Truth or Lie About Partnership Business Formation
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Partnership Business Formation Transactions
Topics of this game:
- A partnership is a legal entity separate and apart from its owners.
- 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.
- Two or more persons may form a partnership for the exercise of a profession.
- There can never be a partnership without contribution of money, property or industry to a common fund.
- Work or services that may either be personal manual efforts or intellectual may also be contributed to a partnership.
- A partnership may be established for charity.
- A partnership cannot be established for religious purposes.
- A partnership has a juridical personality separate and distinct from that of each of the partners,
- A partnership must always have two or more owners.
- A partnership must always have at least two owners.
- A proprietorship has a limited life whereas a partnership may have an unlimited life.
- One of the partners in a proposed partnership is a multi- millionaire. The stipulation in the articles of partnership that this partner shall be excluded from sharing in the profits of the partnership is valid.
- One of the partners in a proposed partnership is a multi-millionaire. The stipulation in the articles of partnership that this partner shall be excluded from sharing in the profits of the partnership is void.
- A partner who invests assets into a partnership retains control over those specific assets.
- All partnerships have a limited life and assets are co-owned by the partners.
- A partnership has a limited life because any change in the relationship of the partners dissolves the partnership.
- Bankruptcy of a partner will dissolve the partnership.
- The essence of partnership is that each partner must share in the profits or losses of the venture.
- A partnership involves mutual agency, unlimited liability for general partners and limited life.
- Mutual agency means that each partner has the right to bind the partnership to contracts.
- As long as the action is within the scope of the partnership, any partner can bind the partnership.
- In a general partnership, each partner's liability for losses is limited to his investment in the firm.
- Each partner is personally liable for all debts of the partnership.
- One advantage of a partnership over a corporate form of organization is the unlimited liability of partners.
- A disadvantage of partnerships over corporations is the partners' unlimited liability.
- Under the partnership form of business, large amounts of capital can be raised easily.
- An advantage of the partnership form of business is that each partner's potential loss is limited to that partner's investment in the partnership.
- There is no income tax imposed on a partnership.
- Ownership is easily transferred in a partnership.
- A limited partnership must have at least one general partner.
- All partners in a general partnership are personally liable for all debts incurred by the partnership.
- A limited partnership normally has one or more general partners whose liability is unlimited.
- In a limited partnership, the general partner's liability is limited to his investment.
- The limited partners are liable only to the extent of their personal contributions.
- In a limited partnership, none of the partners has unlimited liability for the business debts.
- A partner usually retains title to assets contributed to a partnership, so that certain assets may be identified as belonging to a given partner.
- Not all of the partners in a general partnership are personally liable for all debts incurred by the partnership.
- All partnerships are subject to tax at the rate of 35% of taxable income.
- A de jure partnership is one which has complied with all the legal requirements for its establishment.
- A dormant partner is one who does not take active part in the partnership business and is not known as a partner.
- A secret partner is one who does not take active part in the partnership business and is not known as a partner.
- A dormant partner is one who does not take active part in the partnership business though may be known as a partner.
- A silent partner takes active part in the business of the partnership and is not known by outsiders to be a partner.
- A partner by estoppel is one who is actually not a partner but who represents himself as one.
- A partnership is created by mere agreement of the partners.
- A partnership and a corporation cannot form a partnership in general rule.
- A partnership agreement should include the procedure for ending the business.
- The basis of valuation for non-cash investments should be fair market value.
- The basis of valuation for non-cash investments should be at values agreed upon by the partners.
- When the partners invest assets other than cash in a partnership, their capital accounts should be credited with the current fair market values of the assets.
- When a partner invests assets in a partnership, the assets are recorded at the partner book value.
- Liabilities related to assets invested in a partnership by a new partner cannot be transferred to the partnership.
- Accounting for a partnership comes closer to accounting for a sole proprietorship than to accounting for a corporation.
- Partners' drawing accounts have normal credit balances.
- The manner in which profits are to be shared should be specified in the articles of partnership.
- A partnership should always be constituted in writing.
- A public instrument needs to be executed when immovable property or real rights are contributed to the partnership.
- When the partnership capital is P3,000 or more, the public instrument must be recorded with the Securities and Exchange Commission.
- A partnership with a capital of less than P 3,000 is valid even if it is unregistered with the Securities and Exchange Commission.
- A partnership with a capital of P3,000 or more is valid even if it is unregistered with the Securities and Exchange Commission.
- A partnership with a capital of less than P 3,000 is void if it is unregistered with the Securities and Exchange Commission.
- Each partner has a capital account and a drawing account. These accounts are used in a slightly different way compared to those in a sole proprietorship.
- The partner's capital account is debited for additional investments and credited for his share in profit.
- The partner's capital account is debited for the debit balance of the drawing account at the end of the period.
- A partner's capital account is debited to reflect assets permanently withdrawn.
- Adjustments prior to formation may be omitted since these will not affect the partners' capital credits.
- Assets invested in the partnership should be recorded at their cost to the partner.
