Question

If the distribution of income, the net income is less than the salary and interest allowances granted, the remaining balance will be a negative amount that must be divided among the partners as though it were a loss.True/false

Answer 1

True

Step-by-step explanation:

Any loss or profit of the business is distributed equally among the partners in the ratio of their investments.

Any profit is shared equally among the partners in the profit sharing ratio. Similarly any loss is shared equally in the profit sharing ratio.

The salary is debited to the Partner's capital account and loss is credited from Partners Capital account. the adjusting entry would be

Salary Dr

Partners Capital Account Cr

For loss

Partner's Capital Account Dr

Profit and Loss Cr