A Good Reason Why Partners Should Spell Out the Details

question 213

Multiple Choice

A good reason why partners should spell out the details of their partnership arrangements in writing is

• A) the partnership is not a legally recognized business unless they do so.
• B) a written agreement will help reduce misunderstandings and disagreements among the partners.
• C) putting the agreement in writing will limit the liability of each partner to a specified level.
• D) doing so will make it easier to convert the business to a corporation at a later date.

---

Definitions:

Fringe Benefits

Nonwage compensation, mainly medical insurance, that workers receive from employers.

Demand for Labor

The total amount of labor that employers are willing and able to hire at a given wage rate in a certain period.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource or factor of production.

Wage Rate

The amount of compensation workers receive in exchange for their labor, typically expressed per hour, day, or piece rate.