TRUE/FALSE1. There are only four legal structures to form and operate a business.O TrueO False2. In a general partnership, each partner is individually liable to creditors for debts incurred by the partnership, to the extent of the partnership, to the extent of the partner’s capital balanceO TrueO False3. A partnership is a legal entity separate from its owners.O TrueO False4. A partnership is subject to federal income taxes.O TrueO False5. a disadvantage of partnership is the mutual agency of all partners .O TrueO False5. Each partnership must have a written partnership agreement.O TrueO False6. Unsatisfied personal creditors of a partner can attach to the net assets of the partnership without regard to the partner’s capital balance.O TrueO False7. Each partner may withdraw the assets he or she contributed to the partnership at any time.O TrueO False8. When compared to a corporation, one of the major disadvantages of the partnership is its ease of formation.O TrueO False9. Under a Subchapter S Corporation, the IRS allows income to pass through the corporation to the individual stockholders without the corporation having to pay taxes on incomeO TrueO False10. A Limited Liability Corporation is a business entity form that combines the advantages of the corporation and the partnerships forms.O TrueO False11. For tax purposes, a Limited Liability Corporation may elect to be treated as a partnership.O TrueO False12. The Limited Liability Corporation may elect to be manager managed rather than member managed which means that only authorized members may legally bind the corporation.O TrueO False13. Each partner has a separate capital and withdrawal account.O TrueO False14. The chart of accounts for a partnership, with the exception of drawings and capital accounts does not differ from the chart of accounts for a sole proprietorship.O TrueO False15. When there are significant changes in stockholders equity, generally, a retained earnings statement is not sufficient, requiring a statement of stockholders’ equity to be prepared.O TrueO False16. The equity reporting for a Limited Liability Corporation is similar to that of a partnership but the changes 17. in capital ate shown on a statement of members’ equity.O TrueO False18. When a partner invests noncash assets in a partnership, the assets are recorded at the partner’s book value.O TrueO False19. Accounts receivable contributed to the partnership are recorded at their face value.O TrueO False20. A new partner contributes accounts receivable to a partnership which appear in the ledger of his sole proprietorship at $20,500 and there was an allowance for doubtful accounts of 750. If $600 of the accounts receivables are completely worthless, the partnership accounts receivables should be debited for $19,900.O TrueO False21. One reason that distributions of income and loss are prepared is to obtain the information to record a closing entry.O TrueO False22. If nothing is stated, partnership income is divided in proportion to the individual partner’s capital balance.O TrueO False23. The salary allocation to partners used in dividing net income would also appear as salary expense on the partnership income statement.O TrueO False24. If the articles of partnership provide for annual salary allowances of $36,000, X’s share of net income is $20,000.O TrueO False25. If the net income of a partnership is less than the total of the allowances provided by the partnership agreement, the differences must be divided among the partners in the income-sharing ratio
