Steve and Roger Allocate 2/3 of the Profits and Losses

question 16

Multiple Choice

Steve and Roger allocate 2/3 of the profits and losses to Steve and 1/3 to Roger. If the net income of the firm is $30,000, calculate the share of Roger's net income.

• A)$20,000
• B)$10,000
• C)$30,000
• D)$25,000

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Definitions:

Trade Credit

Short-term financing provided by suppliers, allowing buyers to purchase goods or services on account without immediate cash payment.

Compensating Balances

A requirement by some banks for companies to maintain a minimum balance in their account as part of a loan agreement, effectively reducing the amount of usable cash.

Management Policy

Guidelines and rules set by an organization's management to direct operations and decision-making in alignment with the company's objectives.

Credit Policy

A credit policy is a set of guidelines that a company follows to determine credit limits, payment terms, and how to manage delinquent accounts for its customers.