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Questions and Answers
Which of the following is NOT a common type of guarantee mentioned in the text?
Which of the following is NOT a common type of guarantee mentioned in the text?
- Performance guarantees
- Collateral guarantees (correct)
- Indemnifications
- Financial guarantees
In what type of agreements are guarantees often embedded?
In what type of agreements are guarantees often embedded?
- Insurance policies
- Employment contracts
- Lease agreements
- Service contracts (correct)
What is the definition of joint and several liability?
What is the definition of joint and several liability?
- An obligation of several parties that is enforceable against any one of the parties (correct)
- An obligation of one party that is enforceable against several parties
- An obligation that is enforceable only if all parties agree
- An obligation that is enforceable against none of the parties
In a joint and several debt obligation, who can the lender demand payment from?
In a joint and several debt obligation, who can the lender demand payment from?
What are some reasons why a guarantor may guarantee financial or operational performance?
What are some reasons why a guarantor may guarantee financial or operational performance?
Which of the following professions is mentioned as commonly adopting the partnership form of organization?
Which of the following professions is mentioned as commonly adopting the partnership form of organization?
Which of the following is true about the accounting procedures for partnerships?
Which of the following is true about the accounting procedures for partnerships?
Which account is debited when a partner invests cash in a partnership?
Which account is debited when a partner invests cash in a partnership?
What is the accounting treatment when a partner invests an asset other than cash?
What is the accounting treatment when a partner invests an asset other than cash?
When a partnership owes money for an asset, what action may the partnership take?
When a partnership owes money for an asset, what action may the partnership take?
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Study Notes
Guarantees
- A common type of guarantee mentioned in the text is not specified, as the question is asking for the one that is NOT common.
- Guarantees are often embedded in agreements.
Joint and Several Liability
- Joint and several liability is not defined in the text, but it is mentioned as a concept related to debt obligations.
- In a joint and several debt obligation, the lender can demand payment from any borrower.
Guarantors
- A guarantor may guarantee financial or operational performance for various reasons.
Partnerships
- Partnerships are often adopted by lawyers.
- Accounting procedures for partnerships involve specific treatments for different transactions.
- When a partner invests cash in a partnership, the cash account is debited.
- When a partner invests an asset other than cash, the asset account is debited and the partner's capital account is credited.
- If a partnership owes money for an asset, it may take the action of paying for the asset.
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