Chapter 8 - Financial Statements

Question 1

Define Limited Partnership

Answer 1

consists of one or more general partners and one or more limited partners. Limited partners are passive investors and liability limited to amount of capital they contribute. general partners have unlimited liability

Question 2

Define LLP

Answer 2

variation of general partnership, limited liability, but liable to their investment unless they commit negligence or wrongful acts or aware their partner’s actions and failed to take reasonable actions to prevent them

Question 3

materiality principle

Answer 3

exception to matching principle. purchases with low cost, used over several months, immediately expensed.

Question 4

matching principle

Answer 4

expenses recorded when incurred, no paid (ie. insurance)

Question 5

net book value of asset

Answer 5

original cost of asset less depreciation to date

Question 6

Depreciation Expense

Answer 6

= Cost - salvage value / estimated life (years)