BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 12, Problem 1DQ
Textbook Problem

What are the main advantages of (a) proprietorships, (b) partnerships, and (c) limited liability companies?

Expert Solution
To determine

Explain the main advantages of:

  1. (a) Proprietorship.
  2. (b) Partnership.
  3. (c) Limited Liability Company.

Explanation of Solution

Proprietorships: Proprietorship is a form of organization, which is owned, and controlled by an individual called the proprietor. The owners’ liability is unlimited. The most common proprietors are lawyers, physician, a small business owner and more.

Partnership: It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio. The partners are jointly and severally liable for all the debts and obligations of the business.

Limited Liability Company: It is that form of organization which is formed as a legal entity with state charter that provides limited liability to the owners. It has a common seal.

(a)  The main advantages of Proprietorships are:

Easy of formation: It is easy for forming this type of entity.

Non-taxable entity: This entity is not taxed for federal income tax purposes.

(b)  The main advantages of Partnership are:

Expertise can be pooled: Expertise from different field can be pooled in as required for a business under partnership.

Non-taxable entity: This entity is not taxed for federal income tax purposes.

(c)  The main advantages of Limited Liability Company are:

Legal entity: A limited liability company has a legal entity separate from its owners. It can transact business and represent the company of its own.

Expanded access to Capital: A limited liability company can pool a big capital required for the business through issuing shares to the public.

Separation of ownership and management: The management of the company is taken over by the professionals, separate from the owners.

Sustainability: The existence of the limited liability company continues for a long period of time and does not wind up with the death of any shareholders unlike partnership.

Easy transferability of ownership: In limited liability company, the ownership is transferred easily through buying and selling of shares in stock exchange.

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Chapter 12 Solutions

Accounting
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Ch. 12 - Journalizing partners original investment Holly...Ch. 12 - Journalizing partners original investment Austin...Ch. 12 - Dividing partnership net income Lia Chen and...Ch. 12 - Dividing partnership net income John Prado and...Ch. 12 - Revaluing and contributing assets to a partnership...Ch. 12 - Revaluing and contributing assets to a partnership...Ch. 12 - Partner bonus Gomez, has a capital balance of...Ch. 12 - Partner bonus Hiro has a capital balance of 75,000...Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Liquidating partnershipsdeficiency Prior to...Ch. 12 - Liquidating partnershipsdeficiency Prior to...Ch. 12 - Revenue per employee Niles and Cohen, CPAs earned ...Ch. 12 - Revenue per employee Eclipse Architects earned...Ch. 12 - Recording partner's original investment Kimberly...Ch. 12 - Recording partner's original investment Hannah...Ch. 12 - Dividing partnership income Tyler Hawes and Piper...Ch. 12 - Dividing partnership income Using each of the live...Ch. 12 - Dividing partnership net loss Leigh Meadows and...Ch. 12 - Negotiating income-sharing ratio Sixty-year-old...Ch. 12 - Dividing LLC income Martin Farley and Ashley Clark...Ch. 12 - LLC net income and statement of members equity...Ch. 12 - Admitting new partners Myles Eller and Crystal...Ch. 12 - Admitting new partners who buy an interest and...Ch. 12 - Admitting new partner who contributes assets After...Ch. 12 - Admitting new partner with bonus Cody Jenkins and...Ch. 12 - Admitting a new LLC member with bonus Alert...Ch. 12 - Admitting new partner with bonus L. Bowers and V....Ch. 12 - Partner bonuses, statement of partnership equity...Ch. 12 - Withdrawal of partner Lane Stevens is to retire...Ch. 12 - Statement of members' equity, admitting new member...Ch. 12 - Distribution of cash upon liquidation Hewitt and...Ch. 12 - Distribution of cash upon liquidation David Oliver...Ch. 12 - Liquidating partnershipscapital deficiency Lewis,...Ch. 12 - Distribution of cash upon liquidation Bray,...Ch. 12 - Liquidating partnershipscapital deficiency...Ch. 12 - Statement of partnership liquidation After closing...Ch. 12 - Statement of LLC liquidation Lester, Torres, and...Ch. 12 - Partnership entries and statement of partnership...Ch. 12 - Revenue per professional staff The accounting firm...Ch. 12 - Revenue per employee Superior Cleaning Services,...Ch. 12 - Entries and balance sheet for partnership On March...Ch. 12 - Dividing partnership income Morrison and Greene...Ch. 12 - Financial statements for partnership The ledger of...Ch. 12 - Admitting new partner Musa Moshref and Shaniqua...Ch. 12 - Statement of partnership liquidation After the...Ch. 12 - Statement of partnership liquidation On November...Ch. 12 - Entries and balance sheet for partnership On April...Ch. 12 - Dividing partnership income Dylan Howell and...Ch. 12 - Financial statements for partnerships The ledger...Ch. 12 - Admitting new partner Brian Caldwell and Adriana...Ch. 12 - Statement of partnership liquidation After the...Ch. 12 - Statement of partnership liquidation On August 3,...Ch. 12 - Ethics in Action Tayc Barrow, M.D., and James...Ch. 12 - Communication Lindsey Wilson has agreed to invest...Ch. 12 - Dividing partnership income Terry Willard and...

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