In a partnership, the profit and loss sharing ratio will be based:
A) proportionately as per the capital contributions of the partners.
B) on the relative effort contributed by the partners.
C) the relative business risks assumed by the partners.
D) on a formula that the partners agree upon.

Question

Quizplus · Accepted Answer

The profit and loss sharing ratio in a partnership is based on a formula that the partners agree upon. This formula can be based on any number of factors, such as capital contributions, effort contributed, or business risks assumed.

In a Partnership, the Profit and Loss Sharing Ratio Will