Acc407 Advanced Accounting: Week 1 Quiz (Version 1)

Acc407 Advanced Accounting
Week 1 Quiz (Version 1)

1. On a partner's personal statement of financial condition, how should liabilities be valued?
I. Present value
II. Lower of present value or cash settlement amount (Points : 1)
I
II
Both I and II
Neither I nor II

2. The capital balances, prior to the liquidation of the XYZ partnership, were as follows:
X, Capital $130,000
Y, Capital $130,000
Z, Capital $100,000
X, Y, and Z share profits and losses in the ratio of 5:3:2. As a result of a loan, the partnership owes Y $80,000. Using the information above, which partner has the highest Loss Absorption Power (LAP) prior to liquidation? (Points : 1)
X
Y
Z
Both X and Y

3. In the computation of a partner's Loss Absorption Power (LAP), which of the following statements is incorrect?
I. The computation of LAPs for all partners allows cash to be distributed before all partnership assets have been sold and all creditors have been paid.
II. The computation of LAPs for all partners indicates the relative strength of each partner's net capital position so that available cash is distributed in respective loss-sharing ratios. (Points : 1)
I
II
Both I and II
Neither I nor II

4.Griffin and Rhodes formed a partnership on January 1, 2009.Griffin contributed cash of $120,000 and Rhodes contributed land with a fair value of $160,000. The partnership assumed the mortgage on the land which amounted to $40,000 on January 1.Rhodes originally paid $90,000 for the land. On July 31, 2009, the partnership sold the land for $190,000. Assuming Griffin and Rhodes share profits and losses equally, how much of the gain from sale of land should be credited to Griffin for financial accounting purposes? (Points : 1)
$0
$15,000
$35,000
$45,000

5. When a partnership is formed, noncash assets contributed by partners should be recorded:
I.at their respective book values for income tax purposes.
II. at their respective fair values for financial accounting purposes. (Points : 1)
I only
II only
Both I and II
Neither I nor II

6. Which of the following statements best describes limited partnerships? (Points : 1)
In an LLP, there must be at least one general partner that is personally liable for the obligations of the partnership and has management responsibilities.
There are no general or limited partners in an LP; each partner has the rights and duties of a general partner, but limited legal liability.
The identifier LP or LLP need not be included in the name or identification of a limited partnership.
If the presumption of control by the general partner can be overcome, the partner would account for its investment using the equity method of accounting.

7. On a partner's personal statement of financial condition, assets and liabilities are presented:
I.As current and noncurrent.
II. In order of liquidity and maturity. (Points : 1)
I
II
Both I and II
Neither I nor II

8. The BIG Partnership has decided to liquidate at December 31, 20X8. The capital and loan balances of the partners at December 31, 20X8, are provided below:
Partners Capital Balances Loan Balances Profit-and-Loss Sharing %
B $210,000 CR $40,000 CR 50%
I $240,000 CR 100,000 DR 20%
G 40,000 CR 80,000 CR 30%
If you were to calculate the Loss Absorption Power for each partner, how would the partners rank (from highest to lowest LAP)? (Points : 1)
B, I, G
I, B, G
B, G, I
G, I, B

9. A limited liability company (LLC):
I.is governed by the laws of the state in which it is formed.
II. provides liability protection to its investors.
III. does not offer pass-through taxation benefits of partnerships. (Points : 1)
Both I and III.
III.
Both I and II.
I, II, and II.

10. The terms of a partnership agreement provide that one of the partners is to receive a salary allowance of $30,000, plus a bonus of 20 percent of income after deduction of the bonus and the salary allowance. If income is $150,000, the bonus should be: (Points : 1)
$18,000
$20,000
$24,000
$30,000
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