College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN: 9781305666160
Author: James A. Heintz, Robert W. Parry
Publisher: Cengage Learning
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Chapter 19, Problem 5TF
To determine
Identify whether the given statement is true or false.
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When two or more sole proprietors form a partnership, their respectivebalance sheets serve as the basis for the opening entries for theinvestments of such partners.
Which of the following statements is correct with regard to drawing accounts that may be used by a partnership?
Group of answer choices
A. Drawing accounts establish the amount that may be taken from partnership by a partner in a given time period
B. Drawing accounts are closed to the partners’ capital accounts at the end of the accounting period
C. Drawing accounts appear on the balance sheet as a contra-equity account
D. Drawing accounts are similar to Retained Earnings in a corporation.
Which of the following is true in relation to a partnership?
a. A partnership is a separate legal entity
Ob. A partnership is jointly owned and managed by the partners
C. A partnership can raised capital by issuing shares to the members of the publie
d. A partnership is able to own property and other assets in its own name
Chapter 19 Solutions
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Ch. 19 - Prob. 1TFCh. 19 - Prob. 2TFCh. 19 - Prob. 3TFCh. 19 - Prob. 4TFCh. 19 - Prob. 5TFCh. 19 - Prob. 1MCCh. 19 - Prob. 2MCCh. 19 - Prob. 3MCCh. 19 - Prob. 4MCCh. 19 - Prob. 5MC
Ch. 19 - Prob. 1CECh. 19 - Prob. 2CECh. 19 - Prob. 3CECh. 19 - Prob. 4CECh. 19 - Prob. 5CECh. 19 - Prob. 1RQCh. 19 - Prob. 2RQCh. 19 - Prob. 3RQCh. 19 - Prob. 4RQCh. 19 - Prob. 5RQCh. 19 - Prob. 6RQCh. 19 - Prob. 7RQCh. 19 - Prob. 8RQCh. 19 - Prob. 9RQCh. 19 - Prob. 1SEACh. 19 - Prob. 2SEACh. 19 - Prob. 3SEACh. 19 - Prob. 4SEACh. 19 - ENTRIES: PARTNERSHIP LIQUIDATION On liquidation of...Ch. 19 - Prob. 6SPACh. 19 - Prob. 7SPACh. 19 - Prob. 8SPACh. 19 - Prob. 9SPACh. 19 - STATEMENT OF PARTNER SHIP LIQUIDATION WITH LOSS...Ch. 19 - Prob. 1SEBCh. 19 - Prob. 2SEBCh. 19 - Prob. 3SEBCh. 19 - Prob. 4SEBCh. 19 - Prob. 5SEBCh. 19 - Prob. 6SPBCh. 19 - Prob. 7SPBCh. 19 - ENTRIES FOR DISSOLUTION OF PARTNERSHIP Cummings...Ch. 19 - Prob. 9SPBCh. 19 - STATEMENT OF PARTNER SHIP LIQUIDATION WITH LOSS...Ch. 19 - Prob. 1MYWCh. 19 - Prob. 1ECCh. 19 - Prob. 1MPCh. 19 - Prob. 1CPCh. 19 - Prob. 1COP
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- List down the adjusted assets and liabilities of each partner to determine partner's capital.arrow_forwardAnswer the following questions regarding a partner's capital account. a. What is a partner's capital account? What methods can be used to determine the capital account and when might these methods be used? A partner's capital account can be thought of as partner's ownership in the entity. A partner's capital account reflects the partner's in the partnership, and it is determined using one of several possible methods defined by the partnership. The partner's ending capital account balance is the same amount as the partner's basis. A tax basis capital account might be used if the partnership otherwise required to prepare financial reporting information. b. Select either "Yes" or "No" to indicate which of the following are included in a partner's ending capital account balance and which are not. 1. The capital account reflects contributions and distributions of cash or other property to or from the partner. 2. The capital account accumulates the partner's share of…arrow_forwardWhen accounts receivables are transferred into a partnership, at what amount should they be recorded? Include a definition of Accounts Receivable in your response.arrow_forward
- The basis of a partner's interest in a partnership, particularly a trading partnership, is always the same as the partner's capital account balance. True O Fabearrow_forwardIndicate what is the difference between a general partnership and a limited liability company and when might each type of entity be used by completing the table below. Classify each characteristic as belonging to a "General partnership", a "Limited liability company", or both a "General partnership and limited liability company". Characteristic belongs to ... a. Partners are considered members b. Permitted to participate in management of the entity c. Creditors collect from both partnership assets and partners. d. The partners have unlimited liability for the entity's debt. e. Absent a personal guarantee, no liability for the entity's debt. f. Usually used for corporate joint ventures where the corporate partners are established with limited assets.arrow_forwardWhen a partnership is liquidated, any gains or losses realized by the sale of noncash assets are allocated to the partners based on their income sharing ratio. Why?arrow_forward
- Prior to the creation of a partnership, the sole proprietor must first re-evaluate or adjust its business's assets and liabilities. In what account must all revaluations or adjustments be made? O Drawing Account O Capital Account O Income Summary O Revaluation Surplusarrow_forwardIf a partnership is liquidated, how is the final allocation of business assets made to the partners? Multiple Choice According to the initial investment made by each of the partners. According to the profit and loss ratio. Equally. According to the final capital account balances.arrow_forwardThere is a liquidation of assets of a partnership. Describe the order in which assets must be distributed upon liquidation of a partnership, and explain the "right-of-offset" concept.arrow_forward
- What is the proper disposition of a partnership loan that was made from a partner who has a debit balance in the capital account? A. The loan is ignored in liquidation. B. The loan is offset against the debit balance in the capital account. C. The loan is charged off to the capital accounts of all the partners in their profit and loss sharing ratios. D. The loan is held for payment after all other capital accounts are covered.arrow_forwardIn a partnership liquidation, the final cash payment to the partners should be made in accordance with the*a. balance of partners' capital accounts.b. partner's profit and loss sharing ratio.c. ratio of the capital contributions by partners.d. safe payment computations.arrow_forwardWrite the word or group of words that identify each of the following statements. 1. An entry prepared when industry is contributed into the partnership. 2. A partnership organized for the purpose of rendering service. 3. A contract whereby two or more persons bind themselves to contribute money, property, or industry to a common fund with the intention of dividing profits among themselves.arrow_forward
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