Bob and Fred Form a Partnership and Agree to Share

question 7

Multiple Choice

Bob and Fred form a partnership and agree to share profits in a 2 to 1 ratio. During the first year of operation, the partnership incurs a $20,000 loss. The partners should share the losses:

• A) based on their average capital balances.
• B) in a 2 to 1 ratio.
• C) equally.
• D) based on their ending capital balances.