Republic of the Philippines

CAMIGUIN POLYTECHNIC STATE COLLEGE

PARTNERSHIP AND CORPORATION ACCOUNTING

True or False
Unlimited liability holds a sole proprietor personally responsible for all the debts of the
1.
business.
In a limited partnership, a limited partner’s name must be included in the partnership’s
2.
name.
3. Every partnership must have at least one limited partner.
4. A partner who invests assets into a partnership retains control over those specific assets.
A partnership involves mutual agency, unlimited liability for general partners and limited
5.
life.
6. A partner’s capital account is debited to reflect assets permanently withdrawn.
A partnership with capital of less than ₱3,000 is void if it is unregistered with the Securities
7
and Exchange Commission.
8. A partnership cannot be established for religious purposes.
A partnership has a juridical personality separate and distinct from that of each of the
9.
partners.
When the partnership capital is ₱3,000 or more, the public instrument must be recorded
10.
with the Securities and Exchange Commission.
11. Under the partnership form of business, large amounts of capital can be raised easily.
12. All partnerships have limited life and assets are co-owned by the partners.
A dormant partner is one who does not take active part in the partnership business and is
13.
not known as a partner.
14. A partnership is a legal entity separate and apart from its owners.
15. In a limited partnership, the general partner’s liability is limited to his investment.
A partner usually retains title to assets contributed to a partnership, so that certain assets
16.
maybe identified as belonging to a given partner.
17. In a limited partnership, none of the partners has unlimited liability for the business debts.
There can never be a partnership without contribution of money, property or industry to a
18.
common fund.
The essence of partnership is that each partner must share in the profits or losses of the
19.
venture.
20. A partnership should always be constituted in writing.
One of the partners in a proposed partnership is a multi-millionaire. The stipulation in the
21. 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 capital accounts
22.
should be credited with the current fair market values of the assets.
23. Each partner is personally liable for all debts of the partnership.
All partners in a general partnership are personally liable for all debts incurred by the
24.
partnership.
As long as the action within the scope of the partnership, any partner can bind the
25.
partnership.
One of the partners in a proposed partnership is a multi-millionaire. The stipulation in the
26. 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 unregistered with the
27.
Securities and Exchange Commission.
When a partner invests assets in a partnership, the assets are recorded at the partner’s
28.
book value.
29. Partners’ drawing accounts have normal credit balances.
The partner’s capital account is debited for additional investments and credited for his
30.
share in profit
 Republic of the Philippines
CAMIGUIN POLYTECHNIC STATE COLLEGE
Balbagon, Mambajao,Camiguin
A limited partnership normally has one or more general partners whose liability is
31.
unlimited.
An advantage of the partnership form of business is that each partner’s potential loss is
32.
limited to that partner’s investment in the partnership.
33. The basis of valuation for non-cash investments should be fair market value.
A silent partner takes active part in the business of the partnership and is not known by
34.
outsiders to be a partner.
35. A partnership may be established for charity.
36. A limited partnership must have at least one general partner.
The basis of valuation for non-cash investments should be at values agreed upon by the
37.
partners.
A partner by estoppels is one who is actually not a partner but who represents himself as
38.
one.
39. All partnerships are subject to tax at the rate of 30% of taxable income.
40. The limited partners are liable only to the extent of their personal contributions.
41. Two or more persons may form a partnership for the exercise of a profession.
A de jure partnership is one which has complied with all the legal requirements for its
42.
establishment.
Work or services that may either be personal manual efforts or intellectual may also be
43.
contributed to a partnership.
44. A partnership and a corporation cannot form a partnership.
45. Bankruptcy of a partner will dissolve the partnership.
46. Ownership is easily transferred in a partnership.
47. A partnership must always have at least two owners.
Not all of the partners in a general partnership are personally liable for all debts incurred by
48.
the partnership.
49. A proprietorship has a limited life whereas as partnership may have an unlimited a life.
One advantage of a partnership over a corporate form of organization is the unlimited
50.
liability of partners.
51. Assets invested in the partnership should be recorded at their cost to the partner.
A secret partner is one who does not take active part in the partnership business and is not
52.
known as a partner.
In a contract of partnership, two or more persons bind themselves to contribute money,
53. 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 accounts are used in a
54.
slightly different way compared to those in a sole proprietorship.
55. A partnership is created by mere agreement of the partners.
Adjustments prior to formation may be omitted since these will not affect the partners’
56.
capital credits.
A dormant partner is one who does not take active part in the partnership business though
57.
may be known as a partner.
In a general partnership, each partner’s liability for losses is limited to his investment in the
58.
firm.
A partnership has a limited life because any change in the relationship of the partners
59.
dissolves the partnership.
The partner’s capital account is debited for the debit balance of the drawing account at the
60.
end of the period.
61. A partnership agreement should include the procedure for ending the business.
62. A disadvantage of partnerships over corporations is the partners’ unlimited liability.
63. There is no income tax imposed on a partnership.
64. A partnership must always have two or more owners.
Liabilities related to assets invested in a partnership by a new partner cannot be transferred
65.
to the partnership.
Accounting for a partnership comes closer to accounting for a sole proprietorship than to
66.
accounting for a corporation.
67. The manner in which profits are to e shared should be specified in the articles of
 Republic of the Philippines
CAMIGUIN POLYTECHNIC STATE COLLEGE
Balbagon, Mambajao,Camiguin
partnership.
A public instrument needs to be executed when immovable property or real rights are
68.
contributed to the partnership.
69. Mutual agency means that each partner has the right to bind the partnership to contracts.
A partnership with a capital of less than P3,000 is valid even if it is unregistered with the
70.
Securities and Exchange Commission.