Answered: Alison and her cousin Alec are both…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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5. Alison and her cousin Alec are both CPAs and have been in business together as partners for ten years. Now that they are successful-with the families and personal assets to prove it-they are concerned about being held personally liable for the partnership's obligations. How can they address those concerns?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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