Asked by Brandon Watson on Apr 27, 2024
Verified
Partnership income and losses are usually divided on the basis of interest, salaries, and stated ratios because
A) partners seldom contribute time and resources equally
B) this method reflects the amount of time devoted to the partnership by the partners
C) it is simpler than following the legal rules
D) it prevents arguments among the partners
Stated Ratios
These are specific proportions or percentages explicitly mentioned or defined, typically used in financial analysis to assess a company's performance.
Salaries
Payments made to employees for their services over a specified period, often monthly or biweekly.
Interest
This refers to the cost of borrowing money, expressed as a percentage of the borrowed amount, payable to the lender at a specified rate and time.
- Be informed about the process for dispersing net earnings or drawbacks among different partnership arrangements.
- Master the principles of distributing net income among partners by evaluating capital investments, salary contracts, and previously determined ratios.
Verified Answer
AS
Andrea Shaine NovillaApr 27, 2024
Final Answer :
A
Explanation :
Partners often contribute different amounts of time, resources, and capital to a partnership, leading to the need for income and losses to be divided based on interest, salaries, and stated ratios to reflect these differences fairly.
Learning Objectives
- Be informed about the process for dispersing net earnings or drawbacks among different partnership arrangements.
- Master the principles of distributing net income among partners by evaluating capital investments, salary contracts, and previously determined ratios.