Which of the following statements is true about a partnership?
A) One capital and one drawings 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 income taxes.
D)The drawings 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.

Question

Quizplus · Accepted Answer

The capital account is used to record each partner's investment and that partner's designated share of the earnings. The drawings account is used to record each partner's withdrawals. Partnerships are not subject to separate income taxes like corporations, and one capital and one drawings account is not used for each partnership. The drawings account is not closed to retained earnings at the end of the period as it is not considered income.

Which of the Following Statements Is True About a Partnership