Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A) Salaries to partners and interest on partners' capital are expenses of the partnership.
• B) Salaries to partners are expenses of the partnership but not interest on partners' capital.
• C) Interest on partners' capital is an expense of the partnership but not salaries to partners.
• D) Neither salaries to partners nor interest on partners' capital are expenses of the partnership.

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Definitions:

Average Total Cost

The total cost divided by the quantity of output produced, representing the cost per unit of output.

Marginal Cost

The outgoings associated with the production of one more unit of a product or service.

Average Variable Cost

The total variable costs divided by the quantity of output produced; it varies with the level of output.

Long-Run Average Total Cost Curve

A graphical representation showing the relationship between output and average total cost when fixed cost has been chosen to minimize average total cost for each level of output.