28689029-p2-Partnership - GAAP ACCOUNTING FOR PARTNERSHIPS...

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GAAP ACCOUNTING FOR PARTNERSHIPS Formation 1. The Revised Uniform Partnership Act defines a partnership as a. Any association of two or more persons or entities. b . An association of two or more persons to carry on as co-owners a business for profit. c. A separate legal entity for most legal purposes. d. An entity created by following statutory requirements. Gleim 2. The partnership agreement is an express contract among the partners (the owners of the business). Such an agreement generally does not include a . A limitation on a partner’s liability to creditors. b. The rights and duties of the partners. c. The allocation of income between the partners. d. The rights and duties of the partners in the event of partnership dissolution. Gleim *. A partnership records a partner’s investment of assets in the business at a. The market value of the assets invested. b. A special value set by the partners. c. The partner’s book value of the assets invested. d . Any of the above, depending upon the partnership agreement. RPCPA 0598 3. When property other than cash is invested in a partnership, at what amount should the noncash property be credited to the contributing partner’s capital account? a . Fair value at the date of recognition. b. Contributing partner’s original cost. c. Assessed valuation for property tax purposes. d. Contributing partner’s tax basis. AICPA 0594 F-35 4. When property other than cash is invested in a partnership, at what amount should the noncash property be credited to the contributing partner’s capital account? a . Fair value at the date of contribution. b. Contributing partner’s original cost. c. Assessed valuation for property tax purposes. d. Contributing partner’s tax basis. AICPA 0594 F-35 *. Four individuals who were previously sole proprietors form a partnership. Each partner contributes inventory and equipment for use by the partnership. What basis should the partnership use to record the contributed assets? a. Inventory at the lower of FIFO cost or market. b. Inventory at the lower of weighted-average cost or market. c. Equipment at each proprietor’s carrying amount. d . Equipment at fair value. AICPA 0591 T-39 *. Hayes and Jenkins formed a partnership, each contributing assets to the business. Hayes contributed inventory with a current market value in excess of its carrying amount. Jenkins contributed real estate with a carrying amount in excess of its current market value. At what amount should the partnership record each of the following assets? AICPA 1190 T-40 Inventory Real estate a . Market value Market value b. Market value Carrying amount c. Carrying amount Market value d. Carrying amount Carrying amount 5. Partnership capital and drawing accounts are similar to the corporate a . Paid-in capital, retained earnings, and dividend accounts. b. Retained earnings account.
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28689029-p2-Partnership - GAAP ACCOUNTING FOR PARTNERSHIPS...

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