Drew,Elmer,and Frank Are Partners in the DEF Partnership

question 34

Multiple Choice

Drew,Elmer,and Frank are partners in the DEF partnership.The partnership is being dissolved.It has $200,000 in cash assets and it owes $410,000 to creditors.Profits and losses of the partners are shared equally,although Drew contributed $100,000 in capital;Elmer contributed $50,000 in capital;and Frank contributed $25,000 in capital.Which of the following is correct with regard to the responsibility of each partner?

• A) Each partner is responsible for $70,000 of the money owed to creditors.
• B) Elmer will have to contribute additional capital in order to settle the partnership affairs.
• C) Drew will have to contribute additional capital in order to settle the partnership affairs.
• D) All of these are correct.

---

Definitions:

Organizational Objectives

Specific goals that a company or institution aims to achieve, which guide its operations and strategic planning.

Employee Ownership

A business structure where employees have a significant stake in the company, often through stock ownership.

Profit-sharing Plans

A company program where employees receive a portion of the profits based on the company's earnings.

Fixed Costs

are business expenses that remain unchanged irrespective of the level of production or sales activity, such as rent, salaries, and insurance.