Which of the Following Statements Is True About a Partnership

question 6

Multiple Choice

Which of the following statements is true about a partnership?

• A) One capital and one drawings account is used for each partnership.
• B) The capital account is used to record each partner's investment and that partner's designated share of the earnings.
• C)Partnerships are subject to separate income taxes.
• D)The drawings account is closed to retained earnings at the end of the perioD.The capital account in a partnership keeps track of each partner's capital balance and is affected by partner investments and withdrawals as well as net income.

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Definitions:

Direct Effects

Immediate impacts or outcomes that directly result from a specific cause or action without intermediate steps.

Indirect Effects

Outcomes that are not directly caused by an action but occur as a secondary or subsequent result of it.

Goals Motivate

The concept that setting and striving for objectives can drive individuals or teams to improve their performance and achieve success.

Goal-Setting Theory

A psychological theory that suggests setting specific and challenging goals enhances motivation and performance.