Circle the correct answer. True/False (If False, Explain Why) 1. A partner can bind the partnership to outside contracts without receiving permission from the other partners. True False 2. In a limited partnership, one or more partners have limited liability for the debts of the firm True False 3. A partner is never liable for more than his or her capital investment in the partnership. True False 4. In a partnership, when the division of profits and losses is based on salaries, interest, and a tieed ratio, if the salary and interest allocation exceeds net income, then a net loss has in fact occurred True False 5. A partnership is considered an accounting entity for financial reporting purposes. True False When the partnership contract does not specify the manner in which net income and net loss are to be divided, profits and losses are distributed based on the average capital balances of each partner during the year. 6. True False 7. The partners\' capital statement explains the changes in each partner\'s capital account and in total partnership capital during the year. True False Upon the sale of assets in liquidation, gains and losses are always divided equally among partners. True 8. False 9. If a partnership is admitting a new partner to the existing partnership and the existing partners are to receive a bonus, this bonus would be allocated on the basis of their income ratios before the admission of the new partner. True False Admission of a new partner to the partnership does not result in the dissolution of the existing partnership. True False 10.
A PARTNERSHIP IS AN AGREEMENT BETWEEN TWO OR MORE PERSONS TO CARRINGOUT A BUSINESS AND TO DISTRIBUTE PROFIT AMONG THEMSELVES.
1) THIS STATEMENT IS FALSE:- A PARTNER CAN NOT BIND THE PARTNERSHIP FIRM TO OUTSIDE CONTRACT WITHOUT TAKING PERMISSION FROM OTHER PARTNERS.AS A PARTNERSHIP IS A ASSOCIATION OF PERSONS AND THERE IS A APPEARENT RELATIONSHIP AMONG PARTNERS ,A SINGLE PARTNER CAN\'T BIND THE PARTNERSHIP.
2)TRUE.
3)FALSE:- IN A PARTNERSHIP THE LIABILITY OF PARTNERS IS UNLIMITED UNLESS IT IS A LIMITED LIABILITY PARTNERSHIP.
4)FALSE:-SALARIES AND INTEREST IS PAYABLE TO PARTNERS UPTO THE PROFIT.THAT MEANS AFTER PAYING INTEREST AND SALARIES TO PARTNERS THE BALANCE CAN BE POSITIVE OR NILL BUT IT CAN\'T BE IN NEGATIVE FIGURE.
5) FALSE:-A PARTNERSHIP IS NOT A SEPARATE ENTITY IN THE EYES OF LAW.SO IT IS NOT CONSIDERED AS AN ACCONTING ENTITY FOR FINANCIAL REPORTING PUPOSES.
6)FALSE:-WHEN THE PARTNERSIHP CONTRACT DOESNOT SPECIFIES THE MANNERS IN WHICH NET PROFIT OR LOSSES ARE TO BE DIVIDED, THEN PROFIT OR LOSSES OF THE PARTNERSHIP FIRM ARE DIVIDED EQUALLY.
7)TRUE.
9)TRUE.
10)FALSE:-ADMISSION OF A NEW PARTNER TO THE PARTNERSHIP FIRM RESULTS INTO THE CREATION OF NEW AGREEMENT AMONG PARTNERS.WHICH RESULT INTO THE DISSOLUTION OF EXISTING PARTNERSHIP.
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