Which of the Following Statements Regarding a Partnership Is True

question 89

Multiple Choice

Which of the following statements regarding a partnership is true?

• A) A partnership is an involuntary association.
• B) To be valid, a partnership must have a written partnership agreement.
• C) A partnership is a separate tax-paying entity for federal tax purposes.
• D) Partners have personal liability for business debts and other legal obligations of the business.

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Definitions:

Contribution Margin Ratio

A measure expressing how a product's selling price exceeds variable costs, shown as a percentage of the sales price.

Fixed Expenses

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profit.

Variable Expenses

Costs that change in proportion to the activity of a business, such as sales commissions or raw materials.