Asked by Vaden Mangler on Jun 18, 2024
Verified
Partnership income or loss need not be closed to partners' capital accounts each period because of the unlimited life characteristic of partnerships.
Capital Accounts
Accounts used to record the financial contributions, withdrawals, and the share of profit or loss of owners in a partnership or in their personal accounts.
Unlimited Life
A concept in accounting that assumes a company will continue to operate indefinitely, allowing for the deferral of certain expenses over a long period.
- Absorb the principal properties and components of a partnership form of organization, with a focus on the implications of liability, the duration of operation, and the significance of an accounting entity.
Verified Answer
AL
Avishai LoweryJun 24, 2024
Final Answer :
False
Explanation :
Partnership income or loss must be closed to partners' capital accounts at the end of each accounting period to ensure that each partner's capital account accurately reflects their share of the partnership's profits and losses. This is necessary regardless of the unlimited life characteristic of partnerships.
Learning Objectives
- Absorb the principal properties and components of a partnership form of organization, with a focus on the implications of liability, the duration of operation, and the significance of an accounting entity.
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