Usually the Sharing of Profits Is an Indication of a Partnership.In

question 20

Multiple Choice

Usually the sharing of profits is an indication of a partnership.In which of the following situations will this be TRUE?

• A)to pay the spouse of a deceased partner an annuity
• B)to pay an employee as part of his or her remuneration
• C)to pay the seller of a business an amount for goodwill varying with the profits
• D)to repay a debt owed
• E)none of the above

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Definitions:

Liabilities

Financial obligations or debts owed by a business to others, that must be paid in the future.

R&D Costs

Refers to expenditures related to the research and development of a company’s goods or services. These costs are intended to provide for future growth and innovation.

Net Income

The net income of a business once all costs and taxes are deducted from the overall revenue.

Goodwill

An intangible asset that arises when a business is purchased for more than the fair value of its net identifiable assets.