1.

The total assets of the partnership will always increase upon admission of a new partner by
purchase of interest. FALSE
2. A partnership dissolution may lead to a partnership liquidation. TRUE
3. If the agreed capital exceeds the total contributed capital, the difference may be a positive asset
revaluation. TRUE
4. If the partners did not agree as to how profits are to be divided, then such should be divided
among the partners equally. FALSE
5. Any salaries authorized for partners are regarded as a preliminary step in the division of profits, not
as an expense of the business. TRUE
6. Unless otherwise agreed, allowance for salaries and interest are allowed to partners whether there
is a profit or a loss; whether the profit is sufficient or insufficient. TRUE
7. If the deficient partner is insolvent, his deficiency will be absorbed by the other partners
distributed according to their profit and loss ratio. TRUE
8. Non-cash assets that are not sold should be written off as a loss and such loss is divided to the
partners equally. FALSE
9. The amount of offset in exercising the right of offset shall be the amount of a partners loan to the
partnership or the amount of his deficiency, whichever is lower. FALSE
10. A deficient but solvent partner has to still share on the deficiency of an insolvent partner in case of
final liquidation. TRUE
11. Liquidation expenses which are incurred to facilitate the immediate realization of non-cash assets
affect cash but not capital. FALSE
12. All partnerships are subject to income tax. FALSE
13. In the partnership books, there are as many capital and drawing accounts as there are partners.
TRUE
14. A newly organized partnership should always open a new set of books. FALSE
15. For financial reporting purposes, the personal assets and debts of a partner should be combined
with the assets and debts of the business. FALSE