Partners in a partnership are not taxed on their withdrawals, but rather on _____________________________

156. Partners in a partnership are not taxed on their withdrawals, but rather on _____________________________.

share of partnership income

AACSB: Communication
AICPA: BB Industry
AICPA: BB Legal
AICPA: FN Decision Making
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 12-C1 Identify characteristics of partnerships and similar organizations.
Topic: Partnership Form of Organization

157. Partner net income divided by average partner equity equals ______________________.

Partner return on equity

AACSB: Communication
AICPA: BB Industry
AICPA: FN Risk Analysis
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 12-A1 Compute partner return on equity and use it to evaluate partnership performance.

158. When a partner invests in a partnership, his/her capital account is __________ for the invested amount.

credited

AACSB: Analytical Thinking
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 12-P1 Prepare entries for partnership formation.
Topic: Organizing a Partnership

159. During the closing process, partner’s capital accounts are _______________ for their share of net income and _________________ for their share of net loss.

credited; debited
answers must appear in this order

AACSB: Analytical Thinking
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 12-P2 Allocate and record income and loss among partners.
Topic: Dividing Income or Loss

160. During the closing process, each partner’s withdrawals account is closed to _________________________.

that partner’s capital account

AACSB: Analytical Thinking
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 12-P2 Allocate and record income and loss among partners.
Topic: Dividing Income or Loss

161. If partners agree on how to share income, but say nothing about losses, then losses are shared ___________________.

in the same manner as income

AACSB: Analytical Thinking
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 12-P2 Allocate and record income and loss among partners.
Topic: Dividing Income or Loss

162. A partner can be admitted into a partnership by _________________________ or by __________________________________.

purchasing an interest from a current partner; investing cash or other net assets into the partnership
answers can appear in any order

AACSB: Analytical Thinking
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 12-P3 Account for the admission and withdrawal of partners.
Topic: Admission and Withdrawal of Partners

163. If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to _________________________; if the recorded value of the withdrawing partner’s equity is understated, then a bonus goes to ____________________.

the remaining partners; the withdrawing partner
answers must appear in this order

AACSB: Analytical Thinking
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 12-P3 Account for the admission and withdrawal of partners.
Topic: Admission and Withdrawal of Partners

164. At least one partner having a debit balance in his/her capital account at the point of the final distribution of cash is known as a _________________________.

capital deficiency

AACSB: Analytical Thinking
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 12-P4 Prepare entries for partnership liquidation.
Topic: Liquidation of a Partnership