The Summarized Balances of the Accounts of MNO Partnership on December

question 42

Multiple Choice

The summarized balances of the accounts of MNO partnership on December 31, 2014, are as follows: $\begin{array}{lrlr}\text { Assets }&&\text { Liabilities and Capital }\\\text { Cash } & \$ 15,000 & \text { Liabilities } & \$ 15,000 \\\text { Noncash } & 90,000 & \text { M, Capital } & 45,000 \\& & \text { N, Capital } & 30,000 \\& & \text { O, Capital } & 15,000 \\\hline\text { Total Assets } & \$ 105,000 &\text { Total Equities }& \$ 105,000\end{array}$ The agreed upon profit/loss ratio is 50:40:10, respectively.Using the information given above, which one of the following amounts, if any, is the loss absorption potential of partner N as of December 31, 2014?

• A)$20,000
• B)$35,000
• C)$75,000
• D)$120,000

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Definitions:

Sophomores

Second-year students in a four-year degree program at a high school or university.

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it marks the threshold for significance.

Hypotheses

Proposed explanations or predictions that can be tested through research and experimentation.

T-statistic

A type of statistic used to estimate the population parameter based on a sample statistic.