. Which of the following statements is correct? O A. The liability of the partners for the debts of the partnership is limited to the amounts invested by each partner. OB. The lifespan of a partnership is perpetual. O C. A loan cannot be obtained in the name of the partnership. OD. A partnership business is liable for its own taxes on the profits earned.

. Which of the following statements is correct? O A. The liability of the partners for the debts of the partnership is limited to the amounts invested by each partner. OB. The lifespan of a partnership is perpetual. O C. A loan cannot be obtained in the name of the partnership. OD. A partnership business is liable for its own taxes on the profits earned.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A type of partnership where the company cannot pay its debts with business assets, the partners must use personal assets to pay the debt. O Particular partnership O Nominal partnership O General partnership O Trading partnership
Which of the following is a disadvantage of general partnerships? a) A partner who withdraws from a partnership cannot be held liable for any debts the firm had at the time of withdrawal. b) Compared to the other forms of ownership, the paperwork and costs involved in forming a general partnership are the most extensive. c) All general partners have unlimited liability for the debts and obligations of their business. d) The partners in a general partnership are exposed to double taxation.
Which of the following is true regarding capital deficiencies? O a Ob Oc Od The partners do not have a legally enforceable claim against the partner with the capital deficiency. If a partner with a capital deficiency is unable to pay the amount owed to the partnership, the partners with debit balances must absorb the loss. The loss is allocated based on the profit and loss ratios between the partners whether with credit or debit balances. if the partner with the capital deficiency pays the amount owed to the partnership, the deficiency is eliminated.
Which of the following items is NOT separately stated on a general partnership's Schedule K? a) MACRS cost recovery deductions taken by the general partnership on its business assets. b) Charitable contributions made by the general partnership. c) Amounts elected to be expensed under Section 179 by the general partnership. d) Interest income from a municipality bond held for investment by the general partnership. e) Long term capital gain from the sale of a capital asset held for investment by the general partnership.
Julie contributes, as part of her initial investment, accounts receivable with an allowance for doubtful accounts. Which of the following reflects a proper treatment? O The accounts receivable and allowance should not be recorded on the books of the partnership because a partner must invest cash in the business. O The balance of the accounts receivable account should be recorded on the books of the partnership at its net realizable value. O The allowance account may be set up on the books of the partnership because it relates to the existing accounts that are being contributed. O The allowance account should not be recorded in the books of the partnership.
Identify the correct statement/s from the following:I. In absence of partnership agreement, no interest on capital is allowed II. In absence of partnership agreement, 6% interest on partner's loan is allowed O a. Statement II only correct O b. Statement I only correct O c. Both Statements are correct O d. Both Statements are wrong
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How do the asset and liability sections of the balance sheet differ for a partnership versus other forms of businesses (corporation, sole proprietorship)? Question 1 options: The equity section reports a separate capital account for each partner. The assets and liability sections do not differ between partnerships and other forms of business. The assets and liabilities are assigned to the individual partners. The assets tend to be higher and the liabilities tend to be lower for a partnership.
According to this Chapter on Partnerships, are the following statements True or False: Question 1: A partnership allows owners to pool their talents and resources. A. True B. False Question 2: In a partnership, the income is taxed at the partnership level as well as at the personal level of the owners. A. True B. False Question 3: Mutual agency means that any partner can legally bind the other partners and the partnership to business contracts within the scope of the business's regular operations. A. True B. False
Which of the following statements is always true regarding accounting methods available to a partnership? A) If a partnership has a partner that is a personal service corporation, it cannot use the cash method. B) If a partnership is a tax shelter, it can use the cash method of accounting. C) If a partnership has a partner that is a C corporation, it cannot use the cash method. D) If a nontax-shelter partnership had average annual gross receipts of less than $26,000,000 (2021) for the last three tax years, it can use the cash method.
When a new partner is admitted into the partnership by investment, the following take place except O Total assets and total partners' equity will decrease, unlike admission by purchase of interest. O Investment of non-cash assets must be recorded at current or fair market value. O. It is a transaction between the partnership and the incoming partner O. It involves the investment of assets by new partner into the partnership
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