Which of the Following Statements Best Describes a Partnership

question 161

Multiple Choice

Which of the following statements best describes a partnership?

• A)Partnership involves two or more persons carrying on business with a view toward profits.
• B)Partnerships are created when two or more persons specifically agree to be in partnership.
• C)Partnerships are like any other form of contract; they can only be created when there is consensus between the parties in the form of offer and acceptance to that effect.
• D)Partnerships involve limited liability.
• E)Partnerships are only created when they have been properly registered with the government.

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Definitions:

Sunk Cost

A cost that has already been incurred and cannot be recovered or changed.

Period Cost

Expenses on the income statement that are not directly tied to the production of goods, including sales, administration, and other overhead costs.

Opportunity Cost

The cost of foregone alternatives, representing the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.

Conversion Costs

Expenses incurred in the process of converting raw materials into finished goods, including labor and manufacturing overhead.