Question

55. The revaluation entries during partnership formation will involve real acwins UINJ! 56. The partner's drawing account should be closed to the partner's capital account balance when he or she withdraws from the partnership. 57. Each partner has the authority to act for the partnership and enter into contracts binding upon it because of the mutual agency characteristic of the partnership. 58. If the interest of a partner is purchased in part by another partner, the partnership is dissolved. 59. A partnership may be dissolved without being liquidated but liquidation is always preceded by dissolution 60. A partnership may be established for charitable or religious purposes. 61. Liquidation is the automatic termination of the legal life of the partnership, 62. In the admission of new partner, bonus may exist between two old partners. 63. Allowing interest on partners' capital balances is a method of profit distribution which compensates partners who contributed more funds to the partnership. 64. The Articles of Incorporation guides the partnership in all its undertakings throughout its existence. 5 Page
true our false

Answer 1

56) False. Because at the end of the accounting period the drawing account is closed to the capital account of the partner. The capital account will be reduced by the amount of drawing made by the partner during the accounting period and not per withdrawal.

57) True. The partner has the authority to act on behalf of partnership due to the concept of mutual agency.

58) False. The partnership is not dissolved in case of purchase of partner's interest by other partner.

59) True

60) True

61) True

62) True. A new partner may pay a bonus to existing partners in order to join the partnership. Bonus is the difference between the amount contributed to the partnership and equity received in return.

63) True

64) False. Partnership agreement is the document which guides the partnership.