Business Structures Flashcards
What is a partnership?
Two or more people who enter into a business
Is a partnership a separate legal entity that files its own tax return?
Yes
The equity section of the balance sheet for a corporation is the same as partnership capital - true or false?
True, both refer to ownership in the entity.
What is a pass-thru entity?
Is a partnership a pass-through entity?
An entity in which the profit and loss flow through to the owners.
Yes
Each partnership has at least one general partner - T or F?
True
What kind of liability does a general partner have?
What is at risk?
The general partner has unlimited liability for the acts of the partnership.
At risk = the partner’s personal assets, plus the partner’s investment in the partnership.
What does unlimited liability mean?
That the partner’s personal assets are at risk
What is at risk for a limited partner’s liability
The limited partner’s investment
Can a partner’s interest in a partnership be assigned to someone else?
Can a partner’s ownership be assigned to someone else?
Yes
No
What is a corporation?
A group of people authorized to act as a single entity. Legally, it’s considered a person.
What does the equity section of a corporation consist of?
Common stock
Additional paid-in capital
Retained earnings
What increases stockholders equity?
Issuing shares of stock
Keeping retained earnings
What decreases stockholder’s equity?
Stock buyback
Dividend payout
What government body is responsible for securities regulations?
The SEC
