Partnership Firm Accounting
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Questions and Answers

What is a key characteristic of a partnership firm?

  • Unlimited liability (correct)
  • Separate legal entity
  • Issuance of shares
  • Limited liability

    • What is the taxation status of a partnership firm?

  • It is taxed at the corporate tax rate
  • It is taxed as a separate legal entity
  • It is not subject to tax
  • It passes through its profits or losses to the partners for taxation (correct)

    • How are profits and losses typically shared in a partnership firm?

  • In proportion to the capital invested by each partner (correct)
  • According to the seniority of the partners
  • Equally among the partners
  • Based on the number of partners only

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