Test Bank and Solution Manual for Horngrens Accounting VOLUME 2 11th CANADIAN Edition by Miller-Nobles

TEST BANK FOR HORNGRENS
ACCOUNTING VOLUME 2 11TH
CANADIAN EDITION BY MILLER-
NOBLES

,Horngren's Accounting, Vol. 2, Canadian Edition, 11e (Miller-Nobles)
Chapter 12 Partnerships

Objective 12-1

1) Mutual agency in a partnership means that partnership decisions must be made mutually by
both partners.
Answer: FALSE
Diff: 1 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Understand

2) Accounting for a partnership is similar to accounting for a proprietorship.
Answer: TRUE
Diff: 1 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Conceptual
Cognitive Taxon: Remember

3) Accounting for a partnership is completely different from accounting for a proprietorship.
Answer: FALSE
Diff: 2 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Conceptual
Cognitive Taxon: Remember

4) A partnership agreement may be oral.
Answer: TRUE
Diff: 1 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember

5) Partners can share in net income or loss in any manner they choose.
Answer: TRUE
Diff: 1 Type: TF
CPA Competency: 1.2.1 Develops or evaluates appropriate accounting policies and procedures
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual

,Cognitive Taxon: Remember
6) A partnership agreement is a contract between the partners, so transactions under the
agreement are governed by contract law.
Answer: TRUE
Diff: 1 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember

7) A partnership has a continuous life.
Answer: FALSE
Diff: 2 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember

8) The resignation of a partner dissolves the partnership.
Answer: TRUE
Diff: 2 Type: TF
CPA Competency: 1.2.1 Develops or evaluates appropriate accounting policies and procedures
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember

9) In a limited liability partnership, all the partners have limited liability for the debts of the
partnership.
Answer: FALSE
Diff: 2 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember

10) One of the events that cause a partnership to dissolve is the death of a partner.
Answer: TRUE
Diff: 1 Type: TF
CPA Competency: 1.2.1 Develops or evaluates appropriate accounting policies and procedures
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember
11) A partnership balance sheet will show the ending capital balance for each partner.
Answer: TRUE

, Diff: 1 Type: TF
CPA Competency: 1.3.1 Prepares financial statements
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember

12) Partnerships must pay income tax to the Canada Revenue Agency.
Answer: FALSE
Explanation: Income flows to the individual partners who report it on their personal income tax
return.
Diff: 2 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember

13) One of the advantages of a partnership is unlimited personal liability.
Answer: FALSE
Diff: 2 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Remember

14) One of the disadvantages of a partnership is relationships among partners may be
fragile.Answer: TRUE
Diff: 2 Type: TF
CPA Competency: 1.1.1 Evaluates financial reporting needs
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Conceptual
Cognitive Taxon: Understand

15) The asset and liability sections on the balance sheet are the same for a proprietorship and a
partnership.
Answer: TRUE
Diff: 2 Type: TF
CPA Competency: 1.3.1 Prepares financial statements
Objective: 12-1 Identify the characteristics of a partnership
Knowledge Taxon: Factual
Cognitive Taxon: Evaluate
16) A partnership is an association of ________ who co-own a business for profit.
A) two persons
B) ten persons
C) 300 persons