PARTNERSHIP AND CORP - GENERAL CONCEPT AND FORMATION

This is the most equitable way of distributing profit

• average capital

• beginning capital

• ending capital

• original capital

This partner does not share in the losses incurred by the partnership

• limited partner

• general partner

• industrial partner

• capitalist partner

Properties contributed by the partners should be recorded at

• acquisition cost

• fair market value

• book value

• historical cost

A and B are partners, but only A is the managing partner, both contributed equal assets. the best profit-sharing ratio will be

• Equally

• Salary to A and B remaining profit to be shared equally

• Salary to A, remaining profit to be shared equally

• 1:1 ratio

All except one may be given to a partner whether the operation is a net profit or a net loss

• salaries

• bonus

• interest

• regular drawing

Account receivable invested by a partner should be recorded at its

• realizable value

• book value

• gross amount

• market value

statement 1: all partnership are required to file and pay taxes

statement 2: A partnership has an indefinite life like a corporation

• only first statement is true

• only second statement is true

• both statements are true

• none of the statements are true

Statement 1: In the absence of an agreement , net income or net loss will be distributed equally Statement 2: A limited partner shares in the profits but not in the losses of the partnership

• only first statement is correct

• only second statement is correct

• both statements are correct

• none of the statements are correct

Statement 1: A debit balance in the Income and Expense Summary represent net loss

Statement 2: Giving salary allowance to a partner is a mechanism of distributing profit in recognition of the partner's investment in cash and or property

• only first statement is true

• only second statement is true

• both statements are true

• None of the statements are true

Statement 1: This agreement is valid , A & B invested 100,000 each in the partnership but agreed to divide profits and losses in a 2:1 ratio

Statement 2: Interest given to partners based on their contributions are expense subject to tax

• only first statement is true

• only second statement is true

• both statements are true

• none of the statements are true