Question : Assertion (A): When partners agree on a profit-sharing ratio, they also agree on a loss-sharing ratio.
Reason (R): Although it is stated in the definition that profits will be shared. However, profits also include losses.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Both Assertion (A) and Reason (R) are not correct.
Correct Answer: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Solution : Profits and losses are passed through to the partners in the general partnership, limited liability partnership, limited liability limited partnership, and limited partnership, as specified in the partnership agreement. Profits and losses are shared equally among the partners if not specified.
Hence the correct answer is option 1.
Question : Assertion (A): The Current Ratio is unaffected by debt redemption. Reason (R): Debentures that are redeemable within a year have an impact on the current ratio.
Question : Assertion (A): In order to make up for the partner's capital contribution that exceeds the profit-sharing ratio, the company pays interest on his capital.
Reason (R): Interest on capital is a charge against profit.
Question : Assertion (A) Partner distribution of earnings and losses is based on their profit sharing ratio, not their capitalization ratio. Reason (R): Profit is dispersed in proportion to appropriations if the amount of appropriations is greater than the amount of profit
Question : Assertion (A): Although not specifically mentioned in the definition, the partnership's business should be legal.
Reason (R): Any illegal activity is prohibited in the country. As a result, the business must also be legal to operate.
Question : Assertion (A): The ratio that results from dividing current assets by current liabilities is known as the liquid ratio. Reason (R): Liquid Assets/Current Liabilities is the formula for calculating the liquid ratio.
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