PLEASE CHECK MY ANSWERS:: TRUE & FALSE In a general partnership each partner is

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PLEASE CHECK MY ANSWERS:: TRUE & FALSE In a general partnership each partner is individually liableto creditors for debts incurred by the partnership. True A partnership is subject to federal income taxes. False Each partnership must have a written partnershipagreement. True A limited liability company is a business entity form designedto overcome some of the disadvantages of the partnershipform. True For tax purposes a limited liability company may elect to betreated as a partnership. True The equity reporting for a llc is similar to that of apartnership but the changes in capital are shown on a statement ofmembers equity. True If nothing is stated partnership income is divided inproportion to the individual partners capital balance. False In the distribution of income the net income is less than thesalary & interest allowance is granted, the remaining balancewill be a negative amount that must be divided among thepartners as though it were a loss. True When a partnership dissolves a new partnership is formed &a new partnership agreement should be prepared. True Partnerships asset accounts should be changed from costto fair market value when a new partner is admitted to a firm or anexisting partner withdraws or dies. True If a new partner is given 20% interest in the firm than thenew partner will receive a 20% interest in earnings. True When a partner withdraws from a partnership the partnershipdissolves. True If retiring partner A sells his or her interest to B thepartnership should record the assets paid to A in it's accounts attheir book values. False If the share of losses on realization of the sale of non cashassets exceed the balance in the partners capital account theresulting balance is called a deficiency. True When a new partner purchases the entire interest of an oldpartner the new partner's capital account should be credited forthe amount he or she paid to the old partner. True PLEASE CHECK MY ANSWERS:: TRUE & FALSE In a general partnership each partner is individually liableto creditors for debts incurred by the partnership. True A partnership is subject to federal income taxes. False Each partnership must have a written partnershipagreement. True A limited liability company is a business entity form designedto overcome some of the disadvantages of the partnershipform. True For tax purposes a limited liability company may elect to betreated as a partnership. True The equity reporting for a llc is similar to that of apartnership but the changes in capital are shown on a statement ofmembers equity. True If nothing is stated partnership income is divided inproportion to the individual partners capital balance. False In the distribution of income the net income is less than thesalary & interest allowance is granted, the remaining balancewill be a negative amount that must be divided among thepartners as though it were a loss. True When a partnership dissolves a new partnership is formed &a new partnership agreement should be prepared. True Partnerships asset accounts should be changed from costto fair market value when a new partner is admitted to a firm or anexisting partner withdraws or dies. True If a new partner is given 20% interest in the firm than thenew partner will receive a 20% interest in earnings. True When a partner withdraws from a partnership the partnershipdissolves. True If retiring partner A sells his or her interest to B thepartnership should record the assets paid to A in it's accounts attheir book values. False If the share of losses on realization of the sale of non cashassets exceed the balance in the partners capital account theresulting balance is called a deficiency. True When a new partner purchases the entire interest of an oldpartner the new partner's capital account should be credited forthe amount he or she paid to the old partner. True

Explanation / Answer

In a general partnership each partner is individually liableto creditors for debts incurred by the partnership.False
The partners are taxed as individualsand are personally liable for torts andcontractual obligations. Each is viewed as the agent of the others,and traditionally all are jointly and severally liable for thetortious acts of any partner.

A partnership is subject to federal income taxes. False Each partnership must have a written partnership agreement.False
A limited liability company is a business entity form designed toovercome some of the disadvantages of the partnership form. True For tax purposes, a limited liability company may elect to betreated as a partnership. True The equity reporting for a llc is similar to that of apartnership but the changes in capital are shown on a statement ofmembers equity. True If nothing is stated, partnership income is divided inproportion to the individual partners capitalbalance.False
In the distribution of income, the net income is less thanthe salary & interest allowance is granted, the remainingbalance will be a negative amount that must be divided amongthe partners as though it were a loss. False. Ifthere is a Loss, Salary, Interest on Capital etc is Not allowed.However If Partner has Loaned money to business, the Interest isallowed even if there is a loss. When a partnership dissolves a new partnership is formed &a new partnership agreement should be prepared. False. It is not necessary.
Partnerships asset accounts should be changed from costto fair market value when a new partner is admitted to a firm or anexisting partner withdraws or dies. True If a new partner is given 20% interest in the firm than thenew partner will receive a 20% interest in earnings. True. I hope u mean that new partner with get profit shareof 20% in case there is a profit. When a partner withdraws from a partnership the partnershipdissolves. True If retiring partner A sells his or her interest to B thepartnership should record the assets paid to A in it's accounts attheir book values. False It depends on thepartnership agreement if that defines what happens if a partnerleaves. If the share of losses on realization of the sale of non cashassets exceed the balance in the partners capital account theresulting balance is called a deficiency. True When a new partner purchases the entire interest of an oldpartner the new partner's capital account should be credited forthe amount he or she paid to the old partner. False.Only the actual Capital of Old partner is transfered to newpartner. The amount paid over the capital by new partner to oldpartner is a direct transaction between old & newpartners.

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