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If the partnership deed specifies the profit sharing ratio as \(3:2\), how will the profit be shared?

Answer and explanation

Correct answer: In the ratio \(3:2\)

The partnership deed governs profit sharing; the ratio stated in the deed is applied. So if the deed gives the ratio \(3:2\), profits are divided into 5 parts with partner A getting 3 parts and partner B 2 parts. 'Equally' is only correct when the deed is silent; 'in proportion to capital' or 'based on salaries' apply only if the deed or agreement specifies them. Exam tip: always check the deed first — its provisions override default rules.

Related tags

Partnership AccountsProfit SharingPartnership DeedProfit RatioPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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