Week 4 Tutorial - Types of Business Associations Partnership Complexity The process of establishing a partnership is informal and inexpensive. Commonly established under a written contract but at times can be established simply without any express oral or written consent‚ so long as it satisfies the definition outlined in section 1.1 of the partnership act: “Partnership is the relation which exists between persons carrying on a business in common with a view of profit” Advantage(A) Enjoys
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Corrupt Organizations Act (RICO) was originally designed to combat corporate crime? (Hint: No‚ organized crime…) False 6. General partners or Limited Partners of a limited partnership remain jointly and severally liable for partnership obligations? 7. C corporations are taxed as a pass-through entity or as a separate entity? 8. Most general partnerships pay income taxes as a separate entity or as a pass-through entity? MULTIPLE-CHOICE QUESTIONS 9. The term actus reus is often used to describe
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as a firm’s short-term assets and its short-term liabilities? A. working capital B. debt C. investment capital D. net capital E. capital structure 4. A business owned by a solitary individual who has unlimited liability for its debt is called a: A. corporation. B. sole proprietorship. C. general partnership. D. limited partnership. E. limited liability company. 5. A business formed by two or more individuals who each have unlimited liability for all of the firm’s business debts is called a:
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scratch‚ teaming up with another person‚ or buying an existing business‚ the first thing you should analyze is what form of business you will be partaking in. The four most recent forms of business ownership are sole proprietorship‚ partnership‚ corporation‚ and limited liability. This research paper will cover the definition of each form‚ the advantages‚ and the disadvantages. When you decide to open your own business and you make the choice to be the only boss‚ you have just made the decision to have
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Aggregate vs. Entity Approach 1. Aggregate approach: the partnership as a separate entity is disregarded and each partner is viewed as directly owning an undivided interest in the partnership’s assets operations. If the tax law used only aggregate concepts‚ the partnerships and their partners would be treated: - Each partner would be taxed on share of partnership income and would be viewed as owning a direct interest in each partnership asset. - Contributions and distributions would be viewed
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profit maximization‚ timing of cash flows 9. The sole proprietorship can be described as the absence of any legal business structure. ANSWER: True DIFFICULTY: Moderate KEYWORDS: sole proprietorship 10. In a general partnership‚ all partners have unlimited liability for the actions of any one partner when that partner is conducting business for the firm. ANSWER: True DIFFICULTY: Moderate
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with others 2. Disadvantages a. Unlimited liability for the owner b. Owner must absorb all losses c. Equity capital limited to the owner’s personal investment d. Business terminates immediately upon death of owner B. Partnership: An association of two or more individuals coming together as co-owners to operate a business for profit. 1. Two types of partnerships a. General partnership: Relationship between partners is dictated by the partnership agreement. (l) Advantages (a) Minimal organizational
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DEFINITIONS 5. The management of a firm’s short-term assets and liabilities is called: A. working capital management. b. debt management. c. equity management. d. capital budgeting. e. capital structure. SECTION: 1.1 TOPIC: WORKING CAPITAL MANAGEMENT TYPE: DEFINITIONS 6. A business owned by a solitary individual is called a: a. corporation. B. sole proprietorship. c. general partnership. d. limited partnership. e. limited liability company. SECTION: 1.2 TOPIC: SOLE PROPRIETORSHIP TYPE: DEFINITIONS
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Introduction to Partnership Accounting Sole Proprietorship – owned by one person assume the profit and expenses Service – oriented business – engages in rendering services Merchandising businesses – buy and sell goods for profit Partnership – composed of two or more persons to contribute to a common fund for a profit that will be divided among themselves Money and property include: cash‚ investment in trading securities‚ trade and other receivables‚ prepaid expenses‚ PPE Industry: service‚ labor
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Fred and Ginger are general partners in a business. They decide to purchase a building for the partnership. Ginger will put up the money for the building‚ and Fred will complete the remodeling. While inspecting the building‚ Fred is informed that the building is packed full of asbestos. He fails to tell Ginger of the presence of the substance. They buy the building and go into business. During the remodeling of the building‚ people from the neighborhood begin complaining about the dust from the building
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