Question

In the absence of an agreement to the contrary, partners share profits and losses in the

(1) Ratio of their capitals at the beginning of the year

(2) Ratio of their capitals at the end of the year

(3) Ratio of average capital

(4) Equal ratio​

Answer 1

Explanation:

Partnership Agreement defines the ratio in which partners are supposed to share the profit & loss of the business every year.

If the agreement is silent on the profit sharing ratio, in such case partners share profit and losses in equal ratio.