Partnership Basic Consideration and Formation

A partnership

• is created by agreement of the partner

• has a juridical personality separate and distinct from that of each of the partners

• is dissolved by death of a partner

• all of the above

Which of the following is a characteristic of most partnerships?

• limited liability

• division of profits only

• unlimited life

• mutual contribution

Which of the following is not a characteristic of most partnerships?

• limited life

• limited liability

• mutual agency

• ease of formation

Which of these characteristics does not apply to a general professional partnership?

• unlimited liability

• unlimited life

• mutual agency

• no business income tax

All of the following are true for both general and limited partnerships except

• both must have at least one general partner

• all partners are liable for all debts of the firm

• all partners have the right to participate in the profits of the business

• both are easily dissolved

A partner whose liability for partnership debts is limited to his capital contribution is called

• limited partner

• general partner

• industrial partner

• secret partner

Another way of stating the accounting equation is

• Assets-Liabilities= Owner’s Equity

• Owner’s Equity + Assets= Liabilities

• Owner’s Equity + Assets= Liabilities

• Assest+ Liabilities = Owner’s Equity

A partner invested into a partnership a building with a P250,000 carrying value and P400,000 fair market value. the related mortgage payable of P125,000 was assumed by the partnership. As a result of the investment, the partner's capital account will be credited for

• P275,000

• P125,000

• P400,000

• P250,000

The ability of a partner to enter into a contract on behalf of all partners is called

• voluntary association

• mutual agency

• the partnership agreement

• unlimited liabiity

A disadvantage of a partnerships over corporations is the partners' unlimited liability

• True

• False