Which of these is not a feature of the fixed capital balances method (method 2) 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) Partner's drawings are closed to their capital accounts.
D) The profit or loss distribution account is closed to the partner's retained earnings 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 the profit in the retained earnings account, maintaining the capital account balance fixed unless agreed upon by all partners.

Which of These Is Not a Feature of the Fixed