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

Question

Quizplus · Accepted Answer

This method of allocating income or loss is known as the "average daily balance method" and is commonly used in partnerships. It calculates the average capital balance of each partner over a specific period of time, such as a fiscal year, and allocates income or loss proportionally based on those averages. This method is considered fair and equitable because it takes into account the entire period's contribution of each partner to the partnership.

Income or Loss Can Be Allocated to Partners Based Solely