what is partners ratio of sharing profit and loss in absence of partnership deed Related: Key Notes - Accounting for partnership firms: Fundamentals?

Question

what is partners ratio of sharing profit and loss in absence of partnership deed Related:  Key Notes - Accounting for partnership firms: Fundamentals?

Answer

Profit-Loss Sharing Ratio will be equal i.e., (1:1) in the absence of Partnership Deed in the Partnership Firm.

Answer

Partners will share the profit in the ratio they contributed the capital.

Answer

In the absence of partnership  deed Profit sharing ratio will equal as per the partnership act,1932

Answer

Partners Ratio of Sharing Profit and Loss in the Absence of Partnership Deed

In the absence of a partnership deed, the partners' ratio of sharing profit and loss can be determined based on the provisions of the Indian Partnership Act, 1932. According to this Act, in the absence of a partnership deed, the partners will share the profits and losses equally. However, if the partners wish to have a different profit-sharing ratio, they can agree upon it orally or through a written agreement.

Default Ratio of Equal Sharing
- If there is no agreement between the partners regarding the profit-sharing ratio, the profits and losses are shared equally among the partners.
- This means that each partner will receive an equal share of the profits and bear an equal share of the losses.

Deviation from Equal Sharing
- If the partners wish to deviate from the default ratio of equal sharing, they can do so by mutual consent.
- It is advisable for partners to have a clear understanding of their profit-sharing ratio to avoid any disputes or conflicts in the future.
- The profit-sharing ratio can be based on various factors such as capital contribution, expertise, effort, or any other reasonable basis agreed upon by the partners.

Documentation
- It is highly recommended for partners to have a written partnership deed that clearly states the profit-sharing ratio and other terms and conditions of the partnership.
- The partnership deed should be duly signed by all the partners to ensure mutual understanding and avoid any future disputes.

Legal Implications
- In the absence of a partnership deed, any dispute regarding the profit-sharing ratio will be settled based on the provisions of the Indian Partnership Act, 1932.
- The act provides certain guidelines for the distribution of profits and losses in the absence of an agreement.
- However, it is always better to have a partnership deed to avoid any legal complications and have a clear understanding of the rights and responsibilities of each partner.

Conclusion
In the absence of a partnership deed, the partners will share the profits and losses equally. However, it is advisable for partners to have a written partnership deed that clearly states the profit-sharing ratio and other terms and conditions of the partnership. This will help in avoiding any disputes or conflicts in the future and ensure a smooth operation of the partnership.

Answer

Equal ratio distribution 1:1

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