Wade Comer and Tom Busby Decide to Start a Partnership

question 102

Multiple Choice

Wade Comer and Tom Busby decide to start a partnership and offer accounting services. Which of the following is the best way to start this partnership?

• A) They should orally discuss how they want the partnership to work and who is responsible for certain areas.
• B) They should determine the exact way the business should be run and have a witness listen to their oral discussion.
• C) They should let a third party, such as a consultant or an attorney, draft whatever agreement the consultant or attorney thinks is appropriate.
• D) They should carefully draft an articles of partnership together, outlining each partner's responsibilities and other important information.
• E) With the help of an attorney, they should draft a partnership agreement that states each partner's duties and investments.

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Definitions:

Market Price

The present value at which a service or asset is available for purchase or sale in the marketplace.

Par Value

The face value of a bond or stock as stated by the issuing company, unrelated to its market value. It's a nominal value used for accounting purposes.

Anticipated Future Earnings

Projected profits or income that a company expects to earn in future periods, often used in valuations.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders a share in the company's profits and voting rights.