Which of the Following Statements Is True of Partnerships

question 41

Multiple Choice

Which of the following statements is true of partnerships?

• A)If the partners have no partnership agreement specifying how to divide profits and losses,then they share profits and losses equally.
• B)It is legally required to share the profit and losses equally,irrespective of the partnership agreement.
• C)The stated ratio of profit sharing needs to be approved by the SEC.
• D)The profit sharing is always based on each partner's capital balances and any losses will be shared equally.

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Definitions:

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not change with the level of production, such as salaries of supervisors and factory rent.

Raw Materials

Basic substances in their natural, modified, or semi-processed state, used as inputs for manufacturing.

Standard Cost System

A cost accounting system that uses standard costs for inventory valuation and cost control, comparing actual costs to standard costs to assess performance.

Direct Labor Costs

The wages paid to workers directly involved in the manufacturing of products or the provision of services.