PARTNERSHIP - FORMATION

Question 1

In a contract of partnership, two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profit among themselves.

Answer 1

TRUE

Question 2

In a limited partnership, none of the partners has unlimited liability for the business debts

Answer 2

FALSE

Question 3

A silent partner takes active part in the business of the partnership and is not known by outsiders to be a partner

Answer 3

FALSE

Question 4

A partner’s capital account is debited to reflect assets permanently withdrawn.

Answer 4

TRUE

Question 5

A limited partnership must have at least one general partner.

Answer 5

TRUE

Question 6

A partnership may be established for charity.

Answer 6

FALSE

Question 7

Assets invested in the partnership should be recorded at their cost to the partner.

Answer 7

FALSE

Question 8

All partnerships have a limited life and assets are co-owned by the partners.

Answer 8

TRUE

Question 9

A disadvantage of partnerships over corporations is the partners’ unlimited liability.

Answer 9

TRUE

Question 10

There is no income tax imposed on a partnership.

Answer 10

FALSE

Question 11

A partnership has a juridical personality separate and distinct from that of each of the partners.

Answer 11

TRUE

Question 12

A partnership must always have two or more owners.

Answer 12

TRUE

Question 13

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.

Answer 13

TRUE

Question 14

All partnerships are subject to tax at the rate of 30% of taxable income.

Answer 14

TRUE

Question 15

When the partners invest assets other than cash in a partnership, their capital accounts should be credited with the current fair market values of the assets

Answer 15

FALSE

Question 16

Penetrante owns and operates a large hardware store in Cabanatuan City that employs about forty-five personnel. She delegates some of the decision making to two supervisors. Penetrante’s business is organized as a

Answer 16

sole proprietorship