Partnership - Formation, Operations,...
True or False
1
.
The life of a partnership is terminated upon death or withdrawal of a
partner, admission of a new partner, bankruptcy, or assignment of a
partnership interest to a third party.
True
False
2
.
Goodwill may not be recorded on the books of the partnership at formation
because no arm’s length transaction has taken place.
True
False
3
.
The partners’ drawing accounts are closed to Retained Earnings at the end
of the accounting period.
True
False
4
.
When interest on capital account balances is used as a means of profit
distribution, interest should always be calculated on weighted average
capital account balances net of drawings.
True
False
5
.
A new partner cannot be admitted to the partnership without the consent of
all continuing partners in the business.
True
False
6
.
The net assets of a partnership do not have to be re-valued upon
admission of a new partner or assignment of an interest.
True
False
7
.
When there is a time lag between the death or retirement of a partner and
settlement of his/ her partnership interest, the capital account balance of
that partner is classified as a liability.
True
False
8
.
A limited liability partnership consists of at least one general partner, who
has unlimited liability for partnership debts, and one or more limited
partners whose risk is limited to the amount invested in the partnership.
True
False