II. MULTIPLE CHOICE QUESTIONS 1. A partnership a. has only one owner. pays taxes on partnership income. c. must file an information tax return. d. is not an accounting entity for financial reporting purposes. 2. A partner's share of net income is recognized in the accounts through a. adjusting entries. b. closing entries. C. correcting entries. d. accrual entries. 3. Which of the following would not cause an increase in partnership capital? a. Drawings b. Net income C. Additional capital investment by the partners d. Initial capital investment by the partners 4. Which of the following is not a principal characteristic of the partnership form of business organization? a. Mutual agency b. Association of individuals Limited liability d. Limited life 3. Which of the following is not an advantage of the partnership form of business? a. Mutual agency b Ease of formation Ease of decision making d. Freedom from governmental regulations and restrictions