Kaylyn Is a 40% Partner in the KKM Partnership

question 63

Multiple Choice

Kaylyn is a 40% partner in the KKM Partnership.During the current year, KKM reported gross receipts of $160,000 and a charitable contribution of $10,000.The partnership paid office expenses of $100,000.In addition, KKM distributed $10,000 each to partners Kaylyn and Kristie, and the partnership paid partner Megan $20,000 for administrative services.Kaylyn reports the following income from KKM during the current tax year:

• A)$16,000 ordinary income; $4,000 charitable contribution.
• B)$8,000 ordinary income; $4,000 charitable contribution.
• C)$4,000 ordinary income.
• D)$12,000 ordinary income.
• E)None of the above.

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Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, used for managing liquidity and ensuring financial stability.

Accounts Receivable Turnover

A financial metric that measures how efficiently a company collects revenue from its credit sales by dividing net credit sales by average accounts receivable.

Payables Deferral Period

The average time between the purchase of goods or services by a company and the payment of this outstanding money to its suppliers.

Cash Conversion Cycle

The length of time between the firm’s actual cash expenditures on productive resources (materials and labour) and its own cash receipts from the sale of products (i.e., the length of time between paying for labour and materials and collecting on receivables). Thus, the cash conversion cycle equals the length of time the firm has funds tied up in current assets.