For a composite firm of three licensees and one unlicensed consultant, AC502's Unit 7 entity comparison memo favors a limited liability partnership, provided state accountancy ownership rules admit the consultant. Searches like "ac 502 unit 7 assignment example", "ac502 unit 7 sample" and "ac502 unit 7 example" land here.
What a finished AC502 Unit 7 entity comparison memo looks like
A four-page memo to the four founders, with a comparison table at its center. A header block and a two-sentence recommendation open it. Facts follow: three licensed accountants, one unlicensed systems consultant, a ten-year office lease, a bank line the founders expect to guarantee personally, and a staff of [six]. The table sets general partnership, limited liability partnership, professional corporation and professional limited liability company across the top, with rows for formation, who may own, liability for one's own malpractice, liability for a colleague's malpractice, liability for contract debts, and taxation. Four scenarios then run through each form: a founder's own error on a client return, a staff member's error on an engagement another founder supervised, the lease, and the guaranteed line.
How a AC502 Unit 7 example is structured
Professional liability sets the axis; formation, management and tax get a line apiece so the pages go to whose assets answer when an engagement fails. Ownership is settled before liability, because a form the consultant cannot legally join is not a real option; the memo explains that most state accountancy laws require licensees to hold a majority of a firm's ownership, and that professional corporation statutes in many states limit shareholders to licensed professionals. The scenarios then run form by form. In every structure, a founder stays answerable for her own malpractice. The shields differ on colleagues' errors, on the lease, and on whether a supervising founder is exposed for staff work, and the memo notes that partnership shield statutes vary between full and partial protection. The guaranteed line reaches the founders in every form. Conditions close the recommendation: malpractice coverage, registration and a partnership agreement.
Who is allowed to own
Majority ownership by licensees under most state accountancy laws, and professional corporation statutes that may exclude the consultant altogether.
Four forms, six rows
Four forms across and six rows down, with the two professional liability rows visibly carrying the memo's weight.
A founder's own error
Personal liability for her own malpractice survives in every structure, which the memo states once, plainly, before comparing anything else.
A colleague's error, a supervisor's exposure
How each shield treats staff work supervised by another founder, including the split between full-shield and partial-shield partnership statutes.
Lease, line and recommendation
The ten-year lease tested against each shield, the guaranteed line reaching everyone, and a conditional recommendation for the partnership form.
Where marks go in AC502 Unit 7
Recommendations made before the ownership question is answered draw the heaviest deduction in this memo, since a form the consultant may not join cannot be the answer however well it shields. After ownership, grading turns on the distinction between one's own malpractice and a colleague's, the line on which professional entity shields actually operate; a memo promising that any limited form protects a founder from her own negligence misstates the law. Treating every limited liability partnership statute as a full shield overlooks the partial-shield states. Tax discussion that crowds out liability loses ground, because the prompt asks about exposure. Personal guarantees missed in the bank-line scenario leave the recommendation overstated. Memos that compare forms in the abstract, without the four scenarios, show knowledge without application.
Get a AC502 Unit 7 example written to your instructions
Name the business your Unit 7 scenario describes, its owners and any licensing facts, then list the forms to compare and attach the rubric. Ownership rules come first, then scenarios run form by form ahead of a conditional recommendation, delivered within 24-48h. The opening sample is free and remains an academic comparison; forming an actual firm calls for counsel in that state.
AC502 Unit 7 questions, answered
Can an unlicensed consultant own part of an accounting firm?
Often, within limits. Many states follow the Uniform Accountancy Act model, which allows owners without a license so long as licensees hold a majority of the ownership and the firm meets other conditions. Rules differ by state and by form. The example states the general pattern, flags that professional corporation statutes may be stricter, and treats the answer as the first gate.
Does a limited liability partnership protect a partner from her own mistakes?
No. Every professional entity shield leaves individuals liable for their own negligence, and many statutes extend that to people they directly supervise. What the shield protects against is liability for a colleague's error and, in full-shield states, for the firm's contract debts. The example makes that distinction the center of the whole comparison.
Why is the professional limited liability company not the recommendation?
It could work, and the example says so. It prefers the partnership form because the scenario states that the founders' malpractice carrier writes partnership coverage and that the state named in the prompt registers the form simply. If your state's statutes or your scenario's facts point elsewhere, the recommendation changes with them, and the memo shows where.