Assume That You Own a Business with a Friend and You

question 18

Multiple Choice

Assume that you own a business with a friend and you both signed an agreement that says if one of you should leave the company,the other person has the legal right to purchase the share of the company owned by the person leaving. This is known as a

• A) buyback clause.
• B) nondisclosure clause.
• C) noncompete clause.
• D) unlimited personal liability clause.
• E) uniform partnership clause.

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Definitions:

Account Payable

An account payable is a liability representing an amount owed by an entity to a supplier or creditor for goods or services received but not yet paid for.

Return on Assets Ratio

The Return on Assets Ratio measures a company's ability to generate earnings from its assets, calculated by dividing net income by the average total assets.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments due on any type of debt.

Return on Assets Ratio

A financial metric used to evaluate a company's profitability relative to its total assets.