ACC_401_Chapter_2 - CHAPTER 2 PARTNERSHIPS ORGANIZATION AND...

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CHAPTER 2 PARTNERSHIPS: ORGANIZATION AND OPERATION ANSWERS TO REVIEW QUESTIONS 5. Among the items that should be included in a limited liability partnership contract are the following (only five are required): (1) The date of formation and the planned duration of the partnership, the names of the partners, and the name and business activities of the partnership. (2) The assets to be invested by each partner, the procedure for valuing noncash investments, and the penalties for a partner’s failure to invest and maintain the agreed amount of capital. (3) The authority of each partner and the rights and duties of each. (4) The accounting period to be used, the nature of accounting records, financial statements, and audits by independent public accountants. (5) The plan for sharing net income or loss, including the frequency of income measurement and the distribution of the income or loss among the partners. (6) The salaries and drawings allowed to partners and the penalties, if any, for excessive withdrawals.
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