Compliance with Legal Requirements Quiz

Questions and Answers

One which has complied with all the legal requirements for its establishment.

De Jure partnership

one who is liable to the extent of his separate property after all the assets of the partnership are exhausted.

General Partner

If a partner withdraws a substantial amount of money with the intention of repaying it.

LOANS RECEIVABLE FROM PARTNERS

Since they never had a previous business, journal entries and general ledger will be recorded in new set of books.

2 or more Individuals with no existing business form a partnership Signup and view all the answers

If the investment made by the new partner is less than the book value of the capital interest that has been purchased, then the bonus will be allocated to that new partner.

bonus method Signup and view all the answers

one who takes active part in the business but is not known to be a partner by outside parties.

Secret Partner Signup and view all the answers

one who is actually not a partner but who represents himself as one.

Nominal Partner Signup and view all the answers

blank partnership of all present property. All contributions become part of the partnership fund.

universal partnership Signup and view all the answers

associated with professions like, medicine, public accounting, law etc

General professional partnership Signup and view all the answers

essence of partnership is that each of the partner must share in profits/ losses of the venture.

Division of profits or losses Signup and view all the answers

Study Notes

Partnership Basics

A partnership must comply with all legal requirements for its establishment.

Types of Partners

Limited Liability Partner: liable to the extent of their separate property after all the assets of the partnership are exhausted.
Active Partner: takes an active part in the business, but is not known to be a partner by outside parties.
** Ostensible Partner**: not actually a partner, but represents themselves as one.
Partners in Professions: associated with professions like medicine, public accounting, law, etc.

Partnership Formation

New Partner Investment: if the investment made by the new partner is less than the book value of the capital interest purchased, the bonus is allocated to the new partner.
Initial Recordings: journal entries and general ledger are recorded in a new set of books if the partners have no previous business.

Partnership Fund

Contributions: all contributions become part of the partnership fund.

Partnership Essence

Profit and Loss Sharing: the essence of partnership is that each partner must share in the profits and losses of the venture.