CFIN -STUDENT EDITION-W/ACCESS+STICKER
5th Edition
ISBN: 9781305920378
Author: BESLEY
Publisher: CENGAGE L
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Chapter 1, Problem 19PROB
Summary Introduction
To determine: the likelihood of agency problem in three major forms of business organizations namely, proprietorship, partnership with 5 partners and corporation with 100000 stockholders
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Define and discuss each of the following by providing at least 2 practical examples:
1. Limited Partnership; Limited Liability partnership; Professional corporation?
2. A friend asked you to reveal important financial information of the company, being a finance manager of the company what would you do? Justify by considering ethics in finance.
3. Describe mechanisms that motivate managers to act in stockholders’ best interests, and to overcome agency problem?
Question 1:
Define and discuss each of the following by providing at least 2 practical examples:
a) Limited Partnership; Limited Liability partnership; Professional corporation?
b) A friend asked you to reveal important financial information of the company,being a finance manager of the company what would you do? Justify by considering ethics in finance.
c) Describemechanisms that motivate managers to act in stockholders’ best interests, and to overcome agency problem?
Question: Define and discuss each of the following by providing at least 2 practical examples:
Limited Partnership; Limited Liability partnership; Professional corporation?
A friend asked you to reveal important financial information of the company, being a finance manager of the company what would you do? Justify by considering ethics in finance.
Describe mechanisms that motivate managers to act in stockholders’ best interests, and to overcome agency problem?
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CFIN -STUDENT EDITION-W/ACCESS+STICKER
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- . Write the word or group of words that identify each of the following statements. 1.A partner who has financial interest in the firm, not known to be a partner, but takes active part in the management of the firm. 2. The government body which is in charge with administering the various laws affecting partnerships and corporations in the Philippines.arrow_forwardHow does financial reporting by partnership different from corporate financial reporting Please solve within 30 minutesarrow_forward2-Assume a Legal Entity’s capital structure consists of the following accounts General partner capital $240,000 Limited partner capital 2,160,000 Total capital $2,400,000 A Reporting Company is the sole general partner of the Legal Entity. The limited partnership capital was contributed by unaffiliated individual investors recruited by a regional boutique investment bank. The Reporting Company is paid an $180,000 management fee. The limited partners expect the partnership to be highly successful over the next five years. The investment bank estimated that the distribution of income to these investors should be at least $400,000 during the time period. What is the maximum amount of expected losses that the Legal Entity can expect to sustain without being considered a variable interest entity (VIE)?arrow_forward
- You are an accountant working for a company that has recently decided to incorporate. The company has incurred $4,300 for attorneys fees, promotion costs, and filing fees with the state of incorporation as a part of organizing the corporate entity. What is the journal entry to record these costs on March 13, assuming they are paid in cash?arrow_forwardYou are an accountant working for a manufacturing company that makes personal care products and has recently decided to incorporate. The company incurred a total of $7,900 for attorneys fees, promotion costs, and filing fees with the state of incorporation as a part of organizing the corporate entity. What is the journal entry to record these costs on February 28, assuming they are paid in cash?arrow_forwardThe following describe several different business organizations. Determine whether each description bestrefers to a sole proprietorship (SP), partnership (P), corporation (C), or limited liability company (LLC). Riley and Kay own Speedy Packages, a courier service. Both are personally liable for the debts of the business.arrow_forward
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