Final answer:
The equitable distribution of partnership profits based on capital contributions employs the average capital method to ensure fairness over time.
Step-by-step explanation:
The most equitable distribution of partnership profits based on capital contributions uses the 'average capital' concept. When profits are divided according to average capital, it considers the capital that each partner has contributed over a certain period, such as annually. This method ensures that the distribution of profits takes into account any changes in the capital contributions throughout the year, rather than just the beginning or the ending capital, which might not present an accurate picture of a partner's contribution over time.