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The deed is silent, but A's capital is three times B's capital and B manages the business full time. How will profit be shared?

Answer and explanation

Correct answer: Equally

The governing default rule is that, when the partnership deed is silent, partners share profits and losses equally. The amount of capital contributed does not by itself determine the profit ratio, and the time or effort spent in managing the business also does not alter the ratio unless the deed provides a special arrangement. Therefore A’s capital being three times B’s capital is irrelevant to profit sharing, and B’s full-time work does not entitle B to the entire profit. The profit will be divided equally between A and B, so option B is correct. Options A and C apply unsupported bases, while D ignores A’s status as a partner.

Related tags

Silent Partnership DeedEqual Profit SharingDefault RuleProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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