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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.
Transcribed Image Text: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.
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