Exercise 2-2. Alternate Response: Write TRUE, if the statement is correct and FALSE, if thestatement is wrong.1. An individual must contribute capital to become a partner in a firm.2. No entry is necessary to record the investment of industrial partner.3.A partnership whose capital is P3,000 pesos and above should be registeredwith the Securities and Exchange Commission.4.5. The characteristic of unlimited liability does not apply to a limited partnership.6.A partner who is not known as a partner but who participates actively in themanagement of the partnership is called a managing partner.7. All partners in a general partnership are general partners.8.Oral agreement will still bind the partners forming the partnership.9.The partnership form of business does not have to comply with as many legalformalities compared to a corporation.10. Partnership form of business is best suited to practice of professions.Accounts Receivable, if part of a partner's investment maybe recorded at netrealizable value.

Partnership - A partnership is a type of business where two or more people formally agree to be…

Exercise 2-2. Alternate Response: Write TRUE, if the statement is correct and FALS statement is wrong. 1. An individual must contribute capital to become a partner in a firm. 2. No entry is necessary to record the investment of industrial partner. 3. A partnership whose capital is P3,000 pesos and above should be regist with the Securities and Exchange Commission. 4. Accounts Receivable, if part of a partner's investment maybe recorded realizable value. 5. The characteristic of unlimited liability does not apply to a limited partne 99 6. A partner who is not known as a partner but who participates actively in management of the partnership is called a managing partner.

Exercise 2-2. Alternate Response: Write TRUE, if the statement is correct and FALS statement is wrong. 1. An individual must contribute capital to become a partner in a firm. 2. No entry is necessary to record the investment of industrial partner. 3. A partnership whose capital is P3,000 pesos and above should be regist with the Securities and Exchange Commission. 4. Accounts Receivable, if part of a partner's investment maybe recorded realizable value. 5. The characteristic of unlimited liability does not apply to a limited partne 99 6. A partner who is not known as a partner but who participates actively in management of the partnership is called a managing partner.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.1C

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1. Statement I: One who lends money/credit to the owner of a business establishment in consideration of which he will share in the profits in repayment of such credit, is presumed to be a partner. Statement II: If an employee received a share in the profits of the partnership in consideration of rendition of services, does not make the employee a partner. Both statements are True Statement I is True; Statement II is False Statement I is False; Statement II is True Both statements are False 2. A, B, and C are partners contributing the following amount: A=P50,000 B=25,000 and C=25,000. The partners did not agree on the profit and loss sharing. If there is a loss of P90,000, how much is their respective shares? A= 45,000, B=22,500 C=22,500 A= 50,000, B=20,000 C=20,000 A= 30,000, B=30,000 C=30,000 There will be no distribution of loss because it is not stipulated in the agreement. 3. Statement I: The mere sharing of gross returns establish the fact that it is a partnership, no…
Which of the following statements is most true? a. The liability for other partners’ wrong doings is limited to the amount a particular partner has invested in the partnership. b. Partnerships are formed in accordance with specific guidelines that include the filing of a formal written agreement to the government. c. A fast growing firm would be more probable to establish a partnership as its business form than would a slow growing firm. d.Corporations can easier attract investors than those of the partnership and sole proprietor businesses.
A & B approach C about forming a general partnership. A & B will each contribute $10,000 cash as start-up funds. C is to contribute no cash but instead work full-time in the business. A & B will work only part-time in the business. A, B, & C will share profits equally. C believes this is a great opportunity for him as he has no investment to risk by going into business with A & C. Is he correct?
1.Discuss the advantages and disadvantages of creating a partnership and say why the company format was chosen instead. 2.Discuss whether or not the creation of a partnership could hamper their ability to borrow to fund their operations. 3.Discuss he advantages and disadvantages of forming a company. 4.Discuss whether they should form a public or private company and whether the company should be unlimited or limited. If you suggest that the company should be unlimited, should the company be limited by shares or by guarantee. Give reasons for the type of company chosen. 5.Discuss how the creation of a company may impact the ability of MM, AA, BB and SS to borrow money to fund their operations. 6.Describe and discuss two (2) corporate governance theories that may assist MM, AA, BB and SS in running their business. 7.Discuss how MM, AA, BB and SS may approach the appointment of Directors to their company and whether or not any or all of them should become Directors given their…
Which sentence is not true? Select one: a. In Partnership, the ownership divided into shares of stock. b. Profit or loss has an effect on the owner's equity. c. Companies usually prepare 4 financial statements. d. Assets are resources for providing future services or benefits.
1. S1: The personal assets of the partners are used first to settle their personal obligations before they are used to satisfy the claims of the partnership creditors. S2: An industrial partner is exempted to share for the losses of the business and is not required to contribute additional cash in case of insolvency of the partnership. a. Both statements are correct b. Both statements are incorrect c. Only S1 is correct. d. Only S1 is incorrect. 2. S1: In liquidation process, the noncash assets are sold only to outside parties but never to any of the partners. S2: An insolvent partners’ capital deficiency can be solved by his additional cash contribution. a. Both statements are correct b. Both statements are incorrect c. Only S1 is correct. d. Only S1 is incorrect. 3. S1: Dissolution and liquidation are different. S2: In the liquidation of a business the owners’ claims are settled simultaneously…
Choose the response that correctly completes the following sentence about an individual partner's outside basis in a partnership. A partner's outside basis: A) Cannot be less than zero. B) Does not change as long as the partner maintains their partnership interest. C) Is used to apply the basis limitation to losses from a partnership. D) Must be tracked by the partnership. An S corporation shareholder may carry forward unallowed loss that exceeds the basis of their stock (increased by any loans the shareholder made to the corporation) for what period of time? A) A maximum of two years. B) A maximum of ten years. C) A maximum of twenty years. D) Indefinitely, until they are allowed to deduct the entire amount. The Form 1099-A, Acquisition or Abandonment of Secured Property, gives the taxpayer the information that they need to calculate: A) The amount that they will need to pay to avoid having to give up their property. B) Gain or loss from the sale of the property. C) Their ordinary…
TRUE or FALSE The accounting for partnerships differs from the accounting for sole proprietorships, corporations and cooperatives in regard to the accounting for equity but not for assets and liabilities. A partnership is relatively easy to form but also easy to dissolve. Ms. A contributed equipment with carrying amount of P100 and fair value of P200 to a partnership. If no bonus is given to any partner, Ms. A's capital account should be credited for P200. Fact pattern: Mr. Debinsky contributed inventory with purchase cost of P300 and net realizable value of P350 to a partnership. Mr. Debinsky acquired the inventory on account and the partnership will assume the unpaid balance of P80. 4. The partnership will record the inventory at P350. 5. Mr. Debinsky's capital account in the partnership books will be credited for P270. Fact pattern: Mr. B and Ms. C formed a partnership. The partners have equal interests in the partnership and their respective contributions shall reflect this…
Case Study Louise Mathew is one of three full partners in a newly formed business. Without the permission of the other two partners, she enters into a written contract with a creditor. The transaction binds the firm in the amount of $75,000. Louise then leaves the area and cannot be located by the other two partners. Directions: Answer the following questions and include the characteristics of this business form to provide support for your answer. Are the other two partners liable for the $75,000? What legal features of the partnership apply to this case? Is what Louise has done legal?
A client of yours is considering investing in a partnership and has been analyzing the financial statements of the partnership. Their analysis has resulted in the following observations that that they are hoping you could address: 1. The balance sheet does not set forth the capital stock account at par value, which would define some level of minimum legal liability. 2. The balance sheet does not include any accrual for either state or federal income taxes even though the partnership reported pretax income. 3. In analyzing the income statement, your client noted that no salaries to partners were listed as an expense even though they know that existing partners received a salary from the partnership. 4. Interest on a partner’s capital balance is used as a means of allocating profits; however, no such interest appears on the income statement. Provide a response to each of your client’s observations regarding the partnership’s financial statements.
1. S1: In a partnership, at least one partner is required to be a/an limited partner in order to ensure partnership creditors will be paid and protectedS2: Unpaid liabilities should be included in computing for the total loss attributed to the partners. * Both statements are false S1 True; S2 False S2 True; S1 False Both statements are true 2. [S1] Forming a partnership requires two or more people agreeing to be partners contributing all their personal properties. [S2] Oral agreements of partners are not allowed. * Statement 2 is true. Both statements are true. Both statements are false. Statement 1 is true.
II. Write the word or group of words that identify each of the following statements. 1. A partnership wherein all the partners have limited liability except or at least one general partner. 2. The contribution of an industrial partner 3. A partner who contributes money, property, and industry. 4. Any partner can act in behalf of the partnership as long as these acts are within the scope of normal partnership activity. 5. A partnership which failed to comply with one or more of the legal requirements for its establishment. 6. An entry prepared when industry is contributed into the partnership. 7. A partnership organized for the purpose of rendering service.…