Question

1.Which of the following correctly describes the difference between an LLP and an LLC?
a)Partners of an LLC are NOT allowed to purchase a company's stock shares, while partners of an LLP are allowed to purchase a company's stock shares.
b)Partners of an LLC are legally treated the same as a business, while partners of an LLP bear no legal responsibility.
c)Partners of an LLC exist separately from owners and shareholders, while partners of an LLP are held accountable for the actions of the other partners.
d)Partners of an LLC are NOT responsible for liabilities, while partners of an LLP are responsible for their investment amount.

2. What are the total liabilities of Big Galaxy Toys if the total assets are $248,000 and the equity is $67,000?
a)$181,000
b)$382,000
c)$315,000
d)$563,000

3 Which one of the businesses below would be best served by the periodic inventory method?
a)Restaurant
b)Fish market
c)Construction equipment dealer
d)Online mass consumer goods retailer

4. As she performs the closing process, which step did Lily complete directly before determining the balance of the income summary account?
a)Making the revenue closing entry
b)Making the drawing closing entry
c)Preparing an earnings summary
d)Preparing a post closing trial balance

5. Vern uses a perpetual inventory method at his store. This means that purchases are debited to his merchandise inventory.
Which of the following is credited to his merchandise inventory?
a)Cost of goods sold
b)Net sales
c)Owner’s equity
d)Purchase returns

Answer 1

Ques 1 The correct answer is C "Partners of an LLC exist separately from owners and shareholders, while partners of an LLP are held accountable for the actions of the other partners."

Partners of LLP are personally responsible for the obligations of the business, and for the actions of the other partners.

LLC ensures that members cannot be held personally responsible for business debts and liabilities .

Ques 2 The correct answer is A "$181,000"

Total assets = Total liabilties + Equity

Thus, 248,000 = Total liabilties + 67,000

Total liabilties = 248,000 - 67,000 = $181,00

Ques 3 The correct answer is C "Construction equipment dealer"

Businesses having Lower inventory and lower amount of sales tend to mainatain periodic inventory system.

The other 3 options have frequent sales and maintain ahigh amount of inventory. hence, they would use perpetual system

Ques 4 The correct answer is B "Making the drawing closing entry"

Entry for drawings will not impact the Income summary account, hence that can be done before determining the balance of income summary account