ADVANCED ACCOUNTING
13th Edition
ISBN: 9781264046263
Author: Hoyle
Publisher: MCG
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Chapter 14, Problem 1P
To determine
Identify the correct statement for not being a reason for the popularity of partnerships as a legal form for businesses.
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Which of the following is a reason to use a partnership as the legal form of a business?
A.
Partnerships avoid the difficulty of raising capital.
B.
Partnerships avoid the issue of mutual agency.
C.
Partnerships avoid the issue of double-taxation faced by corporations.
D.
Partnerships avoid the issue of unlimited liability.
19. Which of the following statements is not correct?
A. As a rule, co-ownership is not subject to income tax because the activities of the co-owners are limited to the preservation and enjoyment of the property and the collection of the income therefrom.
B. All partnerships, no matter how created or organized are considered corporations subject to corporate income tax.
C. When the co-owners invest the income of the property co-owned in a business or any income-producing properties or activities constituting themselves into a business partnership, such partnership is consequently subject to tax as a corporation.
D. A co-owner is subject to income tax on his share in the net income of the co-ownership actually or constructively received.
Raising large amounts of capital is more difficult for a partnership than for a corporation. (True or False)
What term is used to describe the characteristic of a business entity where an individual(s)
associated with an entity can not only lose all of his/her investment in the firm but personal assets
can be taken to pay the debts of the firm if necessary?
For federal income tax purposes, what term refers to the business entity not being a separate
entity from the owners? This type of entity is not taxed but the owner(s) must record the earnings
from the business on his/her individual income tax return.
What is the characteristic of a partnership that gives the authority to any partner to legally bind the
partnership and all other partners to business contracts called?
Assess the truth of this statement: The day-by-day transactions of a partnership are recorded in
accordance with the double-entry accounting concepts and are recorded exactly like transactions
in previous chapters…
Chapter 14 Solutions
ADVANCED ACCOUNTING
Ch. 14 - Prob. 1QCh. 14 - Prob. 2QCh. 14 - Prob. 3QCh. 14 - Prob. 4QCh. 14 - Prob. 5QCh. 14 - Prob. 6QCh. 14 - Prob. 7QCh. 14 - Prob. 8QCh. 14 - Prob. 9QCh. 14 - Prob. 10Q
Ch. 14 - Prob. 11QCh. 14 - Prob. 12QCh. 14 - What is a partnership dissolution? Does...Ch. 14 - Prob. 14QCh. 14 - Prob. 15QCh. 14 - Prob. 16QCh. 14 - Prob. 17QCh. 14 - When a partner withdraws from a partnership, why...Ch. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3PCh. 14 - Prob. 4PCh. 14 - Prob. 5PCh. 14 - Prob. 6PCh. 14 - Prob. 7PCh. 14 - Prob. 8PCh. 14 - Prob. 9PCh. 14 - Prob. 10PCh. 14 - Prob. 11PCh. 14 - Prob. 12PCh. 14 - Prob. 13PCh. 14 - Prob. 14PCh. 14 - Prob. 15PCh. 14 - Prob. 16PCh. 14 - Prob. 17PCh. 14 - Prob. 18PCh. 14 - Prob. 19PCh. 14 - Prob. 20PCh. 14 - Prob. 21PCh. 14 - Prob. 22PCh. 14 - Prob. 23PCh. 14 - Prob. 24PCh. 14 - Prob. 25PCh. 14 - Prob. 26PCh. 14 - Following is the current balance sheet for a local...Ch. 14 - Prob. 28PCh. 14 - Prob. 29PCh. 14 - Prob. 30PCh. 14 - Prob. 31PCh. 14 - Prob. 2DYSCh. 14 - Prob. 3DYSCh. 14 - Prob. 4DYSCh. 14 - Prob. 5DYS
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Similar questions
- Why would smaller partnerships and other businesses for that matter use only the tax basis of accounting, which does not follow GAAP?arrow_forwardSelect the best answer. Which of the following statements regarding various entities is true? O O O A. A business entity with only one owner is classified as a corporation or is disregarded. Question Q 10 B. A disadvantage of a pass-through entity is double taxation. C. By default, an eligible entity that has a single member will be treated as a limited partnership. Partnerships are taxpaying entities, because tax attributes pass through to the individual partners. O D. Submit Answers 100% Completearrow_forwardQuestion # 1: Which of the following statements is CORRECT? a. One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes bankrupt. b. Sole proprietorships are subject to more regulations than corporations. c. In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner. d. Sole proprietorships and partnerships generally have a tax advantage over many corporations. e. Corporations of all types are subject to the corporate income tax.arrow_forward
- 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 resourcesarrow_forwardQuestion One: State whether each of the following statements is true or false and correct the false statements: 1. General partnerships are not subject to taxes on its income. 2. Double taxation is one of the major disadvantages of partnerships. 3. In limited partnerships limited partner has the right to manage the business. 4. Mutual agency does not exist in partnerships. 5. Corporations can be formed by a verbal agreement.arrow_forwardNonearrow_forward
- Which of the following statements is CORRECT? a. A major disadvantage of all partnerships compared to all corporations is the fact that federal income taxes must be paid by the partners rather than by the firm itself. b. A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster growing company. c. Attracting large amounts of capital is more difficult for partnerships than for corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity (difficulty buying and selling) of partnership interests. d. In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business. e. The limited partners in a limited partnership have voting control, while the general partner has operating control over the business. Also, the limited…arrow_forwardThe major advantage of a regular partnership or a corporation as a form of business organization is the fact that both offer their owners limited liability, whereas proprietorships do not.a.True/.Falsearrow_forwardQ.Real estate ownership is often structured in a limited partnership or LLC legal form. The PRIMARY reason why these forms are preferred over a regular corporation is: a. Provides the participants easier way to borrow funds b. Allows owners the benefit of state laws versus federal laws c. To avoid double taxation d. Ability to limit liabilityarrow_forward
- Which of the following is true? a. Owner in sole proprietorship has less responsibility in running his business compared to partnership b. The liability for sole proprietorship is limited compared to partnership c. The sole proprietorship business has unlimited growth potential compared to partnership d. The owner of sole proprietorship has less available capital compared to partnershiparrow_forwardHow does running a company as a partnership as opposed to a corporation benefit the parties involved? What are the drawbacks of this approach?arrow_forwardThe Limited Liability Company (LLC) is a step above the sole proprietorship and partnership in that it does not limit the owners' personal liability and can more easily obtain funding from lenders and investors. Select one: True Falsearrow_forward
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