Question

Agreement to share profits ______________.

• A. implies an agreement to share losses
• B. does not necessarily mean an agreement to share losses
• C. must be coupled with an agreement to share losses
• D. is same as agreement to share losses

Answer 1

Answer: (B)

does not necessarily mean an agreement to share losses

Everyday is not same in any business, sometimes there is profit and sometimes losses. If a business is based upon partnership, then for sure an agreement is madeby the partners and that agreement contains each and every thing regarded to a partnership.

Since the firm is entitled to both losses as well as profits, then agreement must have information about sahring of profits along with sharing of losses.