Based on your knowledge of the nature of a partnership, its legal provisions and its accounting

procedure select the appropriate answers from Column A to what is being described in each
statement listed in Column B.

Advances to the partnership payable in the future to a partner. LOAN PARTNER

Acts of each partner when transacting business with outsiders are binding to the partnership
because of this characteristic. MUTUAL AGENCY

Partners may be required to use personal funds to pay partnership debts in case partnership
become insolvent. UNLIMITED LIABILITY

Partners are considered as having rights over partnership properties because of this
characteristic. JOINT OWNERSHIP

A partner who invests cash or properties. CAPITALIST PARTNER

A partner who invests skill or expertise. INDUSTRIAL PARTNER

A written arrangement embodying the nature of the partnership, the partners and their
contributions, their duties, their profit and loss sharing ratio, the manner of withdrawing assets,
the manner of dissolving/liquidating. ARTICLES OF CO-PARTNERSHIP

Partnerships are taxable entities except for this type of partnerships. GENERAL PARTNERSHIP

This represents interest of the partners over the net assets of the partnership.
PARTNER’S EQUITY

This account is used to record regular cash taken by a partner against his/her share in the
partnership profits. PARTNER’S DRAWING

Investment in properties are recorded in the partnership books at this value. MARKET VALUE

This statement is prepared to summarize the changes in the partners' capital for a particular
period of time. STATEMENT OF PARTNER’S EQUITY

This statement shows the financial structure of the firm by listing down its assets and obligations
and the rights of the partners over the assets. STATEMENT OF FINANCIAL POSITION

Permanent investments and withdrawals are recorded in this account. PARTNER’S CAPITAL

This partner cannot actively manage the partnership business. LIMITED PARTNER
 1. A characteristic describing a partnership as a judicial personality which can acquire, sell
or dispose properties and incur obligations

Taxable Entity

Legal Entity

Mutual entity

Voluntary Entity

2. A business, such as partnership, has to file its partnership agreement and register its
firm's name with these government agencies, except one.

Securities and Exchange Commission

Department of Trade and Industries

National Bureau of Investigation

Bureau of Internal Revenue

3. An industrial partner cannot be a general partner.

True

False

4. A capitalist partner cannot be a limited partner.

True
False
5. The partner's personal account which was collected by the partnership and credited to its
accounts receivable is a violation of the

Partner's Equity Concept

Business Entity Concept

Realization Principle

Accrued Principle

6. It is easier to change ownership in a corporation than in a partnership.

True

False

7. The characteristic of unlimited liability is a disadvantage from the viewpoint of the

partnership creditors.

True

False

8. The partners have the following rights, except one:

share in profits

receive net assets at liquidations point

co-manage the business

transfer ownership at will
9. A loan due to a partner is presented in the statement of financial position as a

Current Asset

Current Liability

Partner's Equity

Fixed Asset

10. A decrease in the capital of one or more partners with a corresponding increase in the
capital of another partner(s), without cash being involved, is a transfer of interest called

asset revaluation

appraisal

goodwill

Bonus

11. Which of the following is not a characteristic of all partnerships?

Taxable entity

Co-ownership of property

Mutual Agency

Voluntary Association
 12. Advantages of a partnership over a corporation do not include

ease of formation

ease of decision

more capital

freedom from government regulation

13. Which of the following statements is true?

The partners' drawing accounts are shown in the statement of financial position

Changes in partners' equity is shown in the income statement.

Capital contributions of the partners are shown in the income statement.

Profit share of each partner is shown in the partners' capital statement