Taxation For Decision Makers 2019 9th Edition By Shirley Dennis-Escoffier – Test Bank

True-False: Insert T for True and F for False before the questions.

_____ 1. A flow-through entity aggregates all its income and subtracts all expense items for reporting its net income.

ANSWER False LO 11.1
DIFFICULTY: Easy

_____ 2. A sole proprietorship must use the cash method of accounting.

ANSWER False LO 11.2
DIFFICULTY: Easy

_____ 3. A sole proprietor is considered a self-employed individual.

ANSWER True LO 11.2
DIFFICULTY: Easy

_____ 4. A general partner in a limited partnership is not protected from the partnership’s liabilities.

ANSWER True LO 11.3
DIFFICULTY: Easy

_____ 5. A limited partnership must have a general partner.

ANSWER True LO 11.3
DIFFICULTY: Easy

_____ 6. Partners pay taxes on their share of all the partnership net income annually.

ANSWER True LO 11.3
DIFFICULTY: Easy

_____ 7. The limited liability partnership form of business offers partners protection from all partnership debts.
ANSWER False LO 11.3
DIFFICULTY: Easy

_____ 8. The owners of a limited liability company are called members.

ANSWER True LO 11.3
DIFFICULTY: Easy

_____ 9. Limited liability companies are generally taxed as partnerships unless the company elects to be taxed as a corporation.

ANSWER True LO 11.3
DIFFICULTY: Easy

_____ 10. A limited liability company that has only one member must be taxed as a sole proprietorship.

ANSWER False LO 11.3
DIFFICULTY: Easy

_____11. The entity concept of a partnership views the partnership as separate from the partners and permits certain transactions between the partner and the partnership.

ANSWER True LO 11.3
DIFFICULTY: Easy