There are two methods of accounting for equity in a partnership referred to in the text, method 1 and method 2; these are:
A) variable and fixed capital balances methods.
B) equal and unequal profit sharing methods.
C) interest and no interest methods.
D) debit and credit methods.

Question

Quizplus · Accepted Answer

The two methods of accounting for equity in a partnership are the variable and fixed capital balances methods. These methods refer to the way partners' capital accounts are maintained and how profits and losses are distributed among partners. Therefore, option A is the correct answer. Option B is incorrect because it refers to profit sharing, which is a separate issue from accounting for equity. Option C is also incorrect because it is not a valid method of accounting for equity in a partnership. Option D is incorrect because debit and credit are accounting concepts that apply to all financial transactions and do not specifically relate to accounting for equity in a partnership.

There Are Two Methods of Accounting for Equity in a Partnership