Question
In: Accounting
Which of the following statements is true of partnerships? If the partners have no partnership agreement specifying...
Which of the following statements is true
of partnerships?
If the partners have no partnership agreement specifying how to divide profits and losses, then they share profits and losses equally.
B.
The profit sharing is always based on each partner's capital balances and any losses will be shared equally.
C.
It is legally required to share the profit and losses equally, irrespective of the partnership agreement.
D.
The stated ratio of profit sharing needs to be approved by the SEC.
Solutions
Expert Solution
Correct option is (A)
If the partners have no partnership agreement specifying how to divide profits and losses, then they share profits and losses equally.
When partners have not made any partnership agreement or they have made a partnership agreement but the partnership agreement does not contain any provision regarding sharing of profits, in that case profits are shared equally among all the partners, ignoring the capital contributions by the partners.
Statements B, C and are not correct.
The profit sharing is always based on each partner's capital balances and any losses will be shared equally.- It is false since it is possible only when provided in the partnership agreement. Thus this is not always true.
It is legally required to share the profit and losses equally, irrespective of the partnership agreement.- It is false since there is no legal provision to share profits equally.
The stated ratio of profit sharing needs to be approved by the SEC- It is false since SEC has nothing to do with the approval of profit sharing ratio of partners.
ekkarill92 answered 4 months agoRelated Solutions
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16. Which of the following statements about partnerships are
true?
A.
Partnerships afford their owners a liability shield against
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B.
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C.
Absent an agreement to the contrary partnerships do not survive
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D.
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17.The Securities and Exchange Commission holds primary
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The partnership agreement of Ahmed and Ali has the following provisions: 1 - Partners are to...
The partnership agreement of Ahmed and Ali has the following
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1 -
Partners are to earn 10% interest on their average capital
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2 -
Ali is to earn a 5% bonus on any net income above 40,000
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4 -
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Ahmed's average capital balance is 130,000 and Ali's is 30,000
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Indicate whether each of the following statements is e true or false. ________ 1. Partnerships have...
Indicate whether each of the following statements is e true or
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________ 1. Partnerships have unlimited life. Corporations do
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________ 2. Partners jointly own partnership assets. A
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________ 3. In a limited partnership, the general partners
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The following balance sheet is for a local partnership in which the partners have become very...
The following balance sheet is for a local partnership in which
the partners have become very unhappy with each other.
Cash
$
41,000
Liabilities
$
31,000
Land
135,000
Adams, capital
84,000
Building
125,000
Baker, capital
30,000
Carvil, capital
62,000
Dobbs, capital
94,000
Total assets
$
301,000
Total liabilities and
capital
$
301,000
To avoid more conflict, the partners have decided to cease
operations and sell all assets. Using this information, answer the
following questions. Each question should be viewed as...
The following balance sheet is for a local partnership in which the partners have become very...
The following balance sheet is for a local partnership in which
the partners have become very unhappy with each other.
Cash
$
43,000
Liabilities
$
33,000
Land
145,000
Adams, capital
89,000
Building
135,000
Baker, capital
36,000
Carvil, capital
66,000
Dobbs, capital
99,000
Total assets
$
323,000
Total liabilities and capital
$
323,000
To avoid more conflict, the partners have decided to cease
operations and sell all assets. Using this information, answer the
following questions. Each question should be viewed as...
The following balance sheet is for a local partnership in which the partners have become very...
The following balance sheet is for a local partnership in which
the partners have become very unhappy with each other.
Cash
$ 61,000
Liabilities
$ 51,000
Land
235,000
Adams, capital
156,500
Building
225,000
Baker, capital
45,000
Carvil, capital
102,000
Dobbs, capital
166,500
Total assets
$521,000
Total liabilities and
capital
$521,000
To avoid more conflict, the partners have decided to cease
operations and sell all assets. Using this information, answer the
following questions. Each question should be viewed as an
independent...
The following balance sheet is for a local partnership in which the partners have become very...
The following balance sheet is for a local partnership in which
the partners have become very unhappy with each other.
Cash
$
49,000
Liabilities
$
39,000
Land
175,000
Adams, capital
108,500
Building
165,000
Baker, capital
45,000
Carvil, capital
78,000
Dobbs, capital
118,500
Total assets
$
389,000
Total liabilities and
capital
$
389,000
To avoid more conflict, the partners have decided to cease
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The following balance sheet is for a local partnership in which the partners have become very...
The following balance sheet is for a local partnership in which
the partners have become very unhappy with each other. Cash $
65,000 Liabilities $ 55,000 Land 255,000 Adams, capital 169,500
Building 245,000 Baker, capital 51,000 Carvil, capital 110,000
Dobbs, capital 179,500 Total assets $ 565,000 Total liabilities and
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to cease operations and sell all assets. Using this information,
answer the following questions. Each question should be viewed as...
The following balance sheet is for a local partnership in which the partners have become very...
The following balance sheet is for a local partnership in which
the partners have become very unhappy with each other.
Cash
$
40,000
Liabilities
$
30,000
Land
130,000
Adams, capital
80,000
Building
120,000
Baker, capital
30,000
Carvil, capital
60,000
Dobbs, capital
90,000
Total assets
$
290,000
Total liabilities and capital
$
290,000
To avoid more conflict, the partners have decided to cease
operations and sell all assets. Using this information, answer the
following questions. Each question should be viewed as...
The following balance sheet is for a local partnership in which the partners have become very...
The following balance
sheet is for a local partnership in which the partners have become
very unhappy with each other.
Cash
$
64,000
Liabilities
$
54,000
Land
250,000
Adams,
capital
165,500
Building
240,000
Baker,
capital
51,000
Carvil,
capital
108,000
Dobbs,
capital
175,500
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assets
$
554,000
Total
liabilities and capital
$
554,000
To avoid more
conflict, the partners have decided to cease operations and sell
all assets. Using this information, answer the following questions.
Each question should be viewed as...
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