Which of the Following Statements Best Describes Partnerships

question 28

Multiple Choice

Which of the following statements best describes partnerships?

• A) In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business.
• B) Partnerships have trouble attracting large capital due to such factors as unlimited liability, and the illiquidity of partnership interests.
• C) A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster-growing company.
• D) A major disadvantage of all partnerships relative to all corporations is the fact that taxes must be paid by the partners rather than by the firm itself.

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Definitions:

Lifo Inventory

A method of inventory valuation where the last items placed into inventory are the first ones taken out, used to calculate the cost of goods sold and ending inventory.

Basic Earnings Per Share (Eps)

Basic Earnings Per Share (EPS) is a calculation used to gauge a company's profitability on a per-share basis, dividing net earnings available to common shareholders by the average outstanding shares.

Net Income

The remaining income of a company after deducting expenses and taxes from the total income generated.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a dataset, often used in accounting and inventory valuation.