A Partnership Agreement Sets How the Partners Will Be Compensated

question 122

Multiple Choice

A partnership agreement sets how the partners will be compensated.Normally:

• A)partners are not entitled to salaries or wages,but are compensated by a share of the profits of the business.
• B)the general partner's salary is set at 2 times the salaries of the limited partners.
• C)both general and limited partners are permitted salaries,but all silent or dormant partners are compensated only by sharing in the profits.
• D)while the agreement establishes payout schedules,it does not spell out what constitutes profit.

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Definitions:

Central Planning

An economic system where the government or central authority makes all decisions regarding the production and distribution of goods and services.

Coordination Problem

The challenge of aligning decisions and actions among various parties to achieve a common goal.

Inputs

Resources such as labor, materials, and capital that are used in the production process to create goods or services.

Enterprise Managers

Individuals responsible for planning, directing, and overseeing the operations and fiscal health of a business unit, division, department, or an operating unit within an organization.