Skip to content

CA Foundation · Accounting · Partnership and LLP Accounts

In the absence of any agreement in the partnership deed, how are the profits of a partnership firm divided among the partners?

When the partnership deed is silent, profits and losses are shared equally among all partners. Capital contributed, time devoted or drawings made do not affect the sharing ratio unless the partners have expressly agreed otherwise in the deed.

  1. AIn the ratio of their capital contributions
  2. BEqually among all partnersCorrect
  3. CIn the ratio of their drawings
  4. DIn the ratio of the time devoted by each partner

Explanation

Under the Partnership Act, 1932, when the deed is silent, partners share profits and losses equally irrespective of capital contributed or work done. Sharing in the capital ratio is a common error but applies only if the deed says so.

Did you get it right without looking?

One question tells you little. A timed set on Partnership and LLP Accounts shows your real accuracy, how long you take and where you lose marks.

Practise Partnership and LLP AccountsFree diagnostic mock

More Partnership and LLP Accounts questions