Equal proportion
Capital ratio
Profit sharing ratio
Proportion to assets realized
Answer is Right!
Answer is Wrong!
The correct answer is: A. Equal proportion
In the absence of any contract, profit arising from partnership firm is credited to the partners capital account in equal proportion. This is because the Partnership Act, 1932 does not specify any particular ratio in which the profits of a partnership firm should be shared. Therefore, in the absence of any agreement to the contrary, the profits of a partnership firm are shared equally by all the partners.
The other options are incorrect because:
- Option B: Capital ratio is the ratio in which the partners contribute capital to the partnership firm. However, the Partnership Act, 1932 does not specify that the profits of a partnership firm should be shared in the same ratio as the partners’ capital contributions.
- Option C: Profit sharing ratio is the ratio in which the partners agree to share the profits of the partnership firm. However, if there is no such agreement, the profits of the partnership firm are shared equally by all the partners.
- Option D: Proportion to assets realized is the ratio in which the partners share the assets of the partnership firm on its dissolution. However, this ratio is not relevant for the purpose of sharing the profits of the partnership firm.