Partners Active in a Partnership Business Should Have Their Share

question 36

Multiple Choice

Partners active in a partnership business should have their share of partnership profits based on the following

• A)​A combination of salaries plus interest based on average capital balances.
• B)​a combination of salaries and percentage of net income after salaries and any other allocation basis.
• C)​salaries only.
• D)​percentage of net income after salaries is paid to inactive partners.

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Definitions:

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth.

Deposits

Money placed into a financial institution for safekeeping, which may earn interest over time.

Investment Plan

A financial strategy designed to help individuals allocate their capital towards investment vehicles with the aim of generating future profits.

Present Value

The present value of an anticipated amount of money or sequence of financial inflows, discounted by a particular return rate.