The use of salaries in the allocation of income or loss allows for the differences in the services that partners provide the business.

Question

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Salaries can be used as a way to compensate partners based on the value of their services to the business, which may not always be equal. By allocating income or loss based on salaries, the partnership can more accurately reflect each partner's contribution to the business.

The Use of Salaries in the Allocation of Income or Loss