Which of the following statements is correct?
A)If partners consider their cash withdrawals to be compensation for the work they do for the partnership, the amounts of the withdrawals should be charged to Salaries Expense.
B)If there is no specific agreement on the division of partnership profits and losses, they are divided equally among the partners.
C)If a salary is allowed to one partner, other partners also must receive a salary allowance.
D)None of the above statements is correct.

Question

Quizplus · Accepted Answer

This is a basic principle of partnership accounting. If there is no specific agreement, profits and losses are divided equally among the partners. Option A is incorrect because cash withdrawals are not necessarily salary payments. Option C is incorrect because partners can agree on different compensation arrangements based on their contributions to the partnership. Option D is not correct because option B is correct.

Which of the Following Statements Is Correct