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Questions
Q:
A partnership that has two classes of partners, general and limited, where the limited partners have no personal liability beyond the amounts they invest in the partnership and no active role in the partnership except as specified in the partnership agreement, is a:
A. Mutual agency partnership
B. Limited partnership
C. Limited liability partnership
D. General partnership
E. Limited liability corporation
Q:
Mutual agency means
A. Creditors can apply their claims to partners' personal assets.
B. Partners are taxed on partnership withdrawals.
C. All partners must agree before the partnership can act.
D. The partnership has a limited life.
E. A partner can commit or bind the partnership in any contract within the scope of the partnership business.
Q:
A partnership agreement:
A. Is not binding unless it is in writing.
B. Is the same as a limited liability partnership.
C. Is binding even if it is not in writing.
D. Does not generally address the issue of the rights and duties of the partners.
E. Is also called the articles of incorporation.
Q:
Which of the following best lists the disadvantages of a partnership:
A. Unlimited life and mutual agency.
B. Mutual agency and limited liability.
C. Unlimited liability and unlimited life.
D. Limited Life and limited liability.
E. Limited life, mutual agency, and unlimited liability are all disadvantages of a partnership
Q:
An unincorporated association of two or more persons to carry on a business for profit as co-owners is a(n):
A. Partnership
B. Proprietorship
C. Contractual company
D. Mutual agency
E. Voluntary organization
Q:
If a partner is unable to cover a deficiency and the other partners absorb the deficiency, then the partner with the deficiency is thus relieved of all liability.
Q:
A capital deficiency can arise from liquidation losses, excessive withdrawals before liquidation, or recurring losses in prior periods.
Q:
A capital deficiency exists when all partners have a credit balance in their capital accounts.
Q:
When a partner leaves a partnership, the withdrawing partner is entitled to a bonus if the recorded equity is overstated.
Q:
When the current value of a partnership is greater than the recorded amounts of equity, the current partners usually require any new partner to pay a bonus for the privilege of joining.
Q:
Admitting a partner into a partnership by accepting assets is a personal transaction between one or more current partners and the new partner.
Q:
Assets invested by a partner into a partnership remain the property of the individual partner.
Q:
When a partner leaves a partnership, the present partnership ends, but the business can still continue to operate.
Q:
To buy into an existing partnership, the new partner must contribute cash.
Q:
Assume that the S & B partnership agreement gave Steely 60% and Breck 40% of partnership income and losses. The partnership recorded a loss of $27,000 in the current period. Steely's share of the loss equals $16,200 and Breck's share equals $10,800.
Q:
If the partners agree on a formula to share income and say nothing about losses, then the losses are shared equally.
Q:
If partners devote their time and services to their partnership, their salaries are expenses on the income statement.
Q:
The equity section of the balance sheet of a partnership can report the separate capital account balances of each partner.
Q:
The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.
Q:
Salary allowances are reported as salaries expense on a partnership income statement.
Q:
In the absence of a partnership agreement, the law says that income of a partnership will be shared equally by the partners.
Q:
In closing the accounts at the end of a period, the partners' capital accounts are credited for their share of the partnership loss or debited for their share of the partnership net income.
Q:
The withdrawals account of each partner is closed to retained earnings at the end of the accounting period.
Q:
Partners can invest both assets and liabilities into a partnership.
Q:
Partners' withdrawals are credited to their separate withdrawals accounts.
Q:
When partners invest in a partnership, their capital accounts are credited for the amount invested.
Q:
Benson is a partner in B&D Company. Benson's share of the partnership income is $18,600 and her average partnership equity is $155,000. Her partner return on equity equals 8.33.
Q:
Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.
Q:
A partnership cannot use salary allowances or interest allowances if it uses the stated ratio method to allocate income and losses to the partners.
Q:
If a U.S. company makes a credit sale to a foreign company, the sales price must be translated into dollars as of the date of _____________.
Q:
An investing company that owns _________ of another (investee) company's voting stock (but not more than 50%) is presumed to have a significant influence over the investee.
Q:
Long-term investments in available-for-sale securities are reported using their _______ on the balance sheet.
Q:
Held-to-maturity securities are ____________ securities a company intends and is able to hold until maturity.
Q:
____________________________ are debt and equity securities that a company intends to actively manage and trade for a profit.
Q:
Investments in trading securities are always classified as ______________ and are reported as _______________ on the balance sheet.
Q:
________________________ refers to all changes in equity for a period except for those due to investments and distributions to owners.
Q:
Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.
Q:
Investments in equity securities where the investor has a significant, but not controlling, influence are accounted for using the _______________ method.
Q:
An investing company that owns more than ________ of another (investee) company's voting stock is presumed to have controlling influence over the investee.
Q:
_________________________ are investments that are both readily converted to known amounts of cash and mature within three months.
Q:
__________________________ are investments in securities that are not readily convertible to cash or are not intended to be converted to cash in the short-term.
Q:
___________________________ are investments in securities that management intends to convert to cash within one year or the operating cycle, whichever is longer, and are readily convertible to cash.
Q:
As a long-term investment, Elmer's Equipment Enterprise purchased 35% of Sticky Supplies Inc.'s 300,000 shares for $350,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of Stickys net assets were equal. During the year, Stickys earned net income of $430,000 and distributed cash dividends of 0.42 cents per share. The fair value of Stickys assets at the end of the year totaled $349,450. What is the journal entry, if any to record the net income for the investment in Sticky?
Q:
As a long-term investment, Elmer's Equipment Enterprise purchased 20% of Sticky Supplies Inc.'s 300,000 shares for $350,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of Stickys net assets were equal. During the year, Stickys earned net income of $430,000 and distributed cash dividends of 0.42 cents per share. The fair value of Stickys assets at the end of the year totaled $349,450. What is Elmers balance for this investment at the end of the year, assuming there is no significant control?
Q:
As a long-term investment, Elmer's Equipment Enterprise purchased 35% of Sticky Supplies Inc.'s 300,000 shares for $350,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of Stickys net assets were equal. During the year, Stickys earned net income of $430,000 and distributed cash dividends of 0.42 cents per share. The fair value of Stickys assets at the end of the year totaled $349,450. What is Elmers balance for this investment at the end of the year?
Q:
The following information is available from the financial statements of Cosmotropolis: 2012
2013
2014 Total assets, December 31
$341,585
$395,412
$922,357 Net income
35,550
49,512
68,149 What is Cosmotropolis return on total assets for 2014?
Q:
The following information is available from the financial statements of Cosmotropolis: 2012
2013
2014 Total assets, December 31
$341,585
$395,412
$922,357 Net income
35,550
49,512
68,149 What is Cosmotropolis return on total assets for 2013?
Q:
Mian, Inc., sells American gourmet foods to merchandisers in Singapore. Prepare the journal entries for Mian to record the following transactions. Include any year-end adjustments. Dec 20
Sold items to Solingen, Inc., for 60,000 Singapore dollars. The exchange rate was $0.476 per Singapore dollar. The purchase terms were n/30. Dec 31
The exchange rate was $0.480 per Singapore dollar. Jan 17
Received payment from Solingen for the December 20 sale. The exchange rate was $0.495 per Singapore dollar.
Q:
Texana Inc. imports inventory from Mexico. Prepare the journal entries for Texana to record the following transactions. Include any year-end adjustments. Dec 21
Purchased inventory from Acquilla Co. for 500,000 Mexican pesos. The exchange rate was $0.0914 per peso. The credit terms were n/30. Dec 31
The exchange rate was $0.0917 per peso. Jan 20
Paid Acquilla Co. for the December 21 purchase. The exchange rate was $0.0920 per peso.
Q:
Golden Age Co. exports Native American artwork to Japan. Prepare journal entries for the following transactions. Nov 10
Sold artwork to Tanaka Company for 10,000,000 yen, terms n/30. The exchange rate was $0.0084 per yen. Dec 5
Received payment from Tanaka Company for the November 10 sale. The exchange rate was $0.009 per yen.
Q:
Rhone Importers purchases automotive parts from Germany. Prepare journal entries for the following transactions of Rhone. Oct 1
Purchased inventory from Weimar Co for 12,000 euros, terms n/30. The exchange rate was $1.15 per euro. Oct. 30
Paid Weimar Co. for the October 1 purchase. The exchange rate was $1.13 per euro
Q:
On January 1, 2012, Frederich Corporation purchased 7,500 shares of Sport Tech, Inc. as a long-term investment for a total of $235,000. The 7,500 shares represent 30% of the outstanding (25,000) shares of Sport Tech. Prepare the journal entries for Frederich to record the following transactions and events: December 31, 2012
Sport Tech reported net income of $66,000 for 2009. February 1, 2013
Sold 1,875 of the Sport Tech shares for $34 per share. In addition, $1,350 in fees and commissions were paid by Frederich on this sale. November 1, 2013
Frederich received a $0.90 per share cash dividend from Sport Tech. December 31, 2013
Sport Tech reported net income of $146,000 for 2010
Q:
Savan Co. purchased 14,000 shares of Briton Corporation's 40,000 shares of common stock on December 31, 2012. This represented 35% of Briton's outstanding shares and gave Savan Co. significant influence over Briton's management and operations. On October 11, 2013, Briton declared and paid cash dividends of $30,000. On December 31, 2013, Briton reported net income of $125,000 for the year. Prepare the journal entries Savan Co. should record to account for its investment in Briton Corporation during 2013.
Q:
Kramer Corporation had the following long-term investment transactions. Jan. 2
Purchased 5,000 shares of Optic, Inc. for $42 per share plus $7,000 in fees and commission. These shares represent a 35% ownership of Optic. Oct. 15
Received Optic, Inc. cash dividend of $2 per share. Dec. 31
Optic reported a net loss of $66,000 for the year. Prepare the journal entries Kramer Corporation should record for these transactions and events.
Q:
On January 2, Froxel Company purchased 10,000 shares of Sandia Corp. common stock at $19 per share plus a $3,000 commission. This represents 30% of Sandia Corp.'s outstanding stock. On August 6, Sandia Corp. declared and paid cash dividends of $1.75 per share and on December 31 it reported net income of $150,000. Prepare the necessary entries Froxel Company must make to account for these transactions and events.
Q:
Detalo Co. held bonds of Schooner Corp. with a cost of $125,000 and a market value of $127,000. Detalo also held 1,500 shares of Tranco common stock with a cost of $25,000 and a market value of $24,700. These are classified as long-term available-for-sale securities. Prepare the journal entry to record the market value of the investments as of December 31.
Q:
Chrono Co. held bonds of Ayrford Co. with a cost of $125,000 and a year-end market value of $123,700. Chrono also held 1,500 shares of Avian common stock with a cost of $25,000 and a year-end market value of $26,100. These are classified as long-term available-for-sale securities. Prepare the journal entry to record the market value of the investments as of its December 31 year-end.
Q:
Columbia Corp. held 1,500 of Vianco common stock with a cost of $74,387. These shares were classified as a long-term available-for-sale investment. It sold the shares on December 13 for $55,275. Prepare the journal entry to record this sale.
Q:
Marina, Inc., held 1,500 of Navia common stock with a cost of $36,900. These shares were classified as a long-term available-for-sale investment. It sold the shares on December 13 for $42,100. Prepare the necessary journal entry to record this sale.
Q:
On October 31, Mayfair Co. received cash dividends of $0.15 per share from its investment in Carter Corp.'s common stock. Mayfair owned 1,200 shares of Carter Corp.'s stock on October 31. The investment is considered available for sale. Prepare the investor's journal entry to record the receipt of the cash dividends.
Q:
Haladam Company had the following transactions relating to investments in trading securities during the year. Prepare the required general journal entries for these transactions. May 4 Haladam purchased 600 shares of Cob Company stock at $120 per share plus a $750 brokerage fee. July 1 Haladam received a $2.50 per share cash dividend on the Cob Company stock. Sept. 15 Sold 300 shares of the Cob Company stock for $125 per share, less a $450 brokerage fee. Dec. 31 The market value of the Cob Company stock (the only investment that Haladam owns) is $124 per share. The balance of the Market Adjustment Trading a zero balance prior to adjustment.
Q:
Wiffery Company had the following trading securities in its portfolio at December 31. The Market Adjustment Trading account had balance of zero prior to year-end adjustment. Prepare the appropriate adjusting journal entry. Short-Term Investments
Cost
Market Value IBM....................................................................
$ 24,500
$ 25,900 Microsoft............................................................ Intel..................................................................... Dell......................................................................
51,000 62,300 29,900
48,600 61,000 30,200 Totals
$167,700
$165,700
Q:
A company had net income of $76,000 in 2012 and $88,000 in 2013. Its net sales were $640,000 in 2012 and $611,000 in 2013. Its average total assets in 2012 were $670,000 and $712,000 in 2013. Calculate the profit margin, total asset turnover, and return on total assets for both years. Comment on the results.
Q:
A company reported net income for 2012 of $98,000 and $106,000 in 2013. It also reported net sales of $735,000 in 2012 and $798,000 in 2013. The company's average total assets in 2012 were $1,850,000 and $1,720,000 in 2013. Calculate this company's profit margin, total asset turnover, and return on total assets for 2012 and 2013. Comment on the results.
Q:
A company reported net income of $275,000, net sales of $2,500,000, and average total assets of $2,100,000 for the current year. Calculate this company's profit margin, total asset turnover, and return on total assets.
Q:
A company had net income of $45,000, net sales of $390,000, and average total assets of $250,000 for the current year. Calculate this company's profit margin, total asset turnover, and return on total assets.
Q:
A company had net income of $450,000 in 2012 and $620,000 in 2013. The company had average total assets of $2,500,000 in 2012 and $3,000,000 in 2013. Calculate the return on total assets for 2012 and 2013. Comment on the results.
Q:
A company reported net income of $100,000 and average total assets of $425,000. Calculate its return on total assets.
Q:
A company paid $500,000 for 12% bonds with a par value of $500,000. The bonds pay 6% interest semiannually on September 1 and March 1. The company intends to hold the bonds until they mature. Prepare the journal entries for the following dates and transactions related to this bond acquisition.
(1) Bonds purchased on September 1, 2012.
(2) Year-end adjusting entry, December 31, 2012.
(3) Receipt of semiannual interest March 1, 2013.
(4) Redemption of the bonds at maturity on August 31, 2019.
Q:
On April 1 of the current year, a company paid $150,000 to purchase 7%, 10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1. The company intends to hold the bonds until they mature. Prepare the journal entry to record the receipt of the semiannual interest payment on April 1 of the following year.
Q:
On April 1 of the current year, a company paid $150,000 to purchase 7%, 10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1. The company intends to hold the bonds until they mature. Prepare the journal entry to recognize accrued interest as of December 31 of the current year.
Q:
On April 1 of the current year, a company paid $150,000 to purchase 7%, 10-year bonds that had a par value of $150,000 and paid interest semiannually each April 1 and October 1. The company intends to hold the bonds until they mature. Prepare the journal entry to record the receipt of the first semiannual interest payment on October 1 of the current year.
Q:
On April 1 of the current year, a company paid $150,000 cash to purchase 7%, 10-year bonds that had a par value of $150,000 and paid interest semiannually each April 1 and October 1. The company intends to hold these bonds until they mature. Prepare the journal entry to record the purchase of the bond.
Q:
Explain how transactions (both sales and purchases) in a foreign currency are recorded and reported.
Q:
Explain how equity securities having significant influence are accounted for and reported in the financial statements. Include a discussion of the criterion for these securities in terms of an investee's voting stock.
Q:
Explain how available-for-sale debt and equity securities are accounted for at and after acquisition and how they are reported in financial statements.
Q:
Explain how held-to-maturity debt securities are accounted for at and after acquisition and how they are reported in the financial statements.
Q:
Identify the three types of classifications for noninfluential investments in securities.
Q:
Define the return on total assets and explain how it is used to measure a company's financial performance.
Q:
Define the foreign exchange rate between two currencies. Explain its effect on business transactions conducted in a foreign currency.