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</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</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</p> Signup and view all the answers

    How are noncash investments recorded in partnership formation?

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

    How are liabilities assumed by the partnership valued?

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

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