Why may loss sharing ratio be separately written in a partnership deed?

Correct answer: To clarify loss distribution

A partnership deed records the agreed rules governing the partners and the firm. Profit sharing and loss sharing are often the same, but the partners may agree to use different ratios. In that situation, the loss-sharing ratio should be written separately and clearly in the deed. This prevents confusion when the firm suffers a loss and provides an exact basis for preparing the accounts.

Therefore option A, “to clarify loss distribution,” is correct. The purpose is not to hide profit, increase a partner’s salary, or close a loan. A written clause is especially useful because partnership accounting follows the agreement between the partners. If the deed gives a specific loss ratio, that ratio is applied when the loss is transferred among partners. If no separate ratio is stated, the applicable partnership rule would be considered, but a clear deed clause has priority.