With Regard to Taxation of Partnerships,which of the Following Statements

question 129

Multiple Choice

With regard to taxation of partnerships,which of the following statements is correct?

• A) Profits are taxed twice.
• B) Each partner is taxed in the same way as a sole proprietor.
• C) Taxes are paid on a partnership's profits,after which each partner pays taxes on his or her share of the profits.
• D) A partnership is exempt from taxes.
• E) The partnership is taxed as a separate entity.

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Definitions:

Issued at Face Value

A term indicating that a financial instrument, such as a bond, is sold for its original cost, not at a premium or discount.

Equipment

Tangible property used in operations, such as machinery and office equipment, which is not intended for sale.

Bond Payable

A long-term liability account that represents a promise to pay a series of payments over time and repay the principal amount at maturity.

Bondholder

An investor or entity that owns bonds issued by corporations or governments, entitling them to receive the bond's face value at maturity, as well as periodic interest payments.