FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Different forms of businesses have different characteristics. Which of the following characteristics would apply to a partnership? Check all that apply.
Legal arrangement between two or more people
Income is allocated on a pro rata basis
Subject to unlimited personal liability
Taxed at individual level
Chartered by a state and is its own legal entity separate and distinct from its owners and managers
Can easily raise large amounts of capital
You come across different kinds of businesses every day. The following table describes some businesses. Using the description of each business,
classify it as a sole proprietorship, a partnership, a corporation, or a limited liability company/limited liability partnership.
Business Scenario
Type of Business
Andrew founded and operated a wedding planning agency, which specialized in celebrity
weddings. When he died, his business was dissolved because there was
no plan for control
after his death.
Purple Consulting has five consultants in the firm. The company's annual revenue is
around $500,000. Income is distributed among all consultants, and each is personally
liable for claims if the company goes under.
DDX Co. is a shipping company. Caesar owned 1,000 shares of DDX stock. He found
better opportunities and sold his entire stake in DDX to another investor.
Caesar, Rafael, and Jose own an accounting firm in San Francisco. All share in the profits
of the firm proportionately and file taxes at an individual level. According to their
agreement, none of the owners will be held personally liable for the accounting firm's
debt.
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Transcribed Image Text:Different forms of businesses have different characteristics. Which of the following characteristics would apply to a partnership? Check all that apply. Legal arrangement between two or more people Income is allocated on a pro rata basis Subject to unlimited personal liability Taxed at individual level Chartered by a state and is its own legal entity separate and distinct from its owners and managers Can easily raise large amounts of capital You come across different kinds of businesses every day. The following table describes some businesses. Using the description of each business, classify it as a sole proprietorship, a partnership, a corporation, or a limited liability company/limited liability partnership. Business Scenario Type of Business Andrew founded and operated a wedding planning agency, which specialized in celebrity weddings. When he died, his business was dissolved because there was no plan for control after his death. Purple Consulting has five consultants in the firm. The company's annual revenue is around $500,000. Income is distributed among all consultants, and each is personally liable for claims if the company goes under. DDX Co. is a shipping company. Caesar owned 1,000 shares of DDX stock. He found better opportunities and sold his entire stake in DDX to another investor. Caesar, Rafael, and Jose own an accounting firm in San Francisco. All share in the profits of the firm proportionately and file taxes at an individual level. According to their agreement, none of the owners will be held personally liable for the accounting firm's debt.
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