Which of the following statements is true?
A)Partners are employees of the partnership.
B)Salaries to partners are expenses on the income statement.
C)Salary allowances should reflect the relative value of services provided by partners.
D)Salary allowances are expenses.
E)Interest allowances are expenses.

Question

Quizplus · Accepted Answer

Salary allowances to partners should reflect the relative value of services provided by each partner. This is because partners are not considered employees of the partnership, and their compensation should be based on their contribution to the partnership. Salaries to partners are not expenses on the income statement, as they do not reduce the partnership's profits. Instead, they are recorded as withdrawals by the partners. Interest allowances are also not expenses, but rather an allocation of partnership income to the partners based on their capital contributions.

Which of the Following Statements Is True