Mary and Jane are partners in a business. Their business is growing but has not yet reached the point where they can afford a new delivery truck. Jane owns an old truck that she has not been using. She decides to donate it to their business for free.

Question

Quizplus · Accepted Answer

Although Jane is not receiving any direct payment for the truck, there is still an economic cost involved. She could have sold the truck for some amount of money, which she is forgoing by choosing to donate it to the business instead. However, there is no accounting cost involved because there is no actual exchange of money or assets between the partners.

Mary and Jane Are Partners in a Business