White,Gray,and Greene Enter into a Contract to Form a Partnership,but

question 31

Multiple Choice

White,Gray,and Greene enter into a contract to form a partnership,but the contract says nothing about the sharing of profits and losses.Which of the following will take place?

• A) Profits and losses will be shared in a ratio based on the dollar amount of their capital investments.
• B) Profits will be shared equally;losses will be absorbed based on dollar amount of capital investment.
• C) Profits will be based on amount of time each partner spends working for the firm;losses will be shared equally.
• D) Profits and losses will be shared equally.

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Definitions:

Option to Expand

The option to expand is a strategic flexibility available to companies, allowing them to increase their investment in a project based on future market conditions or performance indicators.

Cash Break-even

The point where a business's cash inflows match its cash outflows, excluding non-cash expenses, indicating no net gain or loss.

Accounting Break-even

The point at which a company's total revenues equal its total expenses, and it begins to make a profit.

Financial Break-even

The point at which total revenues exactly cover total costs, resulting in no profit or loss.