Chapter 1 Questions: Quiz

1. In a contract of partnership, two or more persons bind themselves to

contribute money, property, or industry to a common fund, with the intention of
dividing the profit among themselves

2. CHARACTERISTICS OF A PARTNERSHIP
a. Mutual Contribution
b. Division of Profits or Losses
c. Co-Ownership of Contributed Assets
d. Mutual Agency
e. Limited Life
f. Unlimited Liability
g. Income Taxes
h. Partner’s Equity Accounts

3. KINDS OF PARTNERS
a. General Partner
b. Limited Partner
c. Capitalist Partner
d. Industrial Partner
e. Managing Partner
f. Liquidating Partner
g. Dormant Partner
h. Silent Partner
i. Secret Partner
j. Nominal Partner or partner by estoppel

4. Fair market value is the estimated amount that a willing seller would receive
from a financially capable buyer for the sale of the asset in a free market.

5. Double-entry system are the dual effects of a business transaction are

recorded.

6. Basic accounting model, Assets always equals to Liabilities and Owner’s

Equity

7. TRUE: Mutual Agency means that each partner has the right to bind the
partnership to contracts.

8. FALSE: A partnership with a capital of less than P3,000 is valid even if it is

unregistered with the SEC.
9. TRUE: A partnership has a juridical personality separate and distinct from
that of each of the partners.

10. TRUE: A dormant partner is one who does not take active part in the
partnership business though may be not known as a partner

11. FALSE: Adjustments prior to formation may be omitted since they will not
affect the partners’ capital credits

12. FALSE: The partner’s capital accounts is debited for additional investments
and credited for his share of profits

13. TRUE: A partner by estoppel is one who is actually not a partner but who
represents himself as one

14. TRUE: A limited partnership normally has one or more general partners
whose liability is unlimited

15. A partner by estoppel is one who is actually not a partner but who
represents himself as one

16.