Business Types
Owned by one person
Proprietorship
assets contributed are recorded at what value
Market Value
If a partnership agreement says nothing about dividing income or loss, it is divided...
Equally
Does buying from another partner affect assets
The act of selling an asset is called
Realization
Income is passed through to owners
Partnership/LLC
When a partner contributes equipment with an agreed value of $15,000 to a new partnership, the partnership records this by doing what to the equipment account?
debiting the equipment account for $15,000
At the end of the accounting period, each partner's share of income is recorded by closing revenue and expense accounts into which account?
Income summary account
What is it called when you receive an extra payment when you join a partnership
Bonus
selling noncash assets
In what business type do the owners have limited liability
LLC
Assets contributed by a partner are recorded at this value
Current value/fair market value
If allowances exceed net income, the difference is treated as what
Net Loss
A new partner is admitted by purchasing an ownership interest directly from an existing partner. How does this transaction affect the partnership's total assets and total owner's equity?
No change to total assets and no change to total owner's equity
Who gets paid before partners
Creditors
In this business types, owners are personally liable for all debts and legal claims
Partnership/Proprietorship
If no agreement exists, profits and losses are divided this way
equally among partners
Stone and Mills have salary allowances of $50,000 and $30,000. The remaining income is split equally. If the total net income is $100,000, how much does Mills receive?
$40,000
When the partnership pays a withdrawing partner, but cash is not immediately available, what type of account may be created.
Accounts payable to the withdrawing partner
During liquidation, noncash assets with book value of $90,000 are sold for $75,000. The $15,000 difference is recorded as what, when it is allocated to partners?
Loss of realization
This characteristic allows each partner to legally bind the business in contracts
Mutual Agency
Before admitting a new partner, assets should be to this
Current Market Value
Perez gets a $4,000 monthly salary allowances and Cordova gets $5,000 monthly. Net income of the partnership is $136,000, and the remainder is split equally. How much total income does Perez Receive?
$67,500
Before a partner is admitted or withdraws, asset values should be update, and any increase or decrease is allocated to partners using what basis?
Income-sharing ratio
If a partner has a capital deficiency and cannot pay it, the unpaid amount is distributed to the remaining partners based on what specific ratio
income sharing/profit and loss ratio