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 agree to split them equally?
  1. 60% to Partner A and 40% to Partner B
  2. 50% to each partner
  3. 70% to Partner A and 30% to Partner B
  4. 40% to Partner A and 60% to Partner 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 agree to split them equally?
  • Step 1: Identify the contributions of each partner. Partner A contributes 60% and Partner B contributes 40%.
  • Step 2: Note that the partners have agreed to split the profits equally.
  • Step 3: Since they agreed to split profits equally, each partner will receive 50% of the profits.
  • Step 4: Conclude that despite the different capital contributions, the profit division is based on their agreement.
  • Profit Sharing Agreement – Understanding that profit distribution can differ from capital contribution based on mutual agreement.
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