Answered: The following characteristics…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The following characteristics represents differences of partnership from a corporation, except *

-mutual agency

-unlimited liability

-limited life

-separate legal personality

-answer not given

To compensate the partners for the difference in capital contributions, they may include which of the following in their profit or loss sharing agreement? *

-ratio based on capital

-interest and salaries

-interest and bonus

-interest and ratio based on capital

-answer not given

Profit distribution method that recognizes primarily the time and effort that a partner may devote to the partnership’s business operations. *

-interest on capital

-salary to partner

-bonus to partner

-both salary to partner and bonus to partner

-answer not given

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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