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1. All partnerships have general partners. 2. Each partner generally has the authority to enter into contracts which are binding upon the partnership. 3. A partner's contribution in the form of non-cash asset should be recorded at its fair market value even if there is an agreed value.

1. All partnerships have general partners. 2. Each partner generally has the authority to enter into contracts which are binding upon the partnership. 3. A partner's contribution in the form of non-cash asset should be recorded at its fair market value even if there is an agreed value.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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True or false choose which

True or False: 1. All partnerships have general partners. 2. Each partner generally has the authority to enter into contracts which are binding upon the partnership. 3. A partner's contribution in the form of non-cash asset should be recorded at its fair market value even if there is an agreed value. 4. All types of partnerships are subject to income tax. 5. If the partners did not agree as to how profits are to be divided, then such should be divided among the partners equally. 6. All partners, whether capitalist or industrial, are to share on whatever partnership profits or losses. 7. The total assets of the partnership will increase upon admission of a new partner by purchase of interest. 8. The admission of a new partner in an existing partnership dissolves the old partnership. 9. Admission of a new partner by purchase of interest is a personal transaction between the selling partner and the buying partner. Hence, any indicated gain in the transaction is not recognized in the partnership books. 10. The percentage interest in a partnership is always the same as the profit-sharing ratio. 11. If the partnership agreement specifies a method for sharing profits, but not losses, the losses are shared equally. 12. Using bonus method, total contributed capital is always equal to total agreed capital. 13. Dissolution immediately causes the termination of a firm. 14. It is easier to change ownership in a corporation than in a partnership. 15. Accounting for the withdrawal of a partner when one of the remaining partners buys the retiring partner's interest is not the same as when an outside person buys a retiring partner's interest.
Transcribed Image Text:True or False: 1. All partnerships have general partners. 2. Each partner generally has the authority to enter into contracts which are binding upon the partnership. 3. A partner's contribution in the form of non-cash asset should be recorded at its fair market value even if there is an agreed value. 4. All types of partnerships are subject to income tax. 5. If the partners did not agree as to how profits are to be divided, then such should be divided among the partners equally. 6. All partners, whether capitalist or industrial, are to share on whatever partnership profits or losses. 7. The total assets of the partnership will increase upon admission of a new partner by purchase of interest. 8. The admission of a new partner in an existing partnership dissolves the old partnership. 9. Admission of a new partner by purchase of interest is a personal transaction between the selling partner and the buying partner. Hence, any indicated gain in the transaction is not recognized in the partnership books. 10. The percentage interest in a partnership is always the same as the profit-sharing ratio. 11. If the partnership agreement specifies a method for sharing profits, but not losses, the losses are shared equally. 12. Using bonus method, total contributed capital is always equal to total agreed capital. 13. Dissolution immediately causes the termination of a firm. 14. It is easier to change ownership in a corporation than in a partnership. 15. Accounting for the withdrawal of a partner when one of the remaining partners buys the retiring partner's interest is not the same as when an outside person buys a retiring partner's interest.
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