,000 and they have a current market value of $10,000. What amount should the partnership record in Juan's Capital account due to this contribution?

A. $10,000

B. $7,000

C. $3,000

D. none of the above

7. 15.2 Which one of the following would not be considered in the development of a partnership agreement?

A. profit and loss levels

B. processing disputes

C. stock options

D. asset contributions

8. 15.3 A well written partnership agreement should include each of the following except ________.

A. how to settle disputes

B. the name of the partnership C. division of responsibilities

D. Partner's individual tax rate

9. 15.3 What type of assets may a partner not contribute to a partnership?

A. accounts receivable

B. furniture

C. equipment

D. personal credit cards

10. 15.3 How does a newly formed partnership handle the contribution of previously depreciated assets?

A. continues the depreciation life as if the owner had not changed

B. starts over, using the contributed value as the new cost basis

C. shortens the useful life of the asset per the partnership agreement

D. does not depreciate the contributed assets