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1. Which of the following is TRUE of the net business profit of the partnership?
1. Which of the following is TRUE of the net business profit of the partnership? (Points : 1) The profits of a partnership are not taxable unless the partnership has over $250,000 of net profits.The profits of a partnership are only taxable to the limited partners.The profit is not taxable.The profits of the partnership pass through the partnership to be taxed to the partners. 2. Which of the following is a disadvantage of partnerships? (Points : 1) Double taxation applies to corporate earnings but not to partnership earnings.Mutual agency and unlimited liability create personal obligations for each partner.A partnership does not require a charter from the state.A partnership brings together the abilities of more than one person.3. Allen invests $20,000 cash and Anne invests land that originally cost $20,000 in their new Partnerships. The land is now worth $35,000. Which of the following is the balance in Anne's capital account? (Points : 1) $30,000$35,000$20,000$25,0004. After a partner decides to withdraw from a partnership, which of the following occurs when the withdrawing partner receives more cash than the amount in his or her capital account? (Points : 1) The capital accounts must be revalued.The partnership recognizes a gain.The partnership recognizes a loss.The difference in the capital account and the cash paid must be allocated to the remaining partners based on their profit-and-loss-sharing percentages.5. Rachel, Ashley, and Jacob are partners. They share profits and losses equally. After the books are closed, their capital balances are $90,000, $120,000, and $70,000, respectively. Jacob has decided to leave the firm. Which of the following would be included in the entry to record the transaction if the partnership pays Jacob $50,000 in cash and a promissory note for $20,000 for his withdrawal from the partnership? (Points : 1) Jacob, capital would be credited for $50,000.Jacob, capital would be debited for $50,000.Jacob, capital would be debited for $70,000.Jacob, capital would be credited for $70,000.6. After the partners decide to liquidate a partnership, which of the following is the last step in the liquidation? (Points : 1) Liabilities are paid.Any remaining cash is paid to the partners based on the capital balance.The partnership books are adjusted and closed up to the date of the liquidation.The assets are sold and any gain or loss is allocated to the partners.7. After the partners decide to liquidate a partnership, which of the following occurs? (Points : 1) The partnership books are adjusted and closed up to the date of the liquidation.Liabilities are paid and any remaining cash is paid to the partners based on the capital balance.The assets are sold and any gain or loss is allocated to the partners.All of the above.8. Which of the following occurs when a bond's stated interest rate is greater than the market interest rate? (Points : 1) The bond will be issued at a premium.The bond will be issued at maturity value.The bond will be issued at a discount.The bond cannot be sold.9. A company issues bonds with a stated rate of 8% when the market interest rate is 7%. How will the bonds be issued? (Points : 1) The bonds will be issued at par.The bonds will be issued at a discount.The bonds will be issued at a premium.None of the above.10. Which of the following will be included in the entry to record the issuance of bonds at par value? (Points : 1) The entry will include a debit to bonds payable for the par value of the bonds.The entry will include a debit to cash for the par value of the bonds.The entry will include a debit to discount on bonds payable.The entry will include a credit to premium on bonds payable.11. Which of the following is an advantage of issuing stock rather than issuing bonds? (Points : 1) Issuing stock creates interest expense that must be paid.Issuing stock is more risky to the issuing corporation.Issuing stock creates no liabilities.Issuing stock generally results in higher earnings per share.12. Which of the following is TRUE of a discount on bonds payable? (Points : 1) A discount on bonds payable is added to bonds payable and shown with long-term liabilities on the balance sheet.A discount on bonds payable is subtracted from bonds payable and shown with the current liabilities on the balance sheet.A discount on bonds payable is added to bonds payable and shown with stockholders' equity on the balance sheet.A discount on bonds payable is subtracted from bonds payable and shown with long-term liabilities on the balance sheet.13. Which of the following will be included in the entry to record the semiannual interestpayment on bonds that were issued at par value? (Points : 1) The entry will include a credit to discount on bonds payable.The entry will include a credit to premium on bonds payable.The entry would include a debit to bonds payable.The entry will include a debit to interest expense.14. Which of the following statements is true? (Points : 1) The premium on bonds payable account is subtracted from the bonds payable account on the balance sheet.The cash proceeds received upon issuance of bonds may exceed the par value of the bonds.The amortization of bond premium increases interest expense.All of the above are true.
