Question : Assertion (A): When partners agree on a profit-sharing ratio, they also agree on a loss-sharing ratio.
Reason (R): Although it is stated in the definition that profits will be shared. However, profits also include losses.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Both Assertion (A) and Reason (R) are not correct.
Correct Answer: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Solution : Profits and losses are passed through to the partners in the general partnership, limited liability partnership, limited liability limited partnership, and limited partnership, as specified in the partnership agreement. Profits and losses are shared equally among the partners if not specified.
Hence the correct answer is option 1.
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