Answered: 21. Statement I: As a rule, an…

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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21. Statement I: As a rule, an industrial partner cannot engage in business himself, unless permitted by other partners. Statement II: If an industrial partner engages in a business similar to the business of partnership, capitalist partners have the right to expel him from the partnership. Statement I is False; Statement II is True Statement I is True; Statement II is False Both statements are True Both statements are False 22. Statement I: If a partner is financially capable, but refuses to contribute additional share to the business during a time of loss, he is obliged to sell his interest to other partners. Statement II:An industrial partner is exempted in additional contribution on the time of an imminent loss. Statement I is False; Statement II is True Statement I is True; Statement II is False Both statements are False Both statements are True 23. Statement I: If immovable property or real rights are contributed in the partnership, the contract must appear in a public instrument with inventory otherwise the contract is void.Statement II: The inventory attached to the public instrument, when there is an immovable property contributed, must be signed by the parties. Both statements are True Statement I is False; Statement II is True Both statements are False Statement I is True; Statement II is False 24. Statement I: The law does not allow the formation of a partnership for the exercise of profession because it is not a business undertaking or enterprise for profit. Statement II: Limited partners may contribute only money or property but not their industry. Both statements are True Both statements are False Statement I is True; Statement II is False Statement I is False; Statement II is True 25. Statement I : General rule, no special form is required for the validity or existence of the partnership.Statement II: The partners may stipulate some other date for the commencement of the partnership. Both statements are True Statement I is False; Statement II is True Statement I is True; Statement II is False Both statements are False 26. Statement I: A partnership is a legal relation based upon the expressed or implied agreement of two or more competent persons where they unite their property, labor or skill in carrying on some lawful or unlawful business. Statement II:The purpose of the partnership is the realization of profits while the co-ownership is for the common enjoyment of a thing or right. Both statements are False Statement I is False; Statement II is True Statement I is True; Statement II is False Both statements are True 27. Statement I:The partnership can possess or acquire property of all kinds. Statement II: The partnership may be adjudged insolvent even if the partners are solvent. Statement I is False; Statement II is True Both statements are False Statement I is True; Statement II is False Both statements are True 28. Statement I : Every partner is a debtor or the partnership for whatever he may have promised to contribute thereto.Statement II: The appraisal of the value of the goods contributed is not necessary in determining the contributed capital of the partner. Statement I is False; Statement II is True Statement I is True; Statement II is False Both statements are False Both statements are True 29. A partner who is known to the public as a partner in the business. Front Partner Public Partner Ostensible Partner Real Partner 30. A, B and C formed a universal partnership with the following contribution: A= car, B=Land, C=Building. Who is the owner of the things contributed? Partners, ownership is not transferred. Third person, because partnership is void. Government, because the partnership is unlawful. Partnership, ownership has been transferred upon contribution.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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