Which Statement Concerning Partnerships Is True

question 18

Multiple Choice

Which statement concerning partnerships is true?

• A) A partnership agreement must be in writing.
• B) If all existing partners must approve a new partner this may make it difficult to sell an interest in a partnership.
• C) Partner's capital accounts must always have equal balances.
• D) The profit or loss is determined in the profit distribution account and is distributed to the partners in the profit summary account.

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Definitions:

Contract

A contract recognized by law, involving at least two parties, each with obligations to the other.

Principal

The original amount of money invested or loaned, before interest, or the primary party engaged in a contract or transaction.

Authority

The legal power or right given to an individual or entity to make decisions, and enforce obedience.

Agents

Persons authorized to act on behalf of another, known as the principal, in legal or business matters.