Which of the Following Is a Disadvantage of Partnerships

question 87

Multiple Choice

Which of the following is a disadvantage of partnerships?

• A) The cost of formation is high.
• B) They are based on consensual contracts.
• C) They are subject to more governmental supervision than corporations.
• D) A partnership needs to obtain a license if it wishes to operate in more than one state.
• E) A partnership will be dissolved any time a partner leaves the partnership.

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Definitions:

Full Disclosure

A principle requiring that all material facts and information related to financial transactions be disclosed in financial statements.

Conservatism Principle

An accounting principle that advises reporting expenses and liabilities as soon as possible, but revenue only when it is ensured.

Gross Profit Method

An inventory valuation method used to estimate the cost of goods sold and ending inventory levels by applying a gross profit margin to sales.

Gross Profit Ratio

The gross profit ratio is a financial metric that measures the proportion of money left over from revenues after accounting for the cost of goods sold (COGS), expressed as a percentage.