Heinz Klein Is a Mechanic

question 59

Multiple Choice

Heinz Klein is a mechanic. Bettina Lopez has some money to invest. They agree that Bettina will lend money to Heinz to buy cars at government sales, fix them up and sell them. They will split the profits. Bettina says that she wants to have nothing to do with the operation of the business. They agree that they will not be partners. Which of the following is TRUE?

• A)They are not partners because they have specifically agreed not to be partners.
• B)They are partners because they are sharing profits from a business on a continual basis.
• C)Bettina is a limited partner and will not be liable for partnership debts beyond her investment.
• D)The partnership is not registered as a limited partnership so Bettina will be liable for partnership debts.
• E)Both B and D

---

Definitions:

Conversion Cost

The total expense, encompassing both direct labor and manufacturing overheads, associated with turning raw materials into finished goods.

Direct Materials

Raw materials directly attributed to the production of goods.

Conversion Costs

Costs in manufacturing that include both direct labor and overhead costs, specifically associated with the conversion of raw materials into finished goods.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services.