Chapter 8.3, Problem 3R

To determine

To ascertain: The profit sharing in a proprietorship, partnership, and a corporation.

Explanation of Solution

If the company does well, the owner retains all the money, there are the benefits and drawbacks of a proprietorship, whereas the owner still has unlimited legal responsibility for all debts and losses resulting from doing business.

Whereas under partnership profits are shared among the partners, as per the profit sharing ratio decided between them. In case of corporations, however, the profits are dispersed among thousands of shareholders.

Economics Concept Introduction

Introduction: Income minus expenses refers to a profit. Profit making is crucial for business of small group, because it is the profit that affects whether a corporate company can raise capital for a loan, attract investors for the financing its operations and so that it continues to grow its business. If businesses do not make a profit, they can't stay in operation.