Question

How will we distribute profit among the partners when the profit is less than the appropriation

Answer 1

Answer:

Profits or losses, made by a firm should be divided among its partners with the provision of their Partnership Deedif there is no written or oral agreement among the partners, the Law states that profits and losses should be shared equally by the partners

Under the Partnership Deed, they are entitled to interest on capital at 6% p.a. before dividing the profit. During a year, the firm earned Rs 7,800 before allowing interest. Profit being less than this amount, the profit will be distributed between the two partners in the ratio