A Limited Partner Who Takes an Active Part in Managing

question 42

Multiple Choice

A limited partner who takes an active part in managing a limited partnership:

• A) will be entitled to profit distributions as if he or she were a general partner.
• B) will be treated as a general partner with respect to parties who reasonably believe that he or she is a general partner.
• C) will be treated as a general partner with respect to all parties with whom he or she transacts business affairs.
• D) will be entitled to reasonable compensation for the value of the managerial services provided.
• E) will lose the right to receive profit distributions as a limited partner.

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Definitions:

Credit

A journal entry that results in an increase in a liability or equity account or a reduction in an asset or expense account.

Overstated

Describing financial statements or figures that have been reported at a value higher than the true or fair value.

Understated

Describes when figures or values are represented in accounting records as less than their true or actual amount.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal, used to verify the accuracy of the bookkeeping system.