Which One of the Following Is Correct with Respect to the Rights

question 182

Multiple Choice

Which one of the following is correct with respect to the rights of partners unless they have agreed otherwise?

• A) Personal expenses incurred by the partners in the course of business are reimbursed.
• B) Only the partners that have contributed the largest capital amount have the right to share in management.
• C) No major decision can be taken without a majority vote agreement of all the partners.
• D) All profits are shared equally between the partners.
• E) Partners can sell their share of the partnership to another person without the agreement of the partners.

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Definitions:

Periodic Inventory System

An accounting method where inventory is physically counted at specific intervals to determine the cost of goods sold and ending inventory levels.

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating how much a company earns from its core business activities before subtracting overheads.

Cost of Goods Available for Sale

The total cost of goods that a company has in its inventory and available for sale, including those purchased or manufactured.

Income Statement

A financial report that shows a company’s revenues and expenses over a period of time, leading to net profit or loss.