ACFAR IFA TOPIC 10 & 11 ( T OR F)
In the absence of a specific agreement, the law requires that partnership profits be divided equally among the partners.
F
Interest on loans from partners is recognized as partnership income.
F
It is possible to allocate profit or loss to partners based solely on interest.
F
Mutual agency means that each partner has the right to bind the partnership to contracts.
F
Partnership profits and losses are divided among partners according to their sharing agreement. If no sharing agreement exists, profits or losses are divided equally.
F
Profits or losses are divided equally among the partners unless the partnership agreement specifies to the partners.
F
The basis of valuation for non-cash investments should be fair market value always.
F
The form and content of the statement of comprehensive income of a partnership resemble those of a sole proprietorship with no exceptions.
F
The increase in equity of the partner due to distribution of profit can be attributed to a particular asset.
F
The salary allocation to partners also appears as salaries expense on the partnership's statement of comprehensive income.
F
When salary and interest allocations exceed profit, a loss has occurred.
F
it is possible to allocate profit or loss to partners solely on salaries.
F
the interest of partners' capital can be considered as expenses depending on partners' agreement.
F
A de jure partnership is one which has complied with all the legal requirements for its establishment.
T
A limited partnership must have at least one general partner.
T
A partner by estoppel is one who is actually not a partner but who represents himself as one.
T
A partnership cannot be established for religious purposes.
T
A partnership is a legal entity separate and apart from its owners.
T
A partnership must always have at least two owners.
T
As long as the action is within the scope of the partnership, any partner can bind the partnership.
T
If a partnership agreement does not specify how profits or losses are to be distributed, they should be allocated based on relative capital account balances.
T
Industrial partner is not liable for losses because he cannot withdraw the work or labor already done by him.
T
It is possible for a partner's capital account to increase as a result of the allocation of a loss.
T
It is possible to allocate profit or loss to partners based solely on average capital balances.
T
It is possible to allocate profit or loss to the partners based solely on the stated ratio.
T
The basis of valuation for non-cash investments should be at values agreed upon by the partners.
T
The equity of a partner in the net assets of the partnership is not the same as the partner's share in the profits or losses.
T
The manner in which profits are to be shared should be specified in the articles of partnership.
T
There can never be a partnership without contribution of money, property or industry to a common fund
T
When a loss is closed into the partners' capital accounts, income summary is credited.
T
When beginning capital balances are used in allocating profits, year-end investments are discouraged.
T
Bankruptcy of a partner will dissolve the partnership.
F
In general partnership, each partner's liability for losses is limited to his investment in the firm.
F
Adjustments prior to formation may be omitted since these will not affect the partner's capital credits.
F
All partnerships are subject to tax at the rate of 30% of taxable income.
F
A partner usually retains title to assets contributed to a partnership, so that certain assets may be identified as belonging to a given partner.
F
A partnership may be established for charity
F
A partnership should always be constituted in writing.
F
A partnership with a capital of less than P3,000 is valid even if it is unregistered with the Securities and Exchange Commission.
F
A stipulation that excludes one or more partners from any share in the profits or losses is valid
F
