Travis Has Agreed to Invest $16,000 in a Partnership with His

question 218

Multiple Choice

Travis has agreed to invest $16,000 in a partnership with his sister and brother-in-law. He does not intend to actively work in the partnership, nor does he wish to risk any of his own assets other than the $16,000 he initially invests. The partnership has agreed to permit him to share in the profits. As an expert on forms of business ownership, you know that Travis is a ______________ in this partnership.

• A) general partner
• B) preferred stockholder
• C) secondary partner
• D) limited partner

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Definitions:

Indirect Materials

Materials used in the production process that cannot be easily traced to specific products, such as lubricants and cleaning supplies.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services.

Manufacturing Overhead

Includes all manufacturing costs other than direct materials and direct labor, encompassing expenses such as depreciation, electricity, and maintenance of factory facilities.

Cost of Goods Sold

The total cost directly associated with producing goods that have been sold, including materials, labor, and overhead costs.