The objective of allocating profits and losses is to reward each partner fairly for the resources and services contributed to the partnership. Which of the following factors would not be directly relevant in negotiating a profit and loss sharing agreement for a partnership?
A) The risks assumed by each partner.
B) The size of each partner's non-partnership assets.
C) Work done by each partner in the partnership.
D) Capital contributed by each partner to the partnership.

Question

Quizplus · Accepted Answer

The size of each partner's non-partnership assets is not directly relevant in negotiating a profit and loss sharing agreement for a partnership. The focus is on the resources and services contributed to the partnership, such as the risks assumed, work done, and capital contributed by each partner. Non-partnership assets are not part of this equation.

The Objective of Allocating Profits and Losses Is to Reward