Questions -
1. The partnership of ABC is made up of partner A, partner B, and partner C. The partnership allocates profits and losses in a ratio of 3:2:5, respectively, to partners A, B, and C. The partnership reported a net loss of $20,000 in the previous year. How will this loss affect Partner B's capital account?
it will increase by $4,000
it will decrease by $4,000
it will increase by $2,000
it will decrease by $2,000
2. Watson Company pays approximately $30,000 in property taxes per year. The bills are received in September and are paid in December. Watson chooses to accrue property tax expense each month throughout the year. After all the bills are received at the end of September, what would be a good estimate for the balance in the accrual account?
$0
$15,000
$22,500
$30,000
3. A characteristic of partnerships that makes it unattractive to potential business owners is the ________.
expense of organization
unlimited personal liability
flow-through of taxes to partners at the personal level
requirement of a charter from the state
4. In a partnership, the procedures for admitting a new partner and the method of sharing profits and losses among partners should be outlined in the ________.
partnership agreement
articles of organization
charter granted by the state
corporate bylaws
5. A piece of manufacturing equipment is purchased on January 1, 20X1 for $75,000. The equipment is expected to have a useful life of 10 years. At the end of 10 years, management thinks they can sell the machine for scrap metal for $3,500. It is expected that the machine will be able to produce 250,000 units. In the first year, the machine produced 26,432 units. If the straight-line depreciation is used, how much depreciation will be recorded in year one?
$7,559.55
$7,929.60
$7,150.00
$7,500.00