Which of the following statements is true?Partners are employees of the partnership. Salaries to partners are expenses on the income statement. Salary allowances should reflect the relative value of services provided by partners. Salary allowances are expenses. Interest allowances are expenses.

The partnership comes into existence when two or more persons agree to do the business and further…

Answered: Which of the following statements is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following statements is true?

Partners are employees of the partnership.
Salaries to partners are expenses on the income statement.
Salary allowances should reflect the relative value of services provided by partners.
Salary allowances are expenses.
Interest allowances are expenses.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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