If Partner A contributes 60% of the capital and Partner B contributes 40%, how s
Practice Questions
Q1
If Partner A contributes 60% of the capital and Partner B contributes 40%, how should profits be divided if they agreed to split based on capital contribution?
60% to A and 40% to B
50% to A and 50% to B
70% to A and 30% to B
40% to A and 60% to B
Questions & Step-by-Step Solutions
If Partner A contributes 60% of the capital and Partner B contributes 40%, how should profits be divided if they agreed to split based on capital contribution?
Step 1: Identify the total capital contributions of both partners. Partner A contributes 60% and Partner B contributes 40%.
Step 2: Understand that profits will be divided based on the percentage of capital each partner contributed.
Step 3: Calculate Partner A's share of the profits, which is 60% of the total profits.
Step 4: Calculate Partner B's share of the profits, which is 40% of the total profits.
Step 5: Conclude that profits should be divided as 60% to Partner A and 40% to Partner B.
Profit Sharing Based on Capital Contribution – This concept involves dividing profits in proportion to the amount of capital each partner has invested in a business.
