PRTNRSH

Question 1

TRUE OR FALSE: the capital contributed should always be equal to the capital credit of that partner upon partnership

Answer 1

FALSE: bonuses or transfer of capital is permitted among partner.
also, partners may also further invest or withdraw to bring their capital ratio equal to a specifically agreed ratio.

Question 2

PARTNERSHIP FORMATION:
how will the services of an industrial partner be recorded?

Answer 2

Memorandum entry only

Question 3

Partnership is a contract where _____ persons bind themselves to contribute _____,______,_______ to a common fund, with the intention of ________.

Answer 3

two or more,
money
property
industry
dividing the profits among themselves.

Question 4

life of a partnership describe as?

Answer 4

Limited Life

Question 5

What does CAPITALIST PARTNER contribute to the partner?

Answer 5

Cash and/or non-cash asset

Question 6

what does an INDUSTRIAL PARTNER contribute to the partnership

Answer 6

Services

Question 7

liabilities of the partners in a partnership describe as

Answer 7

Unlimited Liability

Question 8

Between partnership and a corporation, which has less legal requirements to form

Answer 8

Partnership

Question 9

What is the minimum number of a general partner in a partnership?

Answer 9

1

Question 10

What can increase the capital balance of a partner?

Answer 10

Additional investment and share in the partnership profits

Question 11

What can decrease the capital balance of a partner?

Answer 11

Withdrawal and share in the partnership losses

Question 12

PARTNERSHIP FORMATION:
What value should be the first priority in recognizing and measure asset contribution by the partner?

Answer 12

1st: AGREED VALUE
2nd: FAIR VALUE

Question 13

If 2 sole partnership will join forces to become a partnership, whose set of accounting records will persist for the partnership formation and operation?

Answer 13

any of the ff: so long as the partners agree:
* Books of the 1st sole proprietorship
*Books of the 2nd sole proprietorship
*New set of books

Question 14

PARTNERSHIP FORMATION: how will the liability assumed by the partnership be measure?

Answer 14

Present value (fair value)

Question 15

A loan from a partner should be classified as

Answer 15

a loan from a partner should be classified as a LIABILITY OF THE PARTNERSHIP. This is NOT considered as Capital Investment.

Question 16

TRUE OR FALSE: Partnership Formation, initial capital balances of the partners should always be aligned with their profit/loss ration

Answer 16

FALSE, the capital ration is not the same as the profit/loss ration, unless otherwise stated.

Question 17

PARTNERSHIP FORMATION: what are the possible ways of realigning the capital balances of a partner when Total Contributed Capital is EQUAL to Total Agreed Capital

Answer 17

TRANSFER OF CAPITAL
regardless whether it is with or without personal cash settlements among the partner.

Question 18

PARTNERSHIP FORMATION:
what are the possible ways of realignment the capital balances of partner when Total Contributed Capital is GREATER that Total Agreed Capital

Answer 18

Partner will either withdraw assets from partnership or there is a downward revaluation of asset

Question 19

PARTNERSHIP FORMATION: What are the possible ways of realigning the capital balance when Total Contributed Capital is LESS than Total Agreed Capital

Answer 19

Partners will EITHER invest additional assets from the partnership OR there is an upward revaluation of asset, or there is a goodwill

(goodwill recognition outside of business combi is not allowed under IFRS. Partnership Formation does not constitute Business Combi under IFRS 3.

Question 20

PARTNERSHIP FORMATION: Wherein the partners agreed to align their Capital balances with the profit and loss ratio, which methods will not change the total capital of the partnership.

Answer 20

BONUS METHOD/TRANSFER OF CAPITAL METHOD will NOT change the total capital balance of the partnership.
This is as opposed to additional investments or withdrawals by a partner(s), which will increase or decrease the total capital of the partnership, respectively.

Question 21

TRUE OR FALSE: Goodwill is allowed to be recognized in partnership formation and/or dissolution

Answer 21

FALSE:
Internally generated goodwill is not allowed to be recognized as an asset.
Goodwill will only arise from a Business Combi

Question 22

TRUE OR FALSE:
An industrial partner will not have a capital balance upon partnership formation

Answer 22

TRUE: unless that partner is a capitalist-industrial partner.

Services alone is not recognizable in accordance with conceptual framework of financial reporting.

Question 23

TRUE OR FALSE:
An Industrial Partner will never have a capital balance.

Answer 23

FALSE:
although they have 0 balance upon formation, they ,ay have a capital balances during the life of the partnership due to their share in the net income of the partnership.

Question 24

Which among Salary Allowance, Interest Allowance and Bonus Allowance is NOT time proportioned?

Answer 24

BONUS ALLOWANCE is not prorated by the number of months during the reporting year.

Question 25

In the absence of an agreed loss sharing ratio, what ratio will the partners apply sharing the net loss of the partnership?

Answer 25

Agreed Profit Ratio

Question 26

In the absence of an Agreed Profit Ratio, what ratio will the partners apply in sharing the net income of the partnership?

Answer 26

The original capital ratio, after providing an amount which is just and equitable to industrial partner.

Question 27

THRUE OR FALSE: in the absence of an agreed loss ratio, an industrial partner will be exempt from sharing in the net losses of the partnership

Answer 27

TRUE

Question 28

These are typically provided to industrial partners in compensation for their SERVICES to the partnership.

Answer 28

Allowance for salaries

Question 29

These are typically provided to capitalist partners in compensation for their INVESTMENT in the partnership

Answer 29

Allowance for interest

Question 30

These are typically provided to managing partners as an ADDITIONAL COMPENSATION FOR THEIR CRUCIAL ROLE in the performance of the partnership

Answer 30

Allowance for bonus

Question 31

TRUE OR FALSE: Profit and Loss Agreements should always provide for allowance for salaries, interest and bonuses

Answer 31

FALSE: Profit And loss of the partnership can be shared in whenever way the partners agreed upon. In addition, the lack of an agreed profit and loss ration is also possible.

Question 32

This type of withdrawal is a withdrawal of investment, not expected to be reinvested in the partnership any time soon

Answer 32

Permanent Withdrawal

Question 33

This type of withdrawal is done because of the partners share or expected share in the profit of the partnership

Answer 33

Temporary Withdrawal

Question 34

What account will be debited for a temporary withdrawal

Answer 34

Partner's Drawing Account

Question 35

What account will be debited for a permanent withdrawal?

Answer 35

Partner's Capital Account

Question 36

What is a typical reason for crediting the drawings account?

Answer 36

Partner's shar e in the net income of the partnerhsip

Question 37

In terms of computing the average capital balances, what is the difference between permanent and temporary withdrawals

Answer 37

Permanent withdrawals are included in the computation of average capital balance, while temporary withdrawals are not.

Question 38

Between Permanent and temporary withdrawals, which i/are included in the computation of the ending capital balance of a partner?

Answer 38

BOTH

Question 39

Which allowance is generally NOT provided to a partner in the event of a NET LOSS of teh [artnership?

Answer 39

BONUSES

Question 40

A stipulation that exclude a partner from sharing in the profit is

Answer 40

VOID by the mere definition of a partnership "with the intention of dividing the profit among themselves"

Question 41

Who will decide what amount constitute "just and equitable share"

Answer 41

The partners shall determine this. However, the court will determine this in the event that the partners cannot agree.

Question 42

Will industrial partners be liable for loss?

Answer 42

In the absence of agreement, Industrial Partner are not liable for losses.

Question 43

TRUE OR FALSE: bonuses are assured to be provided in the event of a net income.

Answer 43

FALSE: although the results of operation resulted to a net income, this does not assure that the basis for the bonus will remain positive. BONUS is based on the net income after salaries and salaries is greater than the net income.

Question 44

Partnership Dissolution occurs when _______ or ______

Answer 44

an existing partner retires new partner admitted

Question 45

TRUE OR FALSE: A new partner admitted through a purchase, must purchase their interest from all partners proportionately.

Answer 45

FALSE: a new partner may purchase their interest from any partner in any ratio, as long as all partner give their consent.

Question 46

TRUE OR FALSE: Total Capital of the partnership will not change when a new partner is admitted through purchase of interest.

Answer 46

TRUE: assuming there is no asset revaluation. this admission will only be recorded as a transfer of capital from original partner to new partner.

Question 47

How will the partnership record the purchase of interest by a new partner in partnership admission?

Answer 47

The purchase itself is not recorded in the partnership book since this is a personal transaction among the partners. however, a transfer of capital will be recorded as agreed upon.

Question 48

If a new partner receives a capital credit that is more than what they paid for in a partnership admission through purchase of interest, how will this gain be recorded in the books of the partnership?

Answer 48

a gain is not recorded in the book of the partnership since this is a personal gain of the new partner/

Question 49

It is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business.

Answer 49

PARTNERSHIP DISSOLUTION

Question 50

Is the partnership terminated in a partnership dissolution?

Answer 50

NO, it continues until the winding up of a partnership affairs is completed.

Question 51

TRUE OR FALSE: a partner may admitted with only an majority vote from the original partner

Answer 51

FALSE: it requires consent from all the partners, including the new partner

Question 52

If the total contributed capital is less that the total agreed capital, then _____

Answer 52

there is a positive asset revaluation