Which of the Following Statements Is True About a Partnership

question 65

Multiple Choice

Which of the following statements is true about a partnership?

• A)One capital and one drawing 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 business income taxes.
• D)The drawing 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:

Electronic Accounting System

Computerized systems used for tracking and managing financial transactions and accounts.

General Ledger Accounting Systems

Comprehensive accounting systems that collect, classify, and summarize financial transactions to create financial statements.

Cash Receipts

The collection of money (cash, checks, wire transfers) by a business during a given period, often recorded in the cash receipts journal.

Disbursements

Payments made by a business, including amounts paid out for expenses, through methods like checks or electronic transfers.