22 Questions
What is a key difference between a corporation and a partnership?
The life of the business
How are the members of a limited liability company taxed?
Like partners in a partnership
What happens when one partner makes a decision in a general partnership?
It binds all other partners
How should assets be valued when forming a partnership if no agreed value is provided?
At their fair market value
What type of liability do general partners have?
Unlimited liability
What happens to liabilities attached to contributed assets in a partnership?
They are assumed by the partnership
In the given partnership agreement, how much is the salary allowance for King?
$8,400
What is the interest allowance rate for partners' capital balances according to the agreement?
10%
Based on the agreement, how is the remainder of the net income distributed?
Equally
What were the capital balances of King and Lee at the beginning of the year according to the information provided?
King: $24,000, Lee: $28,000
What was the total net income of the partnership in 2020?
$22,000
In the chart provided, what is the total amount mentioned under Gant, Drawings?
$48,000
What is a major disadvantage of a regular partnership?
General partners are personally liable for business debts
In a Limited Partnership (LP), what is a major advantage of general partners?
They can raise cash without outside investors
What is the main reason Limited Liability Companies (LLCs) are more expensive to create than regular partnerships?
More complex structure and legal requirements
Which characteristic is true for Limited Liability Partnerships (LLPs)?
Partners are personally liable for the malpractice of other partners
What is a characteristic of a regular partnership that makes it simple and inexpensive to create and operate?
Equal sharing of net income by partners
Why are Limited Liability Partnerships (LLPs) mostly of interest to partners in old-line professions such as law, medicine, and accounting?
No personal liability for the malpractice of other partners
What should a partnership agreement specify among partners?
Partners' names and how they share net income
Which feature makes Limited Partnerships (LP) suitable for companies investing in real estate?
Limited personal liability for business debts
What would make a General Partnership less desirable compared to other partnership forms?
General partners personally liable for business debts
Which characteristic makes Limited Liability Companies (LLCs) more costly to establish?
Partners participating in management without extra liability
Learn about the advantages and disadvantages of partnerships, including combining skills and resources, ease of formation, freedom from government regulations, and more. Understand concepts like mutual agency, limited life, and unlimited liability in partnerships.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
