A partnership agreement specifies salaries to partners, interest on partners' capital, and the remaining profits or losses shared in a fixed ratio. When the partnership profit is not sufficient to cover both salaries and interest, only interest is allocated to the partners. the entire profit is shared in a fixed ratio. only salaries are allocated to the partners. both salaries and interest are allocated to the partners.

A partnership agreement specifies salaries to partners, interest on partners' capital, and the remaining profits or losses shared in a fixed ratio. When the partnership profit is not sufficient to cover both salaries and interest, only interest is allocated to the partners. the entire profit is shared in a fixed ratio. only salaries are allocated to the partners. both salaries and interest are allocated to the partners.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 3MC

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Similar questions

When a partnership is liquidated, any gains or losses realized by the sale of noncash assets are allocated to the partners based on their income sharing ratio. Why?
A well written partnership agreement should include each of the following except ________. A. how to settle disputes B. the name of the partnership C. division of responsibilities D. Partners individual tax rate
Salaries provided to partners are generally accounted for as:________ a. Part of the cost of revenues of the partnership b. An operating expense of the partnership c. A profit-sharing mechanism d. Permanent withdrawals of the partners
If the partnership agreement only includes a provision on how to distribute profits, any partnership losses are: Divided based on the ratio of original capital account balances Divided using the same. manner of profit distribution Divided equally among the partners Not distributed among the partners
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If no agreement exists in a partnership as to the allocation of income, what method is appropriate? a. receives equal allocations. b. receives an amount equal to their contributions. c. receives amounts based on their balance in their partnership capital accounts. d. receives an amount equal to the losses.
What is the answer to this question?
The partnership profit is divided in proportion to each partner's capital equity interest, unless the partnership contract specifically indicates the manner of dividing the profit True or False
In the absence of agreement as to distribution of profit, how shall the partnership profit be distributed to the partners? A. The industrial partner shall receive a share equivalent to the least share of a capitalist partner while the capitalist partners shall share based on capital contribution ratio. B. The industrial partner shall receive a just and equitable share and the remainder shall be distributed to the capitalist partners on the basis of capital contribution ratio. C. The profit shall be distributed on the basis of loss contribution ratio which may have been agreed upon by the partners. D. The profit shall be distributed equally to all partners including the industrial partner.
What is the purpose of a partnership appropriation account? A to avoid disagreements between the partners B to calculate residual profits for division between partners C to calculate the profit sharing ratio D to determine the amount of partners’ salaries
18. If the partnership agreement does not specify how income is to be allocated among the partners, profits should be allocated: a. In accordance with some pre-established ratio b. In proportion to the weighted average of capital invested during the period c. Equally d. Equitably so that the partners are compensated for the time and effort expended on behalf of the partnership
is it true or false? Explain Unless stated otherwise,in the partnership contract,profits and losses are shared among the partners in the ratio of their capital equity balances.