Which of the following statements is TRUE of partnerships?
A) If the partners have no partnership agreement specifying how to divide profits and losses, then they share profits and losses equally.
B) It is legally required to share the profit and losses equally, irrespective of the partnership agreement.
C) The stated ratio of profit sharing needs to be approved by the SEC.
D) The profit sharing is always based on each partner's capital balances and any losses will be shared equally.

Question

Quizplus · Accepted Answer

If there is no partnership agreement specifying how to divide profits and losses, the default rule is that profits and losses are shared equally among partners. However, partners can agree to a different allocation of profits and losses in their partnership agreement.

Which of the Following Statements Is TRUE of Partnerships