artners Lim and Tan share profits in a 2:1 ratio, respectively. Each partner receives an annual salary allowance of P60,000. If the salaries are recorded in the accounts as a partnership expense rather that treated as a division of net income, the total amount allocated to each partner for salaries and net income would be: a. Less for both Lim and Tan. b. Unchanged for both Lim and Tan. c. More for Lim and less for Tan. d. More of Tan and less for Lim Please provide an explanation, thank you.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Please provide an explanation, thank you.
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