Unless otherwise agreed amongst the partners, partners salaries, interest on capital and interest on drawings are assumed in partnership accounting to be settled by means of:

Question

Quizplus · Accepted Answer

Partners salaries, interest on capital and interest on drawings are generally settled by means of an adjusting entry in the accounting records (book entry). This is because these transactions do not involve actual cash payments and are recorded in the partnership's books as a means of keeping track of each partner's capital account. However, if the partners have agreed to settle these transactions in a different way, such as by private arrangement or offsetting entries, then those methods would be used instead.

Unless Otherwise Agreed Amongst the Partners, Partners Salaries, Interest on Capital