Advanced Accounting - Chapter 23

 One advantage of a partnership is 

• ease of formation
•  limited liability
• c. unlimited life of the partnership
• limited vision and skills.

 When a partner invests in office equipment, the entry includes a

• a. debit to the partner’s capital account.
• debit to Office Equipment.
• credit to Cash.
• credit to Office Equipment.

When a partner withdraws supplies from the partnership, the entry includes a

• a debit to the partner’s capital account.
• b. a debit to the partner’s drawing account.
• a debit to Supplies.
• a credit to the partner’s drawing account.

Partnership earnings are divided.

•  equally
• according to how long the partner has been in the business.
• according to the age of each partner
• according to the partnership agreement.

The last step in liquidating a partnership is

•  to quit selling products and services.
• selling all noncash assets
• distributing remaining cash to the partners.
• liquidating liabilities

A partner’s drawing account

• has a normal debit balance
•  has a normal credit balance.
• can have a normal balance of either a debit or a credit.
• increases on the credit side

A disadvantage of a partnership over other forms of business ownership is

• being liable for your partner’s actions.
• simple tax structure.
• having more capital available.
• sharing work

When non-cash assets are liquidated and the amount received is less than the book value of the asset liquidated, there is a

• net income.
• net loss.
• gain on the realization.
• loss on the realization.

A partnership distribution of net income or net loss is usually shown on

• the trial balance.
• the balance sheet.
• the statement of cash flows
• none of these.

Vocabulary
A business in which  two or more persons combine their assets and skills.

• Partnership
• Partnership Agreement
• Partner
• Realization