Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 11 - No. 38)
In preparing financial statements for a partnership, what are partners' salaries typically treated as?
An expense in the income statement.
A distribution of profits in the appropriation account.
A capital contribution.
An asset.
Explanation
Partner's salaries are treated as a distribution of profit to the partner and appear in the appropriation account, which outlines how profits are allocated.
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