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Question
When a partner is given a guarantee by other partners, the loss on such a guarantee will be borne by ______.
Options
Partnership firm
All the other partners
Partners who give the guarantee
Partner with highest profit sharing ratio.
MCQ
Fill in the Blanks
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Solution
When a partner is given a guarantee by other partners, the loss on such a guarantee will be borne by partners who give the guarantee.
Explanation:
When a partner is given a guarantee of minimum profit by other partners, and there is a shortfall in the actual profit earned by that partner, the loss due to the guarantee is borne by the partners who have given the guarantee, in the agreed ratio. If no ratio is specified, the loss is shared equally among the guarantors.
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