Which of the following is not a feature of the fixed capital balances method of accounting for partnership equity?
A) Each partner has two permanent equity accounts, a capital account and a retained earnings account.
B) Apart from the initial investment very few adjustments are made to the capital account.
C) The partners retained earnings accounts include their proportions of the profit of loss for the period.
D) Partner's drawings accounts are closed at the end of the accounting period to their capital accounts.

Question

Quizplus · Accepted Answer

In the fixed capital balances method, partner's drawings are not closed to their capital accounts but rather to their current accounts or directly against their share of profits in their drawing accounts. The capital accounts under this method remain fixed and are only adjusted for additional investments or withdrawals of capital, not for drawings or the allocation of profits and losses.

Which of the Following Is Not a Feature of the Fixed