PARTNERSHIP AND CORPORATION ACCOUNTING

Name: TIAMZON, GENEROSO JR.G Score:

Course: BSBA III Date:

True or False
Unlimited liability holds a sole proprietor personally responsible for all the
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debts of the business.
In a limited partnership, a limited partners name must be included in the
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partnerships name.
F 3. Every partnership must have at least one limited partner.
A partner who invests assets into a partnership retains control over those
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specific assets.
A partnership involves mutual agency, unlimited liability for general
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partners and limited life.
A partners capital account is debited to reflect assets permanently
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withdrawn.
A partnership with capital of less than 3,000 is void if it is unregistered
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with the Securities and Exchange Commission.
T 8. A partnership cannot be established for religious purposes.
A partnership has a juridical personality separate and distinct from that of
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each of the partners.
When the partnership capital is 3,000 or more, the public instrument
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must be recorded with the Securities and Exchange Commission.
Under the partnership form of business, large amounts of capital can be
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raised easily.
All partnerships have limited life and assets are co-owned by the
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partners.
A dormant partner is one who does not take active part in the partnership
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business and is not known as a partner.
T 14. A partnership is a legal entity separate and apart from its owners.
In a limited partnership, the general partners liability is limited to his
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investment.
A partner usually retains title to assets contributed to a partnership, so
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that certain assets maybe identified as belonging to a given partner.
In a limited partnership, none of the partners has unlimited liability for the
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business debts.
There can never be a partnership without contribution of money, property
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or industry to a common fund.
The essence of partnership is that each partner must share in the profits
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or losses of the venture.
F 20. A partnership should always be constituted in writing.
One of the partners in a proposed partnership is a multi-millionaire. The
T 21. stipulation in the articles of partnership that this partner shall be excluded
from sharing in the profits of the partnership is void
When the partners invest assets other than cash in a partnership, their
F 22. capital accounts should be credited with the current fair market values of
the assets.
T 23. Each partner is personally liable for all debts of the partnership.
All partners in a general partnership are personally liable for all debts
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incurred by the partnership.
As long as the action within the scope of the partnership, any partner can
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bind the partnership.
F 26. 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 valid.
A partnership with a capital of 3,000 or more is valid even if it is
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unregistered with the Securities and Exchange Commission.
When a partner invests assets in a partnership, the assets are recorded at
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the partners book value.
F 29. Partners drawing accounts have normal credit balances.
The partners capital account is debited for additional investments and
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credited for his share in profit
A limited partnership normally has one or more general partners whose
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liability is unlimited.
An advantage of the partnership form of business is that each partners
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potential loss is limited to that partners investment in the partnership.
The basis of valuation for non-cash investments should be fair market
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value.
A silent partner takes active part in the business of the partnership and is
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not known by outsiders to be a partner.
F 35. A partnership may be established for charity.
T 36. A limited partnership must have at least one general partner.
The basis of valuation for non-cash investments should be at values
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agreed upon by the partners.
A partner by estoppels is one who is actually not a partner but who
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represents himself as one.
F 39. All partnerships are subject to tax at the rate of 30% of taxable income.
The limited partners are liable only to the extent of their personal
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contributions.
Two or more persons may form a partnership for the exercise of a
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profession.
A de jure partnership is one which has complied with all the legal
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requirements for its establishment.
Work or services that may either be personal manual efforts or
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intellectual may also be contributed to a partnership.
T 44. A partnership and a corporation cannot form a partnership.
F 45. Bankruptcy of a partner will dissolve the partnership.
F 46. Ownership is easily transferred in a partnership.
F 47. A partnership must always have at least two owners.
Not all of the partners in a general partnership are personally liable for all
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debts incurred by the partnership.
A proprietorship has a limited life whereas as partnership may have an
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unlimited a life.
One advantage of a partnership over a corporate form of organization is
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the unlimited liability of partners.
Assets invested in the partnership should be recorded at their cost to the
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partner.
A secret partner is one who does not take active part in the partnership
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business and is not known as a partner.
In a contract of partnership, two or more persons bind themselves to
T 53. contribute money, property or industry to a common fund, with the
intention of dividing the profit among themselves.
Each partner has a capital account and a drawing account. These
F 54. accounts are used in a slightly different way compared to those in a sole
proprietorship.
T 55. A partnership is created by mere agreement of the partners.
Adjustments prior to formation may be omitted since these will not affect
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the partners capital credits.
A dormant partner is one who does not take active part in the partnership
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business though may be known as a partner.
 In a general partnership, each partners liability for losses is limited to his
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investment in the firm.
A partnership has a limited life because any change in the relationship of
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the partners dissolves the partnership.
The partners capital account is debited for the debit balance of the
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drawing account at the end of the period.
A partnership agreement should include the procedure for ending the
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business.
A disadvantage of partnerships over corporations is the partners
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unlimited liability.
F 63. There is no income tax imposed on a partnership.
T 64. A partnership must always have two or more owners.
Liabilities related to assets invested in a partnership by a new partner
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cannot be transferred to the partnership.
Accounting for a partnership comes closer to accounting for a sole
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proprietorship than to accounting for a corporation.
The manner in which profits are to e shared should be specified in the
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articles of partnership.
A public instrument needs to be executed when immovable property or
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real rights are contributed to the partnership.
Mutual agency means that each partner has the right to bind the
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partnership to contracts.
A partnership with a capital of less than P3,000 is valid even if it is
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unregistered with the Securities and Exchange Commission.