Keith and Jim Formed a Partnership Business

question 57

Multiple Choice

Keith and Jim formed a partnership business. The partnership incurs a net loss of $6,000 and the partners agreed to share the losses equally. The entry to close the net loss will:

• A)debit Income Summary by $6,000.
• B)decrease Keith, Capital by $3,000.
• C)increase Jim, Capital by $3,000.
• D)decrease Jim, Capital by $6,000.

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Definitions:

Quantity Of Output

The total amount of product or service produced by a company during a given period.

Production Expenses

Costs incurred in the process of manufacturing or producing goods and services.

Variable Cost Estimate

An approximation of the costs that vary in direct proportion to the volume of output or production, such as materials and labor.

Sensitivity Analysis

An approach utilized to assess the effects that changes in an independent variable have on a designated dependent variable within established assumptions.