Why is it incorrect to distribute gross profit directly among partners?

Correct answer: Because normal expenses have not yet been deducted

The governing accounting concept is the distinction between gross profit and net profit. Gross profit is generally calculated after deducting the cost of goods sold from revenue, but operating and other indirect expenses may still remain unpaid or unrecorded. Net profit is obtained only after deducting the relevant expenses, such as salaries, rent, depreciation, and administrative costs, from gross profit. Partnership profit should normally be distributed only after the profit available for appropriation has been determined. Therefore option A is correct. Option B is factually false, option C denies the existence of the partnership, and option D gives an irrelevant reason. Direct distribution of gross profit could overstate the amount available to partners and leave expenses unprovided.