Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following statements exemplifies the entity theory of partnership taxation?

The partnership does not file a tax return; only the partners report income.

Partners are taxed individually on their share of partnership income, regardless of distributions.

All partnership assets are considered to be directly owned by the partners.

A partnership is treated as a separate taxable entity, and income is taxed at the partnership level.

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Verified step by step guidance

Understand the entity theory of partnership taxation: This theory treats the partnership as a separate entity for certain purposes, such as filing tax returns, but not for taxation itself. The income is taxed at the partner level, not at the partnership level.

Analyze the given statements: Each statement represents a different perspective on partnership taxation. Compare them to the entity theory to identify which aligns with its principles.

Evaluate the first statement: 'The partnership does not file a tax return; only the partners report income.' This does not align with the entity theory because partnerships are required to file informational tax returns, even though the income is taxed at the partner level.

Evaluate the second statement: 'Partners are taxed individually on their share of partnership income, regardless of distributions.' This aligns with the entity theory, as it reflects the principle that the partnership itself is not taxed, but the partners are taxed on their share of income.

Evaluate the third and fourth statements: 'All partnership assets are considered to be directly owned by the partners' and 'A partnership is treated as a separate taxable entity, and income is taxed at the partnership level.' Neither aligns with the entity theory. The third statement reflects an aggregate theory, and the fourth contradicts the entity theory by suggesting taxation at the partnership level.