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1、Chapter 13Accounting for Partnerships and Limited Liability CorporationsCHAPTER 13ACCOUNTING FOR PARTNERSHIPS ANDLIMITED LIABILITY CORPORATIONS341Chapter 13Accounting for Partnerships and Limited Liability CorporationsTRUE/FALSE1.There are only four legal structures to form and operate a business.AN
2、S:FDIF:1OBJ:012.In a general partnership, each partner is individually liable to creditors for debts incurred by the partnership, to the extent of the partners capital balance.ANS:FDIF:1OBJ:013.A partnership is a legal entity separate from its owners.ANS:FDIF:1OBJ:014.A partnership is subject to fed
3、eral income taxes.ANS:FDIF:1OBJ:015.A disadvantage of partnerships is the mutual agency of all partners.ANS:TDIF:1OBJ:016.Each partnership must have a written partnership agreement.ANS:TDIF:1OBJ:017.Each partner may withdraw the assets he or she contributed to the partnership at any time.ANS:FDIF:2O
4、BJ:018.When compared to a corporation, one of the major disadvantages of the partnership is its limited life.ANS:TDIF:1OBJ:019.When compared to a corporation, one of the major advantages of a partnership is its ease of formation.ANS:TDIF:1OBJ:0110.Under a Subchapter S Corporation, the IRS allows inc
5、ome to pass through the corporation to the individual stockholders without the corporation having to pay taxes on the income.ANS:TDIF:2OBJ:0111.A Limited Liability Corporation is a business entity form that combines the advantages of the corporation and the partnership forms.ANS:TDIF:1OBJ:0112.For t
6、ax purposes, a Limited Liability Corporation may elect to be treated as a partnership.ANS:TDIF:1OBJ:0113.The Limited Liability Corporation may elect to be manager managed rather than member managed which means that only authorized members may legally bind the corporation.ANS:TDIF:1OBJ:0114.Each part
7、ner has a separate capital and withdrawal account.ANS:TDIF:1OBJ:0215.The chart of accounts for a partnership, with the exception of drawing and capital accounts, does not differ from the chart of accounts for a sole proprietorship.ANS:TDIF:1OBJ:0216.When there are significant changes in stockholders
8、 equity, generally, a retained earnings statement is not sufficient, requiring a statement of stockholders equity to be prepared.ANS:TDIF:1OBJ:0217.The equity reporting for a Limited Liability Corporation is similar to that of a partnership but the changes in capital are shown on a statement of memb
9、ers equity.ANS:TDIF:1OBJ:0218.When a partner invests noncash assets in a partnership, the assets are recorded at the partners book value.ANS:FDIF:2OBJ:0319.Accounts receivable contributed to the partnership are recorded at their face value.ANS:TDIF:1OBJ:0320.A new partner contributes accounts receiv
10、able to a partnership which appear in the ledger of his sole proprietorship at $ 20,500 and there was an allowance for doubtful accounts of $ 750. If $600 of the accounts receivables are completely worthless, the partnership accounts receivable should be debited for $19,900.ANS:TDIF:2OBJ:0321.One re
11、ason that distributions of income and loss are prepared is to obtain the information to record a closing entry.ANS:TDIF:1OBJ:0422.If nothing is stated, partnership income is divided in proportion to the individual partners capital balance.ANS:FDIF:2OBJ:0423.The salary allocation to partners used in
12、dividing net income would also appear as salary expense on the partnership income statement.ANS:FDIF:2OBJ:0424.If the articles of partnership provide for annual salary allowances of $36,000 and $18,000 to X and Y respectively and net income is $30,000, Xs share of net income is $20,000.ANS:FDIF:2OBJ
13、:0425.If the net income of a partnership is less than the total of the allowances provided by the partnership agreement, the difference must be divided among the partners in the income-sharing ratio.ANS:FDIF:2OBJ:0426.The amount that a partner withdraws as a monthly salary allowance does not affect
14、the division of net income.ANS:TDIF:2OBJ:0427.A devotes full time and B devotes one-half time to their partnership. If the partnership agreement is silent concerning the division of net income, A will receive a $20,000 share of a net income of $30,000.ANS:FDIF:2OBJ:0428.In the distribution of income
15、, 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.ANS:TDIF:2OBJ:0429.Details of the division of partnership income should normally be disclosed in the financial statements.ANS
