Note: This Is a Kaplan CPA Review Question

question 6

Multiple Choice

Note: This is a Kaplan CPA Review Question
Fox, Greg, and Howe are partners with average capital balances during 20X1 of $120,000, $60,000, and $40,000, respectively. Partners receive 10% interest on their average capital balances. After deducting salaries of $30,000 to Fox and $20,000 to Howe, the residual profit or loss is divided equally. In 20X1 the partnership sustained a $33,000 loss before interest and salaries to partners. By what amount should Fox's capital account change?

• A) $7,000 increase
• B) $11,000 decrease
• C) $35,000 decrease
• D) $42,000 increase

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Definitions:

Nonfinancial Incentives

Rewards given to employees that do not involve monetary compensation, such as recognition, opportunities for growth, and a positive work environment.

Internal Equity

The principle of providing fair compensation to employees by ensuring that jobs that require similar skills, effort, and responsibility are paid comparably within the organization.

Candidate Pool

The collection of individuals who have expressed interest or have been identified as potential hires for a job position.

Assessing Core Skills

The process of evaluating an individual's essential abilities required for the performance of specific tasks or jobs.