Chapter9ed15 - Chapter 15 Test Bank PARTNERSHIPS FORMATION...

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Chapter 15 Test Bank PARTNERSHIPS – FORMATION, OPERATIONS, AND CHANGES IN OWNERSHIP INTERESTS Multiple Choice Questions LO1 1. Under the Uniform Partnership Act, loans made by a partner to the partnership are treated as: a. advances to the partnership for which interest shall be paid from the date of the advance. b. advances to the partnership that are carried in the partners' capital accounts. c. Accounts Payable of the partnership for which interest is paid. d. advances to the partnership for which interest does not have to be paid. LO1 2. A partner assigned his partnership interest to a third party. Which statement best describes the legal ramifications to the assignee? a. The assignment of the partnership interest does not entitle the assignee to partnership assets upon a liquidation. b. The assignment dissolves the partnership. c. The assignee has the right to share in the management of the partnership. d. The assignee does not become a partner but has the right to share in future partnership profits and to receive the proper share of partnership assets upon liquidation. LO1 3. In the Uniform Partnership Act, partners have I.mutual agency II.unlimited liability a. I only b. II only c. I and II d. Neither I or II 96
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LO1 4. Partnerships LO2 5. Langley invests his delivery van in a computer repair partnership with McCurdy. What amount should the van be credited to Langley’s partnership capital? Use the following information for questions 6, 7 and 8. A summary balance sheet for the McCune, Nall, and Oakley partnership appears below. McCune, Nall, and Oakley share profits and losses in a ratio of 2:3:5, respectively. Assets Cash $ 50,000 Inventory 62,500 Marketable securities 100,000 Land 50,000 Building-net 250,000 Total assets $ 512,500 Equities McCune, capital $ 212,500 Nall, capital 200,000 Oakely, capital 100,000 Total equities $ 512,500 97
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The partners agree to admit Pavic for a one-fifth interest. The fair market value of partnership land is appraised at $100,000 and the fair market value of inventory is $87,500. The assets are to be revalued prior to the admission of Pavic and there is $15,000 of goodwill that attaches to the old partnership. LO2
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