Accounting Documentation and Contra Accounts Quiz
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Questions and Answers

What is a limited partnership (LP)?

  • A business entity with partners having limited liability
  • A business entity with no liability for any partners
  • A business entity with partners having unlimited personal liability (correct)
  • A business entity with only general partners

    • What is the role of a managing partner in a business?

  • Maintaining negative client relationships
  • Not involved in new business acquisitions
  • Only responsible for day-to-day activities
  • Guiding strategic direction and managing day-to-day activities (correct)

    • What is the distinguishing feature of a memorandum entry in accounting?

  • Entered only in the general ledger account
  • Contains complete debit and credit amounts
  • A short message without debit and credit amounts (correct)
  • An entry made only in the general journal

    • How is accrued expense recognized in accounting?

    <p>Credited to an accrued liabilities account</p> Signup and view all the answers

    When is accrued income recorded in accounting?

    <p>When it is earned, following the accrual accounting method</p> Signup and view all the answers

    Which of the following accounts represent tangible assets?

    <p>&quot;Real accounts&quot;</p> Signup and view all the answers

    What is the main purpose of documentation in accounting?

    <p>To provide a financial record of events or activities</p> Signup and view all the answers

    Which type of account carries a balance that offsets the normal account?

    <p>Contra Account</p> Signup and view all the answers

    What is the function of an adjunct account in financial reporting?

    <p>Increases the book value of a liability account</p> Signup and view all the answers

    Which type of business activity results in a direct effect on the financial status and financial statements?

    <p>Cash sales to customers</p> Signup and view all the answers

    What does a capitalist partner contribute to the company?

    <p>Money or property to the capital</p> Signup and view all the answers

    What distinguishes a de jure corporation from other types of partnership?

    <p>It has obtained a certificate of incorporation from the state</p> Signup and view all the answers

    What is the purpose of a special journal?

    <p>To record transactions of a specific type, such as sales or purchases</p> Signup and view all the answers

    What does a partnership capital account contain?

    <p>All transactions between partners and the partnership firm</p> Signup and view all the answers

    How is beginning partner's capital balance calculated?

    <p>Through the value of the partner's contribution to the partnership</p> Signup and view all the answers

    What does income summary account do?

    <p>Aggregates all income accounts except for dividend expenses</p> Signup and view all the answers

    What is interest on partners' capital balance?

    <p>A distribution of profits to partners</p> Signup and view all the answers

    How does the statement of changes in partners' capital differ from the statement of owner's equity?

    <p>It includes a column for each partner and a total column for the company</p> Signup and view all the answers

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