Shelly,Mackay,and Chan Are Setting Up a Partnership

question 68

Multiple Choice

Shelly,Mackay,and Chan are setting up a partnership.They decide that Chan will make all managerial decisions,Mackay will do the bookkeeping,and Shelly will put in the necessary capital - as such,Shelly will have the greatest share of the company (51%) ,Chan the second greatest (30%) ,and Mackay the least (19%) .They make no alterations to the default rules of the partnership agreement.Which of the following is most likely true?

• A)If Chan and Mackay vote together on a matter,it will go through.
• B)Mackay probably has greater access to the books.
• C)Shelly gets the lion's share of the profits.
• D)If Shelly votes against Chan and Mackay,the matter will go through.
• E)Shelly is entitled to the interest on the capital she contributed.

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Definitions:

Current Assets

Assets that can be converted into cash within one fiscal year or an operating cycle.

Property, Plant, And Equipment

Long-term tangible assets held for business use and not expected to be converted to cash in the upcoming fiscal year, including land, buildings, machinery, and vehicles.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit sales, by dividing net credit sales by the average accounts receivable.

Days' Sales

An indicator of a company's efficiency in managing its inventory, it calculates the number of days it typically takes to sell the entire inventory.