Exam (elaborations)
Chapter 12 Accounting for Partnerships and Limited Liability Companies
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Chapter 12 Accounting for Partnerships and Limited Liability Companies Accounting 26th Ed by Warren -Test Bank
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CHAPTER 12: ACCOUNTING FOR PARTNERSHIPS AND LIMITEDLIABILITY COMPANIES
1. There are only four legal structures to form and operate a business.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. In a general partnership, each partner is individually liable to creditors for debts incurred by the partnership, to
the extent of the partner's capital balance.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
3. A partnership is a legal entity separate from its owners.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 12: Accounting for Partnerships and Limited Liability Companies
4. A partnership is subject to federal income taxes.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
5. A disadvantage of partnerships is the mutual agency of all partners.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
6. A partnership requires only an agreement between two or more persons to organize.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 12: Accounting for Partnerships and Limited Liability Companies
7. Each partner may withdraw the assets he or she contributed to the partnership at any time.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
8. When compared to a corporation, one of the major disadvantages of the partnership is its limited life.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
9. When compared to a corporation, one of the major advantages of a partnership is its relative ease of formation.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 12: Accounting for Partnerships and Limited Liability Companies
10. An advantage of the partnership form of business is that each partner’s potential loss is limited to that partner’s
investment in the partnership.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
11. A limited liability company is a business entity form designed to overcome some of the disadvantages of
the partnership form.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. For tax purposes, a limited liability company may elect to be treated as a partnership.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.12-01 - 12-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.ACBSP.APC.19 - Partnership Accounting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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