Which of the Following Will Establish the Existence of a Partnership

question 167

Multiple Choice

Which of the following will establish the existence of a partnership?

• A) A debt is repaid by the creditor taking a share of the profits.
• B) An employee receives a profit-sharing bonus.
• C) The good-will portion of the sale of a business is repaid by a share of the profits.
• D) The parties intend to share the expenses of the business.
• E) The beneficiary of a deceased partner takes that partner's share of the income from the partnership.

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Definitions:

Unit Sold

The total number of individual items or products that have been sold by a business during a given period.

Variable Cost

Costs that change in direct proportion to changes in the levels of production or sales activities, such as materials and labor costs.

Relevant Range

The range of activity or volume over which the assumed cost behavior is valid, beyond which cost patterns and relationships may change.

Average Costs

The total costs divided by the number of units produced, giving a per unit cost average.