Statement I: In the absence of stipulation, the share of each partner in the profits and losses shall be equal to each other.Statement II: A stipulation which excludes one or more partners from any share in the profits or losses is void as a general rule. A. Both statements are true B. Both statements are false C. Only the first statement is true D. Only the second statement is true

Statement I: In the absence of stipulation, the share of each partner in the profits and losses shall be equal to each other.Statement II: A stipulation which excludes one or more partners from any share in the profits or losses is void as a general rule. A. Both statements are true B. Both statements are false C. Only the first statement is true D. Only the second statement is true

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 5RQ

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A, B and C as partners in a partnership stipulated and mutually agreed that A shall not share in the profits, and losses. Is the agreement valid as among the partners only and not against third persons? A. Yes, because among the partners it is valid to exempt one from sharing in the profits and losses. B. Yes, valid as long as third persons are not prejudiced. C. Not valid stipulation exempting a partner from sharing profits and losses. D. Not valid as against third persons or partnership creditors.
Statement I: The estimated deficiency to unsecured claims represents the amount unrecoverable by the creditors. Statement II: In the case of corporate liquidation, historical cost is a material valuation for assets. O Both statements are correct O Both statements are incorrect O Only Statement I is correct O Only Statement I| is correct
S1: If the partners did not agree as to how profits are to be divided, then such should be divided among partners equally. S2: Interest based on partner’s capital are always provided. a. both statements are true b. both statements are false c. only S1 is true d. only S1 is false.
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
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. Both are trueB. S2 True; S1 FalseC. Both are falseD. S1 True; S2 False
11. Statement 1. An industrial partner is not exempted from sharing in the loss of the partnership if he is also a capital partner.Statement 2. When a new partner is admitted in the existing partnership, there is no need the consent of all existing partners. Statement- 1 Statement- 2A. True FalseB. False FalseC. False TrueD. True True
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. Both are false b. S2 True; S1 False c. Both are true d. S1 True; S2 False
I. The use of average capital in distributing profits and losses results in equitable distribution thereof. II. When partners are entitled to salaries, they are to be credited for this even when the operation results in a loss. Group of answer choices a. BOTH STATEMENTS ARE FALSE b. ONLY THE 1ST STATEMENT IS FALSE c. BOTH STATEMENTS ARE TRUE d. ONLY THE 1ST STATEMENT IS TRUE
6 Which is/are the adjustments necessary while admitting a new partner? a. Both Transfer of Undistributed Profit or loss and Accumulated reserves b. Transfer of Undistributed Profit or loss Only c. Transfer of Accumulated reserves Only d. None of the options are correct
1. S1: The dissolution of a partnership occurs only when the partnership is terminating operations and going out of business.S2: Bonus paid to a new partner result in a reduction to the capital accounts of the existing partners in proportion to their capital ratio. a. S1 is false, S2 is trueb. Both statements are truec. Both statements are false d. S1 is true, S2 is false
2) For IRC §704 a) What determines the partner's distributive share? What is a partner's distributive share? b) What if the partnership agreement does not provide for the partner's distributive share? c) Under Treas. Reg. §1.704-2, define a nonrecourse liability (the actual definition not the cite of where it is defined)? Cite where it is defined.
1. S1: Admission of a new partner by investment generally increases the total assets and capital of the new partnership unless there is a negative asset revaluation.S2: Admission of a new partner by the purchase of interest will never affect the total assets and capital of the new partnershipa. S1 is false, S2 is trueb. Both statements are truec. Both statements are false d. S1 is true, S2 is false