Which of the following statements is true about partnership accounting?
A) A particular partner's capital account is debited when a withdrawal takes place by that partner.
B) Through the closing entry process for a partnership, a positive net income results in an increase in overall partner capital.
C)The drawings account balances are subtracted to arrive at the net income to allocate to the partners.
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 closing entry process for a partnership involves transferring net income or loss to each partner's capital account. A positive net income would increase the overall partner capital. Option A is incorrect because a partner's capital account is not debited when a withdrawal takes place, instead, the partner's capital account is decreased. Option C is incorrect because when arriving at the net income to allocate to the partners, the drawings account balances are added back, not subtracted. Option D is incorrect because the drawings account is closed to the partner's capital account, not to retained earnings.

Which of the Following Statements Is True About Partnership Accounting