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 Is rent paid to a partner is appropriation of profits?
  • a)
    Yes
  • b)
    No
  • c)
    If partner’s contribution as capital is maximum
  • d)
    If partner is a working partner
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Is rent paid to a partner is appropriation of profits?a)Yesb)Noc)If pa...
The amount of rent would be seen as this partners capital contribution instead of needing it paid from the venture.

Profits are what’s left after you subtract expenses from revenue. Revenue and Profits are not the same yet people continue to use these terms interchangeably.

Rent paid out usually falls under operational expense and is paid from revenue not profits.

However, you could have an agreement to only pay rent from a % of profits.
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Community Answer
Is rent paid to a partner is appropriation of profits?a)Yesb)Noc)If pa...
Owns the property being rented out, then it is not considered appropriation of profits. However, if the partner is simply renting out a property they do not own, then it would be considered appropriation of profits.
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Is rent paid to a partner is appropriation of profits?a)Yesb)Noc)If partner’s contribution as capital is maximumd)If partner is a working partnerCorrect answer is option 'B'. Can you explain this answer?
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