Question 11 (2 points)

Pat, Helma, and Diane are partners with capital balances of $50,000, $30,000, and $20,000, respectively. The partners share profits and losses equally. For an investment of $50,000 cash, MaryAnn is to be admitted as a partner with a one-fourth interest in capital and profits. Based on this information, the amount of MaryAnn's investment can best be justified by which of the following?

Question 11 options:

	The book value of the partnership's net assets was less than their fair value immediately prior to MaryAnn's investment.
	MaryAnn will receive a bonus from the other partners upon her admission to the partnership.
	Assets of the partnership were overvalued immediately prior to MaryAnn's investment.
	MaryAnn is apparently bringing goodwill into the partnership and her capital account will be credited for the appropriate amount.

Question 12 (2 points)

Vore Corp. bought equipment on January 2, Year One for $200,000. This equipment had an estimated useful life of five years and a salvage value of $20,000. Depreciation was computed by the 150% declining balance method. The accumulated depreciation balance at December 31, Year Two, should be:

Question 12 options:

	$102,000.
	$98,000.
	$91,800.
	$72,000.

Question 13 (2 points)

How should a gain from the sale of used equipment for cash be reported in a statement of cash flows using the indirect method?

Question 13 options:

	In operating activities as a deduction from income.
	In investment activities as a reduction of the cash inflow from the sale.
	In investment activities as a cash outflow.
	In operating activities as an addition to income.

Question 14 (2 points)

Which of the following is an appropriate basis of accounting for a proprietary fund of a governmental unit? Cash Basis Modified Accrual Basis

Question 14 options:

	No No
	Yes Yes
	No Yes
	Yes No

Question 15 (2 points)

Governmental funds include which of the following?

Question 15 options:

	Permanent funds.
	Internal service funds.
	Investment trust funds.
	Private-purpose trust funds.

Question 16 (2 points)

What is the difference between common stock and preferred stock?

Question 16 options:

	Common stock is the residual equity of a corporation while preferred stock is an equity interest of a corporation.
	Common stock is an equity interest of a corporation while preferred stock is the residual equity of a corporation.
	Common stock receives dividends in arrears but preferred stock must be designated as cumulative to receive dividends in arrears.
	Preferred stock pays dividends while common stock does not.

Question 17 (2 points)

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On January 1, Year 1, Company X purchases equipment for $240,000 with an expected useful life of 12 years. The straight-line method is applied. During Year 4, entity officials decide to switch to the double-declining balance method. No other change is made. What amount of depreciation expense is recognized by the entity for Year 4?

Question 17 options:

	$40,000.
	$23,148.
	$27,778.
	$30,000.

Question 18 (2 points)

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Mr. Rich gives $100,000 to United Charity on Monday, with the stipulation the money will be given to the National Association for Dolphin Protection (NADP). However, prior to the actual conveyance, Mr. Rich has the right to divert the gift to a different beneficiary. If the financial statements are produced on Tuesday and United Charity is still holding the money, how much contribution revenue should United Charity recognize, and how much contribution revenue should NADP recognize at that time? United Charity NADP

Question 18 options:

	$0 $0
	$100,000 $0
	$0 $100,000
	$100,000 $100,000

Question 19 (2 points)

When a fixed asset is sold, the gain/loss on disposal is the difference between:

Question 19 options:

	selling price and book value.
	fair value and selling price.
	selling price and accumulated depreciation.
	fair value and accumulated depreciation.

Question 20 (2 points)

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Westwick Corp. (Westwick) leased a building and received the $36,000 annual rental payment on June 15, Year 6. The beginning of the lease was on July 1, Year 6. Rental income is taxable when received. Westwicks tax rates are 30% for Year 6 and 40% thereafter. There were no other permanent or temporary differences and no valuation allowance was required. What amount of deferred tax asset should Westwick report on its December 31, Year 6, balance sheet?

Question 20 options:

	$7,200.
	$5,400.
	$10,800.
	$14,400.