When Closing the Accounts of a Partnership It Is True

question 9

Multiple Choice

When closing the accounts of a partnership it is true that:

• A)Partner's salaries must be treated as drawings because partners are owners
• B)A retained profits account is used rather than a profit and loss summary account
• C)Profit is credited to each partner's capital account according to the profit sharing agreement
• D)A loss for the period is carried forward and is not transferred to the partner's capital accounts

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Definitions:

Debit Side

The debit side refers to the left side of an accounting ledger where debits are recorded, often signifying an increase in assets or expense accounts, or a decrease in liability, equity, or revenue accounts.

Credit Side

The right side of an account ledger, where increases in liabilities, equity, and revenue or decreases in assets are recorded.

Asset Account

An account on a company's balance sheet that represents a resource with economic value that is expected to provide future benefit.

Supplies

Items or materials used in the daily operations of a business.