Keith and Jim Formed a Partnership Business

question 76

Multiple Choice

Keith and Jim formed a partnership business.The partnership incurs a net loss of $5000 and the partners agreed to share the losses equally.The entry to close the net loss will:

• A)decrease Jim,capital by $5000.
• B)decrease Keith,capital by $2500.
• C)debit Income summary by $5000.
• D)increase Jim,capital by $2500.

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Definitions:

Faithful Representation

A qualitative characteristic of financial information that ensures it accurately depicts the economic phenomena it represents.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle.

Current Liabilities

Short-term financial obligations that are due within one year or within a normal operating cycle, including accounts payable and short-term loans.

Accounting Information

Data related to the financial transactions and status of an organization, used for analysis, reporting, and decision making.