CH12 - Accounting for Partnerships and Limited Liability Companies

Question 1

The debit balance in the owner’s equity account of a partner.

Answer 1

deficiency

Question 2

A business form consisting of one or more persons or entities filing an operating agreement with a state to conduct business with limited liability to the owners, yet treated as a partnership for tax purposes.

Answer 2

limited liability company (LLC)

Question 3

The winding-up process when a partnership goes out of business.

Answer 3

liquidation

Question 4

An unincorporated business form consisting of two or more persons conducting business as co-owners for profit.

Answer 4

partnership

Question 5

The formal written contract creating a partnership.

Answer 5

partnership agreement

Question 6

The sale of assets when a partnership is being liquidated.

Answer 6

realization

Question 7

A measure of the efficiency of the business in generating revenues, which is computed as revenue divided by number of employees.

Answer 7

revenue per employee

Question 8

A summary of the changes in each member’s equity in a limited liability corporation that have occurred during a specific period of time.

Answer 8

statement of members’ equity

Question 9

A summary of the changes in each partner’s capital in a partnership that have occurred during a specific period of time.

Answer 9

statement of partnership equity

Question 10

A summary of the liquidation process whereby cash is distributed to the partners based on the balances in their capital accounts.

Answer 10

statement of partnership liquidation