The salary and interest allowances in a partnership profit-sharing agreement can best be described as

Question

Quizplus · Accepted Answer

The salary and interest allowances in a partnership profit-sharing agreement are a way of distributing the net income of the business in proportion to the services provided and capital invested by each partner. They are not expenses of the business that are deducted from revenue nor are they a legal requirement for forming a partnership. They are also not amounts on which partners do not have to pay income tax, as these allowances are considered taxable income for each partner.

The Salary and Interest Allowances in a Partnership Profit-Sharing Agreement