Question

Partnership profits and losses are divided among the partners according to their profit-sharing agreement. If no agreement exists, profits or losses shall de divided equally.

a. True
b. False

Answer 1

Partnership profits and losses are divided among the partners according to their profit-sharing agreement, and if no agreement exists, they shall be divided equally.

Step-by-step explanation:

The statement that partnership profits and losses are divided among the partners according to their profit-sharing agreement, and if no agreement exists, they shall be divided equally, is true.

This means that in a partnership, the partners have the flexibility to decide how they want to distribute the profits or losses based on their agreed-upon sharing ratios. If there is no specific agreement in place, the default rule is an equal division.

For example, if there are two partners in a partnership and they have agreed to a profit-sharing ratio of 60% and 40%, respectively, then the profits and losses will be divided accordingly. If there is no profit-sharing ratio agreement, the profits or losses will be divided equally, with each partner receiving 50%.