CHAPTER 21 PARTNERSHIPS TRUE/FALSE 1. Unlike a subchapter C corporation‚ a partnership is subject to only one level of taxation and can often liquidate in a tax-deferred manner. ANS: T A partnership is a flow-through entity subject to only one level of taxation. Liquidation of the partnership is generally tax-deferred. PTS: 1 REF: p. 21-2 | p. 21-3 2. Section 721 provides that no gain or loss is recognized on contribution of property to a partnership in exchange for an interest in
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including issues from liability to taxation. Starting a business requires some research on licensing‚ state laws‚ and regulations. Opening a business requires choosing an entity‚ taking control‚ taxation methods‚ and liability issues. The most common types of business forms are sole proprietorship‚ partnership‚ corporation‚ and S corporation. Each type of business has its advantages and disadvantages when related to obtaining a start to a business‚ tax information‚ and liability. Lou and Jose are planning
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of business organizations. 2) Benefits of specialization in business management are not present in small scale proprietorship. There is only one manager. In not a few cases‚ the owner is the only employee. 3) The owner has unlimited liability. This means that the owner of the business risks not only the assets of his small enterprise‚ but also his other personal assets like his piece of land‚ bank deposits‚ and other personal properties which are not part of his business. In case of loss
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one individual. An advantage of sole proprietorship is the business can be simple and inexpensive to start. A Disadvantage of sole proprietorship is being the only thinker for ideas for decision making‚ advertising‚ etc. 1. Liability- There is an unlimited amount of liability because nothing separates you from the business legally. This means the owner is held responsible for everything. 2. Income Taxes- The business and you are considered the same in one. The owner may have to fill out an extra
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three basic legal forms of business organizations: the sole proprietorship‚ the partnership‚ and the corporation. Each form of legal organizations has unique characteristics that are important to consider when starting a business. The legal form chosen will make significant differences for things such as ownership‚ sources of financing‚ personal and financial risk‚ taxes‚ workload‚ buying or selling a business‚ and liability issues. A sole proprietorship is a business owned by a single individual.
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Introduction to Financial Management (Chapters 1‚ 2‚ 3‚ 4) Part 4 Capital Structure and Dividend Policy (Chapters 15‚ 16) Part 2 Valuation of Financial Assets (Chapters 5‚ 6‚ 7‚ 8‚ 9‚ 10) Part 5 Liquidity Management and Special Topics in Finance (Chapters 17‚ 18‚ 19‚ 20) Part 3 Capital Budgeting (Chapters 11‚ 12‚ 13‚ 14) C H A P T E R 1 Part 1 Getting Started Principles of Finance Chapter Outline 1.1 Finance: An Overview (pgs. 4–5) 1.2 Three Types
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of any legal business structure. True 4.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. True 5.There is no legal distinction made between the assets of the business and the personal assets of the owners in the limited partnership. False 6.General partners have unrestricted transferability of ownership‚ while limited partners must have the consent of all partners to transfer
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capital is limited to personal funds plus any loans he or she can obtain * The sole proprietor is legally responsible for the business’s contracts and the torts he or she or any of his or her employees commit in the course of employment. Creating a sole proprietorship is easy. There are no formalities‚ and no federal or state government approval is required. A sole proprietor bears the risk of loss of the business. In addition‚ the sole proprietor has unlimited personal liability. Therefore
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perhaps at a faster rate‚ than a partnership or a proprietorship A) Unlimited liability of shareholders B) Access to the capital markets C) Limited life D) Elimination of double taxation on corporate income E) All of the above Answer B Diff 2 Topic 1.1 Finance An Overview Keywords corporation 4) Which of the following reasons is most responsible for corporations being the most important form of business organization in the United States A) Corporations have limited life. B) Stockholders have
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is a limited partnership with $100‚000 in declared but unpaid profits. International Exports L. P.’s creditors include Friendly Credit Corporation who has an interest in the partnership of $5‚000 and Gwen‚ who is also a limited partner‚ has an interest in the partnership of $5‚000. Harry‚ one of the general partners of International Exports‚ L.P. has decided to retire. The other general partners‚ without asking the limited partners opinion‚ vote to liquidate and dissolve the firm. The limited partners
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