Derek and His Friend Tim Own a Bicycle Shop

question 28

Multiple Choice

Derek and his friend Tim own a bicycle shop. Tim works at the store full-time, whereas Derek only works on the weekends. Derek invested $5,000 in the business to get it started, plus he owned the building the shop is housed in, which is worth $50,000. Derek invested $15,000 in the business. Which of the following explains why Derek and Tim will split this year's profits of $130,000 with Tim getting 40% of the profits and Derek getting 60%?

• A) Their business is a corporation, and they will split the profits according to each owner's percentage of ownership.
• B) Their business is a corporation, and Tim's investment in the company is equal to 40%.
• C) Their business is a partnership, and Tim works more hours at the shop than Derek.
• D) Their business is a partnership, and they will distribute the profits according to the terms of the partnership agreement.

---

Definitions:

Social Leadership

The ability to guide, influence, or direct a group towards the achievement of social goals or the improvement of social conditions.

Task Leadership

A style of leadership focused primarily on accomplishing goals, organizing work, and defining the responsibilities of each team member.

Cultural Background

Cultural background encompasses the social practices, languages, traditions, and values that one inherits from their community or society.

Transformational Leadership

A style of leadership where a leader works with followers to identify needed change, creating a vision to guide the change through inspiration, and executing the change in tandem with committed members of the group.