Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Question

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Answer 1

Question

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.

Chapter 9, Problem 1Q

To determine

Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Expert Solution & Answer

Explanation of Solution

The advantages of operating a business as a partnership rather than as a corporation are:

The ability to make virtually arrangements defining their relationship to each other that the partners desire.
Less hassle of forming a partnership.
Fixed oral agreement is required to form a partnership.
Operating costs are reduced and partners can make decisions which they desire.
Partnership can claim losses as tax and do not pay taxes.

The disadvantages of operating a business as a partnership rather than as a corporation are:

Partners have unlimited liability.
Every partner is liable to pay the debts incurred.

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Oriole Company sells product 2005WSC for $55 per unit and uses the LIFO method. The cost of one unit of 2005WSC is $52, and the replacement cost is $51. The estimated cost to dispose of a unit is $6, and the normal profit is 40% of selling price. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market?

Answer 2

Question

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.

Chapter 9, Problem 1Q

To determine

Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Expert Solution & Answer

Explanation of Solution

The advantages of operating a business as a partnership rather than as a corporation are:

The ability to make virtually arrangements defining their relationship to each other that the partners desire.
Less hassle of forming a partnership.
Fixed oral agreement is required to form a partnership.
Operating costs are reduced and partners can make decisions which they desire.
Partnership can claim losses as tax and do not pay taxes.

The disadvantages of operating a business as a partnership rather than as a corporation are:

Partners have unlimited liability.
Every partner is liable to pay the debts incurred.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

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.

Chapter 9, Problem 1Q

To determine

Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Expert Solution & Answer

Explanation of Solution

The advantages of operating a business as a partnership rather than as a corporation are:

The ability to make virtually arrangements defining their relationship to each other that the partners desire.
Less hassle of forming a partnership.
Fixed oral agreement is required to form a partnership.
Operating costs are reduced and partners can make decisions which they desire.
Partnership can claim losses as tax and do not pay taxes.

The disadvantages of operating a business as a partnership rather than as a corporation are:

Partners have unlimited liability.
Every partner is liable to pay the debts incurred.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

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.

Chapter 9, Problem 1Q

To determine

Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Expert Solution & Answer

Explanation of Solution

The advantages of operating a business as a partnership rather than as a corporation are:

The ability to make virtually arrangements defining their relationship to each other that the partners desire.
Less hassle of forming a partnership.
Fixed oral agreement is required to form a partnership.
Operating costs are reduced and partners can make decisions which they desire.
Partnership can claim losses as tax and do not pay taxes.

The disadvantages of operating a business as a partnership rather than as a corporation are:

Partners have unlimited liability.
Every partner is liable to pay the debts incurred.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1Q

To determine

Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Expert Solution & Answer

Explanation of Solution

The advantages of operating a business as a partnership rather than as a corporation are:

The ability to make virtually arrangements defining their relationship to each other that the partners desire.
Less hassle of forming a partnership.
Fixed oral agreement is required to form a partnership.
Operating costs are reduced and partners can make decisions which they desire.
Partnership can claim losses as tax and do not pay taxes.

The disadvantages of operating a business as a partnership rather than as a corporation are:

Partners have unlimited liability.
Every partner is liable to pay the debts incurred.

Answer 6

Chapter 9, Problem 1Q

To determine

Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Expert Solution & Answer

Explanation of Solution

The advantages of operating a business as a partnership rather than as a corporation are:

The ability to make virtually arrangements defining their relationship to each other that the partners desire.
Less hassle of forming a partnership.
Fixed oral agreement is required to form a partnership.
Operating costs are reduced and partners can make decisions which they desire.
Partnership can claim losses as tax and do not pay taxes.

The disadvantages of operating a business as a partnership rather than as a corporation are:

Partners have unlimited liability.
Every partner is liable to pay the debts incurred.

Answer 7

Chapter 9, Problem 1Q

To determine

Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Answer 8

Expert Solution & Answer

Explanation of Solution

The advantages of operating a business as a partnership rather than as a corporation are:

The ability to make virtually arrangements defining their relationship to each other that the partners desire.
Less hassle of forming a partnership.
Fixed oral agreement is required to form a partnership.
Operating costs are reduced and partners can make decisions which they desire.
Partnership can claim losses as tax and do not pay taxes.

The disadvantages of operating a business as a partnership rather than as a corporation are: