In Many Public Meetings,John Has Proclaimed Himself to Be an Equal

question 27

Multiple Choice

In many public meetings,John has proclaimed himself to be an equal partner of Chan's partnership business.Chan's business ran into financial difficulties.John and Chan approached a creditor to obtain loan.The creditor gave the loan based on a false presumption that John was a partner in the business too.Can John be made liable for the loan?

• A) Yes,because John is a close acquaintance of Chan;thus it is his ethical duty to help Chan during her financial trouble.
• B) Yes,because John is a purported partner;public representations of his partner status make him personally liable for the debt.
• C) No,because he is not legally a partner;the creditor should have checked the partnership agreement before advancing the loan.
• D) No,because John did not participate in the business;he was thus not a member of the partnership business.

---

Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials, labor, and overhead.

Lower Of Cost

The accounting principle that dictates inventory items are recorded at the lower of either their cost or market value if the market value is less.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or disposal, often used to evaluate inventory or accounts receivable.

Inventory Cost Methods

Inventory cost methods are accounting strategies for valuing inventory, such as FIFO (First In, First Out), LIFO (Last In, First Out), and average cost method.