Fictitious assets are distributed among the partners in their __________ ratio. *
Answers
The correct answer is Fictitious assets are distributed among the partners in their equal, profitable ratio.
- The term "fictitious assets" refers to assets that are not realistic; they are essentially absent but give the impression that we are owed them. For instance, land, jewellery, cash, clothing, a home, food, a car, etc.
- A partner is someone who contributes to the firm and will share in the profits. The amount of each partner's contribution is up for negotiation, as is the amount of profit that each partner will receive; the partner that contributes more will benefit more.
- For instance, if one partner invests 75%, he will receive 75% of the earnings, while the partner who spends 25% will receive 25% less. In the event of fictional assets, it is acceptable to divide the assets fairly and evenly.
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Fictitious assets are distributed among the partners in their profit-sharing ratio.
Fictitious assets refer to those assets that are not physical in nature but are recorded in the accounting records to reflect some financial transactions, such as adjustments, write-offs, or allocations of expenses. They don't have any actual value, but their presence in the financial statements provides important information about the financial health of the partnership.
The profit-sharing ratio is the agreement between partners about how profits or losses will be divided among them. It is typically based on the investment each partner has made in the partnership and the level of responsibility each partner has for the partnership's operations. For example, if one partner has invested more capital into the partnership and taken on a larger role in managing the business, they may be entitled to a larger share of the profits.
When it comes to distributing fictitious assets, the partners' profit-sharing ratio is used to determine each partner's share. For example, if the profit-sharing ratio is 60/40, the first partner will receive 60% of the fictitious assets and the second partner will receive 40%. This ensures that each partner receives a fair share of the assets based on their investment and contributions to the partnership.
In conclusion, the distribution of fictitious assets among partners is a crucial aspect of partnership accounting and helps ensure that each partner is fairly compensated for their investment and contributions to the business.
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