Partnership Formation
The basis of valuation for non-cash investments should be at values agreed upon by the partners.
True
The essence of partnership is that each partner must share in the profits or losses of the venture
True
The partners' capital account is debited for the debit balance of the drawing account at the end of the period.
True
A dormant partner is one who does not take active part in the partnership business though may be known as a partner.
False
A partner usually retains title to assets contributed to a partnership, so that certain assets may be identified as belonging to a given partner.
False
A partnership may be established for charity
False
A partnership must always have two or more owners
False
A partnership with a capita les than 3,000 is void if it is unregistered with the securities of Exchange commission.
False
A secret partner is one who does not take active part in the partnership business and is not known as a partner
False
A silent partner takes active part in the business of the partnership and is not by outsiders to be a partner
False
Adjustments prior to formation may be omitted since these will not affect the partner's capital credits.
False
All partners are subject to tax at the rate of 30% of taxable income.
False
Assets invested in the partnership should be recorded at their cost to to the partner
False
Each partner has a capital account and a drawing account. These accounts are used in a slightly different way compared to those in a sole proprietorship.
False
In a contract of partnership, two or more persons bind themselves to contribute money, property and industry to a common fund, with the intention of dividing the profit among themselves.
False
In a general partnership, each partner's liability for losses is limited to his investment in the firm.
False
In a limited partnership, none of the partners has unlimited liability for the business.
False
One advantage of a partnership over a corporate form of organization is the unlimited of partners.
False
The partner's capital account is debited for additional investments and credited for his share in profit
False
There is no income tax imposed on a partnership
False
When the partners invest asset other than cash in a partnership, their capital accounts should be credited with the current fair market values of the assets.
False
A partnership with a capital of 3,000 or more is valid even if it is unregistered with the securities and exchange commission.
True
All partnerships have a limited life and assets are co-owned by the partners.
True
Each partner is personally liable for all debts of the partnership
True
One of the partners in a proposed partnership is a multi-millionaire. The stipulation in the articles of partnership that this partner shall be excluded from sharing in the profits of the partnership is void.
True
A disadvantage of partnerships over corporations is the partner's unlimited liability
True
A limited partnership must have at least one general partner.
True
A partner's capital account is debited to reflect asses permanently withdrawn.
True
A partnership agreement should include the procedure for ending the business
True
A partnership by estoppel is one who is not actually a partner but who represents himself as one.
True
A partnership has a juridical personality separate and distinct from that of each of the partners.
True
A partnership has a limited life because any change in the relationship of the partner dissolves the partnership
True
