1. In a general partnership, each partner is individually liable to creditors for debts incurred by the partnership, to the extent of the partner's capital balance. 2. A disadvantage of partnerships is the mutual agency of all partners. 3. When compared to a corporation, one of the major advantages of a partnership is its relative ease of formation. 4. Each partner has a separate capital and withdrawal account. 5. When a partner invests noncash assets in a partnership, the assets are recorded at the partner's book value. 6. If the articles of partnership provide for annual salary allowances of $36,000 and $18,000 to X and Y, respectively, and net income is $30,000, X's share of net income is $20,000. 7. Partner A devotes full time and partner B devotes one-half time to their partnership. If the partnership agreement is silent concerning the division of net income, Partner A will receive a $20,000 share of a net income of $30,000. 8. X sells to A one-half of a partnership capital interest that totals $70,000 for $40,000. A's capital account in the partnership should be credited for $40,000. 9. If the partnership agreement does not otherwise state, partnership income is divided in proportion to the individual partner's capital balance. 10. In the distribution of income, if the net income of a partnership is less than the salary and interest allowances granted, the remaining balance will be a negative amount that must be divided among the partners as though it were a los Multiple Choice 11. Which of the following is a characteristic of a general partnership? a. The partners have co-ownership of partnership property. b. The partnership is subject to federal income tax. c. The partnership has an unlimited life. d. The partners have limited liability. 12. A ratio of 4:2:1 is the same as a. 40%:20%:10% b. 4/7:2/7:1/7 c. 4/10:2/10:1/20 d. 7/4:7/2:7/1