Abe and Carlos Want to Form a General Partnership

question 57

Multiple Choice

Abe and Carlos want to form a general partnership.What must they do in order to create this legal form of business?

• A)They must get a partnership license from the secretary of state.
• B)They must sign a written agreement and file it with the secretary of state.
• C)They must first orally agree to become partners and then formulate a contract.
• D)They can start a partnership without any formalities.

Grasp the calculation and significance of the contribution margin and contribution margin ratio.

Understand how fixed and variable expenses affect a company’s profitability and break-even point.

Calculate the degree of operating leverage and interpret its effects on a company’s operating income.

Assess the impact of changes in variable costs and sales volume on net operating income.

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Definitions:

Risk-neutral

An attitude towards risk where an individual values all outcomes equally without preference for risk.

Risk-loving

A preference or inclination to undertake investment with uncertain outcomes, often with the potential for significant gains.

Utility

A measure of satisfaction, usefulness, or value that a consumer derives from consuming a good or service.

Decreasing Rate

A situation or condition in which the rate at which something occurs or is processed diminishes over time.