Colin, Debby, and Erin agree to be partners in Fajita Pizza, splitting the profits equally. Colin contributes 65 percent of the capital. When Fajita Pizza is dissolved, its liabilities are greater than its assets. The losses are paid by
A) all of the partners in proportion to their capital contributions.
B) all of the partners in proportion to their shares of the profits.
C) Colin because he contributed most of the capital.
D) Debby and Erin because they contributed the least of the capital.

Question

Colin, Debby, and Erin agree to be partners in Fajita Pizza, splitting the profits equally. Colin contributes 65 percent of the capital. When Fajita Pizza is dissolved, its liabilities are greater than its assets. The losses are paid by
A) ​all of the partners in proportion to their capital contributions.
B) ​all of the partners in proportion to their shares of the profits.
C) ​Colin because he contributed most of the capital.
D) ​Debby and Erin because they contributed the least of the capital.

Quizplus · Accepted Answer

In a partnership, unless otherwise agreed, losses are typically shared in the same proportion as profits. Since Colin, Debby, and Erin agreed to split profits equally, they would also share losses equally.

Colin, Debby, and Erin Agree to Be Partners in Fajita