Answered: Which of the following is correct? a.A…

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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Which of the following is correct?

a.A partnership is a reporting entity but not a taxable entity.

b.An individual is a reporting entity but not a taxable entity.

c.A corporation is a reporting entity but not a taxable entity.

d.A partnership is a taxable entity and a reporting entity.

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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