Lisa and John own a partnership that provides rental equipment for parties and special occasions. Which of the following is true about the way Lisa and John would handle company profits?
A) Automatically split the profits, with 50 percent for Lisa and 50 percent for John.
B) They would do nothing because partnerships require that profits remain in the business.
C) Divide the profits according to each person's investment in the business.
D) Distribute the profits according to the terms of the partnership agreement.
E) Split the profits according to how many hours each person worked.

Question

Quizplus · Accepted Answer

The profits of a partnership are typically distributed according to the terms of the partnership agreement. Lisa and John would have outlined in their agreement how profits are to be divided based on factors such as their investment in the business, their roles and responsibilities, and other agreed-upon factors.

Lisa and John Own a Partnership That Provides Rental Equipment