Partnership Formation

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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


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