Question

In the absence of a partnership agreement, the Partnership Act 1890 states that profits should be shared as follows:

a) Equally
b) Based on capital contributions
c) Proportional to the time invested in the business
d) According to seniority in the partnership
e) In accordance with individual efforts and skills

Answer 1

In the absence of a partnership agreement, the Partnership Act 1890 provides guidelines for sharing profits in a partnership.

Step-by-step explanation:

In the absence of a partnership agreement, the Partnership Act 1890 states that profits are shared in the following ways:

1. Equally
2. Based on capital contributions
3. Proportional to the time invested in the business
4. According to seniority in the partnership
5. In accordance with individual efforts and skills

For example, if there are two partners, and one partner invested twice as much capital as the other, the profits would be divided in a 2:1 ratio based on their capital contributions.