It's important for partners to spell out the details of their partnership arrangements in writing because ________
A) the partnership is not a legally recognized business until the arrangement is in writing
B) a written agreement will help reduce misunderstandings and disagreements among the partners
C) putting the agreement in writing will limit the liability of each partner to a specified level
D) doing so will make it easier to convert the business to a corporation at a later date
E) the law requires these arrangements to be filed with state and federal authorities
B
Explanation: B) A drawback of a partnership is the potential for disagreements among the partners. Spelling out the agreement in writing will help settle conflicts when they arise and may discourage small misunderstandings from erupting into larger disagreements.
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Indicate whether the statement is true or false
If a selling segment has excess capacity, the opportunity cost of selling a product internally equals ________
A) the variable costs of producing the product B) the contribution margin the producing segment could have received from selling in the external market rather than the internal market C) the variable costs plus the avoidable fixed costs of producing the product D) zero