Partnership Formation True or False

False 1. An industrial partner is exempted from liability to third persons for the debts of
the partnership.
False 2. A partnership is an incorporated association of two or more persons that
contribute money, property, or industry to a common fund, with the intention of dividing
the profits among themselves.
True 3. A partnership has a limited life because any change in the relationship of the
partners dissolves the partnership.
True 4. When partners introduce cash or any other asset, cash or the other asset
account is debited at the value agreed by the partners and the corresponding partner's
capital account is credited by the same amount.

True 5. Each partner is personally liable for all debts of the partnership.
True 6. Income earned by the partnership is usually viewed as income to the “entity”
with partner entitled to a distributive share of the income.

False 7. In the creation of the initial capital account balances on a partnership's financial
records, each partner's capital account must have a non-zero value assigned to it.

False 8. The newly formed partnership must have a new set of books for accounting
records and should not use the books of one of the sole proprietors.

True 9. If a partner's capital balance is credited for an amount greater than or less than
the fair value of his net contribution, the excess or deficiency is called BONUS.