MLM Directory

Accounting????

TRUE OR FALSE (15 points) 1.A major advantage of the partnership form of organization is that the partners have unlimited liability. 2.The partnership agreement between partners must be in writing. 3.If a partner invests noncash assets in a partnership, they should be recorded by the partnership at their fair market value. 4.Unless stated otherwise in the partnership contract, profits and losses are shared among the partners in the ratio of their capital equity balances. 5.The partners' drawing accounts are closed each period into the Income Summary account. 6.Salary allowances to partners are a major expense on most partnership income statements. 7.The financial statements of a partnership are similar to those of a proprietorship. 8.The function of the Partners' Capital Statement is to explain the changes in partners' capital account balances during a period. 9.The distribution of cash to partners in a partnership liquidation is always made based on the partners' income sharing ratio. 10.The admission of a new partner results in the legal dissolution of the existing partnership and the beginning of a new partnership. 11.If a new partner is admitted into a partnership by investment, the total assets and total capital will change. 12.If a new partner invests in a partnership at book value and acquires a 1/4 interest in total partnership capital, it indicates that a bonus was paid to the original partners. 13.A partnership is an association of no more than two persons to carry on as co-owners of a business for profit. 14.Once assets have been invested in the partnership, they are owned jointly by all partners. 15.In an admission of a partner by investment of assets, the total net assets and total capital of the partnership do not change.

Public Comments

1. 1 F 2 F 3 T 4 F 5 F 6 F 7 T 8 T 9 F 10 T 11 T 12 F 13 F 14 T 15 F