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NATURE AND FORMATION OF PARTNERSHIP
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REVIEW FOR CHAPTER 2 NATURE AND FORMATION OF A PARTNERSHIP
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TRUE OR FALSE1. An individual must contribute capital to become a partner in a firm. FALSE
2. No entry is necessary to record the investment of industrial partner. FALSE
3. A partnership whose capital is P3,000 pesos and above should be
registered with the Securities and Exchange Commission. TRUE
4. Accounts Receivable if part of a partner’s investment maybe recorded at
net realizable value. FALSE
5. The characteristic of unlimited liability does not apply to a limited
partnership. FALSE
6. A partner who is not known as a partner but who participates actively in the
management of the partnership is called a managing partner. FALSE
7. All partners in a general partnership are general partners. TRUE
8. Oral agreement will still bind the partners forming the partnership. TRUE
9. The partnership form of business does not have to comply with as many
legal formalities compared to a corporation. TRUE
10. Partnership form of business is best suited to practice of professions.
TRUE
IDENTIFICATION
MUTUAL AGENCY - A partnership characteristic which states that any partner
may act as an agent of the partnership in conducting its affairs.
, GENERAL PARTNER - A kind of partner one whose liability to third persons
extends to his private property.
CORPORATION - A body formed and authorized by law to act as a single person
although constituted by one or more persons and legally endowed with various
rights and duties.
CAPITALIST PARTNER - A kind of partner who contributes capital in money or
property.
PARTNERSHIP - An association of two or more persons who bind themselves
together to do business for profit. The persons owning this form of business are
called partners.
LEGAL ENTITY - A partnership has a legal personality separate and distinct
from that of each of the partners.
PARTNERSHIP AT WILL - A kind of partnership for which no term is specified
and is not formed for a particular undertaking or venture and which may be
terminated any time by mutual agreement of the partners or the will of one alone.
LIMITED PARTNERSHIP - A kind of partnership consisting of one or more
general partners and one or more limited partners.
CAPITALIST- INDUSTRIAL PARTNER - A kind of partner who contributes
money, property and industry.
VOLUNTARY ASSOCIATION - A partnership characteristic which states that no
one should be forced or coerced in joining a partnership.
MULTIPLE CHOICE
1. When a partnership is formed, assets contributed by the partners should
be recorded on the partnership books at their
fair market value at the time of the contribution.
carrying values on the partners' books prior to their being contributed to the
partnership. original costs to the partner contributing them.
personal assessment of the owner of the non-cash property.
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