Which of the Following Statements Is True of a Partnership

question 29

Multiple Choice

Which of the following statements is true of a partnership?

• A)The partners will not be held responsible for the actions of each other.
• B)All the partners will have limited liability.
• C)The business will face fewer regulatory controls than a corporation.
• D)All partners need to submit quarterly financial statements to stockholders.
• E)The owners will tend to have lower earning power than sole proprietors.

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Definitions:

C Corporation

A corporate structure where the owners or shareholders are taxed separately from the entity, which itself is taxed on its earnings.

S Corporation

A type of corporation that meets specific Internal Revenue Code requirements, allowing profits, and some losses, to be passed directly to owners' personal income without being subject to corporate tax rates.

Legal Entity

An organization or structure with legal rights and obligations, including the capacity to enter into contracts, sue, and be sued.

Accounting System

A systematic process of recording, summarizing, and analyzing an organization's financial transactions, often supported by software.