What is defined as "capital contribution" in a partnership?

Capital contribution in a partnership refers specifically to the assets or money that partners invest into the business. This investment can take various forms, including cash, property, or other assets that the partners bring into the partnership with the intention of contributing to the business's operations and growth.

When partners make a capital contribution, they are essentially providing the initial funding or resources necessary for the business to start and function. This investment is significant because it can directly affect the partnership's structure, the distribution of profits, and the partners’ ownership interests. It is essential for partners to clearly define their contributions in the partnership agreement to avoid disputes in the future.

Other options do not accurately reflect the definition of capital contribution. Monetary loss due to business risks does not represent an investment made in the business but rather an outcome of operating the business. Intellectual property could be a part of a capital contribution if specifically agreed upon, but it is not universally defined as such. Conversely, funds borrowed from external sources are not contributed by partners themselves, but instead represent liabilities that the partnership must manage. Thus, understanding capital contribution primarily focuses on the direct investments made by partners into the partnership.