the absence of agreed profit distribution among partners, the most equitable way to distribute net income generated by the partnership business is to use the peso month verage capital ratio. True False

the absence of agreed profit distribution among partners, the most equitable way to distribute net income generated by the partnership business is to use the peso month verage capital ratio. True False

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: If the income of a partnership is not sufficient enough to satisfy all of the provisions of the…

A: When partnership business income is not sufficient to satisfy all the provision of partnership…

Q: The basis for dividing partnership net income or net loss is referred to as any of the following…

A: The ratio in which the net income or net loss is divided among the partners is agreed upon in the…

Q: 9. If the partnership agreement does not specify for the sharing profits but there is an agreement…

A: solution concept The partnership deed is an agreement where all the terms of entering into…

Q: Which of the following profit and loss methods completely disregards the services rendered by the…

A: Service provided by the partner in the Partnership: When one or more partners provide the services…

Q: 8 Which of the following ratio helps the partners to determine the amount of compensation to be…

A: Ans. When a new partner is admitted to a partnership, the new partner need to pay compensation to…

Q: In answering Partnership Operation problems, explain the detailed process of the following bases for…

A: Partnership: It is a form of business under it two or more persons made a formal agreement with the…

Q: Which of the following methods are used to calculate the estimated profit up to the date of death of…

A: When a partner dies in partnership firm , his heirs are entitled to the amount due and the rights…

Q: Which of the followine Calculation of New p

A: Whenever there is an admission, retirement or death of a partner, the accounting records of the…

Q: salary to partner

A: Profit distribution method that recognizes primarily the time and effort that a partner may devote…

Q: An advantage of a partnership includes which of the following? Group of answer choices Greater…

A: Partnership refers to an agreement where two or more people come together for a common goal. The…

Q: 1. All partnerships have general partners. 2. Each partner generally has the authority to enter into…

A: Since you have posted multiple questions, we will provide the solution only to the first five…

Q: This is a characteristic of a limited partner. a. Limited Life b. Unlimited Life c. Unlimited…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: Which is NOT CORRECT when the Capital Adjustment account is used in the recording of partnership…

A: the capital account of partner according to the adjustment to the capital account shall be increased…

Q: Assume the partnership income-sharing agreement calls for income to be divided with a salary of…

A: A journal entry is a record of a business sale in account. It's the first step in the account…

Q: Nonrecourse debt is generally allocated according to the profit-sharing ratios of the partnership.…

A: Partnership is a form of business organization wherein two or more persons come together to do…

Q: If the salary allowances to partners exceed the net income of the partnership, O the salary…

A: Salary allowances to partners are treated as charge to the net income. It is not appropriation of…

Q: In the liquidating process, any uncollectible deficiency becomes a loss to the partnership and is…

A: The objective of the question is to determine whether the statement about the liquidation process in…

Q: Indicate whether the following statements are "True" or "False" regarding self-employment tax and §…

A: Self Employment Tax Self employed individuals may be liable to self employment taxes. 12.40% for…

Q: Assess the truth of this statement: For a partnership entity, the income statement format is the…

Q: The following characteristics represents differences of partnership from a corporation, except *…

A: SOLUTION- LIABILITY OF PARTNERS IN PARTNERSHIP IS UNLIMITED ACCORDING TO INDIAN PARTNERSHIP ACT…

Q: 83. Which of the following statements about the rules for the distribution of profits or losses…

A: Answer: The distribution of profit and losses are done on the basis of decided ratio.

Q: Because guaranteed payments are treated the same as a payment to a non-partner, they: A. Will never…

A: Guaranteed payments are the reward, regardless of the benefit or loss of the company, to the…

Q: . Which of the following statements is correct? O A. The liability of the partners for the debts of…

A: The partnership business consists of two or more individuals who pool their resources to create a…

Q: 4. The objective of preparation of income statement of partnership is: a.To show the income and…

A: Income Statement is prepared to show the result of operations of a business whether it is…

Q: Partnership is the economic relationship between two or more persons: a. Who have agreed to share…

A: Partnership is a for profit business entity that includes partners who work for profit.

Q: Which statement is CORRECT? Select one: A. Partners' salary is an allowable expenses B. Tax…

A: Following is correct

Q: Explain the effect of guaranteed payments

A: Guaranteed payments to partners are payments meant to compensate a partner for services rendered or…

Q: Bonus to new partner O Asset revaluation Asset market value Bonus to old partners

A: Here discuss about the details of admission of new partners and share of agreed capital compare with…

Q: Net income for a partnership has to be allocated based on stated ratios. Question 2 options:…

A: Partnership is one of the form of business organisation under which two or more than two persons…

Q: Which statement is incorrect? * -The accrual basis of accounting is used to account for partnership…

A: Since you have asked multiple questions, we will solve the first question for you . If you want any…

Q: Tax Drill - Effect of Partnership Operations on Basis Indicate whether the following items…

A: A partner basis in partnership firm is effected by following,it may either increase or decrease…

Q: XYZ partnership shares profits and losses in a 3:2:1 ratio respectively. This means: Partner Z…

A: Total sum of 3:2:1 = 3+2+1 = 6

Q: In the liquidating process, any uncollectible deficiency becomes a loss to the partnership and is…

A: Dissolution of the Partnership Firm :— Whenever Reconstituted takes Place between the partners in…

Q: In the liquidating process, any uncollected cash becomes a loss to the partnership and is divided…

A: In the process of liquidation of partnership any collected cash becomes a loss to the partnership…

Question

In the absence of agreed profit distribution among partners, the most equitable way to distribute net income generated by the partnership business is to use the peso month
average capital ratio.
O True
O False

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

VIEW

Step 2 Solution

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

1. What is KW Partnership’s ordinary business income (loss)? 2. Which of the following items are separately stated?
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.
Accounting type Question: As per the decision in the Garner vs Murray case, when the partner's capital accounts are fixed, any loss arising due to the capital deficiency in the insolvent partner's capital account is to be borne by solvent partners in the ratio of ..... A. profit sharing ratio B. last agreed capital ratio C. sacrificing ratio D. gaining ratio
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.
Coburn (beginning capital, $60,000) and Webb (beginning capital $86,000) are partners. During 2022, the partnership earned net income of $74,000, and Coburn made drawings of $20,000 while Webb made drawings of $22,000.
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
A partnership has the following accounting amounts: Sales Cost of Goods Sold General and Administrative Expenses Distribution costs Interest paid to banks Salary allowances to partners Partners' withdrawals 150,000 80,000 17,000 52,000 23,000 12,000 18,000 Compute the Partnership's net income (loss). Encode as a negative amount if the answer is a loss.
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…
Ma1. TRUE /FALSE in computing a partnerships business income the amount that can be claimed as CCA follows the very same rules that apply to other taxpayers
When the partnership agreement specifically provides for salaries and interest, the provision must be applied before the remainder of profit or loss is divided True False
plz solve!!
How do the asset and liability sections of the balance sheet differ for a partnership versus other forms of businesses (corporation, sole proprietorship)? Question 1 options: The equity section reports a separate capital account for each partner. The assets and liability sections do not differ between partnerships and other forms of business. The assets and liabilities are assigned to the individual partners. The assets tend to be higher and the liabilities tend to be lower for a partnership.