Sharing of profit is ________ evidence of existence of partnership.a)Conclusiveb)Not a conclusivec)Confirmatived)CollaborativeCorrect answer is option 'C'. Can you explain this answer?

Question

Answer

Sharing of profits is not a conclusive test of partnership as per the law

Answer

As per I learnt Sharing of Profits is just a Prima Facie Evidence So the answer should be b)Not a conclusive because as per law language the answer b) is more appropriate

Answer

Answer

B

Answer

Sharing of profit is Confirmative evidence of existence of partnership

When determining the existence of a partnership, the sharing of profit is considered a confirmative piece of evidence. Here's why:

Definition of Partnership

In a partnership, two or more individuals come together to carry on a business with the objective of making a profit.

Sharing of Profit

One of the key characteristics of a partnership is the sharing of profits and losses among the partners.
When profits are shared among the partners, it indicates a mutual agreement to operate as a partnership.

Confirmative Evidence

While sharing of profit is considered confirmative evidence of a partnership, it is not conclusive on its own.
Other factors such as mutual agency, joint ownership, and mutual contribution to the business also play a role in determining the existence of a partnership.

Legal Implications

If a business is found to be a partnership based on the sharing of profit, the partners are subject to the rights and obligations set forth in partnership laws.
Partnerships are governed by specific laws that outline the responsibilities of partners, profit sharing agreements, and other relevant aspects of the business relationship.

In conclusion, while the sharing of profit is confirmative evidence of the existence of a partnership, it is important to consider other factors as well when determining the legal status of a business entity.

Similar CA Foundation Doubts

Sharing of profit is conclusive evidence of partnership. This statement is correct or incorrect comment with reasons??

An organisation running a business has the following attributes: the assets belong to the organisation, it can create a floating charge over its assets, change in membership does not alter its existence, and members cannot transfer their interests to non-members. What type of organisation is it?

All of the following statements are true regarding partnerships except ________.

Following are the differences between Partnership and Joint Venture except

Following are the differences between Partnership and Joint Venture except

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