Circle the correct answer. True/False (If False, Explain Why) 1. A partner can bind the partnership to outside contracts without receiving permission from the other partners. True False 2. In a limited partnership, one or more partners have limited liability for the debts of the firm True False 3. A partner is never liable for more than his or her capital investment in the partnership. True False 4. In a partnership, when the division of profits and losses is based on salaries, interest, and a tieed ratio, if the salary and interest allocation exceeds net income, then a net loss has in fact occurred True False 5. A partnership is considered an accounting entity for financial reporting purposes. True False When the partnership contract does not specify the manner in which net income and net loss are to be divided, profits and losses are distributed based on the average capital balances of each partner during the year. 6. True False 7. The partners' capital statement explains the changes in each partner's capital account and in total partnership capital during the year. True False Upon the sale of assets in liquidation, gains and losses are always divided equally among partners. True 8. False 9. If a partnership is admitting a new partner to the existing partnership and the existing partners are to receive a bonus, this bonus would be allocated on the basis of their income ratios before the admission of the new partner. True False Admission of a new partner to the partnership does not result in the dissolution of the existing partnership. True False 10