Which of the Following Is Considered a Nonbusiness Bad Debt

question 24

Multiple Choice

Which of the following is considered a nonbusiness bad debt?

• A) Tom, a CPA, made personal loans to several friends who were not his clients. ftree of the loans became totally worthless.
• B) Mary obtained a court-order for her former husband, Bill, to pay child support. Bill did not pay the child support.
• C) Kirby guaranteed a loan as a gesture of friendship for Sue. Sue defaulted and Kirby paid off the loan.
• D) None of the above.

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Definitions:

General Partnership

A business structure where two or more partners share unlimited liability for the debts and obligations of the business.

Sole Proprietorship

A business structure owned by a single individual, where the owner and the business are legally considered the same entity, simplifying operations but also involving personal liability.

Limited Partnership

A partnership structure where some partners are liable only to the extent of their investment while at least one partner has unlimited liability.

Uniform Partnership Act

A set of laws adopted by many states to regulate the operations of partnerships and the relationships between partners.