Which of the following statements is true about a partnership?
A)One capital and one drawing 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 business income taxes.
D)The drawing 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 in a partnership is used to record each partner's investment and that partner's designated share of the earnings. The drawing account is used to record withdrawals made by partners during the period. Partnerships are not subject to separate business income taxes, and the drawing account is not closed to retained earnings at the end of the period.

Which of the Following Statements Is True About a Partnership