Which of the Following Is True of Profits and Losses

question 43

Multiple Choice

Which of the following is true of profits and losses in a general partnership?

• A)By law,it is presumed that the proportion of profits shared is equal to the general partner's initial investment.
• B)Unless otherwise agreed,losses are shared equally by all general partners.
• C)The general partner who proposed the idea of the business receives the greatest share of profits.
• D)The proportion of investment governs only the proportion of losses shared and not profits obtained.

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Definitions:

Allowance Method

An accounting method for estimating uncollectible accounts receivable that involves creating a provision for bad debts as a percentage of the accounts receivable.

Gross Price

The total cost of a good or service without deducting any discounts, taxes, or other expenses.

Net Price

The actual price paid for a product after deducting any discounts, rebates, or allowances from the list or gross price.

Allowance Method

An accounting technique that estimates and records bad debts expense from credit sales based on anticipated losses.