If salary allowances and interest on capital are stipulated in the partnership profit and loss sharing agreement they are implemented only if income is sufficient to cover the amounts required by these features.

Question

Quizplus · Accepted Answer

Salary allowances and interest on capital for partners as stipulated in the partnership agreement are typically paid out regardless of whether the firm makes a profit or not, as these are considered as expenses and are accounted for before calculating the net profit or loss of the business.

If Salary Allowances and Interest on Capital Are Stipulated in the Partnership