Jackson and O'Neill Open a Partnership That Produces Gates

question 124

Multiple Choice

Jackson and O'Neill open a partnership that produces gates.Jackson provides $30,000 of capital while O'Neill contributes $90,000 of capital; they agree to split net income by the same proportion.The partnership's net income is $80,000 for the first year.They did not draw any income out of the business or add any additional capital during the first year.At the end of the year,the partners' equity is:

• A)$70,000 for Jackson and $130,000 for O'Neill for a total of $200,000.
• B)$200,000 minus income tax expense for the partnership.
• C)$200,000 minus the income tax paid by each partner.
• D)$50,000 for Jackson and $150,000 for O'Neill for a total of $200,000.

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Definitions:

Real Wage Growth

An increase in wage rates adjusted for inflation, indicating an increase in purchasing power and standard of living.

Capital Accumulation

The process of acquiring additional assets or capital goods aimed at increasing productive capacity or wealth.

Labor Productivity Growth

An increase in the output of goods and services per hour worked, which can lead to higher living standards and economic growth.

Real Wage

The purchasing power of wages, taking into account the impact of inflation, indicating how many goods and services wages can buy.