Which statement concerning drawings by partners in a partnership is true?
A) Interest is charged on drawings if the partnership agreement is silent on the matter.
B) Charging interest on drawings acts as an incentive to partners to withdraw money from the partnership.
C) Drawings are generally regarded as withdrawals of future profits.
D) Drawings are taken into account when calculating the final distribution of profit between the partners.

Question

Quizplus · Accepted Answer

Drawings are considered withdrawals of future profits and do not affect the overall profitability of the partnership. Interest may be charged on drawings if specifically stated in the partnership agreement, but it is not a common practice. Drawings are not taken into account when calculating the final distribution of profit between the partners, as they are already considered to be a withdrawal of future profits.

Which Statement Concerning Drawings by Partners in a Partnership Is