ACC122,EX1-ch12-17 - ACC122-Exam 1 Ch12,13,14,15,16,17...

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Page 1 of 11 ACC122-Exam 1 Ch12,13,14,15,16,17 True/False Indicate whether the statement is true or false. ____ 1. A partnership is a legal entity separate from its owners. ____ 2. Each partner may withdraw the assets he or she contributed to the partnership at any time. ____ 3. In the distribution of income, the net income is less than the salary and interest allowances granted, the remaining balance will be a negative amount that must be divided among the partners as though it were a loss. ____ 4. A person may be admitted to a partnership only with the consent of all the current partners. ____ 5. In admitting a new partner, the company chooses to use the purchase of an interest method, the capital interest of the new partner is obtained from the current partners and both the total assets and total capital are increased. ____ 6. When a new partner purchases the entire interest of an old partner, the new partner's capital account should be credited for the amount he or she paid to the old partner. ____ 7. When a new partner is admitted by making an investment in the partnership, the old partners' capital accounts are always credited. ____ 8. When a new partner is admitted by making an investment of assets in the partnership and the new partner has to pay a premium for admission, a bonus is divided among the old partners' capital accounts. ____ 9. If not enough partnership cash or other assets are available to pay the withdrawing partner, a liability may be created for the amount owed the withdrawing partner. ____ 10. If a partner's capital balance is a debit after it has absorbed its share of the loss on realization, the balance is referred to as a deficiency. ____ 11. The balance in Retained Earnings at the end of the period is created by closing entries. ____ 12. A deficit in Retained Earnings is reported in the stockholders' equity section of the balance sheet. ____ 13. The par value of common stock must always be equal to its market value on the date the stock is issued. ____ 14. When a corporation issues stock at a premium, it reports the premium as an other income item on the income statement. ____ 15. If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $15,000. ____ 16. If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000. ____ 17. The dividend yield indicates the rate of return to stockholders in terms of cash dividend distributions. ____ 18. A secured bond is called a debenture bond and is backed only by the general creditworthiness of the corporation. ____
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This note was uploaded on 08/01/2011 for the course ACCT 122 taught by Professor Ghonar during the Spring '11 term at Columbus State University.

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ACC122,EX1-ch12-17 - ACC122-Exam 1 Ch12,13,14,15,16,17...

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