Question

TRUE or FALSE - All Partnerships have multiple capital accounts. - Partnerships pay no income tax....

TRUE or FALSE

- All Partnerships have multiple capital accounts.

- Partnerships pay no income tax.

- According to the GAAP, partners need to follow the cost principle when recording their initial investment in a newly formed firm.

- Assets invested into a partnership are recorded as credits

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Answer #1

All partnerships have multiple capital accounts. - False. A partnership can maintain a single partnership capital account for all partners

Partnerships pay no income tax- True. It is the partners who pay income tax.

According to the GAAP, partners need to follow the cost principle when recording their initial investment in a newly formed firm. - False, Investment is shown at fair market value

Assets invested into a partnership are recorded as credits - False. The capital account is credited and assets account is debited

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