All of the Following Are Characteristics of a Successful Profit-Sharing

question 110

Multiple Choice

All of the following are characteristics of a successful profit-sharing plan except:

• A) do not bother setting goals for the plan
• B) involve line managers and employees in the plan's creation to ensure they'll support it
• C) tie the program to the company's strategies
• D) give the plan time to succeed

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Definitions:

Capital Balance

A financial balance within a company's or individual's equity account, representing the amount of funds contributed by owners or partners.

Bonus Method

An accounting method for recording partner investments and distributions where the new partner's capital is adjusted to reflect any bonus given to or received from the existing partners, affecting the capital accounts but not the reported income of the partnership.

Capital Balance

Capital balance refers to the amount of funds in an account or that an individual or company has invested, typically represented on the balance sheet as equity or net worth.

Bonus Method

An accounting method used in partnership accounting to reallocate partners' equity accounts when a new partner is admitted without changing the recorded values of the actual assets.