In a partnership, what does the term 'profit-sharing ratio' refer to?

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The ratio of profits to losses
The percentage of profits each partner receives
The ratio of capital contributions
The ratio of partners to employees

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Q: In a partnership, what does the term 'profit-sharing ratio' refer to?

Solution: The profit-sharing ratio refers to the percentage of profits that each partner receives, which may differ from their capital contributions.

Steps: 5

Step 1: Understand that a partnership is a business owned by two or more people.
Step 2: Know that when the business makes money, it has profits.
Step 3: Realize that partners need to decide how to share these profits.
Step 4: The 'profit-sharing ratio' is the way partners agree to divide the profits.
Step 5: This ratio can be different from how much money each partner put into the business.

In a partnership, what does the term 'profit-sharing ratio' refer to?

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