rue or False _______1. Insolvency, insanity, or incapability to perform by a partner may cause the dissolution of the firm
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
True or False
_______1. Insolvency, insanity, or incapability to perform by a partner may cause the dissolution of the firm.
_______2. Dissolution and liquidation mean the same thing.
_______3. Asset revaluation may be recognized for the current partners when the new equity is greater than the original partners' equity.
_______4. Dissolution may not necessarily change the basic function or operation of the partnership.
_______5. Dissolution always immediately causes the termination of a firm.
_______6. An admission of a new partner causes a change in the ownership interest of the original partners.
_______7. Ownership may be transferred at will by anyone partner without consulting the other partners.
_______8. Bonus is, in effect, transfer of capital from one partner to another partner.
_______9. Recognizing undistributed profit or loss share of the partners at dissolution date is necessary in effecting dissolution.
_______10. ABC Partnership decided to admit D who acquired a 20% interest from A whose capital balance was P400,000. D paid her P100,000. The effect of this transaction in the partnership is an increase in total partnership assets and total partners' equity.
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