The Partnership Act provides for the following rule: "all partners are to share equally in the capital and profits of the business and must contribute equally to the losses." Which statement best exemplifies this rule?
A) The losses are restricted to the capital investments made by each partner.
B) This rule is optional and may be varied by written agreement.
C) This rule is mandatory and cannot be modified by agreement.
D) The rule applies only to limited liability partnerships.

Question

Quizplus · Accepted Answer

This rule, as stated in the Partnership Act, serves as a default provision. Partners can agree to a different arrangement regarding the sharing of profits, losses, and capital contributions, which must be documented in a written agreement. This flexibility allows partners to tailor the partnership agreement to their specific situation.

The Partnership Act Provides for the Following Rule: "All Partners