Which of the following statements is true?
A)Partners are employees of the partnership.
B)Salaries to partners are expenses on the partnership income statement.
C)Salary allowances usually 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 reflect the relative value of services provided by partners and are not considered as expenses. However, they are deducted from the partnership income before profits or losses are shared among the partners. Interest allowances, on the other hand, are expenses and reduce the partnership's income. Option A is incorrect because partners are not employees of the partnership but are owners. Option B is incorrect because, as mentioned earlier, salary allowances are not considered expenses. Option D is incorrect for the same reason. Option E is partially correct, but it does not answer the question as to which of the given statements is true.

Which of the Following Statements Is True