1. What does a partnership agreement includes?

A. each partner’s duties

B. the purpose of the business
C. the method of allocating profits and losses
D. all of these

2. Which of the following is not a characteristic of most partnership?

A. ease of formation B. limited liability C. mutual agency D. limited life

3. The partner’s capital account is credited in the following cases except when it involves the recording
of what?

A. additional investment

B. original investment

C. share in profit

D. debit balance of the drawing account at the end of the period

4. How does non-cash assets invested into a partnership will be recorded?

A. zero B. their recorded cost C. their carrying value D. their fair market value

5. What kind of partnership comprises all the profits that the partners may acquire by their work or
industry during the existence of the partnership?

A. de jure partnership

B. universal partnership of profits

C. particular partnership

D. universal partnership of all present property

6. Who is a partner liable for the payment of partnership debts to the extent of his separate property
after the partnership assets are exhausted?

A. Limited partner B. General partner C. Managing partner D. Capitalist partner

7. What is the ability of a partner to enter into a contract on behalf of all partners?

A. mutual agency B. voluntary association C. unlimited liability D. the partnership agreement

8. Two sole proprietors formed a partnership. Non-cash assets forming part of the initial investment in
the partnership would be recorded at what?

A. proprietors’ book values or the fair value of the property at the date of the investment, whichever is
higher.

B. proprietors’ book values or the fair value of the property at the date of the investment, whichever is
lower.
C. fair value of the property at the date of the investment

D. proprietors’ book values of the property at the date of the investment

9. Lacson and Solis started partnership. Lacson contributed a building that she purchased 10 years ago
for P100,000. The accumulated depreciation on the building on the date of formation of the partnership
is P25,000 and the fair value P110,000. For what amount will also Lacson’s capital account be credited
on the books of the partnership?

A. P100,000 B. P75,000 C. P110,000 D. P25,000

1. D
2. B
3. D
4. D
5. B
6. B
7. A
8. C
9. c