Question

For a valid partnership, there must be _______.

• A. sharing of profits
• B. sharing of losses
• C. sharing of profit & losses
• D. none of these

Answer 1

The correct option is A sharing of profits

The partnership is a mutual relationship between two or more person who agrees to carry on a business.

The profits earned by these partners are to be distributed as well as the losses are to be shared. The sharing ratio is decided by the partners and it is both profits a well as losses.

Hence, a partnership will be valid when the partners are sharing both profits and the losses.