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If both interest on capital and partner salary are payable but profit is insufficient how is the available profit normally allocated?

Answer and explanation

Correct answer: If no priority is given in deed both are reduced proportionately

Both are appropriations of profit and if the deed gives no priority the available profit is divided proportionately. In exams first check priority in the deed.

Related tags

PartnershipAdjustmentsInsufficient Profit PriorityPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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