Exercise 1. Choose between the following to make the best sentence concerning partnerships.

(a) A general partnership is an association of (two, three, two or more) entities to carry on as co-owners of a for profit business.

(b) A partnership (is, is not) considered a legal entity (can own property in its own name, enter into legal agreements, and can sue and be sued in court).

(c) A partnership (does, does not) keep records as an independent accounting entity.

(d) A partnership (does, does not) have financial statement that just report quantitative transaction within the partnership. (e) If a partner invests an asset into the partnership, that partner is (assured, not assure) that they will receive that asset back if the partnership is liquidated. (f) The partnership (does, does not) pay the taxes on the income of the partnership. (g) Mutual agency is an (advantage, disadvantage) of the partnership form of business. (h) Once formed, a partnership is considered to be dissolved if the company (ceases to do business, has an ownership change). (i) Once formed, a partnership is considered to be liquidated if the company (ceases to do business, has an ownership change). (j) The income of a partnership is divided among the partners (in the same ratio as the owners investment, according to the partnership agreement). (k) In a general partnership, the partners have (no liability, liability equal to their ownership percentage, unlimited personal liability) for the debts and claims of the partnership.

(l) A partnership (can, cannot) be formed by a handshake between two individuals. (m) The main difference between a general partnership and an LLC is that in an LLC the members have (limited, unlimited) liability for the debts and claims of the LLC. (n) As far as accounting for a partnership or LLC is concerned, the basic difference is in the (Assets, Liabilities, Equity) part of the Accounting Equation