The Partnership Form of Business Organization Should Be Entered into with Caution

question 47

Multiple Choice

The partnership form of business organization should be entered into with caution because

• A)the firm will be bound to perform any contract entered into by a partner with third parties.
• B)a third party may claim damages against the partnership for injury incurred as the result of any tort committed by a partner.
• C)partners may leave the firm to avoid debts or claims against the partnership.
• D)the admission of a new partner to the firm does not automatically render the new partner liable for the existing debts of the partnership.
• E)All of the responses are correct.

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Definitions:

Common Fixed Expenses

Expenses that do not change with the level of production or sales over a certain period and are shared among different segments or products of a business.

Break-Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Sales Dollars

The total revenue generated from selling goods or services, expressed in monetary value.

Net Operating Income

A financial metric that calculates a company's income after all operating expenses, excluding taxes and interest, have been deducted from total revenue.