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Chapter_13_Partnerships_Characteristics_Formation_and_Accounting_for_Activities

Advanced Accounting 12e Paul M Fischer William J Taylor Rita H Cheng

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Chapter_13_Partnerships_Characteristics_Formation_and_Accounting_for_Activities

 

Complete Chapter Questions With Answers

 

Sample Questions Are Posted Below

 

1. The characteristic of a partnership in which partners exercise good faith, loyalty, and sound judgement best describes:

  a. ​Mutual agency
  b. ​Mutual distinction
  c. ​Fiduciary relationship
  d. ​Financial Relationship

 

ANSWER:   c
LEARNING OBJECTIVES:   ADAC.FISC.13-1

 

2. An LLP is a subcategory of:

  a. ​Mutual partnership
  b. ​General partnership
  c. LLC​
  d. ​Corporation

 

ANSWER:   b
LEARNING OBJECTIVES:   ADAC.FISC.13-1

 

3. Characteristics of a partnership that emphasize that the entity is viewed as the individual owners include the following:

  a. ​Salaries to partners are viewed as distribution of income rather than a component of income.
  b. ​Limited liability of general partners extends beyond the entity to the individual partners.
  c. ​Income of the partnership is not taxed at the partnership level but, rather, is included as part of the partners’ individual taxable income.
  d. A & C​
  e. ​All of above

 

ANSWER:   d
RATIONALE:   B is unlimited liability
LEARNING OBJECTIVES:   ADAC.FISC.13-1

 

4. Which of the following statements is most likely false?

  a. ​A partners dissociation may result in dissolution
  b. ​A partner becoming a debtor in bankruptcy
  c. A partners dissociation may be involuntary​
  d. ​None of the above

 

ANSWER:   d
RATIONALE:   All are true
LEARNING OBJECTIVES:   ADAC.FISC.13-2

 

5. Unlike a corporation, the capital investment in a partnership generally is accounted for through two accounts for each partner, a temporary account referred to as the drawing account and a permanent account referred to as:

  a. ​Stock
  b. ​Cash
  c. ​Capital
  d. ​Salary

 

ANSWER:   c
LEARNING OBJECTIVES:   ADAC.FISC.13-3

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