Anita Is Hired as Head of the Sales Team of an Unincorporated

question 36

Essay

Anita is hired as head of the sales team of an unincorporated dress boutique solely owned by Betty. The two agree that Anita will receive one-third of the net profits, which amount is to be paid to her on a monthly basis. Is Anita a partner? If the boutique has a loss instead of a profit, would Anita have to share the loss? Explain.

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Definitions:

Buildings

Structures erected to serve as premises for business, residential, or other purposes, considered as fixed assets on a balance sheet.

Land

Land refers to the surface of the earth and any permanent fixtures attached to it, considered a fixed asset in accounting and not subject to depreciation.

Machinery and Equipment

Fixed assets used in the operations of a business that are expected to be used for multiple years.

Ordinary Maintenance

Routine maintenance and repairs necessary to keep property (equipment, buildings, etc.) in efficient operating condition.