If Tara Simply Opens Her Own Business in Mexico in Conformity

question 58

Multiple Choice

If Tara simply opens her own business in Mexico in conformity with Mexican laws and hires employees in Mexico to sell the product,she would have opened a[n] ______.

• A) Franchise
• B) Distributorship
• C) Joint venture
• D) Licensing subsidiary
• E) Affiliate

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Definitions:

Deficiency

The debit balance in the owner’s equity account of a partner.

Absorbed

Pertains to costs that have been taken into account or integrated into the pricing of products or services, often in relation to overheads or other indirect expenses.

Share of Losses

An accounting term referring to the proportion of losses allocated to an entity in a partnership or joint venture.

Realization

The process of converting non-cash assets into cash or recognizing revenue when it is earned regardless of when cash is received.