Applying the Ratio Based on Investment Method,compute Taylor and Timmy's

question 92

Multiple Choice

Applying the ratio based on investment method,compute Taylor and Timmy's share of net income if Taylor invested $400,000 and Timmy invested $600,000.Net income was $75,000.

• A)Taylor,$15,000;Timmy,$60,000
• B)Taylor,$37,500;Timmy,$37,500
• C)Taylor,$30,000;Timmy,$45,000
• D)None of these answers is correct.

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Definitions:

Income from Operations

The earnings of a business from its core operations, excluding revenue and expenses from non-operational activities like investment gains or losses.

Indirect Expense

Costs not directly linked to the production of goods or services, such as administrative expenses.

Insurance on Merchandise Inventory

A protection coverage for businesses against loss or damage to their stock of goods.

Service Department Charges

Costs allocated to the various service departments within an organization, typically for internal accounting purposes.