Force and Zabala Are Partners

question 25

Multiple Choice

Force and Zabala are partners.Force's capital balance in the partnership is $98,000 and Zabala 's capital balance is $53,000.Force and Zabala have agreed to share equally in income or loss.Force and Zabala agree to accept Burns with a 25% interest.Burns will invest $56,000 in the partnership.The bonus that is granted to Force and Zabala equals:

• A)$6,500
• B)$9,125
• C)$2,125
• D)$4,250
• E)$0,because Force and Zabala actually grant a bonus to Burns

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Definitions:

Residual Income

The income that exceeds the minimum rate of return expected on investments or loans, essentially the net income after accounting for the cost of capital.

Goal Congruence

A situation where the goals of the company's employees align with the goals of the organization, leading to optimal decision-making.

Return On Investment

A financial metric used to evaluate the efficiency of an investment or compare the efficiency of multiple investments.

Residual Income

Income that continues to generate after the initial effort has been expended, often used as a metric to evaluate the performance of investment centers within companies.