In a Partnership Agreement, If the Partners Agreed to an Interest

question 49

Multiple Choice

In a partnership agreement, if the partners agreed to an interest allowance of 10% annually on each partner's investment, the interest allowance:

• A) Is ignored when earnings are not sufficient to pay interest.
• B) Can make up for unequal capital contributions.
• C) Is an expense of the business.
• D) Must be paid because the partnership contract has unlimited life.
• E) Legally becomes a liability of the general partner.

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Definitions:

Sexual Reproduction

The process by which organisms produce offspring through the combination of genetic materials from two different cells, typically involving male and female gametes.

Genetic Diversity

The total number of genetic characteristics in the genetic makeup of a species, contributing to its ability to adapt and survive changes.

Asexual Reproduction

A mode of reproduction that does not involve the fusion of gametes, resulting in offspring genetically identical to the parent.

Diploid Cells

Cells that have two complete sets of chromosomes, one from each parent, characteristic of most organisms’ body cells.