Which of the Following Statements Is True Regarding Accounting Methods

question 19

Multiple Choice

Which of the following statements is true regarding accounting methods available to a partnership?

• A) If a partnership is a tax shelter, it cannot use the accrual method of accounting.
• B) If a partnership has a personal service corporation as a partner, it cannot use the cash method.
• C) If a partnership has a partner that is a C corporation, it cannot use the cash method.
• D) If a partnership has a partner that is a C corporation, it must use the cash method.
• E) All of the above statements are false.

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Definitions:

Assignee

The person or entity to whom rights, interests, or properties are legally transferred.

Rights to Payment

Legal entitlements to receive money from another party, either through contractual agreement or as compensation for damages.

Personal in Nature

Characteristics or belongings that are intimately related to an individual's private life or identity.

Assignment

The transfer of rights, property, or obligations from one party to another, often used in contracts and in the context of loans or leases.