Partners of a Partnership

question 68

Multiple Choice

Partners of a partnership:

• A) are not liable for all the obligations of their partnership.
• B) are entitled to income of the partnership,which must be reported on their individual federal income tax returns.
• C) are not permitted to deduct partnership losses on their individual federal income tax returns.
• D) can create a partnership only by complying with a statute.

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Definitions:

Current Debt

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.

Purchases Returns & Allowances

Purchases Returns and Allowances are reductions in the cost of purchases due to returning goods or granting allowances for defective or unsatisfactory goods.

Sales Discounts

Sales discounts are reductions in the selling price offered to customers, often as an incentive for early payment or bulk purchases.

Inventory Balance

The value of goods available for sale at the end of an accounting period.