Question: Boswell and Johnson form a partnership on

> How are safe capital balances computed when preliminary distributions of cash are to be made in apartnership liquidation?

> What is the purpose of a statement of liquidation? What information does it convey to its readers?

> After liquidating all property and paying partnership obligations, what is the basis for allocatingremaining cash among the partners?

> Why are liquidation gains and losses usually recorded as direct adjustments to the partners’ capitalaccounts?

> Erin Carson, Megyn Delaney, and Caitlin Erikson form a partnership as a first step in creating a business.Carson invests most of the capital but does not plan to be actively involved in the day-to-dayoperations. Delaney has had some experience and is exp

> Go to the Buckeye Partners, L.P. website where forms filed with the SEC are available through the InvestorCenter. Find Buckeye’s recent annual financial statements in their 10–K report for the partnership. Required Review Buckeye’s financial statements

> The Ace and Deuce partnership has been created to operate a law firm. The partners are attempting to devise a fair system to allocate profits and losses. Ace plans to work more billable hours each year than Deuce. However, Deuce has more experience and c

> 1. Kelly Fernandez and Michael Webster have decided to create a business. They have financing available and have a well-developed business plan. However, they have not yet decided which type of legal business structure would be best for them. Required W

> A company is being created and the owners are trying to decide whether to form a general partnership,a limited liability partnership, or a limited liability company. What are the advantages anddisadvantages of each of these legal forms?

> Which of the following is not a reason for the popularity of partnerships as a legal form forbusinesses? a. Partnerships may be formed merely by an oral agreement. b. Partnerships can more easily generate significant amounts of capital. c. Partnerships a

> Which of the following best describes the articles of partnership agreement? a. The purpose of the partnership and partners’ rights and responsibilities are required elements ofthe articles of partnership. b. The articles of partnership are a legal coven

> How does partnership accounting differ from corporate accounting? a. The matching principle is not considered appropriate for partnership accounting. b. Revenues are recognized at a different time by a partnership than is appropriate for a corporation. c

> If instead the partnership uses the bonus method, what is the balance of Manning’s capital accountafter Clark withdraws? a. $100,000 b. $126,250 c. $130,000 d. $133,750 At year-end, the Circle City partnership has the following capital balances: Manning

> The payment made to Clark beyond his capital account was for Clark’s share of previously unrecognizedgoodwill. After recognizing partnership goodwill, what is Manning’s capital balance afterClark withdraws? a. $133,000 b. $137,500 c. $140,000 d. $145,000

> A partnership has the following capital balances: Allen, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000 Burns, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 Costello, Capital . . . . . . . . . . . . .

> A partnership begins its first year of operations with the following capital balances: Winston, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . $110,000 Durham, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 Salem, Cap

> A partnership begins its first year with the following capital balances: Alfred, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000 Bernard, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 Collins, Capital . .

> The capital balance for Messalina is $210,000 and for Romulus is $140,000. These two partnersshare profits and losses 60 percent (Messalina) and 40 percent (Romulus). Claudius invests $100,000in cash in the partnership for a 20 percent ownership. The bon

> Bishop has a capital balance of $120,000 in a local partnership, and Cotton has a $90,000 balance.These two partners share profits and losses by a ratio of 60 percent to Bishop and 40 percent toCotton. Lovett invests $60,000 in cash in the partnership fo

> Describe the differences between a Subchapter S corporation and a Subchapter C corporation.

> The capital balance for Maxwell is $110,000 and for Russell is $40,000. These two partners shareprofits and losses 70 percent (Maxwell) and 30 percent (Russell). Evan invests $50,000 in cashinto the partnership for a 30 percent ownership. The bonus metho

> A partnership has the following capital balances: Comprix (35% of gains and losses) . . . . . . . . . . $150,000 Heflin (40%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Kaplan (25%) . . . . . . . . . . . . . . . . . . . . . . . .

> A partnership has the following capital balances: Henry (50% of gains and losses) . . . . . . . . . . . . $ 135,000 Thomas (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,000 Catherine (20%) . . . . . . . . . . . . . . . . . . . . . .

> Pat, Jean Lou, and Diane are partners with capital balances of $50,000, $30,000, and $20,000, respectively.These three partners share profits and losses equally. For an investment of $50,000 cash (paid tothe business), MaryAnn will be admitted as a partn

> The Distance Plus partnership has the following capital balances at the beginning of the current year: Tiger (50% of profits and losses) . . . . . . . . . . . $85,000 Phil (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 Ernie (

> Lear is to become a partner in the WS partnership by paying $80,000 in cash to the business. Atpresent, the capital balance for Hamlet is $70,000 and for MacBeth is $40,000. Hamlet and MacBeth share profits on a 7:3 basis. Lear is acquiring 40 percent of

> Darrow invests $250,000 in cash for a 30 percent ownership interest. The money goes to the business.No goodwill or other revaluation is to be recorded. After the transaction, what is Jennings’scapital balance? a. $160,000 b. $168,000 c. $170,200 d. $171,

> Darrow invests $270,000 in cash for a 30 percent ownership interest. The money goes to the originalpartners. Goodwill is to be recorded. How much goodwill should be recognized, and what isDarrow’s beginning capital balance? a. $410,000 and $270,000 b. $1

> Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his own businessand convinces Rob O’Donnell, a local merchant, to contribute the capital to form a partnership.On January 1, 2016, O’Donnell invests a building worth $5

> A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accountsas of January 1, 2018: According to the articles of partnership, Athos is to receive an allocation of 50 percent of allpartnership profits and losses wh

> What information do the capital accounts found in partnership accounting convey?

> The law firm of Hackney and Walton has decided to start supporting a worthy charity. The partners want to select an organization that makes good use of its resources to meet its stated mission. Go to the website www.give.org. Click on “For Donors.” Scrol

> Go to the website https://www.independentsector.org/governance_ethics_resource_center and download the organization’s 33 Principles. Read the explanation for the six principles under the heading of Strong Financial Oversight. Write a short report on the

> Go to the website of a private not-for-profit college or university such as Duke (www.duke.edu), Vanderbilt (www.vanderbilt.edu), Notre Dame (www.nd.edu), or Georgetown (www.georgetown.edu) and locate the latest set of financial statements for the instit

> Go to the website of a private voluntary health and welfare entity such as United Cerebral Palsy (www.ucp.org), the American Heart Association (www.americanheart.org), or the American Cancer Society (www.cancer.org). Find the charity’s latest financial s

> Go to the following URL for Georgetown University: http://financialaffairs.georgetown.edu/gta/statements.html. Click on the link for the most recent set of financial statements for the university. Look through those statements. Then, click on the link fo

> Go to the website www.guidestar.org and enter the name of a private not-for-profit organization. Considerable information will be available about the entity. By registering, it should be possible to find a link to the Form 990 (Return of Organization Exe

> Go to www.charitynavigator.org and click on “Methodology” near the top of the page. Read the information that is provided and write a short memo to explain how this organization rates charities.

> Gray, Stone, and Lawson open an accounting practice on January 1, 2016, in San Diego, California,to be operated as a partnership. Gray and Stone will serve as the senior partners because oftheir years of experience. To establish the business, Gray, Stone

> A voluntary health and welfare entity produces a statement of functional expenses. What is the purpose of this statement? a. Separates current unrestricted and current restricted funds. b. Separates program service expenses from supporting service expens

> George H. Ruth takes a leave of absence from his job to work full time for a voluntary health and welfare entity for six months. Ruth fills the position of finance director, a position that normally pays $88,000 per year. Ruth accepts no remuneration for

> A voluntary health and welfare entity receives $32,000 in cash from solicitations made in the local community. The charity receives an additional $1,500 from members in payment of annual dues. Members are assumed to receive benefits approximately equal i

> A voluntary health and welfare entity sends a mailing to all of its members including those who have donated in the past and others who have never donated. The mailing, which had a total cost of $22,000, asks for monetary contributions to help achieve th

> A voluntary health and welfare entity has the following expenditures: Research to cure disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000 Fund-raising costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> The following questions concern the accounting principles and procedures applicable to a private not-for-profit entity. Write answers to each question. a. What is the difference between revenue and public support? b. What is the significance of the state

> A private not-for-profit entity is working to create a cure for a deadly disease. The charity starts the year with cash of $700,000. Of this amount, unrestricted net assets total $400,000, temporarily restricted net assets total $200,000, and permanently

> Wilson Center is a private not-for-profit voluntary health and welfare entity. During 2017, it received unrestricted pledges of $600,000, 60 percent of which were payable in 2017, with the remainder payable in 2018 (for use in 2018). Officials estimate t

> Under Lennon Hospital’s rate structure, it earned patient service revenue of $9 million for the year ended December 31, 2017. However, Lennon did not expect to collect this entire amount because it deemed $1.4 million to be charity care and estimated con

> The following questions concern the appropriate accounting for a private not-for-profit health care entity. Write complete answers for each question. a. What is a third-party payor, and how have third-party payors affected the development of accounting p

> During the year ended December 31, 2017, Anderson Hospital (operated as a private not-for-profit entity) received and incurred the following: Fair value of donated medicines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

> Assume that Charity A and Charity B are alike in every way except as described below. Assume that each of these questions is independent from all other questions. a. Each charity suffers significant damage from a hail storm this year. Each hires a person

> On December 25 of Year 2, the entity above received a $40,000 cash gift. The donor specified that the entity hold the money for four months. If, at the end of four months, the donor still wished to do so, the money was to be given to the local Kidney Fun

> On January 1, Year 2, several supporters of the entity above spent their own money to construct a garage for its vehicles that is worth $70,000. It should last for 10 years and will have no salvage value although no time restriction was assumed. The enti

> Assume that the entity is a charity that charges its “members” monthly dues totaling $100,000 per year (in both Year 1 and Year 2). However, the members get nothing for their dues. The organization has consistently recorded this amount as an increase in

> At the beginning of Year 1, the entity above received $50,000 in cash as a gift with the stipulation that the money be used to buy a bus. The accountant made the appropriate entry at that time. On the first day of Year 2, the entity spent the $50,000 for

> During Year 1, the entity above received a gift of $80,000. The donor specified that this money be invested in government bonds with the interest to be used to pay the salaries of the entity’s employees. The gift was recorded as an increase in permanentl

> Assume that this entity is a private college that charged students $600,000 but then provided $140,000 in financial aid. The $600,000 was reported as a revenue; the $140,000 was shown as an expense. Both amounts were included in the unrestricted net asse

> Help & Save is a private not-for-profit entity that operates in Kansas. Swim For Safety is a private not-for-profit entity that operates in Missouri. The leaders of these two organizations have decided to combine forces on January 1, 2017, in order t

> You are preparing a statement of activities for the University of Richland, a private not-for-profit entity. The following questions should be viewed as independent of each other. Part 1 During the current year, a donor gives $400,000 in cash to the scho

> Following is the current balance sheet for a local partnership of doctors: The following questions represent independent situations: a. E is going to invest enough money in this partnership to receive a 25 percent interest. No goodwillor bonus is to be

> The College of Central North (a private school) has the following events and transactions: a. On January 1, Year 1, the board of trustees voted to restrict $1.9 million of previously unrestrictedinvestments to construct a new football stadium at some fut

> Officials for the City of Artichoke, West Virginia, have recently formed a transit authority to createa public transportation system for the community. These same officials are now preparing the city’sCAFR for the most recent year. The transit authority

> The City of Abernethy has three large bridges built in the later part of the 1980s that were not capitalizedat the time. In creating government-wide financial statements, the city’s accountant is interested inreceiving suggestions as to how to determine

> Prior to the creation of government-wide financial statements, the City of Loveland did not report thecost of its infrastructure assets. Now city officials are attempting to determine reported values for majorinfrastructure assets that were obtained prio

> The City of Larissa recently opened a solid waste landfill to serve the area’s citizens and businesses.The city’s accountant has gone to city officials for guidance as to whether to record the landfill withinthe general fund or as a separate enterprise f

> Go to www.phoenix.gov and do a search for the term “CAFR.” Those results should lead to the latestCAFR for the City of Phoenix, Arizona. The financial statements for a state and local government mustinclude a Management’s Discussion and Analysis of the i

> Read the following journal article: “25 Years of State and Local Governmental Financial Reporting—An Accounting Standards Perspective,” The Government Accountants Journal, Fall 1992. Or, as an alternative possibility, do a search of books in the college

> If this landfill is judged to be a governmental fund, what liability will be reported at the end of the second year on fund financial statements? a. $–0– b. $110,000 c. $190,000 d. $200,000 A city starts a solid waste landfill that it expects to fill to

> Which of the following is true for the Year 2 government-wide financial statements? a. Both expense and liability will be zero. b. Both expense and liability will be $110,000. c. Expense will be $110,000 and liability will be $190,000. d. Expense will be

> A city creates a solid waste landfill. It assesses a charge to every person or company that uses the landfill based on the amount of materials contributed. In which of the following will the landfill probably be recorded? a. General fund. b. Special reve

> In the early part of 2018, the partners of Hugh, Jacobs, and Thomas sought assistance from a localaccountant. They had begun a new business in 2017 but had never used an accountant’s services. Hugh and Jacobs began the partnership by contributing $150,00

> A city provides a local business with a tax abatement so that real estate taxes will be avoided for the next five years. In exchange, the business agrees to construct a new facility to hire 50 or more individuals. How is this reported? a. Only on the gov

> A city agrees to allow the Jones Company to operate within its geographical boundaries without having to pay real estate taxes for the following 10 years. In exchange, Jones agrees to continue employing at least 120 people at all times. For this tax abat

> Which of the following has the least amount of official authority for the financial reporting of state and local governments? a. GASB Technical Bulletins. b. GASB Statements of Governmental Accounting Standards. c. GASB Concepts Statements. d. GASB Imple

> Which of the following is most likely to be true about the financial reporting of a public college or university? a. It resembles the financial reporting of private colleges and universities. b. It will continue to use its own unique style of financial r

> Which of the following is true about the statement of cash flows for the proprietary funds of a state or local government? a. The indirect method of reporting cash flows from operating activities is allowed although the direct method is recommended. b. T

> Government-wide financial statements make a distinction between program revenues and general revenues. How is that difference shown? a. Program revenues are offset against the expenses of a specific function; general revenues are assigned to governmental

> A government reports that its public safety function had expenses of $900,000 last year and program revenues of $200,000 so that its net expenses were $700,000. On which financial statement is this information presented? a. Statement of activities. b. St

> The City of Bacon is located in the County of Pork. The city has a school system and reports buildings at a net $3.6 million although they are actually worth $4.2 million. The county has another school system and reports buildings at a net $5.2 million a

> An employment agency for individuals with disabilities works closely with the City of Hanover. The employment agency is legally separate from the city but still depends on it for financial support, which leads to a potential financial burden for the city

> An accountant is trying to determine whether the school system of the City of Abraham is fiscally independent. Which of the following is not a requirement for being deemed fiscally independent? a. Holding property in its own name. b. Issuing bonded debt

> The partnership of Matteson, Richton, and O’Toole has existed for a number of years. At the presenttime the partners have the following capital balances and profit and loss sharing percentages: O’Toole elects to with

> Which of the following is not necessary for a special purpose local government to be viewed as a primary government for reporting purposes? a. It must have a separately elected governing body. b. It must have specifically defined geographic boundaries. c

> Which of the following is true about the management’s discussion and analysis (MD&A)? a. It is an optional addition to the comprehensive annual financial report, but the GASB encourages its inclusion. b. It adds a verbal explanation for the numbers and t

> Which of the following is true about use of the modified approach? a. It can be applied to all capital assets of a state or local government. b. It is used to adjust depreciation expense either up or down based on conditions for the period. c. It is requ

> A city builds sidewalks throughout its various neighborhoods at a cost of $2.1 million. Which of the following is not true? a. Because the sidewalks qualify as infrastructure, the asset is viewed in the same way as land so that no depreciation is recorde

> Assume in Problem 12 that the city reports the work as a capital asset. Which of the following is true? a. Depreciation is not recorded because the city has no cost. b. Depreciation is not required if the asset is viewed as being inexhaustible. c. Deprec

> In Problem 12, which of the following statements is true about reporting a revenue in connection with this gift? Problem 12 The City of Wilson receives a large sculpture valued at $240,000 as a gift to be placed in front ofthe municipal building. Which o

> The City of Wilson receives a large sculpture valued at $240,000 as a gift to be placed in front of the municipal building. Which of the following is true for reporting the gift within the government-wide financial statements? a. A capital asset of $240,

> The City of Nomanchester has a defined benefit pension plan for a number of its employees. A pension trust fund has been set up that currently has a net position of $32.7 million because quite a number of investments are being held. An actuary estimates

> The City of Francois, Texas, has begun the process of producing its current comprehensive annualfinancial report (CAFR). Several organizations that operate within the city are related in some wayto the primary government. The city’s accountant is attempt

> A city government adds street lights within its boundaries at a total cost of $300,000. The lights should burn for at least 10 years but can last significantly longer if maintained properly. The city sets up a system to monitor these lights with the goal

> The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $230,000 Adams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,0

> On January 1, 2017, the City of Graf pays $60,000 for a work of art to display in the local library. The city will take appropriate measures to protect and preserve the piece. However, if the work is ever sold, the money received will go into unrestricte

> On January 1, 2017, a rich citizen of the Town of Ristoni donates a painting valued at $300,000 to be displayed to the public in a government building. Although this painting meets the three criteria to qualify as an artwork, town officials choose to rec

> The City of Columbus has approximately 2,000 employees. For the past three decades, the city has provided its employees with a defined benefit pension plan. The plan contract calls for specific payment amounts to be made to each retiree based on a set fo

> The City of Lawrence opens a solid waste landfill in 2017 that is at 54 percent of capacity on December 31, 2017. The city had initially anticipated closure costs of $2 million but later that year decided that closure costs would actually be $2.4 million

> On January 1, 2017, the City of Hastings created a solid waste landfill that it expects to reach capacity gradually over the next 20 years. If the landfill were to be closed at the current time, closure costs would be approximately $1.2 million plus an a

> For component units, what is the difference in discrete presentation and blending? a. A blended component unit is shown to the left of the statements; a discretely presented component unit is shown to the right. b. A blended component unit is shown at th

> The City of Huble has a defined benefit pension plan for a number of its employees. Which of the following is not included immediately in the determination of pension expense that this government should recognize in its government-wide financial statemen