Adam, Bill, and Charlie Are Partners

question 32

Multiple Choice

Adam, Bill, and Charlie are partners. The profit and rule sharing rule between them is 2:5:3, with Bill getting the most and Adam getting the least. The partnership incurs a net loss of $18,000. While closing the Income Summary:

• A)Income Summary will be credited for $5,400.
• B)Adam, Capital will be debited for $5,400.
• C)Adam, Capital will be credited for $5,400.
• D)Charlie, Capital will be debited for $5,400.

Understand and apply the concept of break-even analysis and leverage, including the calculation and significance of the degree of operating leverage.

Analyze the impact of changes in sales volume, costs (fixed and variable), and price on profit.

Calculate and interpret the margin of safety and its significance in business decision-making.

Apply critical thinking to assess the impact of pricing decisions on net income and break-even points.