Match Each of the Following Statements with the Numbered Terms

question 221

Multiple Choice

Match each of the following statements with the numbered terms below that provide the best definition.
-Entity concept

• A)Organizational choice of many large accounting firms.
• B)Partner's percentage allocation of current operating income.
• C)Might affect any two partners' tax liabilities in different ways.
• D)Partnership in which partners are liable only for any partner's malpractice.
• E)Amount that might be reported on either form 1065, page 1 or, on Schedule K.
• F)Transfer of asset to partnership followed by immediate distribution of cash to partner.
• G)Must have at least one general and one limited partner.
• H)Long-term capital gain might be recharacterized as ordinary income.
• I)All partners are jointly and severally liable for entity debts.
• J)Theory treating the partner and partnership as separate economic units.
• K)Partner's basis in partnership interest after tax-free contribution of asset to partnership.
• L)Partnership's basis in asset after tax-free contribution of asset to partnership.
• M)One way to calculate a partner's economic interest in the partnership.
• N)Owners are members.
• O)Theory treating the partnership as a collection of taxpayers joined in an agency relationship.
• P)Participates in management.
• Q)Not liable for entity debts.
• R)No correct match provided.

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Definitions:

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the amount of sales decline a business can tolerate.

Net Operating Income

The profit generated from a business's regular operational activities, excluding expenses and taxes.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating the portion available to cover fixed costs and generate profit.

Net Operating Income

Gross income after operational expenses are deducted but before income taxes and interest are calculated.