In the AD Partnership,Allen's Capital Is $140,000 and Daniel's Is

question 20

Multiple Choice

In the AD partnership,Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio,respectively.They decide to admit David to the partnership.Each of the following questions is independent of the others.
-Refer to the information provided above.David directly purchases a one-fifth interest by paying Allen $34,000 and Daniel $10,000.The land account is increased before David is admitted.What are the capital balances of Allen and Daniel after David is admitted into the partnership?

• A)Option A
• B)Option B
• C)Option C
• D)Option D

---

Definitions:

Economies of Scale

Cost advantages that entities attain due to the scale of operation, with costs per unit of output generally decreasing with increasing scale.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the performance exceeding opportunity costs.

Short-Run Equilibrium

The condition in which supply and demand are equal at a particular price level, within a short time frame, before all variables have fully adjusted.

Profit-Maximizing

The process or goal of a firm to adjust its production and sale strategies to achieve the highest possible profits.