1. A partnership is an association of three or more persons to carry on as co-owners of a businessfor profit.2. The legal requirements for forming a partnership can be quite burdensome.3. A partnership is not an entity for financial reporting purposes.4. The net income of a partnership is taxed as a separate entity.5. The act of any partner is binding on all other partners, even when partners perform businessacts beyond the scope of their authority.6. Each partner is personally and individually liable for all partnership liabilities.7. When a partnership is dissolved, the assets legally revert to the original contributor.8. In a limited partnership, one or more partners have unlimited liability and one or more partnershave limited liability for the debts of the firm.InstructionsIdentify each statement as true or false. If false, indicate how to correct the statement.

There are some statement for which we have to identify whether the statement is true or false.

Answered: Instructions Identifv each statement as…

Business

Accounting

Instructions Identifv each statement as true or folse If folse indicate ho w to correct the statenment

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter20: Corporations And Partnerships

Section: Chapter Questions

Problem 21DQ

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Question

1. A partnership is an association of three or more persons to carry on as co-owners of a business
for profit.
2. The legal requirements for forming a partnership can be quite burdensome.
3. A partnership is not an entity for financial reporting purposes.
4. The net income of a partnership is taxed as a separate entity.
5. The act of any partner is binding on all other partners, even when partners perform business
acts beyond the scope of their authority.
6. Each partner is personally and individually liable for all partnership liabilities.
7. When a partnership is dissolved, the assets legally revert to the original contributor.
8. In a limited partnership, one or more partners have unlimited liability and one or more partners
have limited liability for the debts of the firm.
Instructions
Identify each statement as true or false. If false, indicate how to correct the statement.

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Which of the following is a disadvantage of the partnership form of organization? A. limited life B. no taxation at the partnership level C. flexibility in business operations D. combining of financial resources
Which of the following may not be treated as a partnership for tax purposes? Arnold and Willis operate a restaurant. Thelma and Louise establish an LLP to operate an accounting practice. Lucy and Desi purchase real estate together as a business. Jennifer and Ben form a corporation to purchase and operate a hardware store. All of the above are partnerships.
A partnership ________. A. has one owner B. can issue stock C. pays taxes on partnership income D. can have more than one general partner
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 sharing
Owners have no personal liability under which legal business structure? A. a corporation B. a partnership C. a sole proprietorship D. There is liability in every legal business structure.
What type of assets may a partner not contribute to a partnership? A. accounts receivable B. furniture C. equipment D. personal credit cards
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 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 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.
which of the following is false regarding the partnership form of business? The potential liability of limited partners is limited to the amount they invested in the firm. Partnerships are relatively easy to start Transfer of ownership is easy for the general partners Income of the business is taxed only as the personal income of the partners General partners have unlimited liability for the debts of the firm.
Which of the following statements is most true? a. The liability for other partners’ wrong doings is limited to the amount a particular partner has invested in the partnership. b. Partnerships are formed in accordance with specific guidelines that include the filing of a formal written agreement to the government. c. A fast growing firm would be more probable to establish a partnership as its business form than would a slow growing firm. d.Corporations can easier attract investors than those of the partnership and sole proprietor businesses.