The Williams & Wiley partnership has two partners and each partner has $50,000 invested in the firm. Woods is admitted to the partnership for one-third interest and invests $80,000. Woods's partnership account would be credited for:

Answer

a. $80,000.
b. $50,000.
c. $180,000.
d. $60,000.

Question

Which of the following statements best summarizes what a business partnership is all about?
Answer

a.A partnership involves two or more persons engaged in economic activity.

b.Partners need careful planning to succeed in business.

c.Partners own the partnership's assets together.

d. Partnerships can harness the skills and expertise of more than one person.

Question

Two partners agree to share profits in the following arrangement:
1) Salary of $40,000 for each
2) Interest at 10 percent on beginning capital balances
3) The remainder in a 50-50 ratio
The first partner contributed $100,000 in beginning capital, and the second contributed $50,000. How much money would the second partner receive from total profits of $120,000?
Answer

a.$45,000

b.$52,500

c.$12,500

d.$57,500

Question

If an incoming, new partner purchases an equity interest of $70,000 in a partnership and uses $90,000 in cash to do so, existing partners:
Answer

a.should give the new partner a one-third interest.

b.receive bonuses.

c.forfeit some capital to the new partner.

d.have overvalued the business's oldest assets.