Question

Ted and Fred are the owners of a gas station. They invested $150,000 each and pay an employee named Lawrence $35,000 per year. This year revenues are $900,000, while costs are $940,000. Who is legally responsible for bearing the $40,000 loss?

Answer 1

Answer:

Ted and Fred

Step-by-step explanation:

As per the question,

Ted and Fred are the owners of a gas station that is they are the owner of their own firm.

As being the owner of their own company, they are the one who is responsible for their loss. That is the firm’s owners always suffer the firm’s risk.

Business Risk: Risk that a business will not be able to cover its operating costs.

So in this case, Lawrence is the employee and legally he is not responsible to suffer any kind of the loss.

So he must be paid his salary  on time and in full whether or not the firm is running a profit, a loss, or just breaking  even.

As being owner Ted and Fred are responsible to withstand the business risk.

Hence, the person who is legally responsible for bearing the $40,000 loss is Ted and Fred.