Answered: The following describe several…

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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Question

The following describe several different business organizations. Determine whether each description best
refers to a sole proprietorship (SP), partnership (P), corporation (C), or limited liability company (LLC). Micah and Nancy own Financial Services, which pays a business income tax. Micah and
Nancy do not have personal responsibility for the debts of Financial Services.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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