True or False (Write TRUE if the statement is correct and underline the word/s that make/s the statement if your answer is FALSE.) 1 2 \\lO? 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 A partnership is a legal entity separate and apart from its owners. In a contract of partnership, two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profit among themselves. Two or more persons may form a partnership for the exercise of a profession. There can never be a partnership without contribution of money, property or industry to a common fund. Work or services that may either be personal manual efforts or intellectual may also be contributed to a partnership. A partnership may be established for charity. A partnership cannot be established for religious purposes. A partnership has a juridical personally separate and distinct from that of each of the partners. A partnership must always have two or more owners. A partnership must always have at least two owners. A proprietorship has a limited life whereas a partnership may have an unlimited life. One of the partners in a proposed partnership is a multimillionaire. The stipulation in the articles of partnership that this partner shall be excluded from sharing in the profits of the partnership is valid. One of the partners in a proposed partnership is a multimillionaire. The stipulation in the articles of partnership that this partner shall be excluded from sharing in the profits of the partnership is void. A partner who invests assets into a partnership retains control over those specific assets. All partnerships have a limited life assets are co-owned by the partners. A partnership has a limited life because any change in the relationship of the partners dissolves the partnership. Bankruptcy of a partner will dissolve the partnership. The essence of partnership is that each partner must share in the profits or losses of the venture. A partnership involves mutual agency, unlimited liability for general partners and limited life. Mutual agency means that each partner has the right to bind the partnership to contracts. As long as the action is within the scope of the partnership, any partner can bind the partnership. In a general, each partner's liability for losses is limited to his investment in the firm. Each partner is personally liable for all debts of the partnership. One advantage of a partnership over a corporate form of organization is the unlimited liability of partners. A disadvantage of partnerships over corporations is the partner's unlimited liability. Under the partnership form of business, large amounts of capital can be raised easily. An advantage of the partnership form of business is that each partner's potential loss is limited to that partner's investment in the partnership. There is no income tax imposed on a partnership. Ownership is easily transferred in a partnership. A limited partnership must have at least one general partner. All partners in a general partnership are personally liable for all debts incurred b the partnership. 32 A limited partnership normally has one or more general partners whose liability is 33 34 unlimited. In a limited partnership, the general partner's liability is limited to his investment. The limited partners are liable only to the extent of their personal contributions