by William Thomas and Wendy M.Tietz Chapters 1 - 12,
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Complete
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,
,Chapter 1 ll
The Financial Statements
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Ethics Check
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(5-10 min.)
l l l EC 1-1
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a. Objectivity and independence
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b. Due care ll
c. Integrity
d. Integrity
, Short Exercises ll
(10min.) S1-1 l l l l
a. Corporation, l l limited l l partners l l of l l a l l Limited-
liability partnership (LLP) and Limited-liability company (LLC). If
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ll any of these businesses fails and cannot pay its liabilities,
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ll creditors cannot force the owners to pay the business’s debts ll ll ll ll ll ll ll ll ll
ll from the owners’ personal assets. Creditors can go after the
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ll general partner of a limited liability partnership.
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b. Proprietorship. There is a single owner of the business, so the ll ll ll ll ll ll ll ll l ll
ll owner is answerable to no other owner.
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c. Partnership. If the partnership fails and cannot pay its liabilities, ll ll ll ll ll ll ll ll ll
ll creditors can force the partners to pay the business’s ll ll ll ll ll ll ll ll l l debts
l l from l l their l l personal l l assets. l l A partnership affords more
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ll protection for creditors than a proprietorship because there are ll ll ll ll ll ll ll ll
ll two or more owners toshare this liability.
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(5min.) S1-2 l l l l
1. The entity assumption applies.
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2. Application of the entity assumption will separate Osmond’s ll ll ll ll ll ll ll
ll personal assets from the assets of Simple Treats, Inc. This will
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l l help Osmond, investors, and
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