12 Questions
What is typically covered in a partnership agreement?
Determining the value of a departing partner's interest
Which aspect is NOT usually included in partnership agreements?
Methods of transferring ownership
In a partnership, what determines the liability of each partner?
Their shareholdings in the business
What is one advantage of corporations compared to partnerships?
Ease of transferring ownership
Which disadvantage of partnerships is related to the termination of the business when a partner leaves or passes away?
Limited life
What does a partnership agreement aim to prevent or minimize?
Potential conflict between partners
In a limited partnership, the liability of one or more partners is limited to what?
The amount of assets invested in the business
What potential area of disagreement between partners is related to decisions on credit extensions and granting additional benefits to employees?
Potential conflict between partners
What is a key advantage of a sole proprietorship in terms of profit distribution?
Profits are distributed solely to the single proprietor
How are government regulations different for sole proprietorships compared to partnerships and corporations?
Sole proprietorships have fewer regulations to comply with
What is a disadvantage of a sole proprietorship related to raising additional capital?
Challenges in raising additional funds
How is the net income of a sole proprietorship treated for taxation purposes?
It is taxed as personal income of the owner
Test your knowledge on the tax advantage and various disadvantages of partnerships. Topics include income taxation, unlimited liability, limited life, and potential conflicts between partners.
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