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Questions and Answers
Which of the following is NOT a learning objective in the chapter on partnership formation?
Which of the following is NOT a learning objective in the chapter on partnership formation?
- Identifying the peculiar accounts used in a partnership
- Accounting for the initial investments of the partners to the partnership
- Stating the valuation of contributions of partners
- Differentiating between the accounting for partnerships, sole proprietorships, and corporations (correct)
What is the definition of a partnership?
What is the definition of a partnership?
- An unincorporated association of two or more individuals to carry on a business, with the intention of dividing the profits among themselves (correct)
- A corporation with multiple shareholders
- A business owned by a single individual
- A legal entity with separate legal personality from its members
When must a partnership with more than Php3,000 capital register with the Securities and Exchange Commission?
When must a partnership with more than Php3,000 capital register with the Securities and Exchange Commission?
- When it has more than Php5,000 capital
- When it has more than Php10,000 capital
- When it has more than Php3,000 capital (correct)
- When it has more than two partners
Which article of the civil code governs partnerships in the Philippines?
Which article of the civil code governs partnerships in the Philippines?
What is the definition of a partnership's juridical person?
What is the definition of a partnership's juridical person?
Accounting for partnerships, sole proprietorships, and corporations requires the ability to ______ between the three entities
Accounting for partnerships, sole proprietorships, and corporations requires the ability to ______ between the three entities
The valuation of contributions of partners is necessary to determine each partner's ______ in the partnership
The valuation of contributions of partners is necessary to determine each partner's ______ in the partnership
To account for the initial investments of the partners, the partnership must record the ______ made by each partner
To account for the initial investments of the partners, the partnership must record the ______ made by each partner
In a partnership, there are peculiar accounts that are used to track specific transactions, such as the ______ account
In a partnership, there are peculiar accounts that are used to track specific transactions, such as the ______ account
A partnership with more than Php3,000 capital must register with the ______
A partnership with more than Php3,000 capital must register with the ______
Flashcards
What is a partnership?
What is a partnership?
An unincorporated association of two or more individuals operating a business to profit between themselves.
When must a partnership register with the SEC?
When must a partnership register with the SEC?
When it has more than Php3,000 capital.
What is a partnership's juridical person?
What is a partnership's juridical person?
A partnership with separate legal personality from its members
Why value partner contributions?
Why value partner contributions?
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What must accounting record?
What must accounting record?
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What account tracks specific transactions?
What account tracks specific transactions?
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Who should partnerships with capital over ₱3,000 register with?
Who should partnerships with capital over ₱3,000 register with?
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Study Notes
Partnership Formation
- A partnership is an unincorporated association of two or more individuals to carry on a business, with the intention of dividing the profits among themselves.
- A partnership is treated as a juridical person, having a separate legal personality from that of its members.
- A partnership with more than Php3,000 capital must register with the Securities and Exchange Commission.
- Partnerships are governed by the Civil Code, specifically Article 1767 to 1867 of the Philippines.
Accounting for Partnerships
- Differentiate between the accounting for partnerships, sole proprietorships, and corporations.
- Valuation of contributions of partners is a key aspect of partnership accounting.
- Initial investments of partners to the partnership are accounted for separately.
- Peculiar accounts used in a partnership include:
- Partner's capital accounts
- Partner's drawing accounts
- Partner's current accounts
- Partnership profit and loss accounts
- Transactions that affect these accounts include:
- Initial investments
- Partner's drawings
- Profit and loss distributions
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