F:12 Partnerships Flashcards
Capital Deficiency
A partner’s claim against a partner. Occurs when a partner’s capital account has a debit balance
Dissolution
Ending of a partnership
General Partner
A partner who has unlimited personal liability in the partnership
General Partnership
A form of partnership in which each partner is a co-owner of the business, with all the privileges and risks of ownership
Limited Liability Company
(LLC) A form of business organization that is neither a partnership nor a corporation but combines the advantages of both.
Limited Liability Partnership
(LLP) A form of partnership in which each partner is protected from the malpractice of negligence of the other partners
Limited Partner
A partner who has limited personal liability in the partnership
Limited Partnership
(LP) A partnership with atleast two classes of partners; one or more general partners and one or more limited partners
Liquidation
The process of going out of business by selling the entity’s assets, paying its liabilities, and distributing any remaining cash to the partners based on their equity balances
Mutual Agency
Every partner can bind the business to a contract within the scope of the partnership’s regular business operations
Partnership
A business with two or more owners and not organized as a corporation
Partnership Agreement
The contract between partners specifies such items as the name, location, and nature of the businesses; the name, capital contributions, and duties of each partner; and the method of sharing profits and losses among the partners
S Corporation
A corporation with 100 or fewer stockholders that can elect to be taxed in the same way as the partnership
statement of partner’s equity
Summary of the changes in each partner’s capital account for a specific period of time
Unlimited Personal Liability
When a partnership (or a sole proprietorship) cannot pay its debts with business assets, the partners (or the proprietor) must use personal assets to meet the debt
