ExpertHard1 markMultiple Choice
CPA · Question 39 · Area II: Business Law
Under the Revised Uniform Partnership Act (RUPA), absent an agreement to the contrary, how are profits and losses shared among partners?
Under the Revised Uniform Partnership Act (RUPA), absent an agreement to the contrary, how are profits and losses shared among partners?
Answer options:
A.
Profits are shared equally; losses are shared in the same manner as profits.
B.
Profits are shared in proportion to capital contributions; losses are shared equally.
C.
Profits and losses are shared in proportion to capital contributions.
D.
Profits are shared equally; losses are shared in proportion to capital contributions.
How to approach this question
Partnership Default = Equality (Heads). LLC/Corp Default = Capital (Dollars).
Full Answer
A.Profits are shared equally; losses are shared in the same manner as profits.✓ Correct
Under RUPA, unless the partnership agreement states otherwise, partners share profits equally, and losses are shared in the same proportion as profits (equally).
Common mistakes
Assuming capital contribution ratios apply (that's the rule for Corporations and often LLCs, but not General Partnerships).
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