Accounting in Theory And Practice a Text book for the Use of Accountants Soli

Cover Accounting in Theory And Practice a Text book for the Use of Accountants Soli
Accounting in Theory And Practice a Text book for the Use of Accountants Soli
George Lisle
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Sometimes it is desirable that either partner in respect of devoting his whole time to the business should receive a salary before the divisible profits are ascertained, so that in the event of there being no profits such partner still draws his salary. Interest on the capital employed should also be charged before arriving at the divisible ' profits. Even when the capital of a partnership at starting is the same, during the progress of the partnership, in consequence of circumstances arising, ...the proportions of the partners' capital change, and to make a fair allowance for this it is very desirable that there should be a stipulation in the deed of co-partnery that interest is to be allowed at the rate of say 4 or 5 per cent upon all sums at the credit of the partners, and charged on all sums at their debit. The effect of this is that the partners receive interest in respect of the money they have in the business. The proportion in which the profits and losses of the business are to be allocated should be strictly defined.

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