Accounting Test 1
Characteristics of a proprietorship - ANS-Simple to form
No limitation on legal liability
Not taxable
Limited life
Limited ability to raise capital (funds)
Characteristics of a partnership - ANS-Moderately complex to form
No limitation on legal liability
Not taxable
Limited life
Limited ability to raise capital (funds)
Characteristics of an LLC - ANS-Moderately complex to form
Limited legal liability
Not taxable
Unlimited life
Moderate ability to raise capital (funds)
Prior to liquidating their partnership, Manning and Adamo had capital accounts of
$240,000 and $150,000, respectively. Prior to liquidation, the partnership had no cash
assets other than what was realized from the sale of assets. These partnership assets
were sold for $410,000. The partnership had $80,000 of liabilities. Manning and Adamo
share income and losses equally.
Determine the amount received by Manning as a final distribution from liquidation of the
partnership. - ANS-80000 + 240000 + 150000 = 470000
470000-410000=60000
60000 x .5 = 30000
240000-30000=*210000*
Characteristics of a corporation - ANS-May acquire, own, and dispose of property in its
own name
May also incur liabilities and enter into contracts
Can sell shares of ownership, called stock
The stockholders have limited liability
Characteristics of a proprietorship - ANS-Simple to form
No limitation on legal liability
Not taxable
Limited life
Limited ability to raise capital (funds)
Characteristics of a partnership - ANS-Moderately complex to form
No limitation on legal liability
Not taxable
Limited life
Limited ability to raise capital (funds)
Characteristics of an LLC - ANS-Moderately complex to form
Limited legal liability
Not taxable
Unlimited life
Moderate ability to raise capital (funds)
Prior to liquidating their partnership, Manning and Adamo had capital accounts of
$240,000 and $150,000, respectively. Prior to liquidation, the partnership had no cash
assets other than what was realized from the sale of assets. These partnership assets
were sold for $410,000. The partnership had $80,000 of liabilities. Manning and Adamo
share income and losses equally.
Determine the amount received by Manning as a final distribution from liquidation of the
partnership. - ANS-80000 + 240000 + 150000 = 470000
470000-410000=60000
60000 x .5 = 30000
240000-30000=*210000*
Characteristics of a corporation - ANS-May acquire, own, and dispose of property in its
own name
May also incur liabilities and enter into contracts
Can sell shares of ownership, called stock
The stockholders have limited liability
