Question

Interest allowances are given to partners who made larger capital contributions. True or False The withdrawals...

Interest allowances are given to partners who made larger capital contributions.

True or False

The withdrawals account of each partner is closed to income summary at the end of the accounting period.

true or false

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Homework Answers

Answer #1

1. Interest allowances are given to partners on the basis of their capital balances whether the capital balance is small or bigger. So only the partner who made larger contribution get interest allowances is a false statament because a small contribution made by partners will also entitled to get interest allowances on his small contribution made.

Hence, the given statement is false.

2. Withdrawals of each partner is not closed to income summary as the same cannot be consider as expense on income summary. So the withdrawals accounts of each partner should be debited to each partners capital account as drawings and cannot be closed to income summary.

Hence, the given statement is false.

SUMMARY:

Both the statements are false.

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