Asked by Jasmine Queen-O'Connell on Jul 07, 2024
Verified
A profit and loss ratio must be based on capital contributions.
Profit And Loss Ratio
An agreed upon ratio used to divide earnings or losses of a partnership.
- Recognize the relevance of partnership agreements in determining profit and loss distribution.
Verified Answer
LN
Leslie NungarayJul 08, 2024
Final Answer :
False
Explanation :
A profit and loss ratio can be based on various factors agreed upon by the partners, such as capital contributions, effort, or time invested, and does not solely depend on capital contributions.
Learning Objectives
- Recognize the relevance of partnership agreements in determining profit and loss distribution.