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A partnership contract may provide for a special compensation in the form of bonus to the managing partner when the results of operations of the partnership are favorable. - True Changes in the Partners' Equity between the beginning and the end of the reporting period reflect the increase or decrease in its net assets during the period. - True When salary and interest allocations exceed profit, a loss has occurred - False The salary, interest and stated ratio method of allocation cannot be applied when a loss has occured - False When a loss is closed into the partners' capital accounts, income summary is credited. - True The basis on which profits and losses are shared is a matter of agreement among partners and may not necessarily be the same as their capital contribution ratio. - True The use of salaries in the allocation of profit or loss allows for the differences in the services that partners provide the business. - True When ending capital balances are used, additional investments during the year are encouraged. - False Bonus is not being considered in the computation of profit, rather it is a mere technique to distribute profits. - True After all the components of the statement of financial performance along with the changes int he partners' equity for the period have been properly presented, the preparation of the statement of financial position will present no major difficulty. - True When a profit or loss sharing agreement provides for salary and interest allowances to the partners, these salary and interest allowances should be deducted to revenues in arriving at partnership profit. - False A partnership agreement may validly stipulate that one partner shall receive no share in profits or losses. - False
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