David, Ed, and Fred Are Partners in the DEF Partnership

question 27

Multiple Choice

David, Ed, and Fred are partners in the DEF partnership. The partnership is being dissolved, having $200,000 in assets and owing $410,000 to creditors. David contributed $100,000 in capital; Ed contributed $50,000 in capital; and Fred contributed $25,000 in capital. Profits are shared equally. Which of the following is correct with regard to the responsibility of each partner?

• A) The partners will bear losses equally.
• B) The partners will bear losses in the proportion of their relative capital contributions.
• C) If Ed refuses to contribute to covering the loss and he is out of the jurisdiction, David and Fred must contribute the additional amount necessary to pay DEF's liabilities in the relative proportion of their capital contributions.
• D) Any of these could be true, depending on the partnership agreement.

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Definitions:

Transnational Collaboration

The cooperation between organizations or individuals across national borders to achieve a common goal or address global challenges.

Sympathy Strikes

Labor strikes initiated by workers in one company or industry in support of workers in another organization or sector who are already on strike.

Collective Bargaining

The process by which workers, through their unions, negotiate contracts with their employers to determine terms of employment, including wages, hours, and working conditions.

Mass Migration

The movement of large numbers of people from one geographical area to another, often across international borders.