Income of a partnership firm is allocated on the basis of the terms agreed upon in the partnership agreement. The partnership agreement indicates the allocation of net income of the partnership. The agreement provides for interest, salaries and profits sharing ratio for the partners. To indicate: if the claim of the partner is valid. Income of a partnership firm is allocated on the basis of the terms agreed upon in the partnership agreement. A partner can claim salary from the partnership only when there is a provision for the same in the partnership agreement. In the absence of any clause for payment of salary to partner, the partner cannot claim salary from the partnership. Hence in the given case, the claim of the partner for $75,000 salary is not valid because there is not provision for the salary to the parent in the partnership agreement.

Financial Accounting: Information for Decisions

8th Edition

ISBN: 9781259533006

Author: John J Wild

Publisher: McGraw-Hill Education

See similar textbooks

Concept explainers

Motor Vehicle Insurance

Motor vehicle insurance is a contract between the insurance company that provides insurance cover and the person who owns the vehicle. According to the terms and conditions of the insurance contract, the insurance company reimburses the policyholder for …

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter D, Problem 8DQ

Chapter D, Problem 10DQ

Students have asked these similar questions

A company borrowed $12,500 by signing a 150-day promissory note at 7.5% interest. What is the maturity value of the note?

Subject: Generation accounting

Solve with explanation and accounting question

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

SWFT Comprehensive Vol 2020
Accounting
ISBN:9780357391723
Author:Maloney
Publisher:Cengage
SWFT Individual Income Taxes
Accounting
ISBN:9780357391365
Author:YOUNG
Publisher:Cengage
SWFT Comprehensive Volume 2019
Accounting
ISBN:9780357233306
Author:Maloney
Publisher:Cengage
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:9780357110362
Author:Murphy
Publisher:CENGAGE L
Administration Of Wills/Trusts/ And Estates
Finance
ISBN:9781285281308
Author:Brown
Publisher:Cengage
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT