21. Partners can agree to limit the power of negotiating contracts for the partnership to any one or more of the partners. Such an agreement is binding on all outsiders, whether or not they know it exists. 22. If Partner A invested twice as much as Partner B, and there are only two partners, the income must automatically be divided in a ratio of 2:1, respectively. 23. When a partnership agreement provides for the division of earnings based on time spent and investment balances, the resulting amounts may be treated by the partners as deductible salary expenses and interest expenses in determining the net income of the partnership. 24. In the purchase of partnership interest, the capital accounts of the exiting partner(s) will be reduced. 25. General partners are included in limited partnerships. 26. The withdrawal of a partner from a partnership may result in an increase in the capital accounts of the remaining partners. 27. The death of a partner will require that all noncash assets are sold for cash, all liabilities are paid, and remaining cash be distributed to the estate of the dead partner on the basis of the partnership income and loss agreement. 28. A partnership is an incorporated association of two or more persons to pursue a business for profit as co- owners. 29. Total debits exceeded total credits in the Income Statement columns of the worksheet imply that there is a net increase in equity. 30. Physical count of inventory applies to both perpetual and periodic inventory systems.
21. Partners can agree to limit the power of negotiating contracts for the partnership to any one or more of the partners. Such an agreement is binding on all outsiders, whether or not they know it exists. 22. If Partner A invested twice as much as Partner B, and there are only two partners, the income must automatically be divided in a ratio of 2:1, respectively. 23. When a partnership agreement provides for the division of earnings based on time spent and investment balances, the resulting amounts may be treated by the partners as deductible salary expenses and interest expenses in determining the net income of the partnership. 24. In the purchase of partnership interest, the capital accounts of the exiting partner(s) will be reduced. 25. General partners are included in limited partnerships. 26. The withdrawal of a partner from a partnership may result in an increase in the capital accounts of the remaining partners. 27. The death of a partner will require that all noncash assets are sold for cash, all liabilities are paid, and remaining cash be distributed to the estate of the dead partner on the basis of the partnership income and loss agreement. 28. A partnership is an incorporated association of two or more persons to pursue a business for profit as co- owners. 29. Total debits exceeded total credits in the Income Statement columns of the worksheet imply that there is a net increase in equity. 30. Physical count of inventory applies to both perpetual and periodic inventory systems.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:True or False
21. Partners can agree to limit the power of negotiating contracts for the partnership to any one or more of the
partners. Such an agreement is binding on all outsiders, whether or not they know it exists.
22. If Partner A invested twice as much as Partner B, and there are only two partners, the income must
automatically be divided in a ratio of 2:1, respectively.
23. When a partnership agreement provides for the division of earnings based on time spent and investment
balances, the resulting amounts may be treated by the partners as deductible salary expenses and interest
expenses in determining the net income of the partnership.
24. In the purchase of partnership interest, the capital accounts of the exiting partner(s) will be reduced.
25. General partners are included in limited partnerships.
26. The withdrawal of a partner from a partnership may result in an increase in the capital accounts of the
remaining partners.
27. The death of a partner will require that all noncash assets are sold for cash, all liabilities are paid, and remaining
cash be distributed to the estate of the dead partner on the basis of the partnership income and loss
agreement.
28. A partnership is an incorporated association of two or more persons to pursue a business for profit as co-
owners.
29. Total debits exceeded total credits in the Income Statement columns of the worksheet imply that there is a
net increase in equity.
30. Physical count of inventory applies to both perpetual and periodic inventory systems.
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