Amazon.com with Google and microsoft

Present areas where Amazon.com is competing with Google™ and Microsoft®, and whether competition is a wise strategy.

Agency Problem

 

The separation of ownership and control is often a subject of concern for financial managers. Management decisions are sometimes not acceptable to shareholders. This, in turn, raises conflicts. These conflicts are called agency problems.
For example, a chief executive officer (CEO) may spend a considerable amount of the organization's capital on artwork to decorate the office premises. The shareholders may raise the concern that their investment has been inappropriately invested as decorating the office premises will not yield any financial benefits.

Provide at least two more examples of agency problems. Why does such a conflict develop? Are such conflicts more likely to occur in smaller or larger organizations? Why? What can be done to decrease the likelihood of these conflicts?

advantages and disadvantages of global versus domestic sourcing

Prepare a summary of no less than 1,000 words, accompanied by a flowchart that describes or outlines the steps that occur in a typical sourcing process for a global manufacturing firm. Provide a brief evaluation of the steps as illustrated in your flowchart. Address the challenges and opportunities for insourcing versus outsourcing parts, as well as discuss the advantages and disadvantages of global versus domestic sourcing. Include the following:

- Translating corporate objectives into procurement goals

· - Establishing business unit requirement processes

· - Conducting supply market research

· - Setting material management goals

· - Strategic execution

· - Reciprocity

 

AFN, capital budgeting and capital structure

What is the purpose of "Additional Funds Needed (AFN) equation?

Explain the purpose of Operating and Financial Leverage.

 

Provide a brief explanation on the purpose of Capital Budgeting and why this concept is important to the financial health of a corporation

Provide a brief explanation on the purpose of Capital Structure and Cost of Capital, and how these concepts relate to the financial health of a corporation

Accounting MCQ 24

1 Question: Adjusting entries can be classified as
 
A    Postponements and advances
 
B    Accruals and deferrals
 
C    Deferrals and postponements
 
D    Accruals and advances
   
   
2 Question: Daly Investments purchased an 18-month insurance policy on May 31, 2010 for $3,600. The December 31, 2010 balance sheet would report Prepaid Insurance of
 
A    $0 because Prepaid Insurance is reported on the Income Statement
 
B    $1,400
 
C    $2,200
 
D    $3,600

3 Question: Daly Investments purchased an 18-month insurance policy on May 31, 2010 for $3,600. The December 31, 2010 balance sheet would report Prepaid Insurance of
 
A    $0 because Prepaid Insurance is reported on the Income Statement
 
B    $1,400
 
C    $2,200
 
D    $3,600

4 Question: Southwestern City College sold season tickets for the 2010 football season for $160,000. A total of 8 games will be played during September, October and November. Assuming all the games are played, the Unearned Revenue balance that will be reported on the December 31 balance sheet will be
 
A    $0
 
B    $60,000
 
C    $100,000
 
D    $160,000

5 Question: The operating cycle of a company is the average time that is required to go from cash to
 
A    Sales in producing revenues
 
B    Cash in producing revenues
 
C    Inventory in producing revenues
 
D    Accounts receivable in producing revenues

6 Question: The income statement for the month of June, 2010 of Ramirez Enterprises contains the following information:
 
The entry to close Income Summary to Ramirez, Capital includes
 
A    A debit to Revenue for $7,000
 
B    Credits to Expenses totaling $3,600
 
C    A credit to Income Summary for $3,400
 
D    A credit to Ramirez, Capital for $3,400

 7 Question: Joyce's Gifts signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $50,000 with annual interest of 12%. What is the adjusting entry to be made on December 31 for the interest expense accrued to that date, if no entries have been made previously for the interest? A
 
A     
 
B     
 
C     
 
D     
   
   
8 Question: All of the following statements about the post-closing trial balance are correct except it
 
A    Shows that the accounting equation is in balance
 
B    Provides evidence that the journalizing and posting of closing entries have been properly completed
 
C    Contains only permanent accounts
 
D    Proves that all transactions have been recorded

9 Question: The following items are taken from the financial statements of Dinkel Company for the year ending December 31, 2010:
 
What is the company's net income for the year ending December 31, 2010?
 
A    $133,000
 
B    $42,000
 
C    $28,000
 
D    $12,000

10 Question: O.K.C. Company collected $8,400 in May of 2010 for four months of service which would take place from October of 2010 through January of 2011. The revenue reported from this transaction during 2010 would be
 
A    0
 
B    $6,300
 
C    $8,400
 
D    $2,010

11 Question: The following information is for Benton Office Supplies:
 
The total dollar amount of assets to be classified as property, plant, and equipment is
 
A    $320,000
 
B    $170,000
 
C    $245,000
 
D    $190,000
   
   
12 Question: Henry-K Company purchased a computer system for $3,600 on January 1, 2010. The company expects to use the computer system for 3 years. It has no salvage value. Monthly depreciation expense on the asset is
 
A    $0
 
B    $100
 
C    $1,200
 
D    $3,600

13 Question: What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $15,500, and unexpired amounts per analysis of policies of $4,500?
 
A    Debit Insurance Expense, $4,500; Credit Prepaid Insurance, $4,500
 
B    Debit Insurance Expense, $15,500; Credit Prepaid Insurance, $15,500
 
C    Debit Prepaid Insurance, $11,000; Credit Insurance Expense, $11,000
 
D    Debit Insurance Expense, $11,000; Credit Prepaid Insurance, $11,000
   
   
14 Question: The following items are taken from the financial statements of Dinkel Company for the year ending December 31, 2010:
 
The sub-classifications for assets on the company's classified balance sheet would include all of the following except
 
A    Current Assets
 
B    Property, Plant, and Equipment
 
C    Intangible Assets
 
D    Long-term Assets

15 Question: Can financial statements be prepared directly from the adjusted trial balance?
 
A    They cannot. The general ledger must be used
 
B    Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts
 
C    No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose
 
D    They can because that is the only reason that an adjusted trial balance is prepared

16 Question: The following information is for Acme Auto Supplies:
 
The total dollar amount of assets to be classified as current assets is
 
A    220,000
 
B    $150,000
 
C    $300,000
 
D    $180,000


17 Question: A post-closing trial balance is prepared
 
A    After closing entries have been journalized and posted
 
B    Before closing entries have been journalized and posted
 
C    After closing entries have been journalized but before the entries are posted
 
D    Before closing entries have been journalized but after the entries are posted


18 Question: The following information is for Acme Auto Supplies:
 
The total dollar amount of assets to be classified as investments is
 
A    $0
 
B    $150,000
 
C    $80,000
 
D    $180,000
   
   
19 Question: The following selected account balances appear on the December 31, 2010 balance sheet of Chen Co.

Land (location of the corporation's office building)     $150,000
Land (held for future use)     225,000
Corporate Office Building     900,000
Inventory     300,000
Equipment     675,000
Office Furniture     150,000
Accumulated Depreciation     450,000


What is the total amount of property, plant, and equipment that will be reported on the balance sheet?

 
A    $1,950,000
 
B    $1,650,000
 
C    $2,400,000
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D    $1,425,000

20 Question: A post-closing trial balance should be prepared
 
A    Before closing entries are posted to the ledger accounts
 
B    After closing entries are posted to the ledger accounts
 
C    Before adjusting entries are posted to the ledger accounts
 
D    Only if an error in the accounts is detected


                   
21 Question: The balance in the Prepaid Rent account before adjustment at the end of the year is $15,000, which represents three months' rent paid on December 1. The adjusting entry required on December 31 is to
 
A    Debit Rent Expense, $5,000; credit Prepaid Rent, $5,000
 
B    Debit Rent Expense, $10,000; credit Prepaid Rent $10,000
 
C    Debit Prepaid Rent, $5,000; credit Rent Expense, $5,000
 
D    Debit Prepaid Rent, $10,000; credit Rent Expense, $10,000

22 Question: Closing entries
 
A    Are prepared before the financial statements
 
B    Reduce the number of permanent accounts
 
C    Cause the revenue and expense accounts to have zero balances
 
D    Summarize the activity in every account

23 uestion: On January 1, 2010, Masters and Masters Company purchased equipment for $30,000. The company is depreciating the equipment at the rate of $700 per month. The book value of the equipment at December 31, 2010 is
 
A    $0
 
B    $8,400
 
C    $21,600
 
D    $30,000


24 Question: James Corporation purchased a one-year insurance policy in January 2010 for $48,000. The insurance policy is in effect from May 2010 through April 2011. If the company neglects to make the proper year-end adjustment for the expired insurance

 


  A Net income and assets will be understated by $32,000
  B Net income and assets will be overstated by $32,000
  C Net income and assets will be understated by $16,000
  D Net income and assets will be overstated by $16,000

Accounting mcq 20

Baines Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. Compute the number of units of Product A Baines must sell to break even.
5,580.
9,300.
5,080.
3,100.
6,200.

2.value:
1.00 points
At Flint Company's break-even point of 9,000 units, fixed costs are $180,000 and variable costs are $540,000 in total. The unit sales price is:
$100.
$80.
$60.
$40.
$20.

3.value:
1.00 points
Winthrop Manufacturing produces a product that sells for $50.00. Fixed costs are $260,000 and variable costs are $24.00 per unit. Winthrop can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. Compute break-even point in dollars with the purchase of the new machine.
$460,000.
$500,000.
$521,923.
$480,000.
$440,678.

4.value:
1.00 points
The least-squares regression method is:
The only identify cost estimation method allowed by GAAP.
A statistical method to identify cost behavior.
A cost estimation method that only uses the two extreme values.
A graphical method to identify cost behavior.
An algebraic method to identify cost behavior.

5.value:
1.00 points
In Davis Corporation's most recent fiscal year, the company reported pretax earnings of $215,000.
Fixed costs totaled $325,800, the unit selling price of the firm's only product was $60, and the variable costs per unit were 40% of the selling price. Based on this information, the firm's break-even point in units was:
15,023 units.
13,575 units.
9,050 units.
8,750 units.
13,750 units.

6.value:
1.00 points
The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year. If Griffith Corporation's income tax rate is 40%, compute the number of units that must be sold in order to achieve a target pretax income of $130,000. (Do not round intermediate calculations.)

sales(50000units) $1,000,000
Costs:
direct materials $270,000
direct labor 240,000
fixed factory overhead 100,000
variable factory overhead 150,000
fixed marketing costs 110,000
variable marketing costs 50,000 920,000
Pretaxt income $80,000

50,000.
81,250.
58,621.
36,207.
53,165.

7.value:
1.00 points
A statistical method for deriving an estimated line of cost behavior is the:
High-low method.
Least-squares regression method.
Composite method.
Scatter diagram method.
CVP charting method.

8.value:
1.00 points
A cost-volume-profit chart is also known as a(n)
Margin of safety chart.
Sales chart.
Break-even chart.
Operating leverage chart.
Operating profit chart.

9.value:
1.00 points
Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Dunkin company management targets an annual after-tax income of $843,750. The company is subject to a 25% income tax rate. Compute the dollar sales to earn the target after-tax net income.
$5,050,000.
$5,043,750.
$5,640,000.
$4,890,000.
$4,327,500.


10.value:
1.00 points
Baines Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. Compute the contribution margin per composite unit.
$240.
$300.
$330.
$285.
$270.

11.value:
1.00 points
A firm sells two products, A and B. For every unit of A the firm sells, two units of B are sold. The firm's total fixed costs are $1,612,000. Selling prices and cost information for both products follow. What is the firm's break-even point in units of A and B?

31,000 of A and 62,000 of B.
31,000 of A and 31,000 of B.
10,333 of A and 20,667 of B.
62,000 of A and 31,000 of B.
36,167 of A and 72,333 of B.




12.value:
1.00 points
In cost-volume-profit analysis, the unit contribution margin is:
Sales price per unit less cost of goods sold per unit.
Sales price per unit less total variable cost per unit.
Sales price per unit less unit total cost per unit.
The same as the contribution margin ratio.
Sales price per unit less unit fixed cost per unit.

13.value:
1.00 points
Ginger Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%. What is the selling price of the product?
$20.
$30.
$50.
$40.
$5.

14.value:
1.00 points
The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year. If Griffith Corporation is able to achieve the budgeted level of sales, its margin of safety in dollars would be (Do not round intermediate calculations):

$262,500.
$172,420.
$275,862.
$310,115.
$150,000.

15.value:
1.00 points
A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. What is the break-even point in dollar sales?
$6,000.
$420,000.
$1,200,000.
$646,154.
$2,100.




16.value:
1.00 points
Camden Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are:
Unit sales price $7 $4 $6
unit variable costs $3 $2 $3
Total fixed costs are $340,000. The break-even point in sales dollars for the current sales mix is (round to the nearest thousand):
$629,000.
$20,000.
$289,000.
$400,000.
$740,000.

17.value:
1.00 points
Select cost information for Winfrey Enterprises is as follows:

Based on this information:
Both direct materials and rent expense are variable costs.
Utilities expense is a mixed cost and rent expense is a variable cost.
Utilities expense is a mixed cost and rent expense is a fixed cost.
Direct materials is a fixed cost and utilities expense is a mixed cost.
Both direct materials and utilities expense are mixed costs.

18.value:
1.00 points
If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:
$440,000.
$190,000.
$24,000.
$250,000.
$60,000.













19.value:
1.00 points
Wayward Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $6,500,000, calculate the firm's break-even point in sales dollars.
$13,000,000.
$12,750,000.
$12,900,050.
$12,750,625.
$13,250,000.

20.value:
1.00 points
A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:
Break-even line.
Standard cost line.
Estimated line of cost behavior.
Margin of safety line.
Contribution margin line.

Accountimg Qs 26-45

26. Assume for 2011 that Don made one transfer involving his granddaughter as follows: Don opened a joint checking account with his granddaughter, with right of survivorship, for her college expenses. Don made an initial deposit of $100,000. During 20011, granddaughter wrote checks on the account to the school for tuition of $15,000 and living expenses of $20,000. What is the amount of the taxable gift for federal gift tax purposes?

a. 0.
b. $20,000.
c. $22,000.
d. $35,000.
e. none of the above.


27. Oliver gave his wife $5,100,000 worth of publicly traded stock in August 2011, outright. Oliver's basis in the stock was $50,000. What is the amount of the taxable gift for federal gift tax purposes? (Oliver made no other gifts to anyone in 2011).

a. 0.
b. $87,000.
c. $100,000.
d. $5,087,000.


28. For 2012, what is the amount of the maximum gift tax annual exclusion per donor from the value of a gift of a future interest made to any one donee?


a. 0.
b. $13,000.
c. $26,000.
d. $5,000,000.



29. Facts for Questions 29 and 30. Mr. Grey died on January 1, 2011. Mr. Grey made no gifts during his life. Under his will, Mr. Grey devised all of his probate assets to his wife. Mr. Grey owned the following assets, probate and nonprobate, at the date of his death:

Asset 1. Home in Mr. Grey's and Mrs. Grey's (his surviving spouse) names as tenants by the entireties that was purchased in 2005. The home was had a fair market value of $2,000,000 both at the date of Mr. Grey's death and six months after the Mr. Grey's death.

Asset 2. Publicly traded stocks and bonds solely in , Mr. Grey's name that had a fair market value of $3,000,000 on the date of Mr. Grey's death and a fair market value of $2,000,000 six months after Mr. Grey's death.

Asset 3. Undeveloped real estate in Mr. Grey's name and the name of his daughter, Sue Smith, jointly with right of survivorship that Mr. Grey purchased in 2005 for $100,000. The property had a fair market value of $2,500,000 at the date of Mr. Grey's death and a fair market value of $1,000,000 x months after the date of Mr. Grey's death.

Asset 4. A condominium in the decedent's name alone purchased in 2001 and used as a vacation home that had a fair market value of $500,000 on the date of Mr. Grey's death. The condominium was sold by the personal representative of the decedent's estate for $250,000 four months after Mr. Grey's death.


Based on the facts for questions 29 and 30, which of the following options are available to Mr. Grey's estate for valuation of the assets includible in the gross estate?

a. The estate may use date of death values or it may elect alternate valuation.
b. The estate must use date of death values.
c. The estate must elect alternate valuation.
d. Valuation is not required as no Federal Estate Tax Return is required to be filed.


30. Facts for Questions 29 and 30. Mr. Grey died on January 1, 2011. Mr. Grey made no gifts during his life. Under his will, Mr. Grey devised all of his probate assets to his wife. Mr. Grey owned the following assets, probate and nonprobate, at the date of his death:

Asset 1. Home in Mr. Grey's and Mrs. Grey's (his surviving spouse) names as tenants by the entireties that was purchased in 2005. The home was had a fair market value of $2,000,000 both at the date of Mr. Grey's death and six months after the Mr. Grey's death.

Asset 2. Publicly traded stocks and bonds solely in , Mr. Grey's name that had a fair market value of $3,000,000 on the date of Mr. Grey's death and a fair market value of $2,000,000 six months after Mr. Grey's death.

Asset 3. Undeveloped real estate in Mr. Grey's name and the name of his daughter, Sue Smith, jointly with right of survivorship that Mr. Grey purchased in 2005 for $100,000. The property had a fair market value of $2,500,000 at the date of Mr. Grey's death and a fair market value of $1,000,000 six months after the date of Mr. Grey's death.

Asset 4. A condominium in the decedent's name alone purchased in 2001 and used as a vacation home that had a fair market value of $500,000 on the date of Mr. Grey's death. The condominium was sold by the personal representative of the decedent's estate for $250,000 four months after Mr. Grey's death.

Based upon the facts presented in the fact pattern for questions 32 and 33, what is the amount of Mr. Grey's gross estate for federal estate tax purposes?

a. 0.
b. $2,500,000.
c. $3,500,000.
d. $4,250,000.
e. $7,000,000.





31. Jennie purchased 50 percent of the shares of SJ Corporation, a calendar year S corporation, for $7,000. She also guaranteed a corporate loan of $6,000. For 2011, SJ Corporation had an operating loss of $22,000. What is the amount of SJ Corporation's loss that Jennie may deduct on her individual income tax return for 2011?

a. $11,000.
b. $10,000.
c. $7,000.
d. 0.


32. Which of the following trusts is eligible to be an S corporation shareholder?

a. Electing small business trust.
b. Eligible foreign trust.
c. Qualified subchapter S trust.
d. Only a and c.
e. All of the above trusts are eligible to be S corporation shareholders.


33. Which of the following count as a single S corporation shareholder?

a. A husband and wife.
b. A spouse and a spouse's estate.
c. Members of a family with a common ancestor (who meet the six generations test).
d. All of the above.


34. Ellen is a 25 percent partner in EFGH Partners, a general partnership. Ellen's adjusted basis in her partnership interest is $18,000. During the current taxable year, Ellen received a non-liquidating distribution of land from EFGH Partners that had an adjusted basis to the partnership of $23,000 and a fair market value of $45,000 on the date of distribution. What is Ellen's basis in the land received in the non-liquidating distribution?

a. 0.
b. $18,000.
b. $23,000.
c. $45,000.

35. On which of the following grounds may an S corporation may lose its S status?

a. it issues a second class of stock.
b. it has a nonresident alien shareholder.
c. the number of shareholders exceeds 100.
d. all of the above.

36. A shareholder's adjusted basis in the shareholder's stock is used to make determinations with respect to which of the following?

a. the extent to which a distribution made by the corporation to the shareholder is taxable.
b. the amount of losses that shareholders may deduct in a given year.
c. the shareholder's realized gain or loss upon the sale or exchange of the stock.
d. all of the above.
37. In the current year, Sue received a liquidating distribution of real estate from UTSRQ Partnership, a general partnership. The real estate had an adjusted basis to the partnership of $35,000 and a fair market value of $90,000 on the date of the distribution. Sue's adjusted basis in her 20 percent interest in UTSRQ Partnership was $50,000. How much gain or loss did Sue recognize on receipt of the distribution and what is her basis in the real estate?
\

a. 0 gain or loss recognized and a $50,000 basis in the real estate.
b. ($15,000) loss recognized and a $35,000 basis in the real estate.
c. 0 gain or loss recognized and a $35,000 basis in the real estate.
d. $40,000 gain recognized and a $90,000 basis in real estate.
e. $15,000 gain recognized and a $50,000 basis in real estate.



38. On January 1 of the current taxable year, Sam and Barbara form an equal partnership. Sam makes a cash contribution of $60,000 and a contribution of property with an adjusted basis to him of $160,000 and a fair market value of $140,000 in exchange for his interest in the partnership. Barbara contributes property with an adjusted basis to her of $120,000 and a fair market value of $200,000in exchange for her partnership interest. Which of the following statements is accurate regarding the income tax consequences of this transaction?

a. Sam's adjusted basis in his partnership interest is $200,000.
b. The partnership's adjusted basis in the property contributed by Sam is $140,000.
c. Barbara recognized a gain of $80,000 with respect to her contribution of property.
d. Barbara's adjusted basis in her partnership interest is $120,000.

39. Tina and Betty formed a partnership. Tina received a 40 percent interest in the partnership in exchange for land with an adjusted basis to her of $60,000 and a fair market value of $80,000. Betty received a 60 percent interest in the partnership in exchange for $120,000 of cash. Three years after the date of contribution, the land contributed by Tina was sold by the partnership to an unrelated third party for $90,000. How much gain was required to be allocated to Tina as a result of the sale by the partnership?
a. $4,000.
b. $12,000.
c. $24,000.
d. $30,000.


40. When inventory that was contributed to a partnership in exchange for a partnership interest is eventually sold by the partnership, how will the character of the income or loss be determined?

a. The character of any income or loss will be ordinary regardless of when the contributed property is sold by the partnership and regardless of the character of the asset in the hands of the partnership.
b. The character of any income or loss will be ordinary if the contributed property is sold by the partnership within five years after the date of contribution regardless of the character of the asset in the hands of the partnership
c. The character of any income or loss will be based on the character of the asset in the hands of the partnership regardless of when the contributed property is sold by the partnership.
d. The character of any income or loss will be ordinary to the extent of the contributing partner's built-in gain or loss in the property at the time of the contribution regardless of when the contributed property is sold, and any balance will based on the character of the asset in the hands of the partnership.



41. Barbara and Bill formed an equal partnership, B&B, a general partnership, on January 1, 2011. Barbara contributed $100,000 in exchange for her one-half interest. Bill contributed land worth $100,000 that had an adjusted basis to him of $30,000 in exchange for his one-half interest. Which of the following statements is accurate with respect to this transaction?

a. None of Barbara, Bill, or B&B recognized any gain or loss.
b. Bill recognized gain of $70,000 , but Barbara and B&B did not recognize any gain or loss.
c. B&B recognized gain or $70,000 , but Barbara and Bill did not recognize any gain or loss.
d. Bill and B&B each recognized $70,000 of gain, but Barbara did not recognize any gain or loss.

42. Ten years ago, Lisa acquired a one-third interest in Dee Associates, a general partnership. In the current taxable year, when Lisa's entire interest in the partnership was liquidated, Dee Associates' assets consisted of cash of $20,000 and tangible property with an adjusted basis to the partnership of $46,000 and a fair market value of $40,000 on the date of distribution. Dee Associates had no liabilities. Lisa's adjusted basis in her one-third interest in the partnership was $22,000. Lisa received cash of $20,000 in complete liquidation of her entire interest. How much loss will Lisa recognize upon receipt of the liquidating distribution?

a. 0.
b. $2,000 short-term capital loss.
c. $2,000 long-term capital loss.
d. $2,000 ordinary loss.


43. Jim, one of two equal partners of the JJ Partnership, a general partnership, contributed business property with an adjusted basis to him of $15,000 and a fair market value of $10,000 to the JJ Partnership. Jim's capital account was credited with $10,000. The property later was sold for $12,000. As a result of this sale, how much gain or loss must Jim report on his personal income tax return?

a. $1,000 gain.
b. $1,500 loss.
c. $2,000 gain.
d. $3,000 loss.

44. Ronald and Roy formed an equal partnership, R&R Partnership, a general partnership, on January 1, 2012. Ronald contributed $100,000 in exchange for his one-half interest in R&R partnership. Roy contributed land worth $100,000 and with an adjusted basis to Roy of $30,000 in exchange for his one-half interest in the partnership. Roy is a real estate developer, and at the time of the contribution, the land was inventory in his hands. The land is a capital asset in the hands of R&R Partnership. If R&R Partnership sells the land in 2018 to an unrelated taxpayer for $180,000,how much gain will be recognized by R&R Partnership and what will be the character of the gain?

a. $80,000, all of which gain will be ordinary income
b. $150,000, all of which gain will be capital gain.
c. $150,000, all of which gain will be ordinary income.
d. $150,000, consisting of $80,000 capital gain and $70,000 ordinary income.


45. At the beginning of 2012, Margaret's adjusted basis in her 30 percent interest in MP Partnership, a general partnership, was $3,000. During 2012, Margaret did not make any additional contributions to MP Partnership, and Margaret's share of MP Partnership liabilities did not change. During 2012, MP Partnership distributed $5,000 to Margaret, and MP Partnership had the following items of partnership income, deduction, gain and loss for 2012:

Taxable income $15,000
Tax-exempt interest $6,000
Section 1231 loss ($10,000)

What is Margaret's adjusted basis in her partnership interest in MP Partnership at the end of 2012?

a. 0.
b. $1,300.
c. $9,000.
d. $2,700.