Gary, Peter, and Chris Own a Firm as Partners

question 127

Multiple Choice

Gary, Peter, and Chris own a firm as partners. Gary has a capital balance of $25,000; Peter a capital balance of $40,000; and Chris has a capital balance of $31,000. As per the partnership agreement, Gary gets a profit share of 2/9; Peter has 4/9; and Chris has 3/9. Which of the following is true, if Gary withdraws from the partnership by receiving $25,000?

• A)Peter, Capital and Chris, Capital will be credited for $12,500 each.
• B)Gary, Capital will be debited for $25,000.
• C)Cash is debited for $25,000.
• D)Peter, Capital will be credited for $25,000.

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Definitions:

Self-determination Theory

A theory of motivation that is concerned with supporting our natural or intrinsic tendencies to behave in effective and healthy ways.

Competence

The ability or skill to perform a task effectively or to a satisfactory standard.

Distress

The effect of unpleasant and undesirable stressors.

Frustration

The feeling of being upset or annoyed, especially because of inability to change or achieve something.