Identify Which of the Following Statements Is True

question 76

Multiple Choice

Identify which of the following statements is true.

• A) It may be necessary for the partnership to capitalize a partner's guaranteed payment.
• B) A partner who performs services for a partnership is usually not considered an employee of the partnership.
• C) Guaranteed payments are ordinary income to the recipient.
• D) All of the above are true.

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Definitions:

Amortization Period

The length of time it takes to pay off a debt or loan in full through regular payments.

Compounded Quarterly

The process of calculating and adding interest to the principal sum of a deposit or loan every three months.

Outstanding Balance

The total amount of money that is still owed on a loan or a line of credit that has yet to be paid.

Semi-annually Compounded

A reiteration of interest calculation and addition to the principal balance every half year, facilitating growth in investments or debt.