Income can be allocated to partners based solely on average capital balances.

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Income allocation based solely on average capital balances is a common method used in partnership accounting. This means that each partner’s share of the profits or losses is determined based on their average capital balance throughout the year. This method is simple, easy to understand, and ensures that each partner's contributions to the partnership are reflected in their share of the profits or losses.

Income Can Be Allocated to Partners Based Solely on Average