Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 26 - No. 14)
If a partnership agreement specifies that profits and losses are to be shared equally, but the partnership incurs a loss, how is this loss distributed?
The loss is distributed only to the partners who are solvent.
The loss is distributed based on the capital contribution ratio.
The loss is shared equally among all partners.
The loss is carried forward to the next accounting period.
Explanation
In the absence of another agreement, losses would be shared equally.
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