Question 1

A __________ is an association of two or more entities for the purpose of achieving a specific goal,such as the manufacture of a product in a new market.

Accepted Answer

A joint venture is an association of two or more entities for a specific purpose, such as manufacturing a product for a new market. A limited partnership, limited liability company, and S corporation are all forms of business entities, but they do not specifically refer to an association between multiple entities for a specific purpose.

Question 2

Delta and Chen form a partnership and invest the following assets and liabilities
  In the journal provided prepare the entry to record the formation of the partnership.(Omit explanation.)

Accepted Answer

The answer of Delta and Chen form a partnership and...

Question 3

Which of the following is correct?

Accepted Answer

The correct equation is Total assets - Partner's equity = Total liabilities. This is a rearrangement of the basic accounting equation: Total assets = Total liabilities + Owner's/Partner's equity.

Question 4

Which of the following describes a special-purpose entity?

Accepted Answer

A special-purpose entity is an entity created for a specific objective or purpose, and typically has a limited life. It may be created by a company to achieve a specific goal or for a specific project. Examples of special-purpose entities include project finance vehicles, which are set up to finance a particular project, and asset-backed securities, which are created to securitize a pool of assets.

Question 5

A limited partnership

Accepted Answer

In a limited partnership, there are two types of partners: general partners who have unlimited liability for the partnership's debts and obligations, and limited partners who are only liable up to the amount of their investment. This allows some partners to limit their loss to the amount of their investment, which is not possible for general partners.

Question 6

Shannon,Thomas,and Williman are in a partnership that is being dissolved.The stated ratios of Shannon,Thomas,and William are 3:3:4,respectively.The partnership's assets are sold at a loss of $240,000.Which of the following is correct?

Accepted Answer

Since the assets were sold at a loss of $240,000, the partnership will have to absorb this loss. The loss will be shared among the partners in their capital accounts based on their profit sharing ratio. William's profit sharing ratio is 4 out of the total ratio of 10, which means he is responsible for 40% of the loss. Therefore, William's capital account will be debited for $96,000 (40% of $240,000). Shannon and Thomas will also have their capital accounts debited for $72,000 each (30% of $240,000) in order to absorb the remaining loss. Option A is incorrect because Shannon's capital account will be debited, not credited. Option C is incorrect because the loss will be debited to the capital accounts of the partners, not to a separate loss account. Option D is incorrect because only option B is correct.

Question 7

There are several types of business organizations that mimic the characteristics of a partnership.Describe two of these business organizations.

Accepted Answer

The answer of There are several types of business organizations...

Question 8

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that represent less than her current capital balance.Discuss how this transaction is accounted for on the partnership books.

Accepted Answer

The answer of Chelsea,Jack,and Connor have a partnership.Chelsea wishes to...

Question 9

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that are greater than her current capital balance.Discuss how this transaction is accounted for on the partnership books.

Accepted Answer

The answer of Chelsea,Jack,and Connor have a partnership.Chelsea wishes to...

Question 10

Which of the following describes a joint venture?

Accepted Answer

A joint venture is a business arrangement in which two or more entities come together to accomplish a specific goal, typically for a limited time period. These entities may be individuals, companies, or even countries. Unlike a merger or acquisition, a joint venture allows the parties involved to maintain their independence and control over their own operations, while also benefiting from the resources, expertise, and networks of the other party. Joint ventures can take many forms, from simple contractual agreements to more complex equity-based partnerships.

Question 11

Which of the following describes a limited liability company?

Accepted Answer

A limited liability company (LLC) is a special type of partnership that limits the potential loss of its partners to the amount of their investment. This means that the personal assets of the partners are not at risk in case the company faces financial difficulties or lawsuits. However, LLCs are still liable for their own debts and business obligations.

Question 12

Business organizations that mimic the characteristics of partnerships include

Accepted Answer

All three options, special-purpose entities, limited liability companies, and S corporations, can be structured to mimic the characteristics of partnerships. They offer a flexible management structure, ownership by multiple individuals, and pass-through taxation.

Question 13

In a limited partnership

Accepted Answer

In a limited partnership, the general partners have unlimited liability while the limited partners have limited liability. Therefore, choice D, "all but the general partners have limited liability" is the best answer.

Question 14

Warren and Spencer are partners in a drilling operation.Warren purchased a drilling rig to be used in the partnership's operations.Is this purchase binding on Spencer even though he was not involved in it? Explain your answer.

Accepted Answer

The answer of Warren and Spencer are partners in a...

Question 15

Discuss how each of the following would be recorded in the partner's capital account and why:
a.Trevor invests into the partnership land that he paid $40,000 for 3 years ago.Today,the fair market value of the land is $65,000.
b.Marcela invests into the partnership a building that she paid $24,000 for 2 years ago.The building has a $10,000 mortgage and its fair market value is $18,000.The partnership assumes the mortgage.
c.Courtney invests into the partnership equipment she paid $12,000 for earlier in the year by signing a note payable that the partnership is not assuming.The equipment has a fair market value of $15,000.

Accepted Answer

The answer of Discuss how each of the following would...

Question 16

Joint ventures

Accepted Answer

Joint ventures are a type of partnership agreement between two or more entities. They are still widely used in business today as a way to pool resources and share risk in a particular project or venture. Joint ventures can be formed both domestically and internationally. While joint ventures may have a limited duration, they can also have an unlimited life depending on the terms of the agreement.

Question 17

Describe how a dissolution of a partnership is different from a liquidation of a partnership.

Accepted Answer

The answer of Describe how a dissolution of a partnership...

Question 18

Briyanna and Greg form a partnership and invest the following assets and liabilities.Greg's building is subject to a $40,000 mortgage that is not assumed by the partnership.
  In the journal provided prepare the entry to record the formation of the partnership.(Omit explanation.)

Accepted Answer

The answer of Briyanna and Greg form a partnership and...

Question 19

In some liquidations,a partner's share of the loss is greater than his or her capital balance.In such a situation,

Accepted Answer

The answer of In some liquidations,a partner's share of the...

Question 20

Justin and Nicole are forming a partnership.What are some of the factors they should consider in deciding how income might be divided?

Accepted Answer

The answer of Justin and Nicole are forming a partnership.What...

Quiz 12: Accounting for Partnerships