Identify Which of the Following Statements Is True

question 93

Multiple Choice

Identify which of the following statements is true.

• A)John Albin is a retired partner of Brill & Crum, a personal service partnership. Albin has not rendered any services to Brill & Crum since his retirement six years ago. Under the provisions of Albin's retirement agreement, Brill & Crum is obligated to pay Albin 10% of the partnership's net income each year through the end of the current year. In compliance with the agreement, Brill & Crum pay Albin $25,000 in the current year. Albin should treat this $25,000 as a long-term capital gain.
• B)An exchange of partnership interests in different partnerships qualifies under the like-kind exchange rules.
• C)The payment for partnership property to a retiring partner is not deductible by the partnership and often not income to the retiring partner.
• D)All of the above are false.

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Definitions:

External Audit

An external audit is conducted by an independent firm or individual to examine an organization's financial records and operations to ensure the accuracy and integrity of its financial statements.

Internal Control

A process designed to ensure the reliability of financial reporting, compliance with laws and regulations, and effective and efficient operations.

Significant Accounting Policies

These are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.

Financial Statements

Reports that provide detailed information about a company's financial status, including its income, expenses, equity, and cash flows, over a particular period.