Stan and Frank Have Started a General Partnership

question 40

Multiple Choice

Stan and Frank have started a general partnership. Stan has contributed 95 percent of the start-up capital and has the business experience and contacts, while Frank's primary contribution is the labor necessary to operate the business. Management decisions are jointly made. At the end of the year, the business has shown a $100,000 profit. Stan and Frank have no formal written partnership agreement.

• A) Stan is entitled to $95,000, and Frank gets $5,000.
• B) The RUPA mandates that each get $50,000.
• C) The RUPA mandates that Frank be paid a fair amount for his labor contribution and the remaining profits be split with 95 percent going to Stan and 5 percent going to Frank.
• D) The RUPA mandates that Frank be paid a fair amount for his labor contribution and the remaining profits be split equally between Stan and Frank.

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Definitions:

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M3

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M2

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