27 Statement I: When a partner sells an interest to a new partner at an amount that exceeds the carying amount of the equity sold, the difference is recognized as a personal gain of the selling partner from the transaction. Statement II: The amount of net assets invested of a new partner into an existing partnership is not always equal to the amount credited to his capital account. O True, true False, false False, true

27 Statement I: When a partner sells an interest to a new partner at an amount that exceeds the carying amount of the equity sold, the difference is recognized as a personal gain of the selling partner from the transaction. Statement II: The amount of net assets invested of a new partner into an existing partnership is not always equal to the amount credited to his capital account. O True, true False, false False, true

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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12 The undistributed Profit in the partnership firm is shown in _____________ of the old Balance Sheet. a. Asset Side Only b. Liabilities Side Only c. None of the options d. Asset Side and Liabilities Side
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Identify the correct statement/s from the following:I. In absence of partnership agreement, no interest on capital is allowed II. In absence of partnership agreement, 6% interest on partner's loan is allowed O a. Statement II only correct O b. Statement I only correct O c. Both Statements are correct O d. Both Statements are wrong
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KINDLY ANSWER THE FIVE QUESTIONS. THANK YOU! 1.S1: Partnership profits and losses (including bonuses and revaluations) are allocated in accordance with their Profit and Loss Ratio. S2: If only the share in the profits have been established in the articles of partnership, then the share in the losses must be in accordance with their profit ratio.* a. S1 True; S2 False b. Both are false c.Both are true d. S2 True; S1 False 2. If the total contributed capital of the partnership is greater than the total agreed capital, which of the following may arise:* a. Undervaluation of Assets b. Overvaluation of Assets c. All of the choices d. Goodwill 3. Bonuses to the old partners arise under each of the following circumstances, except:* a.Withdrawal of a partner and the interest is purchased by the partnership b.Total contributed capital of the new partner is more than the agreed capital c. Agreed bonus in the distribution of partnership net income d. Purchase of Interest by a new partner 4. Which…
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question 15 choose the correct answer from the choices
PB3. LO 15.5 Match each of the following descriptions with the appropriate term related to partnership accounting. A. Each and every partner can enter into contracts on behalf of the partnership i. liquidation B. The business ceases operations. ii. capital deficiency C. How partners share in income and loss iii. admission of a new partner D. Adding a new partner by contributing cash iv. mutual agency E. A partner account with a debit balance v. income sharing ratio
Statement : Non-cash contributions of the partners should be recorded at agreed value in the absence of fair market value. Statemernt i: Interest ratio is the means of dividing the profit and losses among the partners. 0 Both statements are incorrect O Both staterments are correct OOnly Statementls correct Only Statement ll is correct
7 Which of the following rules apply/s in case of absence of partnership deed? a. No interest on capital Only b. No salaries and No interest on capital c. None of the options d. No salaries Only Clear my choice
1. Which is a deductible expense in determining the net income of the partnership? * -Interest on partner’s loan -Salaries of manager employed by the partnership -Office supplies used in the partners’ offices -all of the above -answer not given 2. The following partners would share in the losses of partnership operations, except: * -Capitalist partner -industrial partner -capitalist industrial partner -limited partner -both the industrial partner and capitalist industrial partner 3. [S1] If partnership operation resulted to a loss, the income summary account shall be closed to by crediting the individual partner’s capital. [S2] In the absence of any agreement, partnership losses shall be divided in the same proportion of the agreed division of profits. * -both are true -both are false -S1 is true -S2 is true 4. [S1] The form and content of the statement of operations of a partnership is similar to a sole…
QUESTION 1 Which one of the following alternatives is correct? A. The retirement of a partner from a partnership does not require the calculation of a new profit-sharing ratio but a simple reallocation of a retired partner's share. B. From the legal perspective, the activities of a dissolved and a subsequent new partnership are not separately accounted for and reported on. C. Since partnerships are not governed by a law requiring that IFRS be applied, it is not possible to introduce a standardised accounting procedure according to which changes in the ownership structure of partnerships ought to be recorded. D. Since a partnership is a legal entity, the ownership of a partnership is vested in the partners, and not in the partnership. E. When a change in the ownership structure of a partnership occurs, a new partnership agreement is entered into by the new partners which causes the existing partnership to continue with its business operations without any interruptions.