Which statement concerning partnerships is true?
A) A partnership agreement must be in writing.
B) If all existing partners must approve a new partner this may make it difficult to sell an interest in a partnership.
C) Partner's capital accounts must always have equal balances.
D) The profit or loss is determined in the profit distribution account and is distributed to the partners in the profit summary account.

Question

Quizplus · Accepted Answer

If all existing partners must approve a new partner, it may make it difficult to sell an interest in a partnership as the existing partners may not approve of the new partner. The other statements are not accurate. A partnership agreement does not necessarily have to be in writing, although it is highly recommended. Partner's capital accounts do not always have to have equal balances, as this would only be the case if the partnership agreement specified equal ownership. The profit or loss is determined in the profit and loss account, and is distributed to the partners in the capital accounts.

Which Statement Concerning Partnerships Is True