Which of the Following Could Be Used as a Basis

question 70

Multiple Choice

Which of the following could be used as a basis to allocate profits among partners who are active in the management of the partnership?
1) Allocation of salaries.
2) The number of years with the partnership.
3) The amount of time each partner works.
4) The average capital invested.

• A) 1 and 2.
• B) 1 and 3.
• C) 1, 2, and 4.
• D) 1, 3, and 4.
• E) 1, 2, 3, and 4.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset by evenly spreading its cost over the expected life of the asset.

Asset Impairment Loss

A sudden write-down or devaluation of an asset to its fair market value which is lower than its currently recorded cost, reflecting unexpected decreases in value.

Future Cash Flows

Estimated incoming and outgoing cash transactions expected to occur in the future.

Net Book Value

The value of an asset after accounting for depreciation or amortization, representing its residual value on the balance sheet.