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

question 44

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) debit profit distribution account; credit partner's capital accounts.
• B) debit profit distribution account; credit partner's retained profit accounts.
• C) debit profit or loss summary account; credit partner's capital accounts.
• D) debit profit or loss summary account; credit partner's retained earnings accounts.

---

Definitions:

Capitalist

An individual who possesses capital, particularly financial assets, and engages in the investment and management of these assets with the aim of generating profit.

Hypocritical

Exhibiting a discrepancy between one's proclaimed beliefs or values and one's actual behavior or actions, often implying a lack of sincerity.

Free World

A Cold War-era term referring to countries aligned with the United States and its allies, emphasizing their non-communist ideology and purported adherence to democracy.