Accounting Documentation and Contra Accounts Quiz

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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?

Credited to an accrued liabilities account Signup and view all the answers

When is accrued income recorded in accounting?

When it is earned, following the accrual accounting method Signup and view all the answers

Which of the following accounts represent tangible assets?

"Real accounts" Signup and view all the answers

What is the main purpose of documentation in accounting?

To provide a financial record of events or activities Signup and view all the answers

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

Contra Account Signup and view all the answers

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

Increases the book value of a liability account Signup and view all the answers

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

Cash sales to customers Signup and view all the answers

What does a capitalist partner contribute to the company?

Money or property to the capital Signup and view all the answers

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

It has obtained a certificate of incorporation from the state Signup and view all the answers

What is the purpose of a special journal?

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

What does a partnership capital account contain?

All transactions between partners and the partnership firm Signup and view all the answers

How is beginning partner's capital balance calculated?

Through the value of the partner's contribution to the partnership Signup and view all the answers

What does income summary account do?

Aggregates all income accounts except for dividend expenses Signup and view all the answers

What is interest on partners' capital balance?

A distribution of profits to partners Signup and view all the answers

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

It includes a column for each partner and a total column for the company Signup and view all the answers