Mike Hill and Larry Wright Decide to Start a Partnership

question 215

Multiple Choice

Mike Hill and Larry Wright 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:

Settlement Process

The sequence of actions for clearing and settling transactions, including the transfer of securities and cash between parties to finalize trades.

Payoff Profile

A graphical representation showing the potential profit or loss of an investment strategy at various prices of the underlying asset.

Buying a Put

Purchasing a put option, which is a financial contract that gives the buyer the right to sell an asset at a predetermined price within a specified time frame.