The income/loss agreement was ignored when closing the income summary and all income was distributed evenly. This error would cause:
A) the total partners' equity to be overstated.
B) the total partners' equity to be understated.
C) the total partners' equity to be unaffected.
D) the ending assets to be overstated.

Question

Quizplus · Accepted Answer

The total partners' equity remains the same regardless of how income or loss is distributed among partners. The distribution affects individual partners' equity accounts but does not change the total combined equity of all partners.

The Income/loss Agreement Was Ignored When Closing the Income Summary