Question

Partnership accounting: (3pts) Uses a capital account for each partner. Uses a withdrawal account for each partner. Allocates net income or net loss to each partner according to the partnership agreement. All of the above.

Answer 1

Answer:

All of the above.

Explanation:

An organization where two or more individuals are involved as co-workers in known as partnership and the accounting principles followed in such an organization is called Partnership Accounting. Although basic principles of accounting are similar for partnership accounting and proprietorship account, there are also some difference. Following is a list of differences where Partnership accounting differs from Proprietorship accounting -

• There are two or more than two owners.
• There is a voluntary association of two or more legally competent persons.
• Each owner is allocated a separate capital account.
• There are separate withdrawal or drawing account for each partner.
• When accounting period ends, the drawing accounts of each partner are closed  to their respective capital accounts.
• The net income or net loss to each partner is allocated separately according to the agreement.

From the above properties of the Partnership Accounting it is clear that among the options mentioned in the question, all are correct.