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In which of the following financial statements would a retained earnings account be found?
Select one:
a. Sole trader.
b. Company.
c. Partnership.
d. None of the options shown would contain a retained earnings account.
A partnership of three siblings would have how many capital accounts in the equity section of the balance sheet?
Select one:
a. One.
b. Two.
c. Three.
d. None.
Which of the following is an advantage of being a sole trader?
Select one:
a. The owner has total autonomy over business decisions.
b. The business is not a separate legal entity.
c. The owner has unlimited liability.
d. The business has limited life.
Partnerships should always have a Partnership Agreement in place to avoid potential disagreements.
Select one:
True
False
If a partner in a partnership decides to leave or retire from the business, the partnership can continue on with no disruption or administrative changes.
Select one:
True
False
Expert Answer
1.Answer ; option B — Company
Because , it’s the money that’s retained (kept in the company’s accounts).
The easy way to understand retained earnings is that it is simply the same concept as Owner’s equity, only it applies to a corporation instead of a sole proprietorship. A corporation has shareholders, and each shareholder has a capital account.
2.Answer –option –C– Three
Because in partnership every partner has there own capital account even they are sibilings.
3.Answer – option A – The owner has total autonomy over business decisions.
Because in sole propritership the owner is a single person who can make desicions on his own.
4.Answer – option – true
Because, Like any relationship, partnerships are fraught with opportunities for disagreement and misunderstanding. But unlike most relationships, once you enter a partnership agreement with someone, you’re legally yoked to them until the partnership is officially dissolved.
Using a written partnership agreement to formalize your joint venture saves personal grief down the road because it allows you and your partner(s) to agree on how you’re going to handle particular situations before they arise. It will make the day-to-day operation of your partnership smoother and prevent problems from escalating into full-blown crises.
5.Answer – option – False
After the leave or retirement of a partner there should be a public notice regarding the retirement and should make changes in profit sharing ratio and even adminstrative changes if the retired person hold any key role in adminstration of business previously
