When closing the accounts of a partnership it is true that:

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When closing the accounts of a partnership, profit is credited to each partner's capital account according to the profit-sharing agreement. This is because partners share the profits and losses of the business according to their agreement. Option A is not true because partner's salaries are not considered as drawings; they are treated as an expense of the business. Option B is incorrect because a profit and loss summary account is used to summarize the profits and losses of the business during the accounting period, whereas a retained profits account is used to record the accumulated profits of the business. Option D is not correct because a loss for the period is shared among the partners according to their profit-sharing agreement and is reflected in their capital accounts.

When Closing the Accounts of a Partnership It Is True