Special Transactions Quiz

Which of the following best describes a partnership?

• A business owned and operated by a single individual.

• A business structure involving two or more individuals sharing profits, losses, and responsibilities.

• A corporation with shareholders and a board of directors.

• A non-profit organization managed by volunteers.

What is the legal basis for requiring a partnership with a capital of P3,000 or more to be recorded in the SEC?

• Securities and Exchange Commission Act.

• Civil Code, Articles 1771-1772.

• Partnership Act of 2020.

• Business Registration Act.

What is one disadvantage of a partnership compared to a corporation?

• Greater source of capital

• Better management

• Unlimited liability

• Fewer constraints on actions

Why might a partnership be less effective than a corporation in raising large amounts of capital?

• Partnerships have limited capital

• Partnerships have better management

• Partnerships have fewer constraints on actions

• Partnerships are subject to less government regulations

What does "Receivable from a Partner" represent in a partnership's ledger accounts?

• Loan obtained by the partnership from a partner

• Loan extended by the partnership to a partner

• Permanent withdrawals of capital

• Share in profits

According to Article 1797 of the Civil Code, if the share of each partner in the profits has been agreed upon, how should the share of each in the losses be distributed?

• In proportion to their capital contribution

• In the same proportion as the profits

• Equally among all partners

• Based on the industrial partner's contribution

If an industrial partner contributes capital in addition to their services, what share do they receive in the profits under Article 1797 of the Civil Code?

• A share in proportion to their capital contribution

• No share in the profits

• A share equal to the other partners' profits

• A share based on the losses incurred

What happens to salaries paid to partners in the absence of any agreement when the partnership incurs losses?

• Salaries are not paid

• Salaries are paid as an expense

• Salaries are paid even when operations yield losses

• Salaries are converted into bonuses

When profits and losses are distributed based on capital contributions, which of the following is NOT a method of determining the capital contribution?

• Original

• Beginning of the year

• End of the year

• Total revenue

What happens to a business after a partner is disassociated, according to the definition of dissolution?

• The business is immediately terminated.

• The business continues until the remaining partners decide to liquidate it.

• The business is sold to a third party.

• The business is automatically incorporated.