Multiple Choice Questions
1. Employers' responsibilities for payroll include:
A) Providing each employee with an annual report of his or her wages subject to FICA and federal income taxes along with the amount of these taxes withheld.
B) Filing Form 941, the Employer's Quarterly Federal Tax Return.
C) Filing Form 940, the Annual Federal Unemployment Tax Return.
D) Individual earnings records for each employee.
E) All of the above.
2. Fixed costs:
A) Create risk.
B) Can be an advantage when a company is growing.
C) Include interest expense.
D) Do not fluctuate with changes in sales.
E) All of the above.
3. An unincorporated association of two or more persons to carry on a business for profit as co-owners is a (n):
A) Partnership.
B) Proprietorship.
C) Contractual company.
D) Mutual agency.
E) Voluntary organization.
4. A partnership agreement:
A) Is not binding unless it is in writing.
B) Is the same as a limited liability partnership.
C) Is binding even if it is not in writing.
D) Does not generally address the issue of the rights and duties of the partners.
E) Is also called the articles of incorporation.
5. Mutual agency means:
A) Creditors can apply their claims to partners' personal assets.
B) Partners are taxed on partnership withdrawals.
C) All partners must agree before the partnership can act.
D) The partnership has a limited life.
E) A partner can commit or bind the partnership in any contract within the scope of the partnership business.
6. A partnership that has two classes of partners, general and limited, where the limited partners have no personal liability beyond the amounts they invest in the partnership, and no active role in the partnership except as specified in the partnership agreement is a:
A) Mutual agency partnership.
B) Limited partnership.
C) Limited liability partnership.
D) General partnership.
E) Limited liability corporation.
7. A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a:
A) Partnership.
B) Limited partnership.
C) Limited liability partnership.
D) General partnership.
E) Limited liability corporation.
8. Partnership accounting:
A) Is the same as accounting for a sole proprietorship.
B) Is the same as accounting for a corporation.
C) Is the same as accounting for a sole proprietorship, except that separate capital and withdrawal accounts are kept for each partner.
D) Is the same as accounting for an S corporation.
E) Is the same as accounting for a corporation, except that retained earnings is used to keep track of partners' withdrawals.
9. Partnership accounting:
A) Uses a capital account for each partner.
B) Uses a withdrawals account for each partner.
C) Allocates net income to each partner according to the partnership agreement.
D) Allocates net loss to each partner according to the partnership agreement.
E) All of the above.
10. In the absence of a partnership agreement, the law says that income (and loss) should be allocated based on:
A) A fractional basis.
B) The ratio of capital investments.
C) Salary allowances.
D) Equal shares.
E) Interest allowances.