ACCTBA2 Quiz 1

Nominal Partner

A partner in name only and does not participate in the management of business.

Industrial Partner

A partner who contributes his work, labor, or industry to the partnership.

General Partner

A partner who is liable for partnership debts beyond his/her capital investment.

False

A partner who is not known as a partner but who participates actively in the management of the partnership is called a managing partner.

True

A partnership as a form of business, is best suited to the practice of professions.

Mutual Agency

A partnership characteristic that authorizes a partner to act for the partnership and to enter into contracts that bind it, provided these are within his/her express or implied authority.

Co-ownership of Property

A partnership characteristic which states that properties invested in a partnership by a partner cease to be his/her own property.

True

A partnership does not have to comply with as many legal formalities as corporation does.

True

A partnership whose capital is P3000 and above should be registered with the Securities and Exchange Comission.

General Partnership

A type of partnership in which each partner is individually liable for the obligations of the firm regardless of the amount of personal investment.

False

Accounts Receivable, if part of a partner's investment, may be recorded at net realizable value.

True

All partners in a general partnership are general partners.

Partnership

An association of two or more persons who bind themselves to contribute money, property, or industry to a common fund, with intention of dividing profits among themselves.

Memo Entry

An entry necessary to record the entrance of an industrial partner.

False

An individual must contribute capital to become a partner in a firm.

True

An oral agreement may still bind the partners forming the partnership.

False

No entry is necessary to record the investment of an industrial partner.

Fair Value

The amount used to record the non-cash asset investment of a partner.

False

The characteristic of unlimited liability does not apply to a limited partnership

Articles of Partnership

This is a written document that specifies the nature, terms and details of partnership operations.