Which of the Following Statements Regarding a Partnership's Tax Year

question 24

Multiple Choice

Which of the following statements regarding a partnership's tax year is/are correct?
I.A partnership formed on July 1 must adopt a tax year ending on June 30.
II.A valid business purpose can no longer be claimed as a reason for adoption of a tax year other than the generally required tax year.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Acid-Test Ratio

A financial metric that measures a company's immediate liquidity by comparing its most liquid assets to its current liabilities.

Quick Ratio

A liquidity ratio that measures a company's ability to meet short-term obligations with its most liquid assets.

Gross Margin Ratio

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, illustrating how effectively a company uses labor and supplies in production.

Gross Profit

The difference between revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.