Partners Brian,Josh,and Chad Have Capital Balances of $8,000,$6,000,and $80,000,respectively

question 105

Multiple Choice

Partners Brian,Josh,and Chad have capital balances of $8,000,$6,000,and $80,000,respectively.The losses for the year are $10,000.What will Josh's capital balance be if the three partners share profits and losses at a 2:2:6 ratio for Brian,Josh,and Chad,respectively?

• A)$4,000 debit balance
• B)$1,000 debit balance
• C)$2,400 debit balance
• D)$4,000 credit balance

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Definitions:

Accounting Profit

The financial profit of a business calculated by subtracting total expenses from total revenue, as shown in the company's income statement.

Economic Profit

A measure of profitability calculated by subtracting both explicit and implicit costs from total revenues, reflecting the true economic performance of a business.

Implicit Costs

Represent the opportunity costs of using resources that a firm already owns for production, instead of allocating them for other purposes.

Economic Profits

The margin between total earnings and all incurred costs, accounting for both obvious and concealed expenses.