Question

If the partnership deed is _______ about the profit sharing ratio, the profits and losses of the firm are to be shared equally by partners, irrespective of their capital contribution in the firm.

• A. Active
• B. Silent
• C. Dormant
• D. Both A and B

Answer 1

The correct option is B Silent

Partnership comes into existence as a result of agreement among the partners. The agreement can be either oral or written. The partnership act does not require that the agreement must be in writing. But whenever it is in writing, the document, which contains terms of the agreement is called "Partnership Deed". There are various provisions affecting partnership accounts. Profit sharing ratio is one of the provisions amongst them. If the partnership deed is silent about the profit sharing ratio, the profits and losses of the firm are to be shared equally by partners, irrespective of their capital contribution in the firm.