Adam,Bill,and Charlie Are Partners

question 108

Multiple Choice

Adam,Bill,and Charlie are partners.The profit and loss sharing rule between them is 2:5:3,with Bill getting the largest share and Adam receiving the smallest.The partnership incurs a net loss of $21,000.While closing the Income Summary ________.(Do not round any intermediate calculations.)

• A) Income Summary will be credited for $6300
• B) Adam, Capital will be debited for $6300
• C) Adam, Capital will be credited for $6300
• D) Charlie, Capital will be debited for $6300

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Definitions:

Long-run Equilibrium

A state in which all economic forces such as supply and demand are balanced, and all firms are producing at a level where no new entrants will disrupt the market.

Minimum ATC

The lowest point on the average total cost curve, representing the most efficient scale of production for a firm.

Creative Destruction

A term coined by Joseph Schumpeter to describe the process by which old industries are destroyed and new ones are created as part of the evolution of capitalism.

New Firms

Entrepreneurial ventures that have recently been established in the market.