White,Gray,and Greene Enter into a Contract to Form a Partnership,but

question 31

Multiple Choice

White,Gray,and Greene enter into a contract to form a partnership,but the contract says nothing about the sharing of profits and losses.Which of the following will take place?

• A) Profits and losses will be shared in a ratio based on the dollar amount of their capital investments.
• B) Profits will be shared equally;losses will be absorbed based on dollar amount of capital investment.
• C) Profits will be based on amount of time each partner spends working for the firm;losses will be shared equally.
• D) Profits and losses will be shared equally.

---

Definitions:

Net Sales

The amount of revenue from sales transactions after deductions for returns, allowances, and discounts have been taken into account.

Accounts Receivables

Accounts Receivables are amounts owed to a business by its customers for goods or services delivered on credit, representing assets on the balance sheet.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets to generate sales revenue, calculated as sales divided by total assets.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.