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Assume Amazon is involved in a major lawsuit and the probabledamages are estimated to be $2,000,000. A. Describe the effectsdamage estimates would have on the financial statements of acorporation and a partnership. B. How do disclosure requirementsdiffer from a corporation to a partnership and what information isrequired? C. Are the shareholders at risk for any personalliability with the company set up as a corporation? Defend yourresponse. D. If your company was set up as a partnership, would thepartners be at risk for personal liability? Defend yourresponse.

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Keith Leannon
Keith LeannonLv2
28 Sep 2019

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Investment and financing decisions, which may beshort-term or long-term decisions are best describedas:

financial decision making.

economic decision making.

accounting decision making.

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A loan secured by the “full faith and credit” of theissuer

Morgan Stanley was the investment banking firm that tookFacebook from being a closely held company to issuing stock to thepublic for the first time. Which of the following terms mostclosely describes this?

money market security.

issuing commercial paper.

initial public offering (IPO).

debt security backed by the general credit of theissuer.

Which of the following transactions does not take placein the primary market? An investor:

buying a newly issued municipal bond.

buying shares of an initial publicoffering.

selling one hundred shares of stock through a stockbroker.

buying a U.S. Treasury bill through the governmentauction.

The majority of home purchases in the U.S. are securedwith a mortgage. A mortgage is:

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Which form of business would most likely describe thefollowing, a college student other students, a retired woman whobabysits children, a teenager who mows lawns, and a partyclown?

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Partnership

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Net profit

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When we talk about capital structure, this refersto:

the cash, inventory, and accountsreceivable.

mix of debt and equity to finance anenterprise.

the investment in plant, property andequipment.

The uncertainty associated with the use of debt tofinance a business enterprise is best described as:

financial risk.

business risk.

operating risk.

The mix of debt and equity that is used to finance abusiness enterprise is best described as theenterprise’s:

assets.

working capital.

capital structure.

capital expenditures

Generally accepted accounting principles (GAAP) are bestdescribed as a(n):

organization that establishes the accounting principlesfor U.S. financial reporting.

accounting standards promulgated by the InternationalAccounting Standards Board (IASB.)

set of basic principles and conventions that are appliedin the preparation of financial statements.

organization that establishes the accounting principlesfor business entities in the European EconomicCommunity.

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Balance sheet

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Owner

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Efficiency

Productivity

Financial Leverage

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Owner

Liquidity

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You are currently working at a mid-sized certified publicaccounting firm. Your client is Bob Jones. Bob, age 60 and single,has recently retired from IBM. He has $690,000 available in his401(k) fund and he is thinking of using that money to open a usedcar business that will be located at 210 Ocean View Drive inPensacola, Florida. Bob has estimated that the business might make$300,000 in taxable income. Bob’s personal wealth includinginvestments in land, stocks, and bonds is about $14,000,000. Hereported an interest income of $20,000 and dividend income of$6,000 last year. The $14,000,000 includes land worth $9,000,000that Bob bought in 1966 for $450,000. Bob has hired your firm forprofessional advice regarding whether he should operate as a soleproprietor, a partnership, an S corporation, or a C corporation. Heis also considering transferring a possible 40% interest in his newbusiness to his daughter Mandy, age 23 and single. Specifically,the following critical elements must be addressed: A. Differentiatebetween accrual accounting and cash basis. Based on the type ofbusiness and the client’s accounting system, what is the impactwhen revenue is recognized? Which option would you recommend forthe client? B. Based on the decision of accrual vs. cash basis,describe when revenue would be recognized on the sale of inventory,and how the accrual reporting differs from cash basis. C. Determinethe economic impact on the client’s financial situation. Based onyour decision, determine the potential tax liability, keeping inmind appropriate IRS code and regulations. D. Summarize, usingmoral reasoning, the cash or accrual accounting method in relationto the selected business entity

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Please help me to Interpret the tax law pertaining to a S corporation business and justify my recommendation using details consistent with tax law, code, and regulations.

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