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If the partnership deed states partners A and B have a profit-sharing ratio of 1:1, what does it mean?

Answer and explanation

Correct answer: Both partners will receive equal profit

A profit-sharing ratio shows how distributable profit is divided among partners. A ratio of 1:1 means the profit is split into two equal parts — each partner gets one part (i.e., 50% each). Options B and C are incorrect because they claim only one partner receives all profit, contradicting 1:1. Option D is irrelevant since the bank is not a partner and cannot receive partnership profit under the deed. Exam tip: convert the ratio to fractions or percentages (1:1 → each gets 1/2 = 50%) to verify quickly.

Related tags

Partnership AccountsProfit SharingPartnership DeedRatioClass 12 AccountancyPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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