When Preparing the Closing Entries for a Partnership at the End

question 3

Multiple Choice

When preparing the closing entries for a partnership at the end of the accounting period which of these statements is true? Assume that capital account balances are not fixed.

• A) The drawings accounts are closed to the capital accounts.
• B) The retained earnings account is closed to the profit or loss summary account.
• C) Income and expenses are closed to the capital accounts.
• D) The profit or loss summary account is closed to the retained earnings accounts.

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Definitions:

Risk-Adjusted Return

A measure of an investment's return that accounts for the level of risk taken, allowing for the comparison of investments with different risk levels.

Mutual Funds

Shareholder-funded investment initiatives that engage in diversified portfolios and are managed by experts.

Return

The gain or loss on an investment over a specific period, usually expressed as a percentage of the investment's initial cost.

Total Risk

The complete range of risks associated with an investment, including both systemic and unsystematic risk.