How is the allocation of partnership profits affected by drawings?
A) Drawings must be deducted from partners' salaries.
B) Drawings must be added back to profits before they are allocated.
C) Drawings must be deducted from profits before they are allocated.
D) Drawings only affect profit allocation if the partnership agreement provides for interest on drawings.

Question

Quizplus · Accepted Answer

Drawings typically do not affect the allocation of profits unless the partnership agreement specifies that interest should be charged on drawings, which would then affect the profit allocation.

How Is the Allocation of Partnership Profits Affected by Drawings