Which of the Following Statements Is True Regarding Partnership Operating

question 76

Multiple Choice

Which of the following statements is true regarding partnership operating distributions?

• A)If a partner's outside basis is greater than the bases of the assets distributed in an operating distribution, the partner will recognize a loss.
• B)If a partner's outside basis is less than the bases of the assets distributed in an operating distribution, the partner will recognize a loss.
• C)If a partner's outside basis is greater than the bases of the assets distributed in an operating distribution, the partner will recognize a gain.
• D)None of these statements is truE.See discussion on operating distributions in the text.Partners will never recognize a loss on an operating distribution.

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Definitions:

Indirect Method

A technique used in cash flow statements to adjust net income for non-cash transactions, depreciation, and changes in working capital.

Depreciation Expense

The portion of an asset's initial cost allocated over a specific period as an expense, reflecting its usage and deterioration.

Operating Activities

Activities that relate directly to the business's primary operations, like selling products or services, as opposed to investment or financing activities.

Accounts Receivable

Money owed to a company by its clients or customers for products or services sold on credit.