Pat Smith and George Johnson Own Five Flower Shops in Manhattan

question 14

True/False

Pat Smith and George Johnson own five flower shops in Manhattan. They want to open a wholesale flower business to supply their shops as well as others in their geographical area. They currently operate as a partnership but are considering changing their legal form of organization. One reason for doing this is to increase the likelihood that they will be able to raise the funds needed to expand

-The partners should consider converting to a corporation.

---

Definitions:

Warranty Obligations

The responsibility of a seller to repair or replace defective goods during a specified period.

Quarterly Entries

are journal entries made in the financial records at the end of each quarter, summarizing the period’s transactions and adjustments.

Transactions

Financial events or operations that result in a change to the accounting equation, affecting an entity's assets, liabilities, or equity.

Working Capital

An indicator of a company's short-term financial health, calculated as current assets minus current liabilities.