Statement I: When a Partnership's operations resulted to a net loss, a partner who contributed legal services, shall have share of loss in accordance to the losses agreement. However, if there is no losses agreement, he shall not be liable to any loss. Statement Il: All withdrawals and investments shall be considered when computing for the weighted average capital balance. O Both statements are true O Both statements are false O S1 is false; S2 is true O S1 is true; S2 is false A partner's initial capital contribution on date of partnership formation is generally equal to: O The sum of the carrying values of the assets contributed to the partnership increased by any liabilities assumed by the partnership O The sum of the carrying values of the assets contributed to the partnership decreased by any liabilities assumed by the partnership O The sum of the fair values of the assets contributed to the partnership increased by any liabilities assumed by the partnership O The sum of the fair values of the assets contributed to the partnership decreased by any liabilities assumed by the partnership

Statement I: When a Partnership's operations resulted to a net loss, a partner who contributed legal services, shall have share of loss in accordance to the losses agreement. However, if there is no losses agreement, he shall not be liable to any loss. Statement Il: All withdrawals and investments shall be considered when computing for the weighted average capital balance. O Both statements are true O Both statements are false O S1 is false; S2 is true O S1 is true; S2 is false A partner's initial capital contribution on date of partnership formation is generally equal to: O The sum of the carrying values of the assets contributed to the partnership increased by any liabilities assumed by the partnership O The sum of the carrying values of the assets contributed to the partnership decreased by any liabilities assumed by the partnership O The sum of the fair values of the assets contributed to the partnership increased by any liabilities assumed by the partnership O The sum of the fair values of the assets contributed to the partnership decreased by any liabilities assumed by the partnership

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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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.

Question

Statement I: When a Partnership's operations
resulted to a net loss, a partner who
contributed legal services, shall have share of
loss in accordance to the losses agreement.
However, if there is no losses agreement, he
shall not be liable to any loss.
Statement Il: All withdrawals and investments
shall be considered when computing for the
weighted average capital balance.
O Both statements are true
O Both statements are false
O S1 is false; S2 is true
O S1 is true; S2 is false

A partner's initial capital contribution on date
of partnership formation is generally equal to:
O The sum of the carrying values of the assets
contributed to the partnership increased by any
liabilities assumed by the partnership
O The sum of the carrying values of the assets
contributed to the partnership decreased by
any liabilities assumed by the partnership
O The sum of the fair values of the assets
contributed to the partnership increased by any
liabilities assumed by the partnership
O The sum of the fair values of the assets
contributed to the partnership decreased by
any liabilities assumed by the partnership

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Assess the truth of this statement: One of the rules of debits and credits and account balances for a partnership is that increases in expense accounts are always debited to the expense account. This statement is true. O This statement is false. O There is not enough information to determine whether or not this statement is true. O This statement is not applicable to accounting concepts.
Which of the following is true regarding capital deficiencies? O a Ob Oc Od The partners do not have a legally enforceable claim against the partner with the capital deficiency. If a partner with a capital deficiency is unable to pay the amount owed to the partnership, the partners with debit balances must absorb the loss. The loss is allocated based on the profit and loss ratios between the partners whether with credit or debit balances. if the partner with the capital deficiency pays the amount owed to the partnership, the deficiency is eliminated.
Assess the truth of this statement: The transaction of a partnership that is recording cash invested by a partner should be recorded as a debit to cash and a credit to the individual partner's drawing account. O This statement is true. O This statement is false. O There is not enough information to determine whether or not this statement is true. O This statement is not applicable to accounting concepts.
Assess the truth of this statement: The normal balance of a partner's capital account is a credit balance. Group of answer choices This statement is true. This statement is false. There is not enough information to determine whether or not this statement is true. This statement is not applicable to accounting concepts.
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