With the Fixed Capital Balances Method (Method 2) of Accounting

question 52

Multiple Choice

With the fixed capital balances method (method 2) of accounting for partnership equity, the general journal entry to record interest on capital is:

• A) DR Profit or loss summary account; CR Partner's capital accounts.
• B) DR Profit or loss summary account; CR Partner's retained earnings accounts.
• C) DR Profit distribution account; CR Partner's capital accounts.
• D) DR Profit distribution account; CR Partner's retained profit accounts.

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Definitions:

Business Ethics

A field of study that examines moral principles and problems that arise in a business environment.

Situational Ethics

An ethical theory which holds that to evaluate the morality of an action, we must imagine ourselves in the position of the person facing the ethical dilemma and then, on that basis, determine whether that person’s action was ethical.

Consequentialism

An ethical theory that judges whether an act is right or wrong based on the outcomes or consequences of that act.

Help

Assistance or support offered to solve a problem or achieve a goal.