Asked by Julie Smith on May 11, 2024
Verified
Which of the following would be the most convincing evidence of a partnership?
A) An agreement to share in the management of a business.
B) Agreements to share gross returns.
C) An agreement to share profits and losses.
D) An agreement to pay a firm manager a percentage of the profits for his salary.
Gross Returns
The total amount of money earned from an investment before any deductions are made for expenses or losses.
Partnership Evidence
This term is unclear in this context and may not specifically refer to a well-defined legal or business concept. NO.
Profits and Losses
Financial terms representing the positive and negative financial results of a business's operations, respectively.
- Recognize the evidence indicative of a partnership formation.
Verified Answer
KS
Kaitlynn SmithMay 12, 2024
Final Answer :
C
Explanation :
An agreement to share profits and losses is a fundamental characteristic of a partnership, indicating a mutual interest in the success and risks of the business. Sharing in management or gross returns, or paying a manager from profits, does not necessarily establish a partnership.
Learning Objectives
- Recognize the evidence indicative of a partnership formation.