Tax Advantage and Disadvantages of Partnerships Quiz
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Tax Advantage and Disadvantages of Partnerships Quiz

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@EnergyEfficientCatharsis

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Questions and Answers

What is typically covered in a partnership agreement?

  • Provisions for hiring specialized management
  • Methods of settling disputes through arbitration
  • Terms of dissolution of the business
  • Determining the value of a departing partner's interest (correct)

    • Which aspect is NOT usually included in partnership agreements?

  • Managing powers and work responsibilities of each partner
  • Distribution of profits and losses
  • Provisions for expelling a partner
  • Methods of transferring ownership (correct)

    • In a partnership, what determines the liability of each partner?

  • Length of the partnership agreement
  • Their shareholdings in the business (correct)
  • Ease of expansion
  • Their ability to hire specialized management

    • What is one advantage of corporations compared to partnerships?

    <p>Ease of transferring ownership</p> Signup and view all the answers

    Which disadvantage of partnerships is related to the termination of the business when a partner leaves or passes away?

    <p>Limited life</p> Signup and view all the answers

    What does a partnership agreement aim to prevent or minimize?

    <p>Potential conflict between partners</p> Signup and view all the answers

    In a limited partnership, the liability of one or more partners is limited to what?

    <p>The amount of assets invested in the business</p> Signup and view all the answers

    What potential area of disagreement between partners is related to decisions on credit extensions and granting additional benefits to employees?

    <p>Potential conflict between partners</p> Signup and view all the answers

    What is a key advantage of a sole proprietorship in terms of profit distribution?

    <p>Profits are distributed solely to the single proprietor</p> Signup and view all the answers

    How are government regulations different for sole proprietorships compared to partnerships and corporations?

    <p>Sole proprietorships have fewer regulations to comply with</p> Signup and view all the answers

    What is a disadvantage of a sole proprietorship related to raising additional capital?

    <p>Challenges in raising additional funds</p> Signup and view all the answers

    How is the net income of a sole proprietorship treated for taxation purposes?

    <p>It is taxed as personal income of the owner</p> Signup and view all the answers

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