Adams Was Approached by a Mr

question 45

Multiple Choice

Adams was approached by a Mr.McCarthy of XYZ Co.,who requested that Adams pay $10 000 to extinguish a debt owed by the partnership of Adams and Jefferson.Adams denied the partnership and the liability.In asserting his claim,McCarthy cited the following facts,all of which he could prove.Which of these facts is the strongest evidence of the existence of a partnership?

• A)Adams and Jefferson co-owned property.
• B)Adams and Jefferson shared gross returns from a business.
• C)Adams and Jefferson worked together for a non-profit charity.
• D)Adams received a commission from Jefferson based on the sale price of the goods sold by Adams for Jefferson.
• E)Adams and Jefferson shared the profits from a business.

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Definitions:

Bad Debt Expense

An expense reported on the income statement, representing the amount of uncollected receivables from customers during a period.

Gross Profit

Gross profit is the difference between sales revenue and the cost of goods sold before deducting overheads, interest, taxes, and other expenses.

Net Income

The amount of profit left after all operating expenses, taxes, and interest have been deducted from total revenue.

Income from Continuing Operations

The earnings of a company from its core business operations, excluding one-time income or expenses from discontinued operations.