61.When a limited liability company is formed
a.the partnership activities are limited
b.all partners have limited liability
c.some of the partners have limited liability
d.none of the partners have limited liability
62.Which of the following below is
notone of the four major forms of business entities that are discussed in thischapter?
a.sole proprietorship
b.corporation
c.partnership
d.subchapter S corporation
63.Which of the following below is
nota characteristic of a limited liability company?
a.unlimited life
b.limited legal liability
c.taxable
d.moderate ability to raise capital
64.When a partnership is formed, assets contributed by the partners should be recorded on the partnership books attheir
a.book values on the partners' books prior to their being contributed to the partnership
b.fair market value at the time of the contribution
c.original costs to the partner contributing them
d.assessed values for property tax purposes
65.As part of the initial investment, Ray Blake contributes equipment that had originally cost $125,000 and on whichaccumulated depreciation of $100,000 has been recorded. If similar equipment would cost $150,000 to replace andthe partners agree on a valuation of $29,000 for the contributed equipment, what amount should be debited to theequipment account?
a. $29,000
b. $150,000
c. $125,000
d. $100,000
66.Luke and John share income and losses in a 2:1 ratio after allowing for salaries to Luke of $48,000 and $60,000 toJohn. Net income for the partnership is $93,000. Income should be divided as
a. Luke, $46,500; John, $46,500
b. Luke, $55,000; John, $38,000
c. Luke, $65,000; John, $28,000
d. Luke, $38,000; John, $55,000
67.As part of the initial investment, Jackson contributes accounts receivable that had a balance of $22,500 in theaccounts of a sole proprietorship. Of this amount, $3,000 is deemed completely worthless. For the remainingaccounts, the partnership will establish a provision for possible future uncollectible accounts of $1,500. The amountdebited to Accounts Receivable for the new partnership is
a. $18,000
b. $22,500
c. $21,000
d. $19,500
68.Jordon and Heidi share income equally. For the current year, the partnership net income is $40,000. Jordon madewithdrawals of $14,000, and Heidi made withdrawals of $15,000. At the beginning of the year, the capital accountbalances were: Jordon, capital, $40,000? Heidi, capital, $58,000. Jordon’s capital account balance at the end of theyear is
a. $68,000
b. $54,000
c. $74,000
d. $46,000
69.Sadie and Sam share income equally. For the current year, the partnership net income is $40,000. Sadie madewithdrawals of $14,000, and Sam made withdrawals of $15,000. At the beginning of the year, the capital accountbalances were Sadie, capital, $42,000? Sam capital, $58,000. Sam’s capital account balance at the end of the yearis
a. $78,000
b. $43,000
c. $63,000
d. $93,000
70.Partnership income and losses are usually divided on the basis of interest, salaries, and stated ratios because
a.partners seldom contribute time and resources equally
b.this method reflects the amount of time devoted to the partnership by the partners
c.it is simpler than following the legal rules
d.it prevents arguments among the partners