Philippine Civil Code: Partnership Formation

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Questions and Answers

What is the main characteristic of a limited partnership?

  • Limited liability for all partners
  • No general partner is present in a limited partnership
  • Partners are liable only up to the extent of their capital contributions (correct)
  • Unlimited liability for all partners

Which of the following increases the capital account in partnership activities?

  • Permanent withdrawal
  • Regular drawings
  • Initial investment (correct)
  • Share in net loss

In accounting for partnership activities, how are loan accounts between partners and the partnership reported?

  • As separate balance sheet items (correct)
  • As part of the capital account
  • As part of the drawing account
  • As liabilities of the partnership

What is a key feature of general partnership with regard to partner liability?

<p>Each partner is personally liable to the partnership’s creditors (C)</p> Signup and view all the answers

How is local currency valued in the context of cash investment in partnership formation?

<p>At face value (C)</p> Signup and view all the answers

What approach is used if the partners' initial investments are not equal to their agreed capital?

<p>Bonus approach (A)</p> Signup and view all the answers

How are noncash investments recorded in partnership formation?

<p>At fair value (A)</p> Signup and view all the answers

How are liabilities assumed by the partnership valued?

<p>At fair value (B)</p> Signup and view all the answers

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