Which of the Following Is Not a Characteristic of a Partnership

question 5

Multiple Choice

Which of the following is not a characteristic of a partnership?

• A) Each general partner has unlimited liability for the debts of the partnership.
• B) If one partner dies or leaves the partnership,the existing partnership is terminated.
• C) The partnership income is subject to a federal income tax that is levied on the business but not on the partners.
• D) The existing partnership agreement is dissolved and a new agreement is formed when a new partner joins the partnership.

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Definitions:

Fair Value Option

An accounting choice giving companies the opportunity to measure financial assets and liabilities at their fair values with changes reflected in the income statement.

Net Income

Net income represents the total earnings of a company once all costs, expenses, and taxes are deducted from its total revenue.

Dividends

Dividends are a portion of a company's earnings distributed to shareholders, usually in the form of cash payments or additional stock.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the net assets of the investee.