Residual partnership profit
Residual partnership profit or loss is the amount remaining for allocation in the agreed profit-sharing ratio after other appropriations. Starting with profit before appropriation, add interest charged on drawings and deduct partner salaries and interest on capital as applicable. A negative residual is allocated as a loss unless the agreement provides otherwise. A partner can receive a salary allocation yet also bear a share of residual loss.
Worked example
Profit of $30,000 plus $600 drawings interest less $10,000 salaries and $2,600 capital interest leaves $18,000. A 2:1 sharing ratio allocates $12,000 and $6,000.
Common mistake
The residual ratio applies to the residual amount, not automatically to the original profit before salaries and interest allocations.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | K1 | Direct | July 2027–August 2028 |
Related terms
Also called: Residual profit share, Share of residual profit or loss