Mastery Exercise
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Colorado State University, Fort Collins *
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Management
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May 11, 2024
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Mastery Exercise
Question 1
1
/ 1
pts
A general partnership may be characterized by:
Each partner is an agent of the partnership for transactions to carry on in the
ordinary course of the partnership business.
All partners are liable jointly and severally for all obligations of the partnership unless otherwise provided by law.
Corporations or other partnerships are co-owners of a partnership.
All of the above are (True).
Correct! Answers a, b, and c describe major characteristics of a partnership.
Question 2
1
/ 1
pts
A general partnership may be characterized by all of the following except:
The partners have limited liability.
Each partner is an agent of the partnership for transactions to carry on in the
ordinary course of the partnership business.
All partners are liable jointly and severally for all obligations of the partnership unless otherwise provided by law.
Corporations or other partnerships are co-owners of a partnership.
Correct! Because partnerships are not incorporated, all partners in a partnership have unlimited liability. Answers b, c, and d describe major characteristics of a partnership.
Question 3
1
/ 1
pts
Upon the formation of a partnership, Smith contributed 70% of the net assets, while Jones contributed 30%. However, Jones has special expertise in the business undertaken by the partnership. In recognition of this fact, the partnership agreement specifies that Jones is entitled to an additional 10% of
the net assets of the business. Under the agreement, Smith’s capital share is:
40%
50%
60%
70%
Correct! Even though Smith contributed 70% of the partnership’s net assets financially and Jones only 30%, the agreement specifies that Jones is to have an additional 10% share, raising his portion of capital to 40%. Therefore, Smith’s portion of partnership capital is reduced to 60%.
Incorrect
Question 4
0
/ 1
pts
Which of the following would not be (True) in the event that a newly admitted partner pays more than book value for his/her investment in a partnership?
Assign a bonus to the prior partners
Record unrecognized goodwill and allocate it to the prior partners
Record no revaluations, bonus, or goodwill
Revalue net assets up to market value and allocate to prior partners
Try again. If a new partner pays more than book value for his investment in a
partnership, the excess of cost over book value may be due to unrecognized goodwill or to undervalued assets. In accounting for his/her admission to the partnership, there are three methods that can be used: (1) revalue net assets; (2) recognize goodwill; and (3) use the bonus method. Under all three
methods, the revaluation of net assets, recognized goodwill, or bonus is allocated to the prior partners, since the cost of the new partner’s investment exceeds its book value. The only case in which no revaluation, bonus, or goodwill is recorded is when the new partner’s investment cost equals its book value. Please review Chapter 13.
Question 5
1
/ 1
pts
Upon formation of a partnership, Sally contributed 70% of the net assets, Mary contributed 30%, and Jenny contributed no assets. However, Jenny has special expertise. In recognition of this fact, the partnership agreement specifies that Jenny is entitled to 15% of the net assets of the business. Profits and losses are shared based upon capital balances. Under the agreement, Mary’s capital share is:
25.5%
25%
20%
15.5%
Correct! Even though Sally contributed 70% of the partnership’s net assets financially and Mary only 30%, the agreement specifies that Jenny is to have an additional 15% share. Therefore, Sally’s portion of partnership capital is reduced to 59.5% and Mary’s to 25.5%.
Question 6
1
/ 1
pts
Joint liability exists for which of the following?
general partnership
limited partnership
limited liability partnership
none of the above
Correct! There is unlimited joint liability for general partners in a general partnership. Other partnership types have liability limitations.
Incorrect
Question 7
0
/ 1
pts
Upon what is the partnership is based?
generally accepted accounting principles
Certified Partnership Association
Unified Partnership Act
none of the above
Try again. A unified model of partnership laws was put together under what is known as the Unified Partnership Act. Please review Chapter 13.
Question 8
1
/ 1
pts
The change in the equity accounts of a partnership would be reflected in:
statement of retained earnings
income statement
statement of cash flows
statement of changes in partners’ capital
Correct! The income statement, balance sheet, and statement of cash flows are typically prepared for the partnership at the end of each reporting period. In addition to the three basic financial statements, a statement of partners’ capital is usually prepared to present the changes in the partners’ capital accounts for the period. The statement of retained earnings is prepared for a corporation, not a partnership.
Question 9
1
/ 1
pts
Upon formation of a partnership, Sally contributed 60% of the net assets, Mary contributed 40%, and Jenny contributed no assets. However, Jenny brings special expertise to the partnership and is entitled to 10% of the partnership. Profits and losses are shared based upon capital balances. Under the agreement, Jenny’s capital share is:
0%
10%
50%
54%
Correct! Even though Sally contributed 60% of the partnership’s net assets financially and Mary only 40%, the agreement specifies that Jenny is to have an additional 10% share. Therefore, Sally’s portion of partnership capital is reduced to 54% and Mary’s to 36%.
Incorrect
Question 10
0
/ 1
pts
Allocation of partnership income is established by:
The partnership agreement
The United Partnership Act
The Certified Partnership Association
none of the above
Try again. Allocation of partnership income is established by the partnership agreement. Please review Chapter 13.
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Question 1
1
/ 1
pts
The change in the equity accounts of a partnership would be reflected in:
statement of retained earnings
income statement
statement of cash flows
statement of changes in partners’ capital
Correct! The income statement, balance sheet, and statement of cash flows are typically prepared for the partnership at the end of each reporting period. In addition to the three basic financial statements, a statement of partners’ capital is usually prepared to present the changes in the partners’ capital accounts for the period. The statement of retained earnings is prepared for a corporation, not a partnership.
Question 2
1
/ 1
pts
Upon the formation of a partnership, Smith contributed 70% of the net assets, while Jones contributed 30%. However, Jones has special expertise in the business undertaken by the partnership. In recognition of this fact, the partnership agreement specifies that Jones is entitled to an additional 10% of
the net assets of the business. Under the agreement, Smith’s capital share is:
40%
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Related Questions
5.
Which of the following is a disadvantage of partnership?
Question 5 options:
Unlimited liability.
More independence than proprietorship.
Easy to form.
Pooled talent.
arrow_forward
Q 3. Two companies, ABC and XYZ were incorporated in year 2020 as public (ABC Ltd.
Co.) and private (XYZ Pvt. Ltd Co.) company respectively. Give a brief description of
privileges enjoyed and restrictions imposed on these companies. If you wish to start any
business what type of company you would choose to incorporate. Explain the reason behind
your decision.
arrow_forward
REA Associations
Bentley Restorations Company restores and sells top-end classic and antique automobiles. Most of its customers are private collectors, but some are investors who buy multiple cars and hold them for resale. Bentley extends no credit terms. All sales are for cash.
1. Which of the relationships in the diagram models the entity associations for Bentley Restorations?
2. Explain your answer:
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(Question on Business Ownership ) What are the responsibilities and obligations of partners in a partnership form of business ?
arrow_forward
QUESTION 9
If an investor holds 50% or more of the investee's outstanding common stock, then the investor is referred to as the parent and the investee is called the subsidiary.
True
False
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Q1. Discuss the restriction imposed by the Companies Act 2016 on a member’s right tovote. In addition, explain the voting by a show of hands and voting by poll under each circumstance during a company general meeting.
arrow_forward
Q. No. 3: What is the procedure for incorporation of a company?
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3 differences between a company and a partnership
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C. Identify the Form of Business Organization being described. (a
1. Form of business organization with unlimited lives and the death or withdrawal of an
owner does not affect its existence.
2. The establishment is generally an easy and inexpensive process.
_3. The most important characteristic of this form of organization is always limited liability.
4. It involves a contractual agreement between all the partners that set the terms and
conditions of their business relationship, including the distribution of ownership, responsibilities,
and profits and losses.
5. This form of business organization generally enjoys fewer options to raise capital.
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QUESTION 10
In order for a corporation to open a cash account, it would need to send a brokerage firm a copy of a:
O Corporate resolution
O Corporate charter
Both Corporate charter & Corporate resolution
O Neither Corporate charter nor Corporate resolution
QUESTION 8
In a limited discretionary account, a Registered Rep may do any of the following EXCEPT:
Obtain written approval from a principal for each trade executed
Execute trades without the verbal approval of the customer
Withdraw securities or cash
Buy securities that are suitable
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What it is talking about?
1. Incorporation of a company
Ø Minimum number of shareholders and directorsEvery company requires at least one member, a director and a company secretary. Have at least one director who is a natural person (s457)
Ø Effects of incorporation
The company is capable of exercising all the functions of an incorporated company (e.g.
separate legal entity, artificial person like entering into contracts in its own name, or
taking legal action against other), and has perpetual succession.
On and after the date of incorporation, the founder members, and any other persons
who may from time to time become the company’s members, are liable to contribute to the assets of the company in the event of the company being wound up as is mentioned in Cap. 32.èLimited Liabilities
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1. Briefly discuss principal–agent problems as related to a corporation.
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Question A .
Janet was an attorney hired to draft the initial paperwork for incorporation of Alpakaz, Inc. In her first meeting with the incorporators, they were unsure about whether they should allow for cumulative voting or only permit straight voting by shareholders. In a company with 100 shareholders and 10,000 shares, how many shares are required to have a controlling position (elect at least 5 of the 9 directors) under cumulative voting?
a. 10,000
b. 1,001
c. 5,001
Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line
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24. When determining whether a partnership exists, which of the following factors would a court consider?
Group of answer choices
A. Whether the organization intended to make a profit
B. Were the participants involved in the management of the business?
C. Did the participants have an agreement?
D. All of the above
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I need answer typing clear urjent no chatgpt plz
pls explain all
Contracts entered by a public company after obtaining the certificate of incorporation, but before getting the certificate to commence business are termed as: a. Preliminary agreements b. Contracts at arm's length c. Pre-incorporation contracts d. Provisional contracts
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The firm X has sales of $420,000, a tax rate of 32%, the payout ratio of 35%, and a net
profit margin of 6%. What is the addition to retained earnings?
а. $8,316
b. $16,380
c. $12,837
d. $10,503
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Direction: Write TRUE if the statement is true and FALSE if the statement is false.
_1. A written partnership contract is required to be prepared whenever a partnership
is formed.
_2. All partnerships are subject to income tax.
3. A partner's contribution in the form of industry or service is recorded by debiting
the account "Industry".
_4. In the partnership books, there are as many capital and drawing accounts as
there are partners.
_5.A partners contribution in the form of noncash assets should be recorded at its fair
market value in the absence of an agreed value.
_6.A partnership is much easier and less expensive to organize than corporation.
7. A newly organized partnership should always open a new set of books .
_8. All partnerships have at least one general partner.
9. Each partner generally has the authority to enter into contracts which are binding
upon the partnership
10. The property invested in a partnership by a partner becomes the property of the
partnership.…
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Activity 3. Examples of Business Organizations based on Ownership
DIRECTION: Using the internet, make aresearch about real names of business
organizations located in the Philippines and supply the necessary information
below (use extra sheet if necessary):
Form of Business
Name of Business
Name of Owner(s)
Organization
Sole
Proprietorship
Partnership
Corporation
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O A duty
Question 43
Which of the following is true about mergers?
Shareholders of the acquired corporation must be paid a premium on their shares
The shareholders of the surviving corporation must approve the merger.
The MBCA does not recognize mergers done solely for the profit motive.
A merger may be invalidated if it freezes out minority shareholders.
arrow_forward
One of the ways in which a company is accountable to shareholders is throughthe reports the board of directors present at the Annual General Meeting.Shareholders are able to evaluate the company’s performance and if needs be,take action against the company and/or specific directors.
Q.3.3.1 Explain what matters must be discussed at an AGM in terms of theCompanies Act.
Q.3.3.2 Your students enquire whether there are any consequences for theboard or particular directors if the financial report raises a numberof questions around authorisation, wasted expenditure, grossmismanagement of the company’s affairs, and avoidable financiallosses. The students ask whether the shareholders, if they areunhappy with a particular director’s conduct, may approach thecourt to have the director declared “unfit” for appointment as adirector.Explain the process to declare a director delinquent or to placeher/him under probation .Provide the following in your answer:• Indicate whether or not a shareholder…
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7-To avoid conflicts between partners and to ensure that all the partners are responsible and benefits to the business are well understood, the partnership should have:
A partnership agreement
A board of directors
A legal department
Regular meetings
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June 7
Issued 4,000 shares of $3 par value common stock for cash of $12 per share
Aug. 16
Issued 400 shares of no-par preferred stock for $25,000 cash
Sept. 19
Received equipment with a market value of $75,000 in exchange for 5,000 shares of the $3 par value common stock
Hi, I'm not totally positive on how to journal these entries.
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Question 10
I. The dissolution of the partnership discharges the existing liability of any partner.
II. The individual property of a deceased partner shall be liable for all obligations of the partnership incurred while he was a partner, but subject to the prior payment of his separate debts.
a. Only I is correct
b. Only II is correct
c. Both are true
d. Both are false
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Question 3Identify and explain any five circumstances under which a partnership may be terminated.
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