This Formula for Determining the Amount Available for Profit Sharing

question 40

Multiple Choice

This formula for determining the amount available for profit sharing uses a specific percentage of annual profits contingent upon the successful attainment of a specified profit goal.

• A)fluctuating first-dollar-of-profits
• B)differed first-dollar-of-profits
• C)graduated first-dollar-of-profits
• D)fixed first-dollar-of-profits

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Definitions:

Specified Goods

Items that are explicitly defined or identified in a transaction or contract.

Contract

An agreement based on mutual promises between two or more competent parties to do or to refrain from doing some particular thing that is neither illegal nor impossible. The agreement results in an obligation or a duty that can be enforced in a court of law.

Warranty of Fitness

An assurance that a product or service is suitable for the specific purpose for which it was bought, often implied in sales contracts.

Bicycle Shop

A retail business specializing in the sale, repair, and sometimes rental of bicycles and related accessories and components.