Which of the following is TRUE of a general partnership? Each partner has all the privileges and risks of ownership. Each partner's liability is limited to their contributed capital. The income of a general partnership is subject to double taxation. When a general partner contributes a particular asset to the firm, he or she is considered the sole
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- Any assets invested by a particular partner in a partnership ________. A. do not become a partnership asset but instead remain with the partner B. can be used only by the investing partner C. become the property of all the partners D. are the basis for all profit sharingWhen a partnership is liquidated, any gains or losses realized by the sale of noncash assets are allocated to the partners based on their income sharing ratio. Why?Which of the following is an element of the requirement that partnership allocations must have substantial economic effect? If an allocation of income, loss, or deduction is made for tax purposes, a similar allocation must be made for partnership book purposes so the partner's capital account (and rights to partnership capital) reflect a corresponding increase or decrease. Liquidations must be made in accordance with partner's capital accounts and a partner with a negative capital account must have the obligation to restore the capital account deficit in case of liquidation. Even if corresponding allocations are made for tax purposes and book purposes, those allocations must be made for economic reasons independent of minimizing taxes based on the partners' individual tax situations. All of these are elements of substantial economic effect
- Which of the following is a correct definition of a concept related to partnership taxation? A partner's capital-sharing ratio is defined as the percentage of partnership assets (capital) that would be allocated to the partner upon liquidation of the partnership. A special allocation is defined as an amount that could differently affect the tax liabilities of two or more partners. The partnership's outside basis is defined as the sum of each partner's capital account balance. The aggregate concept treats partners and partnerships as separate units and gives the partnership its own tax personality.1. Which of the following statements concerning partnership is true? a. A partnership is a legal entity separate and distinct from the individual partners. b. Individual partners are jointly liable for the debts and obligation of a partnership. c. Income tax is levied on the individual partners’ shares of net income of a partnership and is reported in their personal tax returns. d. All of the above is true. 2. Under what circumstances can the closing of the income summary account result in a debit to one partners’ capital account and credits to the other partners’ capital accounts? a. The results of operations are divided in a profit and loss ratio and the partnership sustained a loss for the period. b. The results of operations are allocated in a profit and loss ratio and the partnership’s net income was very low. c. The results of operations are divided in the average capital ratio and one partner had a low capital balance.…Which of the following is NOT a characteristic of a partnership? a. Partners have mutual agency b. Partners are able to contract on behalf of the partnerships. c.Partnership income is tax free d.Partnerships are easy to form
- 1. A partnership contract should always be prepared regardless of the amount or nature of the contribution. 2. All types of partnerships are subject to income tax. 3. A partner's contribution in the form of industry will require a debit to the account "Industry" 4. In the partnership books, there are as many capital and drawing accounts as there are partners. 5. A partner's contribution in the form of noncash asset should be recorded at its fair market value even if there is agreed capital. 6. A partnership is much easier and less expensive to organize than a corporation. 7. A newly organized partnership should always open a new set of books for its use. 8. All partnerships have general partners. 9. Each partner generally has the authority to enter into contracts which are binding upon the partnership. 10. The property invested in a partnership by the partner becomes the property of the…Which of the following is a disadvantage of general partnerships? ( a) The partners in a general partnership are exposed to double taxation. ( b) Compared to the other forms of ownership, the paperwork and costs involved in forming a general partnership are the most extensive. ( c) A partner who withdraws from a partnership cannot be held liable for any debts the furm had at the time of withdrawal. ( d) All general partners have unlimited liability for the debts and obligations of their business.Which statement is incorrect? -All partnerships should have at least one general partner. -A partner can dispose of his share in partnership profits only with the consent of the other partners. -A silent partner is one who does not take active part in partnership operations but is known by the public as a partner. -When two sole proprietorships form a partnership, agreed adjustments on the value of assets and liabilities of each sole proprietorship should accrue to the benefit or loss of the sole proprietor, not to the partnership. -none of the above The following ends the life of a partnership, except * -Bankruptcy -A new partner is accepted in the partnership -Accomplishment of the specific objective for which the partnership was formed -Death or incapacity of any partner -Answer not given
- What is the proper disposition of a partnership loan that was made from a partner who has a debit balance in the capital account? A. The loan is ignored in liquidation. B. The loan is offset against the debit balance in the capital account. C. The loan is charged off to the capital accounts of all the partners in their profit and loss sharing ratios. D. The loan is held for payment after all other capital accounts are covered.The General Partnership form of organization is subject to tax at the business level and again at the ownership level after profits are distributed to the General Partners. Select one: O True FalseWhich of the following is true in relation to a partnership? a. A partnership is a separate legal entity Ob. A partnership is jointly owned and managed by the partners C. A partnership can raised capital by issuing shares to the members of the publie d. A partnership is able to own property and other assets in its own name