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.

Connect Access Card for Financial Accounting: Information and Decisions

8th Edition

ISBN: 9781259662966

Author: John J Wild

Publisher: McGraw-Hill Education

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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 …

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Chapter D, Problem 8DQ

Chapter D, Problem 10DQ

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