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Questions and Answers
Which of the following best defines profit sharing ratio?
Which of the following best defines profit sharing ratio?
- The amount of revenue that each partner receives in a partnership
- The percentage of profit that each partner receives in a partnership (correct)
- The amount of profit that each partner receives in a partnership
- The percentage of revenue that each partner receives in a partnership
What does profit sharing ratio determine in a partnership?
What does profit sharing ratio determine in a partnership?
- The amount of profit that each partner receives (correct)
- The percentage of profit that each partner receives
- The amount of revenue that each partner receives
- The percentage of revenue that each partner receives
In a partnership, if the profit sharing ratio is not explicitly mentioned, how is the profit usually distributed?
In a partnership, if the profit sharing ratio is not explicitly mentioned, how is the profit usually distributed?
- Equally among all partners
- Based on the number of years of experience of each partner
- Based on the amount of capital invested by each partner (correct)
- Based on the percentage of revenue generated by each partner
