AFAR 1

According to the Civil Code of the Philippines, what is the definition of a partnership?

• A contract between two or more persons to contribute property only to a common fund with the intention of dividing the profits among themselves

• A contract between two or more persons to contribute money only to a common fund with the intention of dividing the profits among themselves

• A contract between two or more persons to contribute industry only to a common fund with the intention of dividing the profits among themselves

• A contract between two or more persons to contribute money, property, or industry to a common fund with the intention of dividing the profits among themselves

What are the characteristics of a partnership according to the acronym SECMULI?

• Separate legal personality, Ease of formation, Co-ownership of contributed assets, Mutual Agency, Mutual participation in the profits, Unlimited liability, Unlimited life

• Separate legal personality, Ease of formation, Co-ownership of contributed assets, Mutual Agency, Mutual participation in the profits, Limited liability, Unlimited life

• Separate legal personality, Ease of formation, Co-ownership of contributed assets, Mutual Agency, Mutual participation in the profits, Limited liability, Limited life

• Separate legal personality, Ease of formation, Co-ownership of contributed assets, Mutual Agency, Mutual participation in the profits, Unlimited liability, Limited life

What is the primary formation issue in partnership formation?

• Profit or loss allocation

• Valuation of contribution

• Settlement of partnership liabilities

• Periodic adjustment of capital after operation

According to the Civil Code, in what order should assets contributed by the partners to the partnership be valued?

• Agreed values, Fair values

• Present values, Agreed values

• Agreed values, Present values

• Fair values, Agreed values

What are the stages in the life of a partnership?

• Formation, Operation, Dissolution, Liquidation

• Formation, Operation, Incorporation, Liquidation

• Formation, Operation, Retirement, Liquidation

• Formation, Operation, Dissolution, Incorporation

What is the accounting issue that arises when the net assets invested by a partner do not equal the agreed capital for a partner?

• Bonus method

• Goodwill method

• Revaluation method

• Additional investment

What is the primary accounting issue in partnership operation?

• Settlement of partnership liabilities

• Profit or loss allocation

• Valuation of contribution

• Periodic adjustment of capital after operation

What is the compensation for services provided by a partner, regardless of the existence of profit?

• Bonus

• Interest

• Salary

• Withdrawal

What is the right of a partner to set-off his loan to the partnership against his capital deficiency called?

• Bonus method

• Goodwill method

• Right of offset

• Revaluation method

What is the winding up of the partnership business called?

• Dissolution

• Liquidation

• Formation

• Operation