Which statement is incorrect? * -The accrual basis of accounting is used to account for partnership operation. -When expenses exceed revenues, the income summary account will be debited when closing it to the partners’ capital accounts. -In the absence of any agreement, profits and losses shall be divided based on original capital -Salaries and interest on capital given to partners are not considered as partnership expenses but rather as only a means of distributing partnership net income. -none of the above
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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