Allan and Rick Are Partners Who Share Profits and Losses

question 76

Multiple Choice

Allan and Rick are partners who share profits and losses in the ratio of 3:2.They have capital balances of $40,000 and $30,000,respectively.If Tammy invests $25,000 for one-third interest,Tammy's capital balance will be:

• A)$25,000.
• B)$23,750.
• C)$31,667.
• D)$21,667.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales over a certain period, such as rent or salaries.

Target Net Income

The income objective set by management.

Required Sales

The amount of sales a company needs to achieve in order to cover all its costs and reach its break-even point.

Variable

An element or factor that is subject to change or variation, often used in financial analysis or scientific experiments.