Multiple choice

Profits of a partnership firm must be distributed among the partners as per the partnership deed while the profits of a company

  1. must be distributed to its shareholders

  2. may or may not be distributed to its shareholders

  3. may or may not be distributed to its board of directors, shareholders and other stakeholders

  4. are not distributable at all
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Partnerships MUST distribute profits per the partnership deed (binding agreement). Companies MAY distribute profits to shareholders - they can retain earnings for reinvestment. Option B correctly reflects this discretion. Companies are not required to distribute all profits like partnerships.

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