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4 July, 09:42

If the distribution of income, the net income is less than the salary and interest allowances granted, the remaining balance will be a negative amount that must be divided among the partners as though it were a loss. True/false

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  1. 4 July, 11:19
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    True

    Explanation:

    Any loss or profit of the business is distributed equally among the partners in the ratio of their investments.

    Any profit is shared equally among the partners in the profit sharing ratio. Similarly any loss is shared equally in the profit sharing ratio.

    The salary is debited to the Partner's capital account and loss is credited from Partners Capital account. the adjusting entry would be

    Salary Dr

    Partners Capital Account Cr

    For loss

    Partner's Capital Account Dr

    Profit and Loss Cr
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