Answered: the absence of agreement as to…

Business

Accounting

the absence of agreement as to distribution of loss,

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 6BCRQ

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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.
LIf the partnership agreement does not specify how profits or losses are to be distributed, they should be allocated based on relative capital account balances. IL. The industrial partner is not liable for losses because he cannot withdraw the work or labor already done by him. I. Partnership profits and losses are divided among partners according to their sharing agreement. It no sharing agreement exists, profits and losses are divided equally. IV. It is possible to allocate profit or loss to partners based solely on average capital balances, Only one statement is false O Two statements are true All of the statements are true All statements are false 1. When salary and interest allocations exceed profit, a loss has occurred. IL. The salary, interest and stated ration method of allocation cannot be applied when a loss has occurred. I. It is possible to allocate profit or loss ratio to partners based solely on salaries IV. In the absence of specific agreement, the law requires the…
8 Which of the following ratio helps the partners to determine the amount of compensation to be paid by the new partner to the old partners for the share of profit surrendered? a. Sacrificing Ratio b. New Profit Sharing Ratio c. Gaining Ratio d. None of the options are correct
If the income of a partnership is not sufficient enough to satisfy all of the provisions of the partnership’s profit-sharing agreement, how should this deficiency be handled?
1. Why do you think an industrial partner does not share in the losses of partnership? 2. When the profit and loss agreement provides for the allowance of interest on partner's equity and salaries to partners, why are the partners entitled to these allowances even if the partnership operations results in a loss?
83. Which of the following statements about the rules for the distribution of profits or losses is/are false? * 1. The profits will be divided according to partner's agreement. II. If there is no agreement as to profit distribution, profits shall be divided according to average capital ratio. II. Industrial partner will share profits as may be just and equitable and share partnership losses equally. IV. If there is not agreement as to distribution of losses, losses shall be distributed according to profit distribution agreement. V. Limited partners shall share losses up to their contributions only VI. Capitalist and industrial partners share losses according to ratio of original capital investment O A. II, and III O B. II, III and IV O C. II, III, and V O D. II, III, and VI
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
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Which of the following is a disadvantage of the partnership form of organization? A. limited life B. no taxation at the partnership level C. flexibility in business operations D. combining of financial resources
Any assets invested by a particular partner in a partnership ________. A. do not become a partnership asset but instead remain with the partner B. can be used only by the investing partner C. become the property of all the partners D. are the basis for all profit sharing
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?
Which one of the following would not be considered in the development of a partnership agreement? A. profit and loss levels B. processing disputes C. stock options D. asset contributions