1- The ability of one partner to enter into a contract binding all other partners is termed:
A- Mutual Agency
B- Unlimited Liability
C- Partnership agreement
D- Pass-through entity
2- As a part of the initial investment, a partner contributes office equipment that had a cost of $20,000 and accumulated depreciation of $12,500. If the partner agree on the a valuation of $9,000 for the equipment, what amount should be debited to the office equipment account?
A- $7,500
B- $9,000
C- $12,500
D- $20,000
3- Lee and Stills are partner who share income in the ratio of 2:1 and who have capital balances of $65,000 and $$35,000 respectively. If MOR, with the consent of Stills, acquired ½ of Lee's interest for $40,000 for what amount would MOR's capital account be credited?
A- $32,000
B- $40,000
C- $50,000
D- 72,500
4- Chip and Dale agree to form a partnership. Chip is to contribute $$50,000 in assets and devote ½ time to the partnership. Dale is to contribute $20,000 and to devote full time to the partnership. How will Chip and Dale split the net income/Loss?
A- 5:2
B- 1:2
C- 1:1
D- 2.5:1
5- Henry and Thomas share gains and losses in the ratio of 2:1. After selling all assets for cash and paying all liabilities, the cash account has $12,000 c in it. The capital accounts were as follows:
Henry $10,000, Thomas $2,000. How much of the $12,000 cash would Henry receive?
A- $2,000
B- $8,000
C- $10,000
D- $12,000
6- Which of the following is not true about a partnership?
A- It is easy to form a partnership
B- A partnership has personal limited liability
C- There no double taxation in a partnership
D- A partnership has limited life
7- On which financial statement is each partner's capital account?
A- Balance Sheet
B- Income Statement
C- Statement of Retained earning
D- Cash Flow Statement
8- The partner's capital account is what type of account and what is the Capital account's normal balance?
A- Asset account, normal debit balance
B- Equity account, normal debit balance
C- Asset account, normal credit balance
D- Equity account, normal credit balance
9- Which of the following is not true for a corporation?
A- A corporation is a separate entity from its owners
B- Ownership can be transferred when stock is exchanged
C- Owners have limited liability
D- Corporations are not taxed
10- In a sole proprietorship the drawing account is similar to what account in a corporation?
A- Capital account
B- Retained Earning
C- Dividends
D- Common Stock