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Quiz Partnership 1

The document is a 15 question quiz about partnerships. It covers major considerations in accounting for partnership equity and dissolutions. Key points covered include that partnerships are not taxable entities but are tax-reporting entities. Partnerships are not separate legal entities like corporations. A partner's drawing account is a contra-capital account, not a loan. Partnerships must follow accounting principles but not tax law. Both individuals and other entities can be partners. The last question identifies that partnerships are economic entities, not separate legal entities.

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Arj Sulit Centino Daqui
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490 views2 pages

Quiz Partnership 1

The document is a 15 question quiz about partnerships. It covers major considerations in accounting for partnership equity and dissolutions. Key points covered include that partnerships are not taxable entities but are tax-reporting entities. Partnerships are not separate legal entities like corporations. A partner's drawing account is a contra-capital account, not a loan. Partnerships must follow accounting principles but not tax law. Both individuals and other entities can be partners. The last question identifies that partnerships are economic entities, not separate legal entities.

Uploaded by

Arj Sulit Centino Daqui
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Quiz – Partnership 2

1. The major considerations in the accounting for the equity of partnerships include all of the following,
except:
a. Corporation
b. Formation
c. Operation
d. Dissolution

2. The following are the major considerations in the accounting for partnership dissolutions, except:
a. Liquidation
b. Admission of a partner
c. Withdrawal, retirement or death of a partner
d. Incorporation of a partnership

3. It is a change in the relation of the partners caused by any partner being disassociated from the
business.
a. Dissolution
b. Liquidation
c. Operation
d. Formation

4. A partnership is a taxable entity. - False

5. A partnership is a tax-reporting entity but not a tax-paying entity. – True

6. In a general partnership, only a majority of partners need to have unlimited liability to partnership
creditors. – False

7. When a partnership agreement has provisions that are contrary to laws pertaining to partnerships,
law is controlling. - True

8. Partnerships are separate legal entities, like corporations. - False

9. A partner’s drawing account is merely a contra-capital account. - True

10. A partner’s drawing account is substantively a loan account. - False

11. Under the Partnership Law, partnerships must follow GAAP. - False

12. Only individuals are allowed to be partners in a partnership. – False

13. Proprietorships and partnerships are similar in that they are both easily formed. – True

14. Proprietorships and partnerships are different in that proprietors have unlimited legal liability while
each partner’s legal liability is limited to his/her percentage ownership in the partnership. – False
15. The partnership form of business is:
a. An economic entity
b. A separate legal entity, just as a corporation is a legal entity
c. A taxable entity
d. A fiscal entity

Problem:

Cleary, Wasser and Nolan formed a partnership on January 1, 2014, with investment of P100, 000,
P150,000 and P200,000, respectively. For division of income, they agreed to (1) interest of 10% of the
beginning capital balance each year, (2) annual compensation of P10, 000 to Wasser and (3) sharing the
remainder of the income or loss in a ratio of 20% for Cleary and 40% each for Wasser and Nolan. Net
income was P150, 000 in 2014 and P180, 000 in 2015. Each partner withdrew P1, 000 for personal use
every month during 2014 and 2015.

Requirements:
1. Compute for Wasser’s share of income for 2014.
2. Compute for Nolan’s capital balance at the end of 2014.
3. Compute for Cleary’s share of income for 2015.
4. Compute for Wasser’s share of income for 2015.
5. Compute for Wasser’s capital balance at the end of 2015.

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