In Comparison with the Proprietorship Form of Business Organization, Forming

question 112

Multiple Choice

In comparison with the proprietorship form of business organization, forming a partnership offers which of the following advantages?

• A) Limited life
• B) Legal liability of each partner for all of the debts
• C) Combination of ability and experience of the partners
• D) Simple transfer of interest in the partnership to outsiders

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Definitions:

Direct Cost

A cost that can be easily and conveniently traced to a specified cost object.

Prime Cost

Direct materials cost plus direct labor cost.

Direct Labor

Work done by employees that can be directly traced to the production of goods or services, as opposed to indirect labor involved in support activities.

Direct Materials

The raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.