When preparing the closing entries for a partnership at the end of the accounting period which of these statements is true? Assume that capital account balances are not fixed.
A) The drawings accounts are closed to the capital accounts.
B) The retained earnings account is closed to the profit or loss summary account.
C) Income and expenses are closed to the capital accounts.
D) The profit or loss summary account is closed to the retained earnings accounts.

Question

Quizplus · Accepted Answer

In a partnership, the drawings accounts are closed to the capital accounts to adjust the partners' capital balances for any withdrawals made during the period.

When Preparing the Closing Entries for a Partnership at the End