David, Chris and John Started Off a Partnership Firm on July

question 60

Multiple Choice

David, Chris and John started off a partnership firm on July 31, 2014. They decided to share profits equally, but also inserted a clause in the partnership agreement whereby any loss suffered would be borne in the ratio 3:2:1. For the year ended December 31, 2014, the firm earned a net income of $45,000. However, for the year ended December 31, 2015, the firm incurred a loss of $60,000. Assuming that John had an initial capital contribution of $40,000 and made no further withdrawals, what is the balance of John's Capital account as of December 31, 2015? (Assume that none of the partners made any further contributions to their capital accounts.)

• A)$45,000
• B)$40,000
• C)$55,000
• D)$35,000

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Definitions:

Circular Economy

An economic system aimed at minimizing waste and making the most of resources by reusing, repairing, refurbishing, and recycling existing materials and products.

International Manufacturing

The production of goods in multiple countries to take advantage of global efficiencies such as lower labor costs.

Chemical Derivatives

are substances that are derived from other substances through chemical processes, often possessing different physical or chemical properties.

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A holistic approach to analysis that focuses on the way that a system's constituent parts interrelate and how systems work over time within the context of larger systems.