Where a Partnership Agreement Provides for the Sharing of Profits

question 69

Multiple Choice

Where a partnership agreement provides for the sharing of profits but is silent as to how losses are to be shared,________.

• A)losses are shared in the same proportion as profits
• B)losses are shared in greater proportion than profits
• C)profits are shared in greater proportion than losses
• D)losses are absorbed by the partnership entity rather than borne by the individual partners

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Definitions:

Direct Labour

The cost of wages for employees who directly manufacture or produce goods and services.

Raw Materials

The basic materials from which a product is made, often referred to in the context of manufacturing and production industries.

Assemblers

Individuals or machines that put together components to create a finished product.

Partnership

A legal form of business operation between two or more individuals who share management and profits.