Which of These Is Not a Feature of the Fixed

question 16

Multiple Choice

Which of these is not a feature of the fixed capital balances method (method 2) of accounting for partnership equity?

• A) Each partner has two permanent equity accounts, a capital account and a retained earnings account.
• B) Apart from the initial investment very few adjustments are made to the capital account.
• C) Partner's drawings are closed to their capital accounts.
• D) The profit or loss distribution account is closed to the partner's retained earnings accounts.